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BROWNFIELD LAND - GAP FUNDING SCHEMES GET THE GREEN LIGHT

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Local government and regions minister Hilary Armstrong has welcomed ...
Local government and regions minister Hilary Armstrong has welcomed
the decision by the European Commission to approve two new
'gap-funding' schemes which will enable Regional Development Agencies
(RDAs) and English Partnerships (EP) to regenerate brownfield land
in partnership with the private sector (see LGCnet).
Under a gap-funding scheme, the public sector bridges the gap between
development costs and the likely end value, allowing property
developers to bring contaminated, derelict and disused sites back
into full economic use.
Designed partially to replace the Partnership Investment Programme
(PIP), the new schemes will allow RDAs and EP to support small and
medium sized enterprises involved in a variety of regeneration
projects anywhere in England. Larger firms will be eligible for
support if the project is located in an Assisted Area. In both cases,
the amount of financial aid available will be subject to the
commission's aid intensity ceilings.
Ms Armstrong, said:
'The government has been vigorously pursuing over the last 12 months
new ways of delivering the type of projects previously supported by
PIP. I am delighted that two of the new schemes we proposed have been
approved and alongside the direct development scheme will drive
forward the government's commitment to regenerating brownfield land.
'RDAs and EP will now be able to enter into a range of gap-funding
agreements with private sector developers involved in regeneration
projects, and which are in line with their strategic objectives.
This will allow us to harness the expertise and commercial awareness
of the private sector, achieving better value for money for
taxpayers.
'Over the longer-term, we are pursuing with the commission the
possibility of a new regeneration framework under which state aid
would be permitted for the physical regeneration of derelict or
disused sites throughout England, and the rest of the European
Community.'
NOTES
1. The schemes which have now been approved by the commission will
partially replace the Partnership Investment Programme (PIP). PIP
was closed in December 1999 following a ruling by the European
Commission that the programme was in breach of the State aid
rules, and therefore was not compatible with the principles of the
common market. The commission ruled that PIP would only be
compatible with the State aid rules if it was restricted solely to
assisted areas and was subject to the Aid Intensity ceilings which
applied in those areas.
2. Following this decision, the government notified the commission
of five new schemes designed to partially replace PIP:
* The direct development scheme - which was given agreement in
December following the formal acceptance of the Welsh scheme;
* The two schemes given formal approval by the European Commission
today (28 February 2001) cover developments where the site is
being developed by a known end-user, and projects where the site
is being developed for disposal on the open market.
Developments for a known end-user
These gap-funding projects may be supported in any part of England
provided that the grant recipient is a small or medium enterprise
(SME). Where the grant recipient is not a SME, gap funding may
only be provided if the project is located in an assisted area.
Three forms of support will be permitted for these developments:
* Provision of land and commercial property
* Business and Commercial Premises Improvement
* Physical regeneration services
Developments for disposal on the open market
These projects may be supported in any part of England provided
that the grant recipient is a SME. Where the grant recipient is
not a SME, gap funding may only be provided if the project is
located in an assisted area. In each case, grants will be subject
to the relevant aid intensity ceilings. Four forms of support will
be permitted for this type of development:
* Regeneration grant
* Joint regeneration body/private sector projects
* Regeneration financing aid
* Regeneration services
* An environmental regeneration scheme for soft end uses. A 'soft
end use' is defined as one which is designed primarily to improve
the environment often by providing a cover of vegetation. Examples
include public open spaces, nature conservation and playing
fields. The scheme is designed to offer support for the
reclamation of derelict or potentially directed land for 'soft end
use'. The scheme may not be used to support the redevelopment of
land for 'hard end uses, eg office and commercial buildings or
housing. A decision on this scheme is expected by the end of March
* A scheme linked to neighbourhood renewal - this scheme is
designed to offer support to local communities to enable them to
participate more effectively in local regeneration. A decision on
this scheme is expected by mid-March.
3. The UK government is exploring with the commission the
possibility of a new regeneration framework under which state aid
would be permitted for the physical regeneration of derelict or
disused sites throughout England and the rest of the community,
subject to certain strictly defined conditions.
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