Beeston Hill and Holbeck PFI: Council to step in after cash shortfall

Holbeck Towers, in November 2010, prior to demolition to make way for the PFI regeneration project

The troubled Little London, Beeston Hill and Holbeck PFI Project has suffered so many delays thanks to a costly wait for government decisions you’d be forgiven for thinking it might never happen – and now it appears there are even more delays to the scheme which was due start this month.

On-site work to build 388 new homes and refurbish over 1,200 in Little London, Beeston Hill and Holbeck will not now start until November at the earliest.

A report going to next week’s meeting of the council’s executive board says that one of the banks part-funding the £180 million project – Norddeutsche Landesbank Girozentrale (Nord) Bank – has pulled out.

Leeds City Council has today issued a press release saying it’s due to step in and offer part of the funding for the scheme to ensure it goes ahead.

The release says:

The project represents a major investment in the regeneration of three of Leeds’ most deprived neighbourhoods and will have a major, positive and sustained impact on the lives of tenants, residents and businesses in these areas.

The council’s executive board will be asked next week (Wednesday 18 July) to approve the recommendation of the re-profiling of the council’s affordability position which will allow the council and sc4L to work together to deliver the project.

The proposed development has overcome a number of hurdles in the past months including the loss of one of the lenders in the project. The majority of the project’s funding requirements will continue to be met by the two remaining lenders: Nationwide Building Society and the Co-operative Bank, both of whom have extensive experience of housing private finance schemes.

But a funding shortfall will still remain, and the council has proposed that this should be met through a re-profiling of the council’s contribution to the project.

A number of items have changed within the project, one being the community hub in Little London. The site was originally included in the PFI regeneration of Little London, but was removed after the government value for money review. Since then the council has committed to looking at investment options in the community Hub as part of the larger scale improvement to the local Little London school – this will be handled as a separate project.

Councillor Peter Gruen, Leeds City Council executive board member with responsibility for neighbourhoods, planning and support services said: “This project has encountered a number of hurdles over the past few months, but we are now getting close to the final stage.

“This community has not seen any investment in terms of housing for a number of years, so it is vital that this scheme goes ahead, and therefore we will be working as a partner in the project.

“We are pleased to be able to say that we will be looking into investment into the community Hub and working with local people on the design of the buildings as part of the larger scale works going on at the school.

“This project will bring much needed benefits to three local inner city communities, with renovated and improved council housing, new energy efficient homes and improvement of the local environment.

“This is an exciting project for Leeds, and will be the largest single area regeneration investment in Leeds for many years and one of the largest housing PFI projects in the country, so it is vital that we do this right.”

The Leeds Citizen blog carries a post on the latest developments with the scheme. In a post, the blogger writes:

It is now hoped that the long-delayed contract signing will take place by the end of this month, or as soon as possible afterwards, ‘subject to government and executive board approval, and following funder credit committee approval’.

It’s clear from the report that there is some urgency for the executive to agree to the new arrangements.

Details of next Wednesday’s executive board meeting can be found here. Members of the public are able to attend.