HLF Scotland briefing on Heritage Enterprise programme 18th June 2013. More information on programme at www.hlf.org.uk

2. Heritage Enterprise
Rope Walks, Liverpool

3. Aims of the session
• Introduce the new Heritage Enterprise grants programme
• Explain the rationale for Heritage Enterprise and why HLF
have introduced it
• Give an overview of the programme outcomes.
• Explain the application and assessment process and the
requirements for each stage
• Make you aware of the support that is available for
applicants

4. “From 2013 we will make a new
strategic intervention to stimulate
local economic growth with an
enterprise-focused programme
offering grants of £100,000 to
£5million. This will support the
conservation and adaptation of
an individual historic building or
coherent group of historic buildings
for an end-use which actively
contributes to sustainable
development in areas
experiencing economic
disadvantage ”
Strategic Framework 2013-18
A lasting difference…

5. Background research
HLF Board agreed to introduce a
new “heritage and enterprise”
programme following a long period
of research, involving:
– review of consultation
feedback
– nef think piece
– consultation workshop
– other published studies
– 1:1 interviews

6. 2011 Consultation
32%
34%
13%
6%
2%
5% 8%
StronglyAgree
TendtoAgree
NeitherAgree norDisagree
TendtoDisagree
StronglyDisagree
Noopinion
Don'tknow
Views on heritage-led regeneration
Q26. To what extent do you agree that heritage-led regeneration should continue to be a focus for HLF? (base=932)

7. Research – “New ideas need old buildings”

8. Heritage Enterprise
Butcher Works, Sheffield
• For projects that seek to
achieve economic growth
• Aimed at enterprising
community organisations
• Bridging the funding gap /
addressing market failure
• Commercial / social
enterprise partnerships
• Grants from £100,000 -
£5million

9. State Aid Rules and the Conservation Deficit
• State Aid rules apply where HLF funds projects that
generate a commercial income
• HLF can only fund the additional heritage related
costs of development
• Funding restricted to the “conservation deficit”
• Conservation deficit is where the existing value of a
heritage asset plus the cost of bringing it back into
use is greater than the value of the asset after
development has been completed

10. Heritage Enterprise – who we fund
• Not-for-profit organisations
• Partnerships led by not-for-profit organisations
• Key aim is the integration of commercial and
community interests – not mandatory
• Private sector for-profit encouraged to be involved
but as minority partners
• Special purpose vehicles and joint ventures
• Building Preservation Trusts, social enterprises,
Community Interest Companies etc
• Local authorities, other public sector organisations
also eligible

11. Involvement of private for-profit sector
• Development partner
• Occupier
• Freehold owner
Sowerby Bridge Wharf

12. What we fund - priorities
• End-use that generates a
commercial income
• Heritage assets “at risk”
• Designated heritage assets
• Economically disadvantaged
areas
• Skills opportunities
• Increased learning about heritage
NB Public access not a requirement
Adams Building, Nottingham

13. Less of a priority
Projects with a focus on:
• residential rather than
commercial development
• an active place of
worship
• an urban park
Saltaire Park

14. What we fund
• Purchase of a heritage asset
• Conservation work
• New work to bring vacant
buildings/sites back into
commercial use
• Training
• Activities during project
delivery
• Professional fees
• Specialist research
• Project staff

15. Capital work during development phase
• Urgent repairs during
development phase
• Temporary structures to
facilitate “meanwhile
uses”
• Costs should amount to
no more than 10% of
total delivery request
Pop-up shops, Shoreditch

16. Heritage Enterprise - outcomes
Outcomes for heritage:
• better managed
• in better condition (Weighted)
Outcomes for people:
• developed skills (Weighted)
• learnt about heritage
Outcomes for communities:
• environmental impacts will be reduced
• your local area/community will be a better place to live, work or visit
• your local economy will be boosted (Weighted)

17. Outcomes for heritage
• better managed
• in better condition (w)
Beith THI

18. Outcomes for people
• developed skills (w)
• learnt about heritage
Glasshouse, Stourbridge

19. Outcomes for Communities
• environmental impacts will be
reduced
• your local area/community will
be a better place to live, work or
visit
• your local economy will be
boosted (w)
Middleport Pottery

20. Heritage Enterprise application process
• Two round application process – competition at the
second round
• Each application assessed in approximately 3 months
(depends on meeting schedule)
• Grant development period can last up to 2 years
• Project delivery period can last up to 5 years including
activities
• Applications requesting up to £2m decided by Committee
for Scotland
• Applications requesting between £2m - £5m decided by
UK Board

21. Project enquiry
First round application
Grant Development phase
Second round application
Delivery phase
Application process

22. Conservation deficit
• Heritage Enterprise designed to help bridge the funding
gap
• The case for funding depends on there being a
conservation deficit
• No conservation deficit = no grant
• Outline information about conservation deficit at first-
round indicated in Viability Appraisal
• Detailed information about conservation deficit at
second-round indicated in Development Appraisal
• Grant restricted to 90/95% of conservation deficit

23. Viability Appraisal
• Required with first-round application
• Short statement, including:
– Brief assessment of heritage building or site
– Condition
– Options for new uses
– Outline costs of repair and adaptation
– Reasonable estimate of market value of asset after
completion
• Make the case for a conservation deficit
• Detailed costs and values not required
• Can apply for a start-up grant to assist with this work
• Other grants available e.g. Architectural Heritage
Fund

24. Development Appraisal
• Development appraisal is the key document for the
programme
• Financial cash flow calculation that considers all
expenditure and income in the development process
• Establishes conservation deficit
• Draft development appraisals to be submitted for Stage C
Review
• All appraisals will be assessed by RICS registered valuers
• There will be a period of negotiation
• Guidance on development appraisals will be published soon

25. Development Appraisal calculation
Market value of the completed development (A)
MINUS
All costs of undertaking the development (B)
EQUALS
Residual value of heritage asset (C)
A – B = C
If C is positive, no conservation deficit and no grant
If C is negative, then grant justified
(Applicant contribution of 5/10%)

26. Developers’ Return
• Developers’ profit allowed to encourage investment
• Added as a development cost within the development
appraisal
• Amount of profit depends on:
– Degree of risk
– Nature of development
– Stability of market
• Profit capped at 15% of capital construction costs
• Allowance of profit for all project partners, whether
private or not-for-profit

27. First round requirements
• Viability Appraisal
• Partnership agreement (if applicable)
Development phase information
• Detailed information about work
(including briefs) and timetable in
development phase
• Detailed costs for development phase
• Detailed plans for capital works in
development phase (RIBA Stage D) (if
applicable)

28. First round requirements
Delivery phase information
• Outline plans for capital works in delivery phase
(RIBA Stage B)
• Outline proposals for activities
• Outline information about outcomes
• Outline information about timetable and work in
delivery phase
• Outline costs for delivery phase

29. Second round requirements
• Development Appraisal
• Updated partnership agreement (if applicable)
• Activity Statement
• Detailed plans for capital work (RIBA Stage D)
• Detailed information about outcomes
• Detailed information about timetable and work for
delivery phase
• A project business plan (if grant request is over £2m)
• A conservation plan (if grant request is over £2m)
• A management and maintenance plan
• Detailed costs for delivery phase
• Confirmation of partnership funding secured

30. Activity statement
• Activity Statement required with second-round
application
• Mandatory requirement for skills training, e.g.
– Traditional building skills
– Retrofitting
– Building maintenance
– Planning and guiding tours, IT skills etc
• Activities are required during capital works not
following project completion and can include:
– Tours
– Exhibitions, oral history project etc
– Temporary interpretation, viewing platforms etc
• Digital interpretation, e.g.
– Website
– Smartphone app

31. Terms of grant
• Standard terms of grant last for 10 years from project
completion, even where property acquisition is involved
• If asset is sold within contract life, repayment may be
required
• Repayment based on higher figure of value of the sale
or the value of grant
• Fixed sliding scale for repayments that declines over
time, starting at 100% in year 0-6 of the contract, down
to 20% in year 9-10 of the contract

32. Start-up grants
• Grants from £3,000 - £10,000
- To create a new organisation to look after or engage
people with heritage
- For existing groups taking on new responsibilities for
heritage
•Examples of what we can support:
• viability appraisal, exploring options, early scoping
work, research to inform your project, developing skills,
condition survey, valuations, advice on business
planning

33. Get advice
• Get in touch and let us know about your project
• Submit a project enquiry to get detailed feedback – we
will meet with you if we think it is necessary
• Guidance on our website
• Programme Manager in our policy team will be taking
overview across the UK
• FAQs will be published soon

34. Any questions?