MD2066 Bond Street Public Realm Improvement Growing Places Fund Loan

Type of decision: 
Mayoral decision
Code: 
MD2066
Date signed: 
23 January 2017
Decision by: 
Sadiq Khan, Mayor of London

Executive summary

This MD seeks approval for the GLA to provide funding of £2million to Westminster City Council as a contribution to its costs of delivering public realm improvements on Bond Street providing improved pavement and road surfacing, widening of pavements and improved comfort and access for pedestrians. The finance is to be drawn from the Growing Places Fund (GPF) over 2017 to 2019 and will be repaid over the period 2019 to 2022.  

 

Decision

That the Mayor approves GLA expenditure of up to £2,000,000 (capital) from the Growing Places Fund to Westminster City Council as a contribution to its costs of delivering improvements to Bond Street public realm.

 

Part 1: Non-confidential facts and advice

Introduction and background

The Bond Street Public Realm project is a key part of the Westminster City Council’s (WCC) delivery programme and is timed to be completed in order to support the opening of the Elizabeth Line in December 2018. This is being delivered in partnership with the New West End Company (NWEC) Business Improvement District.   

The project covers the whole length of New and Old Bond Streets from Oxford Street to Piccadilly.  It aims to improve pedestrian experience, create a new ‘town square’, attract more visitors and position Bond Street as one of the premier shopping streets in the world. The project aims to improve the public realm space surrounding Old Bond Street and New Bond Street with the goal of re-establishing the area as the world’s premier luxury shopping street.  The physical works comprise the upgrading of the carriageway and footways using high quality materials. The project delivers more footway space, and improves the balance of space allocation between users of the public realm. Intended outcomes include; increased footfall by 6% over 5 years, increased spend (revenue) of shoppers by 10-15% over 5 years (value £1.78bn) and an uplift of property prices by 16.6%.

The street is under-performing internationally due to the the average visitor not spending a significant amount of time in the area (low dwell time) and expenditure per head of visitors is comparitively lower that international benchmarks. The retail end-users believe that the current poor quality of the public realm is a key factor preventing the attraction of additional expenditure by visitors. This is a key part of the WCC and NWEC vision for Oxford Street by creating a wider district with greater footfall on  side streets and neighbouring primary streets such as Bond Street. 

This also supports the Mayor’s plans to pedestrianise Oxford Street. From the outset the variance in timescales and certainty between the Bond Street improvements and the pedestrianisation of Oxford Street has taken into account. Bond Street has been developed over a longer period of time and in more detail, it has also had continual TfL officer attendance and involvement in its design. Similarly but over a shorter period the Oxford Street West work , which is a joint exercise involving mostly the same Westminster & TfL officers, has been aware of the emerging Bond St scheme. The Bond Street project has set its physical limits to avoid trespassing onto Oxford Street. The traffic issues have been considered and the Oxford Street project does not envisage any changes to how general road traffic enters Bond Street at the north. Therefore in terms of physical works and traffic the two projects can safely co-exist. Any Oxford street future proposals can be physically accommodated without impinging on Bond Street.

The project responds to the London Enterprise Panel objective of an ‘Increased focus on emerging markets’ as set out in Priority 2 within the Growing Places Fund prospectus.  It aims to unlock potential economic growth of the area by improving the customer experience of visiting and shopping in the area by improving the surrounding public realm. It has been identified that this is needed to compete with international competitor cities (Dubai / New York / Paris). 

The project is also successful in generating investment in an infrastrucutre project from a wide range of sources (Priority 7). While there are contributions from funders such as WCC and TFL there is also a significant contribution from private sector stakeholders. This has been largely secured through the work of NWEC and would represent a succesful intervention by a Business Improvement District in engaging with private sector stakeholders to help fund infrastructure improvement projects. 

The design comprises:
    reduce traffic management and speed to create greater pedestrian comfort and access 
    removal of traffic signals at the Grosvenor Street/ Maddox Street junction
    inclusion in the TfL cycle grid (TfL separately funded to the project)
    proposed widening of the pavement by 1m on either side
    new paving and road surfacing comprising York stone, granite sets and coloured asphalt
    shared use of loading, drop off/pick up taxi bays
    Old Bond Street/Burlington Gardens turned into a ‘town square’, with space for public art
    new and rationalised street furniture, new signage and upgraded, utilities and broadband

Funding Package

The project was previously assessed by the LEP with NWEC as the lead partner. At that point the project had no identified repayment mechanism so was not brought forward for approval. This has now been resolved. 

Following the original application from NWEC to the GLA for a Growing Places Fund (GPF) loan application, WCC were asked to take a lead on the application and gained WCC Cabinet approval in this regard which enables the scheme to progress. There is no funding in the Council’s short term budgets allocated to the scheme to fund the gap, therefore if the GPF loan was not approved this would put the project at risk. 

The GPF awarded will be repaid to the GLA by WCC over a 3 year period and the Council has secured approval to underwrite the repayments from the Council’s own funds. WCC will make provision for the entire project within its budget and repay the loan under a repayment schedule as set out in Schedule 4 below.   

As a WCC project, WCC will be responsible for delivering the project and thereby bearing contract and cost risk for the whole project.  It has also carried out cost engineering on the project and has increased the element of private sector contributions in order to reduce the GLA/GPF loan from the original £3m sought by NWEC to £2m currently.

The project has a total cost of £9.85m having been value engineered into its final form.  The budget for the project and contract management is provided by WCC which will enter into contracts with the private sponsors and funding parties. WCC will seek to minimise its risk through the legal agreements but remains the accountable body for the GPF funding, design, procurement and delivery of the project.  

Sources of funding for Bond Street are:
 

Transport for London (LIP secure):                                   £2.30m
Westminster City Council s106 (secure):                          £0.05m
NWEC property levy (secure):                                          £2.80m
NWEC occupiers levy (secure)                                         £0.50m
Private Sector contributions: (currently being raised)        £2.20m
GLA GPF loan (£2m sub to approval):                              £2.00m

Total                                                                                    £9.85m

Scheme

There has been no material change to the scope, design or the quality of delivery of the project since originally submitted to the GLA in summer 2015.  The reduced loan is a consequence of NWEC committing to leveraging a greater level of private sector funding.  The scheme had been value engineered prior to submission to the GLA and some items, such as public art, are now being funded outside of the project.  

GLA Loan Repayment Profile

WCC will make provision for the entire project within its future year budgets and repay the loan under the repayment schedule set out below.
 

SEE SIGNED PDF DECISION FORM

Project images and overview

SEE SIGNED PDF DECISION FORM

 

Objectives and expected outcomes

Project objectives are set out below. 

    Reduce traffic management and speed to create greater pedestrian comfort and access 
    Removal of traffic signals at the Grosvenor Street/ Maddox Street junction
    Inclusion in the TfL cycle grid (TfL separately funded to the project)
    Proposed widening of the pavement by 1m on either side
    New paving and road surfacing comprising York stone, granite sets and coloured asphalt
    Shared use of loading, drop off/pick up taxi bays
    Old Bond Street/Burlington Gardens turned into a ‘town square’, with space for public art
    New and rationalised street furniture, new signage and upgraded, utilities and broadband

The project will be supported by an interlinked schemes run by NWEC that aim to reposition Bond Street and maximise economic benefit to retail in the area. Recruit West End, an employment programme sponsored by NWEC, encourages young people from the Westminster Borough into retail employment and has previously placed 150 hard to reach individuals into employment. A specific Bond Street scheme, which recognises the different nature of the retailers in the street, will be developed alongside the project as part of the retailer’s commitment which will be an additional community benefit. In addition to this it is hoped that a potential extension of Sunday trading hours will over time increase direct employment in the area by some 2000 jobs. This new scheme will take advantage of this impact, open to all Londoners looking for a retail career. 
 

Equality comments

The GLA Regeneration Team works with delivery partners to target investments in places with the greatest potential to secure inclusive jobs and growth opportunities, and ensure all investments promote equality and work to deliver new and secure existing diverse and inclusive opportunities and services. 

The GPF application process invited bidders to demonstrate how they will give due regard to the requirements of the Public Sector Equality Duty Act; this was compulsory for all bidders and all proposals were checked during the validation phase of evaluating the bids to ensure bidders had demonstrated this in their bids. This is reinforced by the requirements set out in the funding agreement of any successful project.

Through their existing public sector duties and via the requirements that will be set out in the funding agreement, WCC must ensure that they give due regard to the requirements of the Public Sector Equality Duty: eliminate discrimination, advance equality of opportunity and foster good relations between different people when carrying out this project.
 

Other considerations

a.    Risks:

SEE SIGNED DECISION FORM

 

b.    Links to Mayoral strategies and priorities:
The project directly supports the Mayoral priority to create a pedestrianised Oxford Street. It also supports the London 2036 LEP priorities to focus on emerging markets. The project helps by increasing the attractiveness of Bond Street to help stimulate business and leisure tourism export earnings from those who visit the area to shop. These are often high-net worth visitors from emerging markets (China, Thailand and Indonesia) visiting the area to shop.  

c.    The Bond Street Public Realm Improvement Programme will deliver against the infrastructure, skills and employment, and increased focus on emerging markets objectives of the LEP's Jobs & Growth Plan (2013), as well as a number of strategic objectives from the Mayor of London’s Action for High Streets. 
 

Financial comments

5.1    The £2m of capital funding can be funded from unallocated Growing Places Fund (GPF) budget project. It is expected that £350,000 will be drawn down in 2016-17, £1.4m in 2017-18 and £250,000 in 2018-19. The overall estimated cost of this project is £9.85m and the additional funding has been sourced directly by Westminster City Council. The balance of £7.85m being sourced by Westminster City Council is summarised below.  

    Funding Sources                                                                   £m
    Transport for London (LIP Secure)                                      2.30
    Westminster City Council s106 (secure)                              0.05
    NWEC property levy (secure)                                              2.80
    NWEC occupiers levy (secure)                                            0.50
    Private Sector contributions (currently being raised)            2.20
    Total Sourced by Westminster City Council                          7.85

5.2    Westminster City Council, who are the accountable body for this project are budgeting to repay the GPF loan over a 3 year period from 2019 to 2022 from their own funds, with the proposed repayment profile as set out in Schedule 4, incorporated into the proposed Funding / Loan Agreement, which will govern the conditions of the loan. The council will bear all the contractual risk for the project and will look to minimise the risk via legal agreements (with contractors and private sponsors). 

5.3    As noted above, the council are currently seeking private sector contributions to part fund the project. While it is expected that £2.20m target will be achieved, in the event that it is not secured, the council will look to re-engineer the scope of the project. The Growing Place Fund loan will be capped to a maximum of £2m. 

5.4    Any changes to this proposal, including budgetary implications will be subject to further approval via the Authority’s decision-making process. All appropriate budget adjustments will be made. 
 

Planned delivery approach and next steps

Delivery Timescale

The project is delivered by WCC and its term contractors (WSP/Conway), working with a range of Bond Street stakeholders involving TfL, NWEC, retailers and property owners on Bond Street and overseen by a joint project board.   WCC has approved the design concept and full Cabinet approval was received in June 2016, after which the initial consultation with stakeholders started, followed by a formal consultation in the autumn on the traffic regulation orders. A start on site is planned for April 2017 and a total scheme completion is planned for December 2018. December 2018 completion is a key milestone to ensure it is complete in time for the opening of the Elizabeth Line.  
 

Activity

Timeline

Stage 1 Feasibility Design (complete)

December 2015

Stakeholder pre-consultation (complete)

June 2016

Stage 2 Design (complete)

October 2016

Full consultation Formal/Traffic Order Consultation

November 2016

Stage 3 Final Design and cost schedule

December 2016

Funding Agreements/Heads of Terms

January 2017

Works commence areas not requiring traffic orders (Old Bond/Town Sq)

April 2017

Works commence areas requiring traffic orders (New Bond/Brook St)

November 2017

Scheme completion for Elizabeth Line opening

December 2018