Funding row hits £22m Oxford shops arcade

Oxford Times

8:10am Thursday 29th July 2010

 By Reg Little »

A £22m shopping precinct in the city centre is under threat following the collapse of talks with Oxford City Council.

The global equity firm, the Carlyle Group, submitted plans to create a new open-air shopping centre running from St Aldates Tavern archway to Queen Street, near the Marks & Spencer store.

The company said it was ready to defy tough market conditions to regenerate a neglected part of the city centre, creating new shops, offices, student accommodation and jobs.

But The Oxford Times can today reveal that a question mark hangs over the whole scheme because agreement cannot be reached with the city council over how much the Carlyle Group should pay into Town Hall coffers under a planning agreement.

The so-called section 106 agreements are legally binding and oblige landowners and developers to contribute to council works and services.

Business leaders warned failure to reach agreement could see the city lose a major opportunity to redevelop the site.

Carlyle submitted a planning application in 2008, with plans for nine shops, 17,000 sq ft of office space and accommodation for up to 96 students above the retail units.

But nearly two years on, the application has still not been considered.

A Town Hall spokesman said: “The scheme at St Aldates and Queen Street would require a significant section 106 contribution from the applicant.

“We have been unable to negotiate with the applicant a level of contribution that we feel we would be able to recommend to our members.”

Mark Harris, head of UK asset management for Carlyle, said: “We are very disappointed that we have not been able to come to an agreement with Oxford City Council with regard to the section 106 at our St Aldates scheme.

“During a time of significant economic uncertainty, we presented them with a viable scheme, which is compliant with current adopted policy in relation to section 106.

“We believe that it would provide enormous social and economic benefits to the local community.”

But Mr Harris said he remained hopeful the scheme could still go ahead.

“Despite the delays, we are still completely committed to the scheme. We have the funding in place to take this forward and hope to receive a positive response.”

David Doughty, chief executive of business group the Oxford-shire Enterprise Partnership, said: “We should do everything we can to encourage schemes like this before companies lose interest and go somewhere else.”

City councillor for the Carfax ward, Tony Brett said: “It is always a shame to see an important opportunity missed. At the same time the council cannot give things away. There seems a big difference between what Carlyle thinks it should pay and what the council wants. I understand we are talking about a factor of ten.”

He said it would be negligent of the council if it did not receive a “satisfactory” level of funding for infrastructure costs.

The section 106 money would go towards funding the West End infrastructure, such as Frideswide Square improvements.

Large areas of the site of the proposed development are owned by Merton College.

Much of the site has been acquired by the Carlyle Group on a 135-year lease. Part of the land, which is used as a private car park, is owned by the city council.

Work would have involved an eight-month refurbishment of existing buildings in St Aldates and later the demolition of the city council offices at St Aldates.

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