Virtual Lancaster

Lancaster City Council has spent over £13 million on the stalled Luneside East development project to rejuvenate St. Georges Quay, virtual-lancaster has learned. It also faces the remote possibility that some £2.5 million might need to be refunded.

Luneside East is a large, mainly derelict brownfield site on Lancaster’s River Lune waterfront owned wholly by Lancaster City Council since November 2006, grossly contaminated by its previous uses. The vision for the project was that it would create a new quarter of the city with 350 houses in a mix of tenures, 8000 square metres of business space, new high quality open spaces and walking and cycling routes.

The Council described the development as “a landmark in urban regeneration and high quality design and be an exemplar in how development can be as sustainable as possible”. But the £70 million scheme stalled in June 2008 when project partner David McLean Homes pulled the plug on plans for 327 apartments and homes, blaming the recession.

Earlier this year, the Lancaster Guardian reported the council had still not secured funding needed to kickstart the development.

A Freedom of Information Act request has revealed that the Council secured over £11 million in grant funding for the first public sector stage of the redevelopment, which involved a comprehensive land assembly, including removal of the operational gasholder in 2006 and a financial contribution towards strategic flood defence works by the Environment Agency. English Partnerships contributed £4,847,000, the North West Regional Development Agency £3,750,000 and £2,526,000 came from the European Regional Development Fund.

In total, spending on the stalled development outstrips funding from national and regional bodies.

The City Council says it has spent £13,219,500 on the project to date (as at the end of March 2010). This includes for all expenditures on the first public sector stage plus, since completion of this, expenditures to meet holding costs – for example, in maintaining effective site security.

The Council, which notes on its web site that it has long recognised that public intervention is required to bring about redevelopment of the site, admits costs exceed the total of grant funding and the Council has funded these directly. None of the grant funding secured and spent to date is for remediation and none is put aside.

With the project stalled, concerns have been raised that some of the funding for the redevelopment might be ‘clawed back’ by public bodies that have provided finance. The Council says legal agreements provide for all the external funding secured by the Council, but admits the ERDF element – some £2.5 million – is potentially at risk from clawback.

“Given the current economic climate and good reasons why the project has not progressed further there is no indication that this is likely,” the Council says.

Web Links:

• Parliament UK | 2004 details of initial Luneside East Funding

• Lancaster Guardian 7/1/2010 | Recession hits quayside plans