Risks, delays & cost increases as York Council struggles to manage its commercial portfolio

York Guildhall

Yesterday’s announcement that more than £15 million of infrastructure schemes had been secured in North Yorkshire over the next 18 months – with £300,000 of funding going towards the York Guildhall offices project – will have been welcomed by many.

The money comes from the Government’s “Getting Building Fund” which “aims to boost economic recovery from Covid-19”.

According to a Council spokesman, the funding will now be used “for internal fit-out works” on the business club which will occupy much of the building.

That will come as a surprise to those who thought that the agreed £20.18 million budget included all costs.  Indeed, the option approved by the Council in February 2019, specifically identified £300,000 for “fixtures, fittings and furniture”.

Council report 2019. Option 1 was agreed

It seems that the only change is that this expenditure will now be funded from general taxation.

Even with this subsidy, and assuming that all offices and the on site restaurant, are all occupied, York Council taxpayers still face an annual bill of over £500,000.

An Executive meeting which took place last week was told in an update on the Guildhall project that “additional delays have meant that it is presently considered that these additional costs cannot be contained within the agreed contingency”.

The scale of the over expenditure was not revealed.

The Guildhall is not the only commercial portfolio project to come under scrutiny.

Some independent commentators are sceptical about the timing of the Councils £2.8 million acquisition of 25/27 Coney Street. Rent levels are now dropping and with them property valuations in some high streets. Coney Street is struggling more than most.

Meanwhile large numbers of Council owned properties remain empty and unused.

These include Ashbank (empty for 8 years), 29 Castlegate (3 years), Oakhaven (4 years) and Willow House (4 years 6 months).

Willow House stands abandoned with no sign of redevelopment work starting.

We now understand that Willow House – which was advertised for sale with Sanderson Weatherall – has been withdrawn from the market. The Council turned down a £3 million offer for the prime site shortly after it became available.

None of these properties are accommodating anyone.

All are incurring maintenance and security costs for taxpayers, while at the same time attracting no Business Rates or rent income.

At a time when local authorities are on their knees financially, poor resource management is  a matter of concern.

Council aiming to clear garden waste and recycling collection backlog today (Saturday)

Litter Bin Sticker GIF | Gfycat

The Council says that it will work today to try to clear the backlog of waste collection in the City.

The backlog has developed due to “social distancing” issues while garden waste volumes have been very high following the recent suspension of collections.

The Council web site says, “

Latest waste service update

Friday 15 May

All scheduled household waste collections have been made, including outstanding collections from Thursday 21 May.

We were unable to collect recycling from a number of areas due to operational restrictions to do with Covid-19.

  • Strensall
  • New Earswick
  • Haxby
  • Wigginton
  • Clifton
  • Rawcliffe
  • Nether Poppleton
  • Upper Poppleton
  • Guildhall

This recycling  will be collected on Saturday 23 May. Please present your containers for collection by 7.00am.

We were unable to collect garden waste from a number of areas due to the large amount to be collected and capacity issues.

  • Acomb
  • Poppleton
  • Clifton Without
  • Rawcliffe

We’ll attempt to return for these collections as follows:

  • Poppleton on the evening of Friday 22 May or Saturday 23 May
  • Acomb, Clifton Without and Rawcliffe on Saturday 23 May

Please present your containers for collection by 7.00am.

All outstanding garden waste from Thursday 21 May has been collected”.

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 refurbishment runs into difficulties

A report to a meeting taking place next week highlights several issues which could delay the refurbishment of the Guildhall.

The Guildhall project has a chequered history with plans for the use of the building conceived 10 years ago beset by delays, indecision and escalating costs. Even after the Council made the controversial (and expensive) decision to re purpose the use of the Listed building as a “business club” & restaurant, the first building contract had to be abandoned.

More recently, new contractors have been working on site. They have been using the river for access. Perhaps not surprisingly the recent floods have impeded operations but worryingly the report reveals several other issues which have caused delays.

The report concludes that overall the project is now regarded as “at risk”.

The biggest risk to taxpayers remains the end use of the site. The Council is borrowing heavily to fund the project and any delay could affect its – already marginal – viability. There is a real danger that the Guildhall project will go the way of the Community Stadium for which there is still no agreed opening date (it was to have been completed last summer).

It is further evidence that the York Council has exceeded its contract management capability.

Hopefully they will now pull back from taking on  any further projects (like Castle/Piccadilly) and concentrate available resources on finishing what they have already started.

River Ouse put to work in Guildhall restoration

The York Council was criticised for allowing the Guildhall to remain empty for 8 years adding to renovation costs

The river Ouse will be put to work this week as deliveries of infrastructure and materials make their way to the Guildhall as part of the restoration works. 

Barges will deliver all the steelwork for the construction and the precast concrete floor slabs that would be near impossible to deliver by road to the city centre location. The use of the river significantly reduces road deliveries into the heart of the city.

These initial deliveries will install the pontoons and begin the erection of the onsite tower crane, enabling regular deliveries to take place from the River. Shortly after, barges will then remove the demolition spoil to a waste re-processing facility in Goole, taking more skip lorries off the city’s road network.

The barges and pontoons carrying the materials replays the route taken by barges in the medieval period when the minster stone was brought to York by boat.  They will travel between Queen’s Staith and Guildhall, arriving near the historic entrance to the city known as Common Hall Lane; the original wharf through which stone for the minster was delivered before travelling up Stonegate to the site of the city’s landmark.

The river Ouse was for centuries the main highway of trade for the city and this week residents will see it back in action to aid the restoration of the city’s Guildhall.

The £20 million redevelopment of the Guildhall will see a business club installed  in the building.  There are concerns that taxpayers will face an ongoing burden following the withdrawal of commercial backers.

Local suppliers are invited to join in the Guildhall’s historic renovation.

Guildhall

City of York Council are hosting a Local Supplier Event in partnership with VINCI Construction UK to invite the city’s local supply chain to take part in the ongoing work to restore the Guildhall.

The £20 million Guildhall project will see a “business club” established in the building. The viability of the project has been strongly criticised by some taxpayers

The Guildhall is one of the city’s most prestigious and historically significant buildings. The complex contains a collection of Grade I, II* and II listed buildings built around the 15th century hall and riverside meeting room. The site is undergoing a full restoration and redevelopment to secure its long-term future, offering high quality office space, community use, a cafe, a new riverside restaurant and better access for local residents.

The event will take place on Wednesday 8 January 2020 at West Offices, Station Rise, York, YO1 6GA.

At this event York’s local businesses will be provided with information on the work packages VINCI Construction UK have available at the Guildhall. This invitation extends to businesses in York who may or may not have worked with the council before.

Chris Winspear, Regional Director at VINCI Construction UK, said: 

“One of the key contributing factors in the success of our business is securing the support and services of a high-quality, skilled supply chain of businesses and specialist trades within the local areas in which we work. We look forward to meeting as many local suppliers as possible at this dedicated event, to learn how the tradespeople of York can support the regeneration of the Guildhall.”

VINCI Construction UK were awarded the contract to restore and renovate of the city’s Guildhall which began in September 2019. As part of their procurement submission, VINCI outlined their ambition to engage with the local supply chain in York to advertise packages of work.

This work may include:

•           Painting and Decorating

•           Carpentry

•           Joinery

•           Cosmetic Repairs

•           Timber flooring/doors and other repairs

•           Stone Mason

•           Pavement Lighting

•           Roofing (single ply, slate tiling, zinc, glazed and lead)

•           Windows and Doors (Aluminium)

This event will allow City of York and VINCI to inform and engage local businesses in the work that has been completed so far at the Guildhall and what work is required moving forward. Details of packages, values and timescales will be provide at the event on Wednesday 8th January 2020.

To register attendance or find out more please contact Chloe Wilcox chloe.wilcox@york.gov.uk or call 01904 551307. Capacity is limited and therefore, attendance is restricted to one person per organisation.

York Council marketing restaurant unit at Guildhall

The Council have let a contract worth £16,000 to “market” the restaurant unit which it hopes to construct at the Guildhall.

The contract has been awarded to Reesdenton Ltd

Delays in deciding the future of the Guildhall have left the building in poor condition

The Council had earlier in the year let a £15.4 million contract for building works at the Guildhall  with  VINCI CONSTRUCTION UK LTD.

A new restaurant has recently been announced which will use the adjacent old Post Office building on Lendal. Jamie Oliver’s nearby restaurant has already closed

The total £20 million Guildhall redevelopment scheme has been criticised by residents who are concerned about the long term burden likely to be placed on taxpayers.

Delays in deciding the future of the building have resulted in escalating renovation costs.

Guildhall contract – further details

York Guildhall

The cost of the redevelopment contract for the Guildhall has been confirmed as £15.4 million. This covers only construction work.

To this must be added supervision, legal and fitting out expenses.

The contract was awarded to Vinci Construction on 16th September 2019.

It is expected that the total will be around £20 million but with substantial annual running costs.

The main use will be as a serviced office location although some Council use will be retained.

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.

£20 million contract signed for the conversion of the Guildhall into a business club

Almost comatose leadership has allowed the York Council to slip into a £20.2 million project which will see the Guildhall and neighbouring development site converted into a business club and restaurant.

Weed infested, stonework stained, windows caked with dirt. The neglect of the Guildhall since 2012

Neglect of the Listed building since 2012 means that some of the money will be needed to underpin parts of the old building while an new roof will also be necessary.

On even the most optimistic of income estimates, York Council taxpayers will be left with an annual bill of £574,000. Most of this is interest charges on additional borrowings of £16 million.

The York Councils PR department has been busy working on a, very awkward looking, video seeking to justify the £20 million scheme. Their time might have been better spent updating residents on what is being done to address failings with the bin emptying service, overgrown paths etc.

There have been numerous occasions over the last 8 years where decisive leadership interventions could have reduced the risk to taxpayers. (click)

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2019

So now we move on to managing the contract and subsequently letting the newly created space.

The Council has committed itself to a £20 million cost envelope and an opening date in “spring 2021”.

The Councils record on major capital projects has not been good in recent years. The £42 million Community Stadium costs escalated from an original plan to invest £16 million and, 3 years after its target completion date, it is still not open.

Taxpayers will be monitoring progress on the Guildhall project with anxiety. Even after completion the authority will be faced with the task of renting out the new office space for £595,000 per annum. Failure to do so would mean an increased subsidy from taxpayers.

 Ironically the Council may then find that it is in competition with itself as some of he office space being built at the Community Stadium site has still not found an occupier.