To receive a presentation on the GIIF, a written report and presentation is attached.
3.1 The Chair welcomed Neil Hopwood, Projects and Infrastructure Manager for GFirst LEP, to present this item. Members noted the following points:
· Originally the GIIF Programme was a grant fund (Growing Places Fund) which was awarded in 2012 and allowed local authorities/LEP to be flexible in how they used the funding. In Gloucestershire it was used as revolving loan fund to provide gap funding for commercially viable projects that needed start up support.
· Typically, once the funding had created an asset, the project would generally then be refinanced, which would then repay the GIIF loan and GFirst would then recirculate the money. The use of this loan had been very successful in creating infrastructure and assets that were struggling to get off the ground.
· Each project had to be commercially viable, but one of the great advantages of the fund was being able to take a slightly longer-term view and look at schemes that might not have been as commercially viable at that point in time.
· Slide 2 gave an overview of all the projects that had been supported to date. The Honeybourne Gate Extra Care Home and Park View Extra Care Home were both regarded as ‘gateway sites’ that had struggled to get funding. Both of these sites were now fully operational and regarded as having high value facilities. By GFirst investing £2.75m of GIIF funding upfront, this drew in £13.4m private sector investment.
· Another notable project was the Gloucester M5 Services (Southbound) with initial GIIF investment of £3m, which drew in £20.34m in private sector investment.
3.2 A member asked if there were projects in the pipeline when the repayments are made in the third quarter. It was noted that there was a major repayment due this quarter and the funds were fully committed to the second phase of Bakers Quay. Following this, there was availability for new projects and the LEP would be looking to promote these available funds in the next few months.
3.3 Following a question, it was explained that the GIIF was currently the only grant funding available. The Getting Building Fund had now been fully committed to projects. It was stated that they were awaiting the Levelling Up White Paper which was expected to be published in the following weeks for clarity on future investment funds.
3.4 Looking at the type of projects the loans could fund, it was queried whether a working group in Gloucester that were looking into creating a sculpture on Robinswood Hill, could apply for the funding. It was advised that unfortunately, as the loan needed to be repaid, this would not be suitable for a community project such as this. Gloucester City had been nominated as a ‘priority place’ by the Arts Council, so the working group could look to apply for a grant capital fund from the Arts Council, which would not need to be repaid.
3.5 It was queried how local authorities were consulted in the decision process. It was explained that the LEP would not fund schemes that hadn’t been granted planning permission, and therefore would have gone through the normal local authorities procedure, which offered an opportunity for councils to influence the process and whether the scheme went ahead or not. It was then the role of the Investment Panel to make the decision on which projects were successful for funding. An action was taken to provide data on how many loan applications were received and how many were refused.
ACTION: David Owen/Neil Hopwood
3.6 A member questioned whether it was suitable for public money to be loaned, interest free, to the private sector. It was confirmed that each project had to demonstrate, through the due diligence process, that this was a ‘loan of last resort’ and prove they had explored all other avenues for funding. There was also a fee that covered due diligence and admin costs of the process.
3.7 On questioning, it was explained that generally, loans of less than £1m would not be granted, as it had been decided by the Investment Panel that it would cost too much for applicants in terms of legal fees involved than it would through other means for smaller loans. It would also be a considerable undertaking for the LEP to manage many smaller loans, although this was being explored for the future.
4.8 A member noted that if interest rates were changing, would this erode the value of the fund overtime, and questioned whether there were future plans to add some interest rate loans to the process. It was advised that the LEP had been making a strong pitch to Government on how well this loan was working for Gloucestershire and the necessity to increase funding in the next round of funding. It was stated that there were no plan to start charging interest except for when projects defaulted (payback periods were slower than predicted), and therefore after a period of time were charged interest.