Crunch time for Council as officials recommend borrowing £7 million to spend on Guildhall project

Heritage Lottery Fund refuses financial help

Senior York Councillors are being recommended to let York taxpayers bear the bulk of the risk in a new Guildhall office project.

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Although the redevelopment has shed its pretentious “media centre” label – attached by the last Labour administration as they adopted a £9 million development scheme – the new project seems to be a case of the “Mayors new clothes”.

Little has changed as the rookie administration is asked to plunge the City further into debt. Each York residents already owes £1326 each following previous Council decisions.

The Council have clearly failed to find a public sector partner who was willing to bear the financial risks involved in converting the complex into a “serviced office venue with virtual office and business club facilities”.

There is welcome news that the Councils traditional civic headquarters – the Guildhall itself and adjacent Council chamber – will continue to be publicly accessible. Officials project income of £80,000 a year from these facilities although this is likely to be dwarfed by ongoing maintenance, energy and caretaking costs.

The project also incorporates a restaurant and café/bar.

The main criticism, of the new Council approach is likely to be that it has failed to test the market for the site. While for many, retaining the historic building in public ownership was a “given”, the so called review process undertaken in the summer turned out to be little more than a cosmetic exercise. Despite the obvious access difficulties for commercial use, alternatives such as hotels or residential were neglected.

York Guildhall

Apartments in the City centre are fetching astronomical prices and the offer of a river view would be irresistible for many. In Clifton Moor the owners of offices have found it impossible to let them. Ironically, many are now being converted into flats.

If the Council has to borrow £7 million to fund the scheme, then debt repayment costs of around £600k a year – for 30 years – will have to be paid. The recommended scheme generates only an estimated £362k in annual rental income and that assumes a high occupancy level.

The Heritage Lottery Fund has now formally turned down a request for a grant so that is one source of funding which has disappeared.

So York residents will be hoping that subsidies from the LEP and similar bodies will offset the burden.

Without them – and a lot of luck – the project could be a burden on generations of York taxpayers for decades to come.

Guildhall future – review meeting scheduled for 19th January

Labour’s plans to spend £9.2 million creating a “Digital Media Centre” (DMC) at the York Guildhall will be up for review on 19^th January

York Guildhall

The Guildhall has been largely unused for 2 years.

The Council first proposed to fund a DMC in July 2012 when “only” £1.4 million was earmarked for a partnership project. The figure has “grown like topsy” since then. The preferred site in 2012 was the Bonding Warehouse.

Labour have been pouring money into the scheme since the summer of 2013 – when they still enjoyed an overall majority on the Council. They failed to secure broad backing for their plans and a bid for Lottery Funding subsequently failed.

A hastily convened Cabinet meeting on 16^th December 2014 agreed to spend another £500,000 on design work plus financial, procurement and legal support.

Up to £100,000 is also to be spent on interim repairs to the Guildhall as it is clear that any new DMC use could not be operational for at least 3 years.

The argument for providing space for digital industries (which are a modest, but expanding, part of the local economy) is that the private sector will not fund offices where there is no guarantee of long term use. Some digital companies expand and contract the amount of space that they use on a regular basis.

Lack of a stable rental income is also the reason why the Council should not plunge further into debt to subsidise what would be a high risk venture.

It was presumably also the reason why no revenue budget for the DMC was published with the Council committee papers in December. “Don’t know” is a poor basis on which to make an investment decision.

The original reports, which sought to forecast demand for this type of casual use, are out of date (DMZ report 2011 for Science City). There is a lot of office space available in the City not least that associated with Higher Education facilities. The workshops, established by the private sector, in partnership with the last Council, at Clifton Moor, often have vacant spaces.

So what now?

The Council should not throw good money after bad. It needs to pause and ensure that other options are fully explored.

The Guildhall complex could be offered on the open market to see what interest is generated. It is a prime site and could accommodate a range of shopping, hotel and office uses.

The historic (listed) Guildhall itself must be properly conserved and accessible to the public. While this might inhibit some potential uses the approach can be similar to that which has seen the Assembly Rooms, De Grey Rooms and (most recently) the Theatre Royal building being successfully taken over by a local conservation charity.

Such an approach would not rule out small office space being provided which is suitable for digital media arts use but the risk, and cost, to Council taxpayers would be reduced.

It is only when these avenues have been explored that the Council will know what viable options are available and an informed choice can then be made.

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It is unfortunate that, at a time when the DMC issue is coming to a head, the Councils involvement in the successful bid to become a UNESCO City of Media Arts is coming into question.

The problems arise from an apparent lack of candor about the amount that the bid, and the subsequent programme of activities, will cost taxpayers. Freedom of information requests have revealed some surprisingly high consultancy fees and opaque appointment processes while two years ago the cost of trips to south east Asia had raised eyebrows.

Time for some public accountability on this issue we think.

Lib Dems challenge £9.2million ‘media hub’ plans

Cllr Andrew Waller

Liberal Democrat councillors say plans to spend £9.2million on a ‘Digital Media Hub’ at York’s Guildhall should be reconsidered.

The proposals were rubber-stamped by the Labour Cabinet last night despite concerns raised at the meeting by Lib Dem Cllr Ian Cuthbertson. Under the plans, City of York Council will spend an initial £500,000 on the project. The overall scheme is due to cost £9.2million with cash coming from council capital funds, borrowing and the council’s ‘Economic Infrastructure Fund’. £1.7million in funding is yet to be found.

The Lib Dems say there is not enough evidence on income to justify the spending and have ‘called-in’ the decision for review. The proposal will now be reconsidered at a cross-party scrutiny meeting in January.

Cllr Andrew Waller, Liberal Democrat Spokesperson for Finance and Performance, commented:

“It is astonishing that the Labour Cabinet has brought forward these proposals without a proper business case which shows how the council hopes to get a return on its investment to justify the spending. There is also currently a £1.7million black hole in Labour’s plans.

“If this plan proceeds, York taxpayers will be asked to underwrite £9million of risk on the project. As well as a huge upfront capital cost the plans would greatly increase the council’s long-term borrowing commitments, a burden which has already increased under Labour.

“The report passed presents no evidence that other options for the Guildhall have been properly considered, that this is the right location for the use being proposed or that the private sector will take on any of the risk of this project.

“At a time when Labour are cutting frontline services for ordinary residents and considering moving to monthly rubbish collections, we cannot support this sort of speculative spending on vanity projects in the city-centre.”
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York Council still dithering – “spend, spend, spend” strategy to continue?

The election of a new Leader doesn’t seem to have brought much realism to the York Council Labour Group.

True new Leader Williams is sacking 2 members of the Cabinet – which will operate with 6 members in future – in a gesture towards financial prudence. At the same time he is trying to “bounce” residents and opposition Councillors into accepting a £9.2 million scheme aimed at providing new offices, a riverside walkway and a restaurant on a site adjacent to the Guildhall site.

Williams slipped out the announcement to the local newspaper 24 hours before the agenda documents for a hastily convened special Cabinet meeting (scheduled to take place on 16^th December) are due to be published.

York Guildhall

It means that residents can’t even view the business case for the project at the moment.

…and there will be minimal time for consultation before the Cabinet signs off £500,000 in expenditure on design work for what it describes as a “digital media centre”.

We’ll reserve comment on the project until the full business case has been published, but if it is as lacking in detail as similar proposals – to invest £8 million in replacing the Waterworld swimming pool and £10 million on a bridge into the York central site – then we will know that the new Council is as financially imprudent, as the Alexander regime was reckless.

York Taxpayers – and their children – could be paying over £2 million a year just servicing the debts on these “vanity” projects.

£30,000 to do a job part time?

Meanwhile the new Labour Leader is likely to be asked to make clear his intentions about how much time he could be expected to spend on York Council work if he were to become the its Leader on Thursday.

A full time £30,000 a year salary has been attached to the post since local government reorganisation in 1997.

The expectation is that the Council Leader will be putting in around 50 hours of work each week,

Some of the holders of the post have worked longer hours. ……but Cllr Williams has, so far, declined to confirm that he will be giving up his (day) job with Yorkshire Water.

Failure to do so would be to short change York Council taxpayers (or Yorkshire Water customers).

So he needs to make his intentions clear before Councillors are ask to endorse his nomination.