Misplaced optimism at Guildhall?

The Council has today issued a media release claiming that the £20 million Guildhall project, “has managed to progress whilst implementing government social distancing restrictions and the team has achieved 90% of all scheduled work on site in the last month”.

That is good news. Earlier in the year long delays had been forecast

The Councils performance in allowing the listed building to slip in a shocking state of disrepair was disappointing. The conservation work needed to be completed and the letting of a repairs contract, after so many delays, was broadly welcomed.

Business case approved by the Council a year ago (option 1)

Unfortunately the Council also agreed to embark on, what some viewed as, a financially reckless bid to provide more offices and a “business club” on the site, with part of the work being paid from rent generated by a large restaurant. Last year the Council let a £16,000 contract aimed at attracting a restaurant operator

The mix of uses always looked risky. The private sector declined to take on any of that risk. The business case looks even less convincing in the light of the recession that will grip this country over the next few years.

Taxpayers already face paying a £574,000 a year subsidy – mostly for interest charges – on the project. Office rent income of £549,000 a year is assumed. If any of the latter doesn’t materialise, then the operating deficit will have to be paid for by cuts in other pubic services in the City.

In seeking to let the office and start up space, the Council will in effect be in competition with itself as there is spare accommodation at the Community Stadium, at the eco small business centre and, potentially, on Piccadilly.

Even the Councils own offices may soon have spare space as more staff find it possible (and desirable) to work from home – one of the possible positive benefits of the current health crisis. (To see other empty property click)

Against that background, residents would have expected the Council to undertake a “root and branch” reappraisal of all aspects of the project.

Instead they seem to be adopting an “it’ll be alright on the night” approach.

In this case, as with several other projects, it most certainly won’t be alright, unless the Council comes up with and implements a convincing economic recovery plan.

NB. Separately it appears that the new £700,000 City centre  “direction signs” project is set to go ahead. 50% is being funded by the York BID.

Leaving aside the controversial appearance of the signs, this is surely expenditure that could have been delayed at least until an economic recovery is well underway and tourists are returning to the city in larger numbers.

Guildhall project cost set to leap to £17 million

When you are in a hole stop digging  – or at least dig where the foundations need to be repaired

York Guildhall

It appears, from a report being considered by the Councils Executive on 8th May, that the cost overrun on the Guildhall development project could have been as much as £6 million. That was what caused officials to pull the plug on a contract with Interserve to redevelop the Guildhall complex.

Taxpayers had already been asked to underwrite an estimated cost of over £12 million for the Council’s plan to establish a “business centre” in the building.

There was no way even the most optimistic estimates of income would have covered the extra £300,000 pa interest costs on the borrowing.

Incredibly Councillors are now being asked to tender the work again with minor changes. Amongst these are a plan to move all building materials through St Helens Square during the 18 months construction period (rather than via the river frontage).

Roof terraces and extensions would be abandoned

Despite these changes, the estimated total cost of the project is now estimated to be an additional “£4-5 million”

“Business case” March 2017

That will be a direct charge on taxpayers as there is no scope for additional income from rents in what will be a smaller than originally planned building.

Significantly, officials provide no update on the business case for the “business centre” which is now clearly nonviable.

It was highly marginal under the old plans (see right) and was therefore labelled as “highly risky” with no private sector partner prepared to become involved

The Councillors are not even being offered the obvious option which would be to put the site on the open market and allow experienced entrepreneurs to suggest viable uses..

The Council has admitted that it has already spent £1.5 million on the project.

If the Council does seek new tenders for the business centre project, they face a major delay – probably until after the next local elections (due in May 2019).

If Labour were to be successful in that poll, they would be left picking up the pieces of a project which started to go wrong during their last tenure in office. They had from 2011 to decide what to do with the Guildhall complex but dithered for four years before passing the buck on to the incoming administration in 2015.

The listed buildings continue to deteriorate.The report say,s “work has identified additional repair and maintenance work particularly relating to the structural weaknesses in the tower and the estimates have risen from £2.5m in the 2017 report to between £3-5 million”

With the annual maintenance bill continuing to grow, taxpayers will wonder just how they can now extract themselves from what has developed into a major financial black hole

If the market had been properly tested four years ago this crisis might have been averted.