CITY AND COUNTY OF CARDIFF AGENDA ITEM: 4 ECONOMY & CULTURE SCRUTINY COMMITTEE: 26 MAY 2011 CENTRAL BUSINESS DISTRICT ENABLING INFRASTRUCTURE

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1 CITY AND COUNTY OF CARDIFF AGENDA ITEM: 4 DINAS A SIR CAERDYDD ECONOMY & CULTURE SCRUTINY COMMITTEE: 26 MAY 2011 CENTRAL BUSINESS DISTRICT ENABLING INFRASTRUCTURE Background 1. A Central Business District (CBD) can be defined as the place of business convergence. The modern CBD mainly refers to a zoned business space where the highest concentration of business offices are constructed for large amounts of highly profitable and productive finance and business services with most convenient municipal transportation and communication. A dynamic CBD is vital to the health of a city and to the city region that surrounds it At the Executive Business Meeting on the 30 March 2011, the Executive considered a report entitled Central Business District Enabling Infrastructure. The report (attached at Appendix 1) sought to gain Executive approval of enabling infrastructure works to facilitate the principle of a Central Business District and public transport hub in the vicinity of Callaghan Square and Central Square. The formal establishment of a central business district was to be subject to separate consideration of relevant planning processes. 3. The report highlights linkage of the central business district concept to the City Centre Strategy and describes the two developments that relate to the terms of reference of this Committee; Cardiff s Financial & Business Service Cluster, and the International Convention Centre. 4. Financial & business services currently employ over 50,000 people in the city around 30% of the total workforce which has grown over the last 2 years. The 1 Bo Wang (2003) Economic Impacts of Central Business District (CBD): A Case Study of Toronto (1970s-1980s). Page 1 of 4

2 report highlights a number of key features which can deliver a thriving financial sector. 5. The economic potential of an International Conference and Exhibition Centre is described and the report highlights three options for delivering the Conference Centre. The need for a robust options appraisal is discussed. 6. The report also highlights issues that fall within the remit of the Environmental Scrutiny Committee relating to Transportation Infrastructure namely: Central Square: Public realm and road infrastructure improvements to create a new high quality environment in front of Cardiff Central train station. The modernisation and reconfiguration of Cardiff Central bus station and associated city centre bus infrastructure improvements and priority measures. Callaghan Square: Public realm and road infrastructure improvements to create new public spaces and development opportunities south of Cardiff Central train station 7. The Environmental Scrutiny Committee have recently completed in (April 2011) an inquiry into the bus station modernisation a new integrated transport hub for Cardiff review of the draft report, that contained 18 recommendations. 8. In considering the report the Executive resolved that: the concept of a central business district be approved as a key regeneration priority for Cardiff, subject to separate consideration of all relevant planning processes the approach outlined in the report regarding enabling transportation improvement works be approved the modification of the planning obligation relating to Herbert Street Bridge be noted and the design of the proposed scheme to provide short term transportation improvements in Callaghan Square be approved and the Page 2 of 4

3 preparation of a detailed design for the works to Callaghan Square be authorised authority be delegated to the Corporate Director (Place) to progress the development of a strategic masterplan and design specifications for Central Square encompassing the modernisation and reconfiguration of Central Bus Station including associated taxi and public drop-off and pick-up arrangements, and the creation of a new public square and associated public realm improvements. authority be delegated to the Corporate Director (Place) to under take an options appraisal for the delivery of a convention centre in the city centre. authority be delegated to the Chief Executive, in consultation with the Leader, to make representations to the Welsh Local Government Association, the Welsh Assembly Government and the UK Government to explore the accelerated delivery of the central business district through the utilisation of Enterprise Zones and Tax Increment Financing. Way Forward 9. Neil Hanratty, Chief Officer City Development will attend the Committee and provide information on the Central Business District concept, Cardiff s Financial & Business Service Cluster and the International Convention Centre. 10. Members are invited to note the information set out in the report, and presentations from the Officers and consider relevant issues for further scrutiny. Legal Implications 11. The Scrutiny Committee is empowered to enquire, consider, review and recommend but not to make policy decisions. As the recommendations in this report are to consider and review matters there are no direct legal implications. However, legal implications may arise if and when the matters under review are implemented with or without any modifications. Any report with recommendations for decision that goes to Executive/Council will set out any legal implications arising from those recommendations. All decisions Page 3 of 4

4 taken by or on behalf the Council must (a) be within the legal powers of the Council; (b) comply with any procedural requirement imposed by law; (c) be within the powers of the body or person exercising powers of behalf of the Council; (d) be undertaken in accordance with the procedural requirements imposed by the Council e.g. Scrutiny Procedure Rules; (e) be fully and properly informed; (f) be properly motivated; (g) be taken having regard to the Council's fiduciary duty to its taxpayers; and (h) be reasonable and proper in all the circumstances Financial Implications 12. There are no financial implications arising directly from this report. RECOMMENDATION The Committee is recommended to note the information contained in this report and to make comments and observations relevant to the Central Business District. If appropriate the comments and observations should be passed on to the Executive Member for consideration in the form of a letter from the Chair of the Committee. Mike Davies Head of Scrutiny. Performance and Improvement 11 May 2011 Page 4 of 4

5 CARDIFF COUNCIL CYNGOR CAERDYDD EXECUTIVE BUSINESS MEETING: 30 MARCH 2011 CENTRAL BUSINESS DISTRICT ENABLING INFRASTRUCTURE REPORT OF THE CHIEF EXECUTIVE AGENDA ITEM: 1 PORTFOLIO: CORPORATE Reason for this Report 1. This report seeks Executive approval of enabling infrastructure works to facilitate the principle of a central business district and public transport hub in the vicinity of Callaghan Square and Central Square. The formal establishment of a central business district would be subject to separate consideration of relevant planning processes. Background 2. Over the past 20 years Cardiff has witnessed various major regeneration projects, from the Cardiff Barrage and the re-development of Cardiff Bay to the recent completion of St David s 2 shopping centre. These projects have supported Cardiff s emergence as one of the most economically and culturally vibrant cities in the United Kingdom. 3. The delivery of St David s 2 was a key milestone in the city s development and coupled with the credit crunch and global recession presented a timely opportunity to consider the city s priorities for the next phase of its development. 4. The Council s emerging economic regeneration vision is to establish Cardiff as a leading European business city over the next two decades. The Corporate Plan makes clear that a key enabler of this vision is the development of a new city centre commercial district to underpin and promote the financial & business services sector. 5. With an upgraded national and regional transport interchange at its heart, a central business district would create an internationally competitive node in the financial and business services sector and a modern business environment to complement existing city centre cultural and leisure assets. Page 1 of 8

6 6. Transportation would be a key success factor for a central business district, enabling the creation of a sustainable and accessible business location. The Council s number one transport priority is the modernisation of the Bus Station as an integral part of the Sustainable Travel City initiative. This will provide a high quality public transport hub for local, regional and national travel. In the medium term, the delivery of upgrades to Cardiff Central train station by Network Rail will strengthen the City s competitive advantage, and will go hand in hand with improvements to service frequency from 12 to 16 trains an hour on the Cardiff Valleys network. The welcome announcement of the electrification of the Cardiff to London line will also further strengthen inward investment opportunities. 7. A positive outcome on the consideration of the business case to electrify the Valley Lines will further strengthen the role of the hub. This will increase Cardiff s population catchment, and extend access to work opportunities for those living in the wider city-region through improved sustainable regional access to the city centre. 8. In summary, a central business district would: Capitalise on Cardiff s existing strengths and predicted growth in financial and business services Put in place the business infrastructure to complement the existing city centre leisure and retail assets Create an iconic gateway to Wales in the heart of the capital Create Wales most sustainable business location Enhance transport connectivity ensuring that the Welsh economy is connected to the global economy and the capital is connected to the region Create a commercial centre, including Grade A office space, a high quality public realm and a vibrant sense of place, which can attract investment. Cardiff s Financial & Business Service Cluster 9. The financial services sector in Cardiff has grown significantly throughout the last decade, including over the recent economic downturn, and is home to an established financial & business services sector, including globally recognised companies such as Admiral Insurance, Zurich, Legal & General, Black Horse Finance, GMAC Financial Services and ING Direct, as well as a thriving SME base, with over 2,800 businesses operating in the sector. Innovation in the sector has also aided growth, with companies such as confused.com and gocompare emerging from established financial services businesses in the city. 10. Financial & business services currently employ over 50,000 people in the city around 30% of the total workforce. Mean annual salaries in the sector are over 29,000 - higher than the all-sector average in Wales of 26,232. Traditionally, the sector benefits from a highly skilled workforce, excellent links with the university sector, and high levels of re-investment. Consequently, over the past ten years the city has attracted 20,000 new Page 2 of 8

7 jobs in the sector representing growth of some 60%, which is faster than any other city in the UK. In total the sector contributes 2.25bn to the Cardiff economy almost a third of the total economic output in the city. 11. In support of its growing strength in financial and business services Cardiff has a number of key features which can deliver a thriving financial sector: Location: Cardiff is the closest capital city in Europe to London the world s leading financial centre. Skills: Cardiff has a higher proportion of its working age population with a degree or equivalent than any of the English core cities. Costs: The cost of property, labour and living in Cardiff is significantly lower without any compromise on quality. Quality of life: Cardiff consistently ranks as one of the best places to live in the UK. 12. The Welsh Assembly Government s Economic Renewal Programme for Wales identifies financial and business services as one of the key sectors for the future Welsh economy. Expected growth in the sector worldwide means that Cardiff must be able to respond to the opportunities for new jobs, and for bringing wealth to Wales. Over the next 10 years the financial and business services sector will be the major contributor to employment growth in the city, creating over 10,000 new jobs. 1 The Central Business District development will ensure that Cardiff is well positioned to take advantage of these opportunities. 13. As an extension of Cardiff city-centre the central business district is in the prime location for delivering economic growth. It is therefore wellpositioned to be supported by new regeneration initiatives, including the Enterprise Zones recently announced by the UK Government, and innovative funding mechanisms including Tax Increment Financing. Transportation Infrastructure 14. The initial enabling works will seek to create an iconic public space at the heart of the nation s capital - a much improved gateway to Cardiff and Wales - and on facilitating the extension of the existing financial and business services cluster south of Cardiff Central train station. 15. The key enabling works include: Central Square: Public realm and road infrastructure improvements to create a new high quality environment in front of Cardiff Central train station. The modernisation and reconfiguration of Cardiff Central bus station and associated city centre bus infrastructure improvements and priority measures. 1 Oxford Economic Forecasting (2010) Page 3 of 8

8 Callaghan Square: Public realm and road infrastructure improvements to create new public spaces and development opportunities south of Cardiff Central train station. 16. The public sector investment will seek to facilitate private sector investment to deliver the redevelopment of Marland House and St David s House and the development of the Seren site and former Western Mail site in the vicinity of Central Square. Central Bus Station and Central Square transport hub 17. The initial works will focus on the transformation of Cardiff bus station to create a modern, attractive and efficient bus facility which will also allow the release of land for significant public realm improvements and for other enabling development. The works will embrace the 20 acres north of the railway station and will ensure that the transport facility is passenger-focused and delivers a first class transport hub for the capital region. In summary, the improvements will underpin the establishment of a new public square and transportation interchange, reflecting high quality public realm commensurate with Cardiff s position as a European Capital City. Callaghan Square access improvements 18. The continued development of Callaghan Square is seen as being progressed concurrently with Central Square. Although Callaghan Square is already Cardiff s best commercial offer, the development is based on an outdated masterplan, designed in the late 80s/early 90s, which anticipated a major increase in private car usage south of the railway line which has not materialised. There is an opportunity to redefine the masterplan for Callaghan Square to create a more dense built environment, with vibrant and accessible pedestrian friendly spaces and a modern, high quality public realm. 19. The proposed improvements will address the current traffic bottleneck and remove the highway dominated character of the Square. They will also deliver a user friendly civic space at the heart of the city centre and provide better connectivity to surrounding developments, including the Bus and Rail Station and potentially attract new investment into the south side of the square. Proposed concept plans can be found in Appendix 1 to this report 20. In order for these changes to be made, a modification is necessary to the terms and responsibilities of the Legal Agreement attached to the planning permission relating to infrastructure works in and around Callaghan Square and Herbert Street Bridge. This modification replaces the Welsh Assembly Government s existing obligation to carry out works with a financial contribution in support of the proposed infrastructure changes outlined above. The modification was approved by the Council s planning committee on 29 March A copy of the letter from the Welsh Assembly Government to the Council relating to this matter is attached to this report as Appendix 2. Page 4 of 8

9 Central Station and South of Station 21. The proposed initial transport infrastructure and public realm improvements will open up significant commercial development opportunities and complement the existing and planned developments south of the railway line. Central to this is the enhancement of Cardiff Central train station to create a modern arrival gateway for Cardiff and Wales, and a sustainable and accessible transport hub for the region. Planning Policy Framework 22. A central business district concept is consistent with the approved City Centre Strategy ( ) which recognises the importance of this area by identifying the following Strategic Actions: To work with partners to deliver the redevelopment of Central Square to include a new state of the art bus station A new city centre transport interchange as part of the mixed use redevelopment of Central Square To develop internationally renowned buildings and landmarks reflecting Cardiff s status as the Capital City of Wales To seek the highest quality of design in high density developments To facilitate the relocation of existing occupiers as part of any future development strategy for the Central Square area To work with Millennium Stadium plc. to provide improved facilities and events management To identify and progress a preferred option for a new city centre conference/convention centre The redevelopment of the Dumballs Road area in line with the approved Planning Brief To complete the development of Callaghan Square as Cardiff s premier office location Creation of a new public transport corridor linking the city centre to Cardiff Bay including improvements to Herbert Street railway bridge area 23. It is the intention to review the City Centre Strategy later this year. International Convention Centre 24. An International Conference and Exhibition Centre would play a significant role in raising the profile of Cardiff and Wales as a business location and would act as a key catalyst to stimulating investor confidence and attracting significant footfall. 25. The Conference market represents an underexploited opportunity for Cardiff. According to a study produced in 2005, the conference and events market in the UK has an expenditure of 9.3 billion, contributes 4.1 billion to GDP and provides 0.5% of all employment in the U.K. 2 The market has grown and developed since this report but Cardiff has been 2 Economic Impact of UK Exhibition Market 2005 KPMG Page 5 of 8

10 unable to share increased opportunities. Currently Cardiff is 7 th in the list of favoured destinations in the UK for exhibitions and conferences, 3 and only takes 2% of the market, whilst the six competitors above Cardiff take 55% An Economic Impact Assessment carried out by the Council indicates that in addition to generating an additional 5.8 million of economic activity during construction, a Conference Centre should generate an additional 46.3 million of economic activity per annum from delegate/visitor/operational spend The key factors currently affecting Cardiff as a destination of choice include: For events greater than 500 delegates it lacks the single and integrated location of space for conferences, exhibitions, catering and breakout rooms. Co-located exhibitions and conferences are mutually supportive, and Cardiff does not provide facilities for these. Competitor cities now have state-of-the-art Conference Centres making Cardiff a less favoured destination. 28. Research indicates that Cardiff needs a Conference Centre to accommodate between 1,300 and 1,500 delegates in order to retain and increase market share. Three options arise for delivering the Conference Centre: the development of a new building; the refurbishment of an existing building; or the development of a larger facility including a multipurpose arena. Further work is now required to identify the most appropriate option. Reasons for Recommendations 29. To enable the Executive to consider and endorse the principle of a central business district concept as a central project in delivering sustainable economic growth to Cardiff and its region. Legal Implications 30. The proposed enabling infrastructure works will need to be competitively procured. Relevant planning issues will need to be properly considered in regard to enabling works and the concept of a central business district. A conference centre raises complex legal issues in terms of procurement, land transactions and State Aid. Financial Implications 31. In this report the Executive has been asked to approve transportation improvements, the concept attached to the creation of a central business 3 UK Events Market Trends Survey BDRC UK Meetings Market Survey Potential Cardiff International Conference Centre Economic Impact Assessment. Cardiff CC February 2011 Page 6 of 8

11 district for Cardiff and to approve further work in considering the options available to the Council in respect of delivering an International Conference Centre. The following financial implications should be noted in respect of the above: 32. The Council s intention is to implement enabling infrastructure works in relation to a central business district in a number of phases. As each phase develops further work will need to be undertaken in respect of both the costs and the funding sources. 33. The report identifies the following projects as being part of the initial enabling works ; Central Square, Callaghan Square and modernisation of the Cardiff Central Bus Station. Further work is required in respect of the initial design of these schemes and the updated costs will be reported back to the Executive at a later date together with the funding sources. 34. Funding for the initial design work on these schemes has been identified and is deemed to be sufficient at this stage to meet the design costs of these schemes. These funding sources include allocations within the Council s current capital programme and support from the WAG, including Transport Grant, Sustainable Travel City and SEWTA allocations. It should be noted that allocations in respect of further Transport Grant, Sustainable Travel City and SEWTA allocations are usually agreed by the WAG on an annual basis and as such are difficult to plan for against a programme of works which will delivered over a number of years. 35. In addition the other key element mentioned is the vision to develop and deliver an International Conference Centre. The report recommends that an options appraisal in respect of the opportunities available is commissioned. It should be noted that the construction and operation of an International Conference Centre carries with it a number of significant complex and material financial challenges and these would need to be fully considered in a further report. 36. This report also advises members of the WAG s agreement to provide a financial contribution in full and final satisfaction of its liabilities in respect of Herbert Street Bridge. RECOMMENDATIONS The Executive is recommended to: (1) Approve the concept of a central business district as a key regeneration priority for Cardiff, subject to separate consideration of all relevant planning processes (2) Approve the approach outlined in this report regarding enabling transportation improvement works (3) Note the modification of the planning obligation relating to Herbert Street Bridge and approve the design of the proposed scheme to provide short- Page 7 of 8

12 term transportation improvements in Callaghan Square and authorise the preparation of a detailed design for the works to Callaghan Square. (4) Delegate authority to the Corporate Director (Place) to progress the development of a strategic masterplan and design specifications for Central Square encompassing the modernisation and reconfiguration of Central Bus Station including associated taxi and public drop-off and pick-up arrangements, and the creation of a new public square and associated public realm improvements. (5) Delegate authority to the Corporate Director (Place) to undertake an options appraisal for the delivery of a convention centre in the city centre. (6) Delegate authority to the Chief Executive, in consultation with the Leader, to make representations to the Welsh Local Government Association, the Welsh Assembly Government and the UK Government to explore the accelerated delivery of the central business district through the utilisation of Enterprise Zones and Tax Increment Financing. JON HOUSE Chief Executive 29 March 2011 The following Appendices are attached: Appendix 1: Callaghan Square Concept Plans Appendix 2: Letter from Welsh Assembly Government Page 8 of 8

13 Appendix 1: Callaghan Square Concept Plans (Before and After)

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15 Appendix 2 Mr Paul Orders Corporate Director Built Environment Cardiff County Council 29 th March 2011 Ein cyf. Your ref PO / CLJ Dear Paul, Planning Permission 97/2272R: Section 136 Agreement Thank you for your letter of 14 th March 2011 setting our the preliminary discussions from our meeting and your outline proposals for dealing with the Welsh Assembly Government s obligations under the legal agreement associated with Planning permission 97/2272. You will appreciate that whilst the Welsh Assembly Government is supportive of your general proposals for the development of Cardiff Business District the funding we are able to provide must be allocated for a clear reason. I have therefore set out in the following paragraph the amounts and reason for the funding discussed with the Welsh Ministers yesterday. The Welsh Ministers have published their decision and issued a statement of information which I have set out below: 1. The Welsh Assembly Government has agreed to provide the sum of 17m to Cardiff County Council in full and final satisfaction of its liabilities under an agreement entered into in 1999 by the former Cardiff Bay Development Corporation to which (for these purposes) the Welsh Ministers are the successor. This payment will release the Welsh Assembly Government from any (or any further) liability under the agreement. 2. Cardiff County Council has submitted to the Welsh Government business district proposals which form part of the development of Cardiff as a Sustainable Travel City. 3. The proposals submitted involve changes to the existing transportation infrastructure as well significant development around the existing bus station. 4. The Welsh Government has agreed to provide a total of 4m of capital funding for the next three financial years. For the avoidance of doubt an amount of 17m will be provided upon the release of the Welsh Assembly Government from all obligations associated with the Planning Permission 97/2272R. The Welsh Assembly Government recognises that this will be subject to the approval of the Local Planning Authority. Infrastructure Delivery Division, Welsh Assembly Government, Cathays Park, Cardiff, CF10 3 NQ Ebost jeff.collins@wales.gsi.gov.uk

16 An amount of 4m to be provided in Transport Grant funding (under the standard term and conditions) over the next three years for public transport works which will be referred to in the offer of Grant. The timing of the funding will be determined by the approval of the Local Planning Authority and subject to our agreement on a Deed of Modification in so far as it releases the Welsh Assembly Government from any further obligations and your acceptance of the terms and conditions for the Transport Grant. I look forward to your letter outlining your proposals connected with the transport grant funding and the draft Deed of Modification once you have secured the permission of the Local Planning Authority. Yours faithfully Jeff Collins Director of Infrastructure