Agenda item

To consider the attached report (C-026-2018/19).

The Portfolio Holder for Commercial and Regulatory Services, Councillor Grigg, introduced the report seeking additional Capital to undertake necessary alterations and the letting of the Council’s Units at the Landmark Building.

With respect to the redevelopment of the former Sir Winston Churchill PH, now renamed the Landmark Building, in September 2013 the Cabinet approved the Heads of Terms of a Development Agreement for the site.  The developer’s financial appraisal for the development, which was verified by consultants appointed by the Council’s Estates & Valuation Team, assessed that it would not be viable to provide any affordable housing as part of the scheme.  However, the agreement allowed for the Council to retain both the freehold of the site and any income derived from the commercial units provided by the developer on the ground floor.  This was in accordance with the planning permission granted by the Council and was considered to be financially advantageous for the Council.

As handover approached, it was apparent that two significant issues needed to be resolved.  Firstly, the units themselves were only constructed to a basic shell specification and work was required to split the units and provide services.  In addition, the complexity of the legal arrangement which required consent for under lettings and access/servicing and alterations agreements has led to delay and the potential loss of two of the original potential tenants.  In hindsight, the Council should have been more specific in the original development agreement in 2013 to avoid these issues.  This is a key consideration in future negotiations of this type.

To date, the Council has incurred £56,000 of unanticipated specialist legal and construction related costs on the project.  However, in order to take the development through to completion and to be ready for occupation, a further £84,000 capital will be required.  This includes work to undertake the physical separation of the units, installation of additional services and further legal, project management and letting agency fees.  This would also include a contingency for minor works.

Councillor Murray commented that some of this expenditure should have been foreseen; the projects were pushed forward too fast. The Landmark site was disliked by the local community and did not meet local housing needs. Councillor C Whitbread said that they had carried out extensive consultation for a landmark building. Councillor Grigg noted that the developers had named the site, it had received planning permission from this council and as for the aesthetics of the building; beauty was in the eyes of the beholder. As for the income from the building, with all the spaces let it was anticipated that it would achieve about a quarter of a million pounds per annum.

Councillor C Roberts asked about the final occupation of the empty retail units of the Landmark building. Would it not now be prudent to consider a wider market for these units, for perhaps offices or start up businesses as an additional option other than retail outlets. We need to be sure more A3 was what the Broadways needed. Councillor Grigg noted that they had a restaurant signed up and now also had a gym in operation. We also have a head of estates who had the expertise on what mix to bring to new developments and we were still receiving enquiries about lettings in the Broadway. The Acting Chief Executive added that a provision of a public house was part of the planning permission for the Landmark building to compensate for the loss of the previous establishment.

Councillor Janet Whitehouse noted that some residents were concerned about the noise levels and food smells etc. were these always part of the plan. Councillor Whitbread said that yes, these were always in the plans, this had not changed.

Decision:

That Cabinet seek a supplementary bid of an additional £140,000 of capital within the 2018/19 revised Capital Programme, from the Council.

Reasons for Decision:

The Council has entered into a 153-year lease with local developer Higgins, to provide a mixed-use development on the site of the former Sir Winston Churchill Public House in Debden.  The Council were incurring costs to facilitate occupation by tenants on the ground floor commercial units, for which additional expenditure was required.

Other Options for Action:

The alterations to the vacant ground floor units were necessary before they could be let.  To leave the units unoccupied or to sell them to another commercial landlord, would not be in accordance with the Council’s Policy of seeking to maximise its assets and generate revenue returns from capital investment.