Another restaurant deal flops leaving York taxpayers £1.375 million out of pocket

The York Council is set to admit that a deal to underwrite the construction of 3 restaurant units at the York Community Stadium, branded in 2017 as “highly risky”, has flopped.

A meeting next week will be told that the Authority must either lease the empty units itself or face an increase of £1.375 million in its contribution to the Community Stadium budget

The news comes one week after the authority was forced to admit that another restaurant, which it constructed as part of the Guildhall renovation project, will also remain empty. That restaurant was supposed to provide £150,000 a year in rental income which would have been used to offset the costs of the Council’s new Guildhall “business centre”.

The Council agreed in October 2017 to accept liability if the developers were unable to lease the Community Stadium restaurant units.

Now with “practical completion” only apparently a few weeks away, and the units still not leased, the Council must decide whether to reduce the sale price for the commercial block or to lease the units itself for 25 years.

Another option, offered by land investment company L&G, would be for the Council to, effectively, buy out their interest in the units.

A Council report says, “Accepting a lease of these 3 units would also enable the Council to facilitate subletting’s for the units to a wider market as the Council could review offers from local and smaller businesses that would not be considered under L&G’s corporate benchmark although subletting’s are subject to L&G’s approval”.

Maybe so.

But the hospitality industry has changed beyond recognition recently. Even before COVID struck, two of the adjacent existing restaurant units (not owned by the Council) had become empty.

*Existing Monks Cross restaurants are struggling*

It is likely to be some years before Monks Cross becomes a destination location with a high footfall.

The Council could also find itself competing against itself to let restaurant units at both Monks Cross and the Guildhall

The Council has not published a business plan which would guide its next set of decisions.

There should be no more ill considered adventures using taxpayers money.

The City already faces cuts to basic public service standards as a result of COVID. Taxpayers should not be expected to subsidise empty floorspace.

Lessons must be learned for the future.

More on financial threat to Energise and other GLL leisure facilities in York

In May, a media report confirmed that the GLL group – who manage several leisure facilities in York including Energise on Cornlands Road and the Yearsley swimming pool – were in financial difficulty.

They asked the York Council for support.

The move may partly explain why more progress has not been made in bringing new facilities at the York Community stadium site into use.

The York City Council said it “will continue to work closely with GLL.”

At the time, Ian Floyd, the council’s interim head of paid services, said: “Throughout the city’s response to coronavirus we understand that the businesses we work with have had to adapt due to temporary closures, working differently and dealing with the financial demands this places on them.

“We are working with our partners across the city to ensure we support them to work safely, and we continue to follow government guidance regarding our ongoing service contracts.

“City of York Council supports GLL through our leisure services contract via monthly payments. This is usually paid in arrears. Following government guidance, the council have paid three months of the contract fee upfront, covering April to June 2020.

“We understand that GLL have furloughed the majority of staff at these venues and have confirmed they are continuing to pay 100% of their salaries until May. City of York Council will continue to work closely with GLL, to work through the contract implications of the Coronavirus response which closed all public leisure facilities in March.”

There has been no recent update from the Council although some facilities did subsequently reopen on a limited basis.

Councils decision making in limbo?

Each week the York Council updates a list of upcoming “decisions” that it intends to make. It is known as the forward programme and covers a four month period. It lists issue areas and gives the date that a decision meeting will take place on.

The intention is to give back bench councillors and members of the public advance notice that changes may be proposed.

City of York - York City Council Meeting 12/17/2019 — York Council meeting – archive photo!

The system has always been slightly opaque with some quite obscure descriptions covering potentially radical change. Nevertheless, the system works after a fashion and was sustained during the peak of the COVID crisis.

During that time decisions were delegated to officials on the basis that they needed to act promptly to address health concerns.

The York Council has been slow to get back to a fully transparent and democratic decision-making process, with meetings still taking place “online”.

Many may think that this is not a bad thing as far as what are termed “executive member decision meetings” are concerned. Essentially this involves one person siting in a room solemnly declaring agreement with often mundane officer recommendations. Provided that written representations are allowed and recorded, remote meetings of this sort have the advantage of avoiding unnecessary travel (and can be viewed live on video by interested parties).

Meeting to consider community stadium shelves

The Councils planning and scrutiny processes are rather different.

There some real debate and probing is necessary to ensure that all options are fully understood and considered. Other Councils have returned to “live” meetings. York should follow suit.

It could start by scheduling its first full Council meeting for 6 months.

The latest “forward plan” suggests that a backlog of work is building up. No fewer than 7 items which have been included on the plan – in some cases for over 6 months – are now shelved.

There is no indication when, or even if, decisions will be made.

They include a review of Homelessness, the agenda for which was published last week and then hastily withdrawn without explanation.

Another report was intended to provide an update on the commercial arrangements at the new Community Stadium complex. There is no clue given as to when a report will be ready despite the start of the new football season being imminent.

Several of the deferred items relate to housing issues. A new Head of Housing has recently been appointed. He will need to get to grips quickly with the backlog.

In the meantime the Council should either schedule the shelved meetings or withdraw them for the list

The deferred items include

25. Homeless Review 2019-20 Decision maker: Executive Member for Housing & Safer Neighbourhoods Decision due: ; The original meeting this item was scheduled to be considered at has been cancelled, therefore this item has been postponed until a new meeting date has been identified. Originally due: 25/08/20 Notice of proposed decision first published: 28/07/2020
26. Make it York Service Level Agreement Decision maker: Executive Member for Culture, Leisure and Communities Decision due: ; In consultation with the Executive Member for Economy and Strategic Planning Originally due: 14/04/20 Notice of proposed decision first published: 24/02/2020
27. Project Executive Fee Level Decision maker: Executive Member for Children, Young People and Education Originally due: 21/04/20 Notice of proposed decision first published: 02/03/2020
28. NSLC Commercial proposals (Community Stadium) Decision maker: Executive Decision due: ; This item has been deferred to enable a more detailed report to be prepared. Originally due: 13/02/20 Notice of proposed decision first published: 13/01/2020
29. Organisational Development (OD) Plan Decision maker: Executive Originally due: 23/04/20 Notice of proposed decision first published: 16/03/2020
30. Garden Assistance for CYC Tenants Decision maker: Executive Member for Housing & Safer Neighbourhoods Originally due: 30/04/20 Notice of proposed decision first published: 03/02/2020
31. Communal Areas Policy (Housing Owned Land) Decision maker: Executive Member for Housing & Safer Neighbourhoods Originally due: 14/05/20 Notice of proposed decision first published: 03/02/2020

What & when at Monks Cross?

It isn’t just the Community Stadium (see story below) that is lying unused at Monks Cross.

The £12 million gym, swimming pool and outdoor all-weather sports pitches are also still under wraps.

Around £14 million of taxpayers money has been used to subsidise the complex on top of which were “developer” contributions of over £15 million (click).

The expectation was that the site would provide several hundred additional jobs for York – opportunities which look to be even more important as the post COVID-19 recession hits employment levels in the City.

Other sports and swimming facilities in the City reopened on 10^th August (click).

The IMAX cinema recently reopened and two adjacent units have been taken up by a bowling alley/café (Hollywood Bowl) and an indoor putting green (Putstars). Opening dates haven’t been confirmed.

Both had been scheduled to open in April. Together they will create about 60 jobs.

Bowling alley and indoor putting ready to open?

Elsewhere the Council hasn’t issued any update on the progress made in letting the floor-space in the building that they have underwritten.

Three of the 4 nearby café units are now vacant following the demise of Frankie and Benny’s.

Costa Coffee remains open.

The has similarly been no word on the plans for a library and the NHS outpatient unit.

Cycle racks at the Park and Ride site are not overused

When will LNER Community Stadium be completed?

Building work is still continuing at the site of the LNER Community Stadium at Monks Cross. It seems that it will be some time before all the buildings can be brought into use.

Community Stadium works till not completed

The main area of concern remains the stadium itself. The authorities failed to stage the required test events before the lockdown led to a suspension of most work.

The test events – of varying capacities – are a prerequisite for the issue of a safety certificate. Without a certificate the stadium can’t be commissioned.

It is something of a paradox that – because of social distancing regulations – initially only a proportion of the capacity would be used. The (National League) football season is due to start at the beginning of October. That is only seven weeks away. Players will recommence training shortly and it is customary to stage friendly matches in the immediate run up to start of a season.

There is little clarify from the government at this stage about how social distancing might limit crowd numbers.

Some sports commentators have said that as few as 1 in 5 seats might be occupied.

Therein may be the rub for York City.

Social distancing is potentially much easier in an all seater stadium like the one at Monk Cross. If 20% of its 8512 seats were occupied then this would be enough to accommodate all season ticket holders plus a few more.

York City’s average attendance, during the last fully completed season (2018/19), was 2443.

In the same year the York Knights Rugby Team attracted 2125.

If one in three seats could be occupied (essentially respecting a 1 metre social distancing guideline) the all regular supporters could be accommodated.

Some other teams in the National League North have announced plans to ground share at stadiums with a larger capacity to accommodate all who wish to attend.

Hopefully the Council and its partners have plans in place to quickly finish off the remaining building work and find a way to open the stadium albeit possibly with a reduced capacity.

York Council spent £4.5 million on buying commercial property last year including £2.8 million on 25/27 Coney Street

Community Stadium not completed, Guildhall business club costs rising

The Council has revealed, in the small print of a report to a meeting taking place this week, that “as part of the council’s response to the COVID_19 pandemic all major procurements are on hold in the short term”. This comes as no surprise with the Castle/Piccadilly development one of these projects now shelved

The Council has expected to recover its investment there using “long term revenue from commercial space”. Speculative building of that sort looks to be that thing of the past for a few years at least.

The same report reveals for the first time that, late last year, the Council purchased 25-27 Coney Street for just under £2.85 million This is the block containing the Holland and Barrett store. Just how the rent freeze during the health scare will affect income from this and similar commercial property investments is not explained in the Council report. Generally speaking, in the long run, the City has always benefited from civic investment in land and property ownership. Values in the past have always risen faster than inflation. In the short term, though, such purchases may place additional burdens on taxpayers.

There may be a bigger issue emerging at the Guildhall where delays have caused an escalation in the cost of the £20 million renovation and remodelling project. The report is, however, still claiming that the hugely expensive project will provide “a comprehensively refurbished and renewed Guildhall complex to provide a contemporary business venue for the City, the works include a green energy solution and dramatically improved facilities for community, civic and council use, with a riverside restaurant unit alongside”. Time will tell.

The report confirms that the “Community Stadium” is still a “live building site”. “All certification and testing will only recommence once Government allows the gathering of people to resume, but only at that point. When all contractors and partners are able to return safely to the site to fully complete the works, they will. Only at that point can the Stadium look to hold test events required and open thereafter”. There is no comment in the report about the commercial and community uses planned for the site or the likely timescales for bringing all spaces into use.

Anyone’s guess when the Community Stadium complex will be fully occupied

Without test events being possible, it now seems unlikely that the football or rugby clubs will be able to play at the stadium from September (the likely start of the National League football season) .

Council net debts mount to £289 million.

The Councils net debts increased to £289 million in the year up to April 2020.

That was an increase of £43.4 million over 12 months.

The figures are revealed in a report to a meeting taking place this week.

The Council net debts are forecast to increase to £452.4 million within the next 5 years.

This will mean that nearly 25% of Council Tax income will be spent on interest and redemption charges.

The figures don’t take into account the toll that Coronavirus has had on finances over the last 4 months.

Although interest rates are at historically low levels, the Councils income steams have been badly hit. In turn this affects the authorities ability to service its debt charges.

Projects which depend on asset sales for funding are also facing challenges. The commercial property market may be depressed for several years.

The report fails to provide an update on the assumptions made about commercial letting returns.

As well as an expanded shops portfolio, the Council has embarked on a series of projects, like the Community stadium and the Guildhall renovation, which depend partly on rent income from office and commercial space to pay for the investment.

Several Council owned offices are currently empty.

The Council, is particularly reluctant to say whether the speculative offices, which it agreed to underwrite at Monks Cross, have yet found a tenant.

Delays in York Council investment programme

A report which is being discussed on Thursday reveals that the Council has fallen behind with several major investment projects.

It means that funding is being slipped from 19/20 into future financial years.

The biggest embarrassment is the Community Stadium project which is between 8 and 1 year behind schedule depending on when you started counting.

A development for the homeless on James Street has also recently been revealed as lagging 12 months behind its target completion date (although it doesn’t rate a mention in the Council report).

Setting the scene for a major increase in investment (and consequent debt levels), the report makes some strange claims.

Centre of Excellence for Disabled children “opening in May?)

Foremost amongst them is a statement that the Centre of Excellence for the Disabled, currently being constructed on Ascot Way, will open for business in May of this year. Really?

Site for new football pavilion

Lowfields

We are assured that show homes at Lowfields will also be available in “late summer” while the waterlogged Ashfield football site – located off Tadcaster Road – will have a clubhouse open by September!

Perhaps more understandably, cautious officials now say that the Community Stadium will be opening to the public “during the year”. No more hostages to fortune then!

Fake news or wishful thinking?

Council publishes new “Our City” newspaper

No doubt the York Council would be criticised if it failed to keep residents informed about what goes on in the City and how the Council spends taxpayers money. Whether spending £10,000 on putting a magazine through everyone’s letterbox represents a prudent use of resources may divide opinion.

The current edition of “Our City” is tidier and therefore more accessible than previous editions. But it fails an important test.

It isn’t objective.

Telling people that things are going well when patently many street level public services in the City are far from that, transforms an information source into a propaganda channel.

There are major problems with keeping the streets tidy and free of weeds. The refuse collection service is now chronically unreliable. Many roads and paths are potholed. Some are dangerously obstructed by trees and hedges. These issues don’t merit a mention in “Our City”.

The Council does praise the hugely expensive community stadium project without telling people precisely when the stadium will come into use. Apparently the IMAX cinema (a plus for the City) will open in December but there is no explanation for the delays that have dogged the future home of York City FC and the York Knights Rugby team.

But the main concern will be the failure to be frank about the risks involved in some of its projects.

The Council is acting as its own housing developer and hopes to build 600 homes in the City over the next few years. It has recruited a significant number of additional staff to do so. It could have used local companies to undertake the work but chose not to. It is a high risk venture but, at the end of the day, in York any new homes will be occupied one way or another.

The same can’t be said about the £20 million Guildhall redevelopment. There is little evidence to suggest that a “business club” is needed in the City and even less that the York Council would be the best organisation to manage one.

The “Our City” article disingenuously talks of the project generating £848,000 a year in rents. It fails to point out that would involve renting out all the available space and that, even then, the income would be barely sufficient to pay the interest payments on the money that the Council intends to borrow to fund the scheme!

Sadly similar mistakes have been made in the past. £12 million was spent on the Barbican concert hall. The Council chose to manage that facility itself despite a complete lack of experience in the field. It later turned out that the hall manager had failed to apply for an entertainments licence for the building and had operated it unlawfully for several months. The Barbican ran at a loss of £800,000 a year and eventually had to be sold on to the private sector.

Whether anyone will come forward to rescue the Guildhall project remains to be seen.

Empty Monks Cross restaurants could cost taxpayers £1.4 million

The Community Stadium saga has taken a new turn, with the Council admitting that it may not get the full £3.8 million which the developer has promised to pay for land allocated for three restaurants.

The units are unlet and if they remain so on the opening date, then the Council could receive £1.4 million less for its interest.

The Council says that discussions are ongoing with several potential tenants.

A report the Councils Executive confirms that building work on the stadium should be completed in September. The buildings would then be handed over to the operators who will be responsible for obtaining a safety certificate. The Council claims that it still opens the stadium will be operational in October but that seems optimistic to many observers.

In the meantime, the Knights Rugby team continue to play their matches at Bootham Crescent. The Council plans to increase their subsidy to the club from £30,000 to £45,000 to compensate for the delays in moving to Monks Cross.

The stadium project cost £22.6 million during the 2018/19 financial year

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