Agenda item - Update on Castle Gateway and Business Case Review

This report recommends a revision to the delivery strategy for the regeneration of the Castle Gateway following a comprehensive review of the project and business case in light of Covid-19. Having considered a range of options it is proposed that the council continues to commit to the delivery of the masterplan, proceeding with the key public benefits at pace through staged decision making, whilst delaying delivery of the elements of the project on which Covid-19 has had the most significant impact, until there is further certainty.

Resolved: (i) That the outcome of the pre-decision scrutiny, recommending Option 5 in the report, be noted.

Reason: To take account of the view of the Customer and Corporate Services Scrutiny Management Committee in deciding how to proceed.

(ii) That approval be given to recommence the paused procurement of a construction contractor to undertake the design and subsequent construction of the proposed apartments, pedestrian / cycle bridge and riverside park at Castle Mills, and that authority be delegated to the Director of Economy and Place (in consultation with the Director of Governance) to take such steps as are necessary to award and enter into the resulting contract.

Reason: To deliver the key public benefits of the first phase of Castle Gateway and allow the council to realise the commercial return to help deliver the wider masterplan.

(iii) That the design and submission of planning applications for a high quality public realm scheme on Castle Car Park and the Eye of York be approved.

Reason: To ensure that the council has shovel-ready public realm proposals of sufficient magnitude to attract potential external funding for the project.

(iv) That it be noted that the decision to procure a construction partner for St George’s Field multi-storey car park will be taken in summer 2021.

Reason: To ensure that the proposal remains the best replacement parking solution once the impact of Covid-19 has become clearer.

(v) That it be noted that a decision on the future of 17-21 Piccadilly will be brought back to Executive in summer 2021.

Reason: To allow a decision on whether to develop the site in line with the masterplan or dispose of it on the open market to be made once the impact of Covid-19 on the land market is more certain.

(vi) That the expenditure of £1.5m from previously committed Castle Gateway budgets to deliver the recommendations set out in the report be noted.

Reason: To support the delivery of the Castle Gateway scheme.

The Head of Regeneration Programmes presented a report which recommended a revision to the delivery strategy for the regeneration of Castle Gateway, following a comprehensive review of the project and business case in the light of Covid-19.

Officers had proceeded with the procurement for St George’s Field and Castle Mills following Executive approval of the phase 1 delivery strategy and associated matters on 21 January 2020 (Minute 80 of that meeting refers). However, in March the council had put all procurement on hold due to the pandemic and instigated a review of all major projects. The review of Castle Gateway had confirmed that the project remained relevant and desirable, but that those elements most significantly affected by Covid-19 should be delayed until there was more certainty.

The review had been taken to the Customer and Corporate Service Scrutiny Management Committee (CCSMC) on 6 September 2020 with the following options, as detailed in paragraphs 35-52 of the report and summarised briefly below:

Option 1 – abandon the project. This had been discounted, as the project principles remained valid.

Option 2 – pause the whole project. Not recommended, as delay could affect investor confidence and result in the loss of funding.

Option 3 – continue with the project as previously approved. Not recommended, as it would require extra borrowing and may mean scaling back the designs if external funding could not be secured.

Option 4 – seek a joint venture partner for Castle Mills. Not recommended, as it would not provide a commercial return to fund the new car park.

Option 5 – proceed with Castle Mills as developer, and delay the multi-storey car park. This was the recommended option and was supported by CCSMC.

Option 6 – pause Castle Mills and St George’s Field until next summer. Not recommended, as delay to Castle Mills would put the West Yorkshire Transport funding at risk.

Members welcomed the report, endorsing the project as an important part of the city’s ongoing recovery and confirming the council’s commitment to a replacement car park on the site.