Agenda item

[Report of the  Director for Planning, Regeneration and Development. To be introduced by the Cabinet Member  for Housing, Regeneration and Planning.]In June 2015 Cabinet agreed objectives and delivery parameters for the Hornsey Town Hall project and approved the site to be taken to market through a public procurement process. This report will update on the procurement and recommend to Cabinet a preferred bidder who the Council will enter into a long lease with for the Hornsey Town Hall site.

 

 

The Cabinet Member for Housing, Regeneration and Planning introduced the report which set out the tendering process which had been undertaken to select a bidder that would be able to provide a financial and sustainable future for Hornsey Town Hall.

 

The Cabinet Member continued to provide some context for the decision going forward, with a reminder of activity undertaken by the Council and local stakeholders, including the Hornsey Town Hall Creative Trust, over the last 10 years, and reiterated the Council’s commitment to community access which required the highest scoring category in the process. He referred to the Mountview proposals, which had disappointingly not eventually proved financially viable.

 

The Cabinet Member emphasised that a solution for Hornsey Town Hall had to be commercially viable. He drew attention to the lengthy, detailed and robust procurement process which he had politically overseen and had been completed effectively, in line, with procurement requirements. Given the high running costs of the building and high restoration costs, the preferred bidder provided a balanced solution, maintaining community access. Therefore agreement was sought from Cabinet for the Far East Consortium International Ltd (“FEC”), the highest scoring bidder, to be appointed as the preferred bidder for HTH.

 

The Cabinet Member for Housing, Regeneration and Planning referred to section 2.5 of the report, which had briefly tried to summarise the report and was not the basis of the recommendation to Cabinet. Instead section 6.25 clearly sets out that following an assessment of the planning strategy of the bidders, the preferred bidder put forward a proposal with lower planning risk. The Cabinet Member re-iterated that the advice of independent planning advisers had been sought when making this decision.

 

The Leader also reminded the meeting of some of the background to Hornsey Town Hall, in particular the Planning Committee meeting decisions in July 2010, where the main objections had been concerned with the scale of the residential development, including concerns on daylight as well as other considerations which arise from having large residential areas.

 

The Leader invited questions firstly from non Cabinet Members and the following information was provided in response to questions/concerns:

 

• Cabinet were making a decision on the procurement process which was triggered in 2015 and not on the parameters of the existing planning consent given by Committee in 2010. The number of affordable units had been set at 4 units due to the high cost of restoring the building.

 

• There was no information to hand on the exact square metres for use for the Hotel. However the preferred bidder was keen to have a presence in and around the Town Hall to answer detailed questions from residents and discuss detailed plans as they are developed with the community.

 

• The Leader referred to the Cabinet report in 2009 where residential development was seen as an enabler to refurbish the building. Knight and Frank advice on affordable housing was 70% private and 30% affordable. However, in 2010 when going to planning committee and while working with Creative Trust on a community solution, it became clear that there would need to more private housing with 123 units and only 4 would be affordable. This was accepted because the planning gain was the community and cultural offer and restoration of the building rather than affordable housing provisions and even with this reduced level of affordable housing there was still a funding gap. Then in 2011 Mountview proposed using the capital receipt from the residential development to refurbish the building but even with the residential enabler there was still not a viable scheme.

 

• Change in the housing market – although house values had gone up, so had construction costs and further building deterioration had also occurred to the Town Hall building during this time which also needed to be considered. The Cabinet procurement decision was working to the Planning permission given in 2010 and this was still a ‘live’ planning permission.

 

• The heritage aspects would be restored, including the committee rooms. It was further clarified that it was the previous car park space at the back of the building being used for the housing development.

 

• Finance issues raised by the MP for Wood Green and Hornsey, Catherine West had been discussed with Council lawyers and the Chief Operating officer. The Cabinet Member was assured that the due diligence process had been conducted including financial advisers and they were reported no concerns about the preferred bidder. The bidder’s intention was to set up special purpose vehicle which will be UK based.

 

• In relation to boutique Hotel, no presumption had been made for the building use. The Council had always  been clear that they could not make promises on what uses could be taken forward  in the Town Hall and this was based on the project objectives, set out in paragraph 1of the report ,agreed by Cabinet in 2015, including community use. It was important to note that this was a building in constant need of funding due to its age and maintenance requirements and there was a recognised need for a part commercial solution. The experience of the preferred bidders in the Hotel industry provided assurance that this was a viable solution to take forward.

 

• The Leader provided a reminder of the Creative Trust Plans from 2008 which would have succeeded if the car park was the basis to fund the restoration of the building and despite working hard for a solution the finance viability could not be met.

 

• Public access was guaranteed to the Square and the Green, which currently have limited budgets available for their upkeep and the community wanted to see more investment to further improve use which the bidder was happy to do. There are no plans for significant development in these areas.

 

• There had been detailed Planning discussions regarding the bids therefore not a need to speak with external planning organisations to seek advice.

 

• Emphasised that the planning strategies submitted by the bidders were assessed and one of these strategies was judged to have risk.

 

• Although the London political context had changed, the Town Hall’s continued maintenance and restoration needs have not altered over the years and this financial aspect has not changed so the need to restore the building and enable meaningful community use is still needed and the decision had to be seen in this context. If a new application including increased affordable housing was put forward by the preferred bidder they would have further financial liability.

 

• TA costs - important to emphasise, the reason for lower level of affordable housing was to enable the restoration of the building. If TA was placed on the site, this would bring additional cost.

 

• Important to secure the future of the Town Hall which will be bound by a lease and a contract. It was also a positive consideration to have attracted this oversees investment in the borough.

 

• The Cabinet cannot take a view on the nationality of the bidders and will be mainly concerned with ensuring the procurement process was robust.

 

The Leader sought Cabinet Member comments and questions who responded as follows:

 

• The Hotel would be in a good place to activate the space at the front of the building,
• It’s been over 10 years since the Hornsey Town Hall Creative Trust started the community solution and then brought through Mountview solution which was disappointingly not financially viable.

 

• Important to bring the building back into full use and protect the footfall into the area and not delay the decision.

 

• Accessible public square part of the procurement objectives. There will be public access to the Hall and Square and this has always been a priority and these areas need to have additional investment which the bidder has promised to do.

 

• It was made very clear that Haringey is not against overseas investment in the borough and this investment should be viewed as a positive thing.

 

• Preferred bidder keen to involve the community in the square issue, and on community access, when the building opens. There will be a substantive community working group to oversee the community access to the building. Clear commitment in writing on this community steering group.

 

• The preferred was bidder keen to engage with residents on their proposals. If the Cabinet agreed the preferred bidder, they would create a community steering group once the building is open.

 

• Cabinet Member for Finance and Health - provided a reminder of the current financial context and reiterated that the Council does not have the financial capacity to bring the building up to standard and continue maintenance. Cllr Arthur acknowledged that the community: wants access to the Town Hall building and square, cherishes its arts activity, want to have some role in its ongoing development of the town Hall and have a stake in the building. The Cabinet Member felt that the proposal meets the requirements of the community as it delivers what people care about i.e. arts centre, access to building and improved square built into contract and the Council will look at how the existing businesses can be relocated. Cabinet will continue to work with the community and preferred bidder to release information and share information on the Arts centre and what will happen to the businesses. 

 

The Leader referred to the petition which did not mention the mixed use nature of the scheme.

 

The Cabinet considered the recommendations in the exempt part of the meeting.

 

The Leader clarified that the recommended bidder be referred to as Far East Consortium International Ltd.

 

Cabinet unanimously RESOLVED

 

To agree to the selection of Far East Consortium International Ltd as the preferred bidder for the HTH site (shown edged red on the plan included in Appendix A) based on the scoring set out in Appendix E and to enter into a Development Agreement for the HTH site  with either Far East Consortium International Ltd or a special purpose vehicle set up by Far East Consortium International Ltd and the grant of long leases with such appropriate tenants as agreed with FEC based on the main  terms set out in paragraph 6.27 of this report; and that delegated authority be given to the Director of Regeneration, Planning and Development after consultation with the Assistant Director of Corporate Governance to agree the final terms of the Development Agreement, long leases  and all associated legal agreements.

 

Reasons for Decision

 

The Cabinet decision in April 2011 declared the site surplus to the Council’s requirements and agreed the principle for a partner to enter into a 125 year lease to operate the building, with the Council retaining the freehold.

 

The Listed building is on English Heritage’s Buildings At Risk Register therefore a solution is required to undertake restoration work to the building and the Council does not have funding available to undertake these works itself. 

 

Options Appraisal work identified that one developer for both the HTH site and building is a preferred approach as it secures both the restoration works and a long term operator for the building and is likely to bring the building back into use at the earliest opportunity. In addition to this a Developer would expect to have control over the works in the town hall as residential units cannot be occupied until essential heritage works have completed in the town hall because of the existing planning condition which links the two elements.

 

A public sector procurement of this scale must legally be governed by the public procurement regulations; therefore an OJEU process had to be carried out to secure a future for the dilapidating building. Professional advisors and the Council’s Legal & Procurement team advised that an OJEU compliant Competitive Dialogue process is the best way to achieve this outcome and this has been undertaken in accordance with the Public Contract Regulations 2015 (as amended) (“Regulations”).

 

To ensure the town hall building remains open and in use in the long term a partner, with a long term sustainable business plan needs to be appointed.

 

A timely decision on the future approach to the HTH project is required in order to engage with and exchange contracts with the bidder while they have a strong appetite to progress with the project, avoid further deterioration to the listed building, remove the ongoing liability of the building to the Council at the earliest opportunity and address the longstanding frustrations of the local community at the timeframe for securing a sustainable future for the Town Hall.

 

Alternative options considered

 

The alternative options that had been considered for the Hornsey Town Hall project can be defined as follows:

·         Option A - Do nothing: Without taking any action to secure a future use and developer/operator for the Town Hall the building condition will continue to deteriorate.  The Council remains responsible for the on-going liability for the building and any use of the building by the local community will be limited.

·         Option B - Conditional land sale: The Council could sell the HTH site via a conditional land sale agreement, however the Council would have limited control in this option to enable and enforce community access and use.

·         Option C - Freehold sale of the site: Sale of the site without retaining any interest would mean the Council is unable to secure community access and use as there are no lease mechanisms to enable this. The Council was not prepared to pursue an option that did not guarantee community access or provide the Council with enough control to ensure that Hornsey Town Hall can support community cohesion and economic dynamism in Crouch End.

·         Option D - Dispose of land at the rear and use receipt to refurbish the building:  In this scenario it is not expected that the land sale receipt would fully cover all the costs to refurbish and fit out the building for use, the Council’s on-going liability for running costs and maintenance is not removed and a sustainable operator and future use is not secured for the Town Hall.