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Request from Coventry City Council

22 June 2023: The SAU has accepted a request for a report from Coventry City Council concerning the proposed subsidy to Shearer Property Group Limited and Hill Holdings Limited. This request relates to a Subsidy of Particular Interest (SoPI).

The SAU will prepare a report, which will provide an evaluation of Coventry City Councils assessment of whether the subsidy complies with the subsidy control requirements (Assessment of Compliance). The SAU will complete its report within 30 working days.

Information about the subsidy provided by Coventry City Council

Following war-time bomb damage, the centre of the city of Coventry was redeveloped during the 1950s and 1960s. These buildings are now at the end of their life and becoming increasingly dilapidated. As a result, Coventrys shopping, city centre living and leisure offer does not live up to what would be expected from a city of its calibre.

Accordingly, Coventry City Council (the Council) has had a longstanding ambition to bring forward the redevelopment of the southern part of the City Centre (an area known as City Centre South). Beginning in 2015, Coventry City Council undertook a regulated procurement process to procure a development partner with the commitment, expertise and resource to deliver a high quality, mixed use retail, leisure and residential regeneration scheme within Coventry City Centre.

The Memorandum of Information issued as part of the regulated procurement process stated the following:

The Council considers that CCS will be more than just a retail scheme. The vision for CCS is instead for it to be a vibrant and successful mixed-use environment. The scheme will respect and where necessary, reinstate the historic street pattern of Coventry. It will not just be a place to shop, visit for leisure or live in but will instead be an environment where a range of activities come together and respond to increased demand for flexible lifestyles.

The Council was not prescriptive as to the mix of uses to be proposed by bidders in order to achieve the fundamental objective of regenerating this part of the City Centre. Following conclusion of the regulated procurement process, Shearer Property Group (SPG) was appointed as its development partner to bring forward a mixed use development (the Development) at City Centre South (the Site).

Following its appointment as development partner, SPG has appointed Hill Holdings Limited (Hill) as its funding partner. To that end, Hill has taken a shareholding in the SPG subsidiary (Shearer Property Regen Limited or SPRL) that will be taking the Development forward. As a consequence, the beneficiaries to the subsidy would be Hill and SPG since both will exercise control over, and therefore form a single economic entity with, the direct recipient of the Council funds, SPRL.

The Councils prior market testing had also led it to conclude that any development on the Site would require financial support from the Council. However, since SPGs appointment, economic conditions have deteriorated such that the scale of Council financial support required for the Development has increased. In addition, the Council has imposed additional requirements on SPG to deliver social and affordable housing units which has also added to the cost of the Development.

The Council will take responsibility for the assembly and remediation of the Site, following which it will be sold to SPRL at its market value to be assessed by reference to an independent valuation for the purposes of determining Best Consideration in accordance with Section 223 of the Town and Country Planning Act 1990. The Council does not consider that this transaction will involve any subsidy to any party.

In addition, the Council will be funding the construction of various public infrastructure works which, similarly, will not involve a subsidy to any party.

However, approximately 37.285 million of the Councils expenditure in connection with the Development will be a subsidy to SPG/Hill. These monies will be spent on qualifying expenditure which is set out in the agreement between the Council and SPG/SPRL and will be subject to verification by monitoring surveyors appointed by the Council.

The Council considers that the subsidy in this case is necessary both to meet a market failure and also to promote an equity rationale, in particular the redevelopment of CCS and the provision of social housing, for which there is considerable need in Coventry.

Information for third parties

If you wish to comment on matters relevant to the SAUs evaluation of the Assessment of Compliance concerning Coventry City Councils proposed subsidy to Shearer Property Group Limited and Hill Holdings Limited, please send your comments before 5pm on the date stipulated in the timetable above. For guidance on representations relevant to the Assessment of Compliance, see the section on reporting period and transparency in the Operation of the subsidy control functions of the Subsidy Advice Unit.

Please send your submissions to us at SAU-Coventry-CC-South2023@cma.gov.uk, copying the public authority: Oluremi.Aremu@coventry.gov.uk and using City Centre South Submission to Subsidy Advice Unit as the reference.

Please also provide a contact address and explain in what capacity you are making the submission (for example, as an individual or a representative of a business or organisation).

Notes to third parties wishing to make a submission

1. The SAU will only take your submission into account if it can be shared with Coventry City Council. The SAU will send a copy of your submission to Coventry City Council together with its report. This is to allow the public authority to take account of the submission in its decision as to whether to grant or modify the subsidy or its assessment. We therefore ask that you provide express consent for your full and unredacted submission to be shared. We also encourage you to share your submission directly with Coventry City Council using the email address provided above.

2. The SAU may use the information you provide in its published report. Therefore, you should indicate in your submission whether any specified parts of it are commercially confidential. If the SAU wishes to refer in its published report to material identified as confidential, it will contact you in advance.

3. For further details on confidentiality of third party submissions, see identifying confidential information in the Operation of the subsidy control functions of the Subsidy Advice Unit.

Contacts

• SAU project team: sau-coventry-cc-south2023@cma.gov.uk
• CMA press team: 020 3738 6460 or press@cma.gov.uk