Agenda item

            (Mr. J. McGrillen, Director of Development, attended in connection with this item.)

            The Committee considered the undernoted report:

“1.0  Purpose of report

1.1    Members will be aware that under the Council’s Investment Programme a number of schemes designed to enhance the city’s economic infrastructure were proposed.  One of these schemes is the creation of a Creative Hub.  This scheme is subject to ERDF funding and is currently a ‘Stage 3 – Tier 0 Scheme’ (Schemes at Risk) on the Council’s Capital Programme.  A letter of offer has not yet been received for the project however Committee agreed in June 2013 that this should be progressed to tender stage due to the tight funding timescales for EU projects.  

1.2    The purpose of this report is to seek Committee approval to proceed now with the acquisition of a building at 19-21 Donegall Street in the Cathedral Quarter for the Council’s Creative Hub. Members are asked to note however that this is still subject to a LOO being received.

2.0    Relevant Background Information

2.1    On 22nd February 2013 following a feasibility study into the viability of a Creative Hub SP&R gave approval for the project to be explored in more detail work on the project and to make an application for funding from ERDF to cover some of the costs associated with the development. 

2.2    On 19th April 2013, Committee approved a report outlining the preferred location for the development of a Creative Hub as Cathedral Quarter/Inner North Belfast and noted that further work would be undertaken to identify an appropriate site. Members of the SP&R and Development Committees were updated June 2013 that potential locations included options in Donegall Street and near Smithfield.

2.3    On 21st June 2013, as part of a wider update on capital schemes, approval was granted by the SP&R Committee to undertake preparatory work on the tendering for the Hub in order to meet the funding deadline of 31st Dec 2015. Committee further agreed on 19th Nov 2013 to incur expenditure up to £150K towards design/development activity, to ensure that funding deadlines could be met based on the potential acquisition of an existing building for refurbishment.

2.4    A comprehensive property search has been undertaken to identify available properties within the Cathedral Quarter/Inner North area meeting key criteria. Twenty commercial agents and landowners in the area were contacted and a long list of 25 properties in the area were considered.   Key criteria were set to evaluate the long list including:

·        Size

·        Location

·        Refurbishment potential within funding timescale and budget

·        Ability to purchase or for long lease

·        Proximity to new University development;

·        Proximity to DSD Managed Workspace Buildings and potential for further expansion. (The DSD Managed Workspace Buildings are to transfer to the Council in 2015 under LGR).

2.5    It is worth noting that whilst many properties were available on the basis of a short term lease they were not available for either purchase or by way of a longer term lease.  In the current downturn in the property market many property owners did not wish to sell, particularly given the pending regeneration of the area as a result of the development of the University of Ulster and the expectation that property values may rise in the future.   

2.6    Using the evaluation criteria a short list of six properties was established from the long list and a scoring matrix used to identify potentially the most suitable building. Based on this the property solution location identified as potentially the best fit for the Creative Hub was 19/21 Donegall Street. This property is not on the open market but we were aware from negotiations with the agent that the owner may be open to a sale.

2.7    An independent Chartered Valuation Surveyor was appointed to progress negotiations on behalf of the Council. These have progressed to a point where Members approval is now being sought to agree the acquisition of 19/21 Donegall Street as the building for the Council’s Creative Hub.

3.0    Key Issues

3.1    19/21 Donegall Street is located in the Inner North part of the city centre known as Cathedral Quarter / Conservation Area. It is a four storey mid- Victorian terrace building in a secondary commercial area. It is currently configured to provide circa 9100 sq ft of fitted out open plan offices with a separate area of circa 700 sq ft on the ground floor fronting the street.  It has a frontage of 26 feet to Donegall Street and stretches back 123 feet to a rear alleyway. This property meets the size criteria from project benchmarks from elsewhere. The property also adjoins DSD’S Managed Workspace building, which is due to transfer to the Council under LGR and it therefore provides scope for potential expansion of the Creative Hub in the future. 

3.2    The premises are held by the owner by way of a Fee Farm Grant. They are currently not occupied but demised on a 25 year lease until March 2016 with an ongoing rental stream to the owner of £87,000 per annum. Negotiations with the owner have reached the point where Members approval is now sought to acquire the property for the consideration of £900,000, subject to a successful funding application by BCC from ERDF and Invest NI. The owner will provide vacant possession of the premises on a proposed timescale of one month post completion of contracts.

3.3    Members are asked to note that the purchase of land and buildings is eligible expenditure under Article 7(1)(b) of ERDF Regulations. The eligible expenditure for land and buildings cannot however represent more than 10% of the overall total eligible expenditure of the project.

4.0   Resource Implications

4.1    Finance - The cost of the property is £900,000.  Members are asked to note that this acquisition is subject to the Council receiving a letter of offer for the project from InvestNI

         Assets - Acquisition of this property will increase the Council’s property portfolio.

         Human Resources - Officers from Estates and Legal Services will complete the acquisition of the premises subject to Members approval.

5       Equality and Good Relations Considerations

5.1    The development of the Creative Hub will be screened for equality impact.

6       Recommendations

6.1    Members are recommended to approve the acquisition of 19-21 Donegall Street for the development of a Creative Hub in accordance with the ERDF application, on the terms outlined above and subject to receipt of a Letter of Offer for funding from Invest NI.”

            The Committee adopted the recommendation.