ADZs must reinforce fabric of community.

Byline: K E VA N CA R R I C K

IN last Wednesday's Journal (July 22) I was delighted to learn of the reported meeting of the Core Cities Group which comprises economic experts from the eight most important cities outside London.

They said that major urban areas have the potential to drive the economic recovery from the recession but must be given greater local control to increase investment in order to do so. We are seeing a shift in policy from both major parties about delivering economic regeneration to the local elected bodies of the councils. While I agree with this policy generally, there needs to be safeguards to ensure effective delivery. The proposal discussed by the Core Cities Group of Accelerated Development Zones (ADZ) has been under consideration for some time. It is the subject of an all-party urban development group inquiry, Regeneration and the Recession: Unlocking the Money, to which the Royal Institution of Chartered Surveyors (RICS) gave evidence and to which I was a contributor.

ADZ is an alternative financing model which has been used successfully in the past where Enterprise Zones (EZs) have previously helped accelerate growth areas. Regrettably EZs were targeted on local authority-owned land outside towns or city centres and in some cases outside the conurbation, which was bad practice.

Consideration should be given to ADZs in a way which reinforces the fabric of a community as well as economic growth. They must help make city and town centres areas of vitality and vibrancy which are attractive and help economic growth on a much wider and stronger basis. Fiscal measures to give support to ADZs would also be helpful to lever in private finance in models which are similar to EZs.

There may also be a need to make changes to current business rates mechanisms. This could include ringfencing of new business rates revenues within the ADZ and ability for local authorities to specifically attribute business rate supplement revenue to the ADZ.

There will also be the opportunity for local authorities to borrow on the income stream generated from the new business rates and invest in the ADZ, as Newcastle has had the foresight to do at Science Central, investing upfront and enabling infrastructure. In the present economic climate, the private sector will not be able to raise finance in this way but can do so later in the development phase for specific viable developments.

This forms an excellent partnership and enables sharing of risk. The council also obtains a return for its initial risk by securing an increase in the value of the land which those improvements create.

The benefits of the tool have already been explored and the critical issues in realising these benefits will include: The level of real support from the Treasury The ability of promoters of ADZs to secure rapid growth within zones The importance of ensuring that the ADZ supports the creation of place and not the other way round Willingness of the private sector to fund ADZ model.

There is still an appetite from the private sector to make investment provided there is an adequate return. The amount of money available has changed and attitudes toward risk have changed somewhat but if debt is 'good-quality debt' and risks are manageable, the private sector will take an interest.

Indeed there are organisations ready, willing and able to make levels of investment necessary for major regeneration schemes. RICS would be happy to share knowledge and experience with groups looking to encourage private investment, one example being the Northern Way and its work with the Private Investment Commission, recently published.

Kevan Carrick is a partner in JK Property Consulting LLP and policy spokesman for RICS North East

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BOOST Enterprise Zone status is still helping business parks such as Cobalt in North Tyneside, even though the scheme has finished.