Memorandum by English Partnerships (GF
PARTNERSHIP INVESTMENT PROGRAMME
The Partnership Investment Programme (PIP) was
launched in 1994 as part of English Partnerships Investment Fund.
PIP was designed to allow a flexible approach towards partnership
with the private sector through one or a mixture of loans, guarantees,
grant and formal joint venture investment. The main but not sole
mechanism used has been to provide grant to private sector developers
where the costs of development are higher than the end value.
PIP provided support for land remediation, site
servicing and building projects. It was not provided to support
the operating costs of developers or the business activities of
The gap between cost and value of a development
may arise as a result of high abnormal costs of development or
as a result of market failure in particular location. Typically
both causes arise on brownfield sites in run-down deprived areas.
Before any PIP support was offered projects
were appraised against agreed criteria to ensure that there was
relevant cause (a reason for public sector involvement), that
the amount of public investment made was the minimum necessary
to allow the project to go ahead and that the outputs from the
project represented value for money.
The annex to this note
provides a description of the typical appraisal process, from
initial enquiry by the developer, through applications, full appraisal
and of grant to monitoring of project performance and completion.
The section below summarises the checklist of issues examined
as part of the appraisal process.
||What is it?|
How does it inter-relate with our other programme and objectives for the area?
Is it of the appropriate quality. Does it have real authority/community support?
|The Developer:||Are they credible and viable?
|The Site/Building:||Is it vacant/derelict?|
Who owns it?
Is it contaminated and if so is the polluter pays principle relevant to the project?
|Costs:||Is the site cost a proper reflection of its current/alternative use? What are the abnormal costs of the development and are they a correct reflection of the work to be carried out?|
Are the main construction works properly described and are the estimated costs a correct reflection of the work to be carried out?
Are design, project management and other fees properly reflected in the cost profile?
Is the construction period and interest charged estimated properly.
|Profit:||Does the required profit properly reflect the risk to the developer?
|Risk:||What are the risks to the project (construction, market, funding) and have they been properly considered?
|Grant Requirement:||Is there a genuine cost-value gap and how much are other public funds contributing and, if so, why is PIP required? What form of support (grant, loan, guarantee) is most appropriate?
|Outputs:||What are the outputs from the project (jobs, land reclaimed/serviced, industrial/commercial space, residential units, private sector leverage). Are they realistic?|
If there are other public sector funders how should outputs be apportioned?
Are there wider benefits of the project beyond the immediate output?
|Value for Money:||Are the outputs value for money for English Partnerships/public sector funding as a whole?
|Development Agreement:||What amendments, if any, should be made to the standard Development Agreement? What are the key monitoring issues?
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