Download Briefing Paper to Select Commission 2

Briefing Paper
To
Select Commission 2
On
nd
22 October 2013
PROPOSED BUSINESS RATES DISCOUNT PILOT FOR MANSFIELD TOWN
CENTRE
1.
SUMMARY
1.1
This report seeks the view of Select Commission 2 with respect to a proposed
NNDR (Business rates) discount scheme to be delivered in Mansfield Town
Centre, from April 2014, as a pilot scheme.
1.2
The scheme would commence in April 2014 and would run for the whole of the
financial year, with regular monitoring and a potential for extending the
geographical coverage of the scheme to other parts of the District, if it is delivers
tangible outcomes.
2.
BACKGROUND
2.1
As at September 2013, Mansfield town centre had 107 vacant commercial
premises, a combination of mainly retail and office premises.
2.2
These empty properties are having a negative effect on the appearance of the
town centre and can contribute towards a reduction in town centre trade and
footfall within the town centre, putting pressure on the remaining businesses.
2.3
As part of a national trend town centre retailers have been struggling to meet the
challenge of competition from out of town retail parks, on-line shopping and the
overall effects of the recession. Although Mansfield town centre has coped
reasonably well in performing at around the national average for retail voids over
the past few years, there is no doubt this has impacted upon the towns overall
retail performance. Supporting town centres is clearly a key corporate regeneration
objective for the Council and as such this proposal addresses this objective.
3.
PROPOSED SCHEME
3.1
The proposed Scheme would offer a discount against Business Rates
commitments, to businesses taking up occupancy in previously empty business
premises within the Town Centre, thereby removing a financial barrier that might
otherwise deter potential occupants.
3.2
The financial support, to be provided by the Council, would allow eligible
businesses to receive a 50% discount for 12 months against the outstanding
business rates payable on any property with a Rateable Value (RV) up to £12,000.
3.3
Some flexibility could be built into the scheme to allow a greater discount rate to
be applied for businesses of types which are being particularly encouraged to
enhance town centre customer experience and develop greater customer choice,
such as restaurants or leisure facilities (excluding public houses) for example,
with each application being treated on its own merits.
3.4
All potential beneficiaries will be advised of any other schemes that might apply,
the Small Business Rates Relief Scheme (SBRRS) for example, and all potential
beneficiaries would need to have claimed any other relief that they might be
eligible for before benefiting from the proposed scheme.
3.5
Eligibility Criteria
3.5.1 An application process together with guidance and eligibility notes will be
developed for the Scheme, with applicants working with the Council to establish
basic eligibility at the initial enquiry stage. This will prevent ineligible potential
applicants wasting time on filling out forms, when there is no chance that their
application will be successful.
3.5.2 For the occupant to benefit from the Scheme, the premises for which the Business
Rates Discount is being sought will need:•
•
•
To be within Mansfield Town Centre (as defined by within the inner ring
road)
To have a Rateable Value of no more than £12,000
To have been vacant for at least 3 months
3.5.3 To benefit from the Scheme, all applicant businesses will need:•
•
•
•
.
3.6
To have received notification of acceptance of their application, prior to
moving in to the premises.
To have applied for any other forms of Business Rates relief available to
them including, Small Business Rates Relief. The discount offered by the
Scheme will only apply to the balance remaining on the NNDR bill after the
value of all other eligible discounts, claimed or not, have been deducted.
To demonstrate it is not relocating from elsewhere within Mansfield, unless
there is a clear and evidenced business case for doing so (such as
business growth). Each case will be treated on its own merits.
To agree to have their details used for promotional purposes, by the
Council, as it sees fit.
To be independent retailers, not part of national retail chains, betting
establishments, pay day lenders, or charity shops, with the Council
reserving the right to refuse any application it sees fit on merit.
Promoting the Scheme
3.6.1 Once the Scheme has been approved, a promotional campaign will be developed
and delivered to support the application process. Details of the scheme will be
circulated internally, to Corporate Communications, Customer Support, the
Planning Services and any other part of the organisation that might engage with
businesses or commercial property landlords, to help ensure maximum interest
and take up by eligible businesses
3.6.2 The Regeneration Team will ensure that all commercial property landlords and
agents are made aware of the Scheme, using existing groups, such as the
Mansfield and Ashfield Development Forum (MADF), as appropriate. The
Regeneration Team will also make the scheme known to any organisation that
enquires about investing in the area that may be eligible as well as using the
scheme as an additional marketing tool for the town to stimulate additional
prospective investors.
3.6.3 Application forms will only be sent out to potential applicants once their basic
eligibility has been established.
3.7
Administering the Scheme
3.7.1 The Business Rates team will be responsible for the administration of the Scheme
with the support of the Regeneration team in confirming eligibility and will integrate
the process into the existing NNDR collection processes. It is proposed that the
Head of Regeneration Leisure & Marketing work with the Head of Finance,
Property & Revenue Services to finalise the guidance criteria and application
process.
3.7.2 The NNDR Team will make applicants to this Scheme aware of the SBRRS and
will encourage them to submit an application, offering assistance where required.
If the applicant to this scheme is eligible for SBRRS and chooses not to apply,
they will effectively have made themselves ineligible for help from this scheme.
3.7.3 Once an application has been approved, the NNDR team will make the necessary
changes to the business rates bill for the premise, so that the discount is deducted
from the outstanding NNDR bill for the applicant business.
3.7.4 The NNDR team will keep records of the value of all discounts issued and the cost
of these discounts will be charged to an appropriate general ledger cost centre
that will be used to track the ongoing cost of the Scheme.
3.8
Evidence of Need
There are a number of barriers, some of which are listed below, that may
contribute to a property being unoccupied and for any given potential occupant, it
will be a combination of these barriers that will prevent them from moving in.
3.8.1 Premises – does the premises offer adequate and appropriate space and access
to the business’ target audience? If the premises do not meet the requirements of
the business, then there will be little that can be done. However, the proposed
scheme could help to encourage improved Council interaction with all of the
relevant private landlords and allow an opportunity to explore whether the cost of
any necessary amendments to the premises could be shared between the landlord
and occupant to a potential tenancy agreement.
3.8.2 Financial – Has the potential occupant got enough money to get the business up
and running and into a sustainable state? The costs associated with the initial set
up of any business are likely to be higher in the first few months of operation and if
the business is going to fail, it is most likely to do so in its first 12 months of
operation. The costs that a business will face, will be fixed costs like rent,
business rates, staffing costs, equipment etc. The business will also have variable
costs, stock for example. As this scheme will effectively reduce the business’
outgoings in its early stages it will certainly lower the financial barrier. In a recent
survey, carried out by DNCC, in response to the question, “What do you think
would make a difference to your local high street/town/city centre?”, 38% of
respondents stated Business rate relief. In the same survey, almost 30% of
respondents suggested that they had not yet applied to receive Small Business
Rates Relief (SBRR). This indicates a low take-up of the SBRR scheme and its
availability, for eligible businesses in properties with an RV of less than £6,000,
would mean that an application to the proposed scheme would not be necessary,
unless the Government removes the doubling of the SBRR discount available, as
of 1st April 2014. For premises with an RV of between £6,000 and £12,000, the
upper limit of both schemes, the proposed scheme would only be paid once SBRR
had been claimed and would be calculated on the balance outstanding after SBRR
had been deducted. This would strongly encourage eligible businesses to
advantage of the Government funding behind the SBRR.
3.8.3 Are the leasing arrangements for the premises acceptable to the business? For
example, the length of the lease, break clauses etc. Potential occupants will seek
to reduce their risks by as much as possible and will probably be reluctant to sign
a long lease, especially where there is no break clause. The increased
engagement with landlords/agents would present an opportunity for us to promote
more flexible leasing terms, where applicable.
3.8.4 The Scheme, by nature of the fact that discount will only be given when occupancy
is taken up, will be self-balancing, in that the Council will only be paying for the
success stories. In other words, if the Scheme achieves a 0% take-up rate, there
will still be the same number of vacant premises, but no discount will have been
paid out. Any advertising/marketing budget will need to have been spent at the
start of the scheme to make landlords, agents and potential occupiers aware of the
proposed scheme, so this will be the limit of the financial risk.
4.
BUDGETARY/RESOURCE IMPLICATIONS
4.1
To operate the pilot scheme, it is proposed that the remaining budget balance
contained in the Economic Stimulus Fund (£52,000) is allocated to the
implementation of this scheme – including a small amount of this to be used for
promotion of the scheme.
4.2
The number of premises the scheme could fill would then depend on a
combination of take-up and whether the government decides to continue the
current boost that is in place on Small Business Rate Relief. The Small Business
Rates Relief Scheme would normally offer eligible businesses an ongoing 50%
discount against NNDR, for premises with an RV of up to £6,000. This discount
rate reduces to 0%, as the RV of the premises increases between £6,000 and
£12,000. The Government currently has in place a temporary boost to the
scheme, which doubles the discount rate, meaning that eligible businesses in
premises with an RV of less than £6,000, get a full 100% discount, reducing to 0%
as the RV of the premises increases to £12,000. This boost is due to end on
March 31st 2014, unless the Government decides to extend it.
4.3
If the SBRR scheme boost stays in place, then the funding being sought could
help to support occupancy of almost 80% of the current vacant premises to be
filled, subject to business demand.
4.4
If the government were to discontinue the SBRR scheme boost, then the funding
being sought could help to support occupancy of up to 40% of the current vacant
premises to be filled, subject to business demand.
4.5
If an additional grant level above the proposed 50% discount were offered to
restaurant and leisure operators (excluding public houses) as part of encouraging
this important sector, then the overall funding would of course not be able to
support as many vacant property applications. This will depend upon market
forces in terms of the business demand through potential applications.
5.
ALIGNMENT TO COUNCIL PRIORITIES
5.1
This proposal is consistent with and would support the Regeneration Objectives of
the Council, through support for businesses and ultimately local shoppers in
Mansfield town centre.
6.
COMMENT OF AUTHOR’S DIRECTOR
6.1
This proposal utilises the new powers the Local Authority has under the Localism
Act and as a pilot initiative, can be reviewed to assess its impact during the course
of the year if approved. Given the impact of business rates on the performance of
the highstreet, this initiative is anticipated to be a significant step change in the
town centre offer which can be used as a key marketing tool for Mansfield. The
encouragement and support of independent retailers is something which Mansfield
would benefit from in enhancing the overall retail offer, especially if successful in
helping to secure additional restaurant and leisure sector businesses.
Author
Designation
Telephone
E-mail
Paul Thomas
Regeneration Manager
01623 463369
[email protected]