Midlands council pioneers city development company

A Midlands council is to set up the first of a new breed of city development companies.

The Black Country authority of Dudley has instructed King Sturge, a property agent, to look for a private partner to help launch a company that will use the council’s assets to regenerate its town centre.

Dudley is responding to pressure from the government to adopt this approach to the funding of regeneration projects. Councils across England’s big cities are looking at launching similar ventures.

Using a model pioneered by the regional development agencies, cash-strapped Dudley and its private partner will hand over land and money to a jointly owned company. It will then use the money and property as collateral to attract additional borrowing for property development purposes.

Chris Pratt, a partner in King Sturge’s real estate division, said the council was interested in teaming up with either an investment fund or a private developer.

He added that the partnership would differ from regular council–developer joint ventures in that it will be set up for a longer period, up to 25 years, and would not be limited to specific projects. Dudley aims to use the company to develop nine town centre sites that have been earmarked for regeneration.

The authority plans a mix of housing, offices and shops, including large units designed to lure retailers away from Merry Hill, an out-of-town mall that has drawn much trade away from Dudley’s high street.

Newham council has also instructed King Sturge to explore the establishment of a similar vehicle to regenerate housing estates.

Chris Brown, the chief executive of regeneration funder Igloo, has set up a similar venture, called Blueprint, with the East Midlands Development Agency. He said: ‘The important thing about these vehicles is that they enable local authorities to achieve wider social and environmental objectives.”