A report to a Council meeting next week offers a limited insight into the York Councils property dealings. It comes at an opportune time with various other Councils having been badly burnt recent by injudicious investments in land and property. Croydon and the Cambridgeshire County Council are both heading for the local government equivalent of bankruptcy.
Against that background taxpayers might would hope for York Councillors to now to adopt a more measured approach to investment. The commercial property market is likely – in the wake of the pandemic – to remain depressed for some time. It is not a good time to sell assets.
Instead we find a plan to borrow an additional £4 million on top of the £384 million already committed. That is a debt of nearly £2000 for every man, woman, and child in the City. 20% of tax payments will have to go towards paying interest charges.
This has remained empty since occupants were moved out – prematurely as it turned out – in 2016. The sale for a new care home to Ashley House fell through in early 2017. No attempt was made to find even a temporary use for the site which occupies a prime location near to local amenities and good transport links. Maintenance expenditure on the empty building continued to fall on taxpayers. Now the council is proposing an “off-market” sale to regional care home operator, Burlington Care Limited. The size of the offer has not been revealed. Ironically, the officer report admits “An open market exercise may be impacted by COVID 19 suppressing property values. The council budget has been significantly impacted by COVID and there is a need to realise value from vacant assets in the near future”
Another former care home, which has been empty for nearly 5 years, is Willow House. It is on a prime site located next to the city walls. The site was nearly sold for student housing in 2017 but ran into planning difficulties. Other offers were ignored by the Council and an offer from a company which utilises empty residential accommodation to accommodate the homeless in return for caretaking and security duties, was spurned. Now it seems that the Council intends to build 40 apartments on the site and will probably use its own “Shape” development company to manage the investment. The site is worth more than £2.3 million.
An elderly person’s home empty since early 2018. No use has been found for the site. It is to be considered for use by “self-builders” but if that is not successful it will be sold on the open market.
Moor Lane car park
This is the site currently in use as a flu vaccination centre. It has mostly been empty for the last 4 years. There has been a lot of developer interest in building on the site. The Council has decided not to include it in the Council house building programme and may therefore sell it on. On the open market – even in these depressed times – it is likely to be worth less per acre than the Willow House site.
The sale of this home to private care home operator “Yorkare” has stalled. COVID is blamed
& the strange ones
Generally, taxpayers have benefited in the long run when the Council has bought land and buildings in the City. There have been exceptions. For example, when the authority impulsively sold the site now occupied by the Hiscox insurance company on Peasholme Green. Had it included a betterment clause in the sale then taxpayers rather than shareholders would have benefited from the subsequent increase in land values.
It looks increasingly likely that the purchase of good quality agricultural land near Knapton, with the intention of planting trees on it, may go into the same ill-considered category. When wooded, the area will not have a resale option but will involve an ongoing maintenance liability. 180 acres will support 50,000 broadleaf trees making a, carbon sequestration, contribution to the £1.2 trillion additional trees which would be required on the planet to reverse climate change! The £1 million project is also hailed as a major new passive leisure option for residents although, in truth, it is poorly positioned to make up for the open space lost in recent years to building operations in the City’s poorer areas.
The major issue remains the lack of an environmental impact assessment. The land currently contributes to the local food supply chain. If the land is lost to food production, imports may increase resulting in longer transport chains and – critically – higher carbon emission levels. Storing carbon – like burying nuclear waste – simply pushes a problem onto the next generation.
The key to improving the environment is to reduce carbon emissions. Even the government seemed to recognise this, with its initiative yesterday aimed at replacing gas boilers with heat pumps and other benign energy sources.
The Eco centre is the small business facility at Clifton Moor which was promoted by the Council some 15 years ago. It was provided via a “design and build” contract on Council owned land.
Occupation levels have been encouraging although usually reflecting the general state of the economy. There are 63 individual units there. The Council currently leases back the centre and has managed the facility since 2015. The rent paid by tenant contributions is claimed to offset the current running costs.
Now officials are recommending that the Council spends £3.9 million buying out the interests of the owner of the building. The Council is not revealing how its business case figures stack up, but it claims that it may generate additional income by fitting PV (solar) panels on the roof.
Judged against the current economic volatility this looks like a high-risk strategy.
The plans for the non-listed section of the Guildhall have been an economic “basket case” for several years. The opportunity to sell part of the building for residential, retail or hotel use represented the least risk option and should have been pursued in 2012 when the building first became empty.
Instead, against a background of neglect and rapidly increasing repair costs, the Council opted for a risky plan to establish a hi tech small business start-up centre. The overall viability of the plan depended on letting part of the space as a high-end restaurant. The Council said it would run the unit itself.
£20 million of taxpayers money is at risk.
Now York University, via its Science City offshoot, has apparently offered to lease the business centre space at the Guildhall. Some civic and community use would continue. Science City has a generally good reputation and the offer to get the Council off its, self-inflicted, hook would seem to be an attractive one.
It is unclear how the success of the new enterprise would be judged. It is even less clear how the demand for City centre “incubator” space will mature in the wake of the pandemic.
The restaurant shell building will remain empty awaiting a resurgence of the local visitor economy.
The Council currently has a 9.2% minority stake in York Science Park Ltd. which it would sell.
The lease deal would be “off market” raising once again accusations of a “family and friends” approach to commercial dealings.
“Town and Gown” relations are already stressed in the wake of the pandemic and a perceived lack of accessibility for residents and visitors to the historic Kings Manor buildings in the City centre, which are currently occupied by the University.
The Council has pointedly not published updated business case figures which reflect the new offer being made as well as ongoing concerns about the cost of the renovation project..
On what must be one of the most risky approaches to the financial management of Council owned property, the Risk Management assessment included in the report amounts to only 7 lines of text and concentrates entirely on the planned bid for the Eco centre.
The report also reviews the future of the Castle Gateway and York Central projects. The former is currently “paused”. Given the parlous state of the councils finances the authority would be wise to freeze expenditure on this plan leaving things as they are for a while at least.
Opportunities may arise over the next few years to sell the Castle Mills and 17/21 Piccadilly sites as the economy improves
The key is to remain flexible if taxpayers interests are to be protected.
In the meantime parking revenue remains vital for the Councils budget while accessible car parking at Castle and (potentially) Castle Mills (surface level) and 17/21 Piccadilly could be an important part of the attempt to revive the City economy.
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 budgetincluded 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.
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.
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.
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 centreand, 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.
A report to a meeting taking place next week highlights several issues which could delay the refurbishment of the Guildhall.
TheGuildhall 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.
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 clubinstalled in the building. There are concerns that taxpayers will face an ongoing burden following the withdrawal of commercial backers.
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
• 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 firstname.lastname@example.org or call 01904 551307. Capacity is limited and therefore, attendance is restricted to one person per organisation.