Author Topic: Swindon's regeneration and the credit crunch  (Read 26809 times)

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Offline Buster

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Swindon's regeneration and the credit crunch
« on: April 26, 2008, 03:13:00 PM »
Following on from points raised on other threads I thought this article offered a good opportunity to start a thread specifically on this subject, which is now looking more worrying.

As I said I would in another thread, I've contacted Phil Young (SBC Cabinet member for planning or regeneration I think) to see if he can offer any reassurances about the financial security of the regeneration in town and I indicated that I'd like to see a discussion on here.

However the following article shows how a local builder has already fallen victim.  What this means for the houses and flats they've built in Swindon is still to be determined, but it doesn't look good.

Some of the comments echo those raised on this forum already.

This makes some sort of public statement from SBC all the more important, confidence is a vital part of the success, or failure, of any development plans.  Imho, silence can only be seen as a sign of no confidence within the council.



http://www.swindonadvertiser.co.uk/news/swindonnewsheadlines/display.var.2227300.0.builder_collapses_in_credit_crunch.php

Quote
Builder collapses in credit crunch
By Leigh Robinson


COTSWOLDGATE, the south west builder which has several sites in Swindon, has gone bust to the tune of £15m.

The administrators have been called in, although its name has not been filed at Companies House.

According to builders in the town, a number of local firms - painters and decorators, carpenters and a brick company - are owed upwards of £100,000.

advertisementNo one from the company was available for comment, but an agent who helped sell some of the company's homes said the firm's demise was a sign of the current credit crunch.

He said: "The fact is, they built good homes at a good price but it is the banks which have pulled the rug from under them.

"You can see the quality of their homes at Groundwell Road, Marlborough Road and Argyle Street.

"I'm hoping the administrators can help them.

"Their going to the wall is a sign of the times with the so-called credit crunch which has not been helped by people who have talked us into a worse situation."

Another building firm, Meadgate, believed to have been a sister company in Wales, went bust earlier this year.

Meadgate Western, a £21m-a-year turnover house builder from Wales and the west of England, went into administration along with eight other associated companies, including Meadgate Homes.

Unsecured creditors are believed to be owed £4m and the Meadgate companies had total debts running to £36m.

It is known to have lost a total of £2.5m during the two financial years to April 2007.

Figures filed at Companies House show a loss of £810,000 in the year to April 30, 2007 following a further shortfall of £1.7m in the previous year.

Cotswoldgate going to the wall could be just the start of a massive decline in the building industry.

On Thursday a number of building companies saw their share prices drop considerably and they have publicly admitted they will be building fewer homes in the next few years.

Debbie Walsh, the head of public policy and communications at the Royal Institute of Chartered Surveyors West, said: "Even before the current market problems, house building rates were well below the Government's aspirational target of 240,000 new homes each year.

"This warning from the stock market shows there is an immediate problem and house building levels will fall further from where the Government is aiming to be.

"In the current climate these targets are looking more and more unrealistic.

"The Bank of England's latest swap arrangement with the banking sector should help provide a little more liquidity for lenders but is not going to turn around the current challenging environment overnight."



Offline Tobes

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Re: Swindon's regeneration and the credit crunch
« Reply #1 on: April 26, 2008, 11:15:06 PM »
Well done Buster! I was going to start a thread on exactly the same subject - you've saved me the digit work!

This issue obviously risks bringing the council and SMCs ambitious plans to a rapid halt - and worse than that, due to the rush to demolish existing properties, risks bequething us with a long-term wasteland rather than the promised vibrant utopia. Its also meant that businesses and services which would otherwise likely to have continued have closed or moved elsewhere (Mecca bingo, housing provision through Davis House, small businesses within the covered market...)

Even IF many of the projects are 'safe' for the time being - it shows the risks that future changes could still throw them into rapid jeapody. I think a lot greater caution is required - otherwise councillors who've nailed their colours to the banner of 'change' are in for a serious lesson in eccenomic reality...
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Offline Bobby Bingo

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Re: Swindon's regeneration and the credit crunch
« Reply #2 on: April 27, 2008, 09:28:19 AM »
Building work on quite a few of the new estates (oops sorry estates is the term used for Council houses I should have said developments, it sounds more vibrant) is definately slowing down in fact in some areas it has stopped. They cannot sell the houses or the flats (oops sorry again I should have said apartments)
I just hope that the development of the town centre can go ahead you cannot blame councillors for having a vision it is up to the 40+ directors to either deliver them or advise they are not practical or economiccaly viable.
Bobby

Offline Alligator

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Re: Swindon's regeneration and the credit crunch
« Reply #3 on: April 27, 2008, 09:57:26 AM »
I agree with Bobby in that you can't blame the councillors for having the vision, however they are our mouth piece in the council and therefore we can expect them to keep us informed.

As I understand it, outline planning permission has been granted for the development at Regent Circus and for the area at Havelock St, but this may not be fully detailed planning permission, the issue of the inclusion of a cinema and the hotel being called into question highlights that there seems to be a significant degree of uncertainty around what will/won't to be included in each portion of the redevelopment or, in the case of the hotel, what may now be built in North Swindon.

With this in mind, I would find it hard to believe that the developers will have taken the risk of securing the finances on a development that has so many shades of uncertainty about its make-up, uncertainty around it being granted full planning permission and uncertainty about its profitability.  This would be the case whether there were world-wide credit issues or not.

This makes me think that the questions being raised are crucial, especially when you consider that occupied buildings are closing at very short notice (Mecca Bingo) in order to make way for the developments.

If there's any doubt over these developments then we all need to know and those with the authority to do so need to reassess the closure of any building that currently have occupants or an ongoing purpose.  Perhaps these could be offered extended leases.  What Swindon can't afford is to see large parts of the town to be turned into a building plot.  The damage this will do to the local economy will be huge in terms of lost business and footfall in the town centre. 

My comments here highlight that this isn't just speculation and scare mongering, it is happening in other towns http://www.talkswindon.org/index.php?topic=3049.msg16783#msg16783

Ongoing uncertainty will have damaging implications for Swindon and its reputation.  Potential new investors will steer clear and the loss of thousands of square feet of building space to the bulldozers will mean that people will quickly get into the habit of going to other towns to do their shopping.

I hope that Phil Young replies to Buster's request, can any councillors reading this give him a nudge?  His input on this matter would be very interesting.



Offline komadori

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Re: Swindon's regeneration and the credit crunch
« Reply #4 on: April 27, 2008, 03:55:00 PM »
From what has been said in another thread there's not much that can be done to avoid the bulldozing unless the redevlopment plans are scrapped.

As of the 1st of April 2008 premises empty for more than 3 months incur full business rate. Factory and warehouse premises that are vacant incur full rate after 6 months.
The intention being that landlords find new tenants, however one would would suspect that if an area is marked for redevelopment then the accountants will make the recommendation to level a site based on the sums and legislation in front of them.

Swindon already has more than its fair share of charity shops, discount stores and empty shop and office buildings. I doubt that there is much more that could be done to fill the empty space whilst the redevlopment continues, possibly at a much slower pace.


Ongoing uncertainty will have damaging implications for Swindon and its reputation.  Potential new investors will steer clear


Which is rather self-fulfilling, as the uncertainty is because potential new investors are steering clear. If the economy picked up, I'm sure the potential new investors would return. (Which is equally self-fulfilling.) :-\
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Offline Alligator

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Re: Swindon's regeneration and the credit crunch
« Reply #5 on: April 27, 2008, 05:28:30 PM »
I can't find anything on the beeb about the goings on in Chester however I did manage to find this article which covers the same issue though.

http://www.chesterchronicle.co.uk/chester-news/local-chester-news/chester-issue/2007/12/07/have-we-come-to-the-crunch-59067-20214602/

Quote
Have we come to the crunch?
Dec 7 2007 by David Holmes, Chester Chronicle

When America sneezes the UK catches a cold. The USA credit crunch is the latest global infection that is spreading like wildfire across Britain. Particularly vulnerable is the North West’s finance capital - Chester. DAVID HOLMES reports.

PROGRESS on the £400m Northgate Development is on hold until further notice. Last week The Chronicle revealed the city centre regeneration scheme by ING Real Estate was under threat because of the “global credit crunch”.

There is no guarantee the scheme will now happen although Chester City Council is hoping it is just a matter of “timings”.

A minimum two-three months delay is expected, paralysing the Northgate timetable and creating uncertainty for shop workers, market traders and council workers at The Forum, which is due to be demolished.

The Gateway Theatre has already closed, buildings have been demolished and the top floor of Trinity Street car park has been closed to the public to make way for private car parking displaced by construction work.

This week Cliff Mallows, the city council’s head of Northgate Development, wrote to market traders who are due to move out of the market hall into a new building, with the first phase scheduled to be ready by November next year.

He said: “Both ING and the city council are committed to delivering the Northgate scheme and are currently reviewing the options that will enable us to bring the matter forward in the New Year. This means that all the current programme dates will have to be reviewed and by way of example there are no dates yet available for the closure of the bus station or changes to the access arrangements for the loading bay.

“We will keep your representatives up to date with developments through the Market Traders Joint Consultative Committee as soon as we have more information to share. It’s likely that there will be two-three months delay.”

Mr Mallows added: “Clearly it is very disappointing to have reached this stage after many years of discussion and consultation but the city council is dedicated to realising this scheme and we have every intention of resolving the current problems and getting work on site as soon as possible.”

Delays are a problem for Chester City Council which must make progress with construction of a replacement building in anticipation of vacating its Forum headquarters ahead of demolition work to make way for new shopping streets.

In a joint statement, developer ING Real Estate and Chester City Council this week shed more light on why the Northgate scheme has ground to a halt.

ING Real Estate development director David Alker said: “Due to the current issues facing the credit markets, commercial and construction price inflation and market conditions, we have no choice but to review the timings of the scheme. We remain committed to Chester and the Northgate scheme while we consider the options open to us.”

Leader of Chester City Council Cllr Margaret Parker said: “The city council is dedicated to realising this tremendous scheme. Unfortunately, the international credit squeeze is affecting this project just as it is developments all over Britain. We will be working closely with ING Real Estate to resolve these issues and progress work on Northgate as soon as possible.”

Offline Phil Young

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Re: Swindon's regeneration and the credit crunch
« Reply #6 on: April 28, 2008, 12:18:09 PM »

I hope that Phil Young replies to Buster's request, can any councillors reading this give him a nudge?  His input on this matter would be very interesting.


No nudge needed!  This is a quick holding reply to acknowledge this thread's existence and Buster's PM.  I received that over the weekend but haven't had a chance to respond yet.  I will do so as soon as I get the chance, and hope to do so later today (at work at the moment so am a bit tied up) or at the latest tomorrow.  Buster, I assume you are happy for me to post my response direct on to here? 
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Offline Buster

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Re: Swindon's regeneration and the credit crunch
« Reply #7 on: April 28, 2008, 12:31:02 PM »
Hi Phil,

Thanks for the update.  I'm certainly happy for you to respond directly on here  O0

Cheers
Buster

Offline Phil Young

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Re: Swindon's regeneration and the credit crunch
« Reply #8 on: April 29, 2008, 12:22:43 PM »
Post 1 - Buster's question (posting this so you know what specifically I am answering!)

Quote
Hi Phil,

I was advised by Justin Tomlinson (via the Adver web chat today) to contact you as you're the person responsible for the regeneration of Swindon town centre.

One thing that has been concerning me, and through Talkswindon, I think others too, is whether the redevelopment is on track.

Essentially the question relates to the issues of the credit crunch. Other towns have experienced issues where buildings have been demolished to make way for new developments only to find afterwards that the developers have been unable to secure the finances at commercially viable rates.  This has left vast areas of these towns with building plots but no buildings.

Can you tell me if there is any issue of this happening to Swindon? So far we have a lot of land marked for demolition, and a number of buildings already demolished The clearance process seems to be underway, but no one knows if the finances are in place to replace these.

Can you answer this?  I'd be keen to know exactly which of the proposed developments in the town centre have secured finances and which ones are yet to do so.

I'd like to make this a thread on Talkswindon so that we could get a discussion going.

Cheers
Buster
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Offline Phil Young

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Re: Swindon's regeneration and the credit crunch
« Reply #9 on: April 29, 2008, 12:26:16 PM »
Post 2 - my answer.  Obviously its addressed to Buster as the question came through via a pm but Buster was keen to see it kick-start a discussion on here which I am very happy to do.  I will try and check in when I can over the next few days but its wifey's birthday today and I am away at the weekend so my time may be limited in the short-term but I will answer any further questions even if it takes a few days to catch up - promise!

Hi Buster,

Many thanks for your question.

It is true that times are tough in the developer world with the credit crunch, and some schemes nationally have fallen by the wayside.  We have, throughout all of this time, kept in very close contact with the developers involved with our regeneration schemes in Swindon and continually monitor the situation, whilst encouraging an open dialogue.  I think this dialogue is the key to keeping on top of this issue.

I am pleased to say that their commitment to Swindon does not appear to be wavering in any way, and the schemes are still very much progressing - albeit maybe not as fast as any of us had hoped!  I can't go into many details for commercial confidentiality reasons but we are still negotiating to ensure that the viability of the schemes stack up and what we expect from the final designs as they come for planning permissions, etc.  This will then get to a point where the developer is confident they are in a position where they can sign the Development Agreement.  I am hopeful that this will happen in the near future.

With reference to the demolition, it is true that we have demolished a number of sites in preparation for the regeneration.  The reason we go ahead and demolish is a financial one.  I think Justin mentioned it in his webchat and I have seen it alluded to on a thread here somewhere I think, that any vacant buildings became liable for NNDR (Business Rates), and so whilst our ownership meant that we had secured an important piece of land to facilitate the regeneration, it would have also had an unacceptable impact on our revenue budgets (unacceptable across all the sites especially as we are under-funded anyway!).  Where possible, we have brought these sites into use rather than demolish so they actually turn an income for us rather than become a cost but most of them are not fit for purpose – hence the need for the regeneration and so demolition is the most suitable answer.  This has been part of the issue in that people see demolition taking place which builds expectation of the regeneration and, quite frankly, looks a bit manky so people want to see something happening on these sites.  In a way this reaction is great because it stirs emotion and means people are passionate and care about the town – that said, this is clearly not a situation we would wish to see go on in perpetuity so we are 100% focussed on making the regeneration happen.

I have not answered your last question over who has secured finances and who hasn’t as I am not sure where the line over commercial confidentiality falls here – it’s not me being evasive, I just don’t want to land myself in hot water.  I’ll try and find out what information I can give without upsetting anyone!

So in a nutshell, we are aware that the credit crunch can bring significant issues but we are working very hard with our partners to ensure that this doesn’t affect our schemes unduly and we get the Development Agreements signed ASAFP and get on with the job!

Sorry for the mass of text but I have covered a few issues there and
have probably sparked off another 1001 questions in people’s minds so feel free to fire away and I’ll answer them as best I can.

Phil
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Offline Tobes

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Re: Swindon's regeneration and the credit crunch
« Reply #10 on: April 29, 2008, 12:57:02 PM »
Phil - what a refreshingly honest and open response! Does an old cynic like me a power of good  O0 (... sadly doesn't remove my growing sense of forboding and pessimism as to what may come to pass, but fingers crossed)
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Offline swearingran

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Re: Swindon's regeneration and the credit crunch
« Reply #11 on: April 29, 2008, 01:50:06 PM »
Anybody been to the outskirts of Leeds?  Now there is forboding, doom and gloom.  We ain't that bad yet guys.  The only time to worry is when the JCB driver is in the Savoy! :D

Offline Buster

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Re: Swindon's regeneration and the credit crunch
« Reply #12 on: April 29, 2008, 08:07:08 PM »
Hi Phil,

Thanks very much for coming on here to offer your views.  Whilst I think the issue of rates being paid on empty properties is at the root of why Swindon may start to look like Bosnia in a few months, I, like Tobes has indicated, also sense the feeling that things can easily go wrong and we can be left in the lurch.

I'm not doubting your word or the good intentions of many interested parties, but events in the macro environment may take us in a direction we don't want to go in or even prevent us from going in a direction we do wnat to go in.

I think the sooner we start to see detailed plans go before planning, the more comfortable I will be that we're not going to reside in a town full of 'prime real estate' with no developers on the horizon. 

You mentioned that things aren't progressing as quickly as we'd like.  Are there any dates that you can share with us?  i.e. are there any planning applications being submitted at the moment or in the near future?    I think we'd all like to see plans move from the speculative to the detailed. 

Thanks again for your input.

Buster

Offline concerned_of_Old_Town

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Re: Swindon's regeneration and the credit crunch
« Reply #13 on: April 29, 2008, 08:24:43 PM »
Yes thanks for the update and agree with Buster

Whilst I appreciate certain commercial confidentiality the biggest frustration seems to be the lack of any visible timescale and estimated start and completition dates.  This is compounded as seems to be unsure in my mind  who actually owns and is responsible for certain key sites for redevelopment (ie Swindon College, old police station, tented market, Davis House) because of this  Joe Public has  little idea what and when is going on and there is a perception that everything has stalled and we are in a worse position than we were three or four years ago!  Whenever i post a comment with new Swindon Company asking for this they never bother publishing (or get back to me with an explanation on why they can't) which reinforces my impression that things have stalled and/or they don't know what they are doing

Furthermore the plain  boardings surrounding these sites do little too inspire confidence of knowing what is happening wouldn't take much to copy how they have boarded up the locarno with some kind of artists impression.

Offline komadori

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Re: Swindon's regeneration and the credit crunch
« Reply #14 on: April 29, 2008, 11:51:11 PM »
Some of the parts that have been demolished are, in the grand plan, the last that will be redeveloped, the old police station for example. As these sites would, even without the economic problems, be vacant for several years, you'd think something better could be done with them than just put hoardings round them. Just grassing them over to give a bit of green space for a while would be a big improvement.
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Offline Alligator

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Re: Swindon's regeneration and the credit crunch
« Reply #15 on: May 03, 2008, 09:08:13 PM »
 Hi Phil,

Are you able to respond to some of these questions?

:popcorn:

Offline Bobby Bingo

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Re: Swindon's regeneration and the credit crunch
« Reply #16 on: May 04, 2008, 04:03:25 PM »
Now that the wharf green T.V. is up and running when are they going to complete the paving blocks?
They have not been sealed and the sweeper is lifting the sand between them.
I visited on Saturday and was most impressed except for the litter and the evidence already of chewing gum.
Is nothing valued by the people of Swindon?
I also went to the County Ground and went along Manchester Road and one of the side streets, I cannot remember the name No wonder it is rat infested some of the front gardens were an absolute disgrace. I honestly believe if it gets any worse even the rats will migrate!
The Millwall supporters said it was the worst area they have had to travel to get to a ground
Surely that must say something about the tip SOME of these people are content to live in.

,
Bobby

Offline Alligator

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Re: Swindon's regeneration and the credit crunch
« Reply #17 on: May 04, 2008, 04:58:39 PM »
Bobby, it sounds like your impression of Wharf Green is much the same as mine. 

I took a little time out of my shopping yesterday to see what all the fuss was about and immediately noticed the paving, the huge gaps with no sand/cement will soon be full of cig ends or weeds.  Setting that aside, I did like the fact that many people, of all types, were simply sitting and enjoying a moderately warm day.

However the TV seems to have sound issues as it was intermittent and when it was on, it was out of sync with the action in screen.

I generally quite enjoyed the five minutes of chilling, but this was brought to an abrupt end when what I can only descibe as a weirdo decided to start talking incoherently at me, I know not what he was saying, but I was clearly expected me to respond.  He then proceeded to sit right next to me, elbowing me to one side in the process, before making a phone call to a friend on loud speaker.   At this point I decided to head home.

Offline Bobby Bingo

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Re: Swindon's regeneration and the credit crunch
« Reply #18 on: May 05, 2008, 09:15:20 AM »
Oh what a shame Alligator if I had known that was you on Wharf Green I would have intriduced myself. (joke?)
Bobby

Offline Bobby Bingo

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Re: Swindon's regeneration and the credit crunch
« Reply #19 on: May 06, 2008, 08:36:19 PM »
Wharf Green update.
At 4.30pm today the Green was a hive of activity.
One poor buggar, complete with brush and a bucket of sand trying to fill the gaps in the blocks and having to remove the cigarette ends first.
While he is doing this the litter was piling up, drinks had been upset and the new blocks are already showing evidence of staining from this.
And finally there was a gathering of 23 young people, at least 6 with Skateboards having a great time. The lads that were kicked off the Wyvern Square are now resurfacing.
And to cap it all adults were setting a fine example by cycling around the area.
Where were the boys in the maroon sweaters? or have they been disbended?
Bobby