Agenda item

The purpose of this report is to explain the current condition of the Bognor Regis Arcade upper floors, the barriers that are preventing its reuse, and seek members consent to refurbish the upper floors into private rented apartments using a potential grant from the Brown Field Land Release Fund and a £7,362,747 investment through the capital programme.

The Regeneration Consultant was invited by the Chair to present the report to members where he explained that the council acquired the arcade in November 2017 for investment and regeneration purposes. Since then, extensive work had been completed to refurbish the ground floor, to get it to the point where it is now fully let. He stated it had now become a vibrant retail, food and beverage experience now. During this time the upper floors have been maintained in waiting as the next project to go ahead. A number of feasibilities had been put together, unfortunately none of which had been deemed as financially viable. At the end of 2022 the potential for funding from the Brown Field Release Land Fund was highlighted and members at its February 2023 meeting agreed to submit a bid. Extensive design, feasibility and costing works had be undertaken which had been included with the report. The reasons rented accommodation was chosen by officers at the preferred option was due to the rental return. He explained that the scheme put together at a total delivery cost of just under £8 million would deliver 35 residential units for rent, it’s considered a prime location for rental accommodation and good links for public transport. In accordance with the decision made in February 2023 a bid had been submitted to the BFRL for the maximum funding available to the council of £628,000. Which if successful would bring the net cost down to £7.3 million, of which would need to be borrowed by the council as an investment to refurbish the building, the cost of that borrowing would be £428,000. This would generate a net rental income from the residential units would be £362,000. Due to the council currently paying business rates on the empty officers on the upper floor at a cost of £29,000 pa. This would mean the net revenue cost to the council of £28,600. He outlined the reasons as to why this would be most financially viable option opposed to just leaving the building in its current state. He also confirmed that work was being completed on the full costing of leaving the building in its current state and this would be reported to members at the Policy and Finance Meeting due to be held on 11 July 2023.

          In summing up he outlined for members that the decision they were being asked to make today were wholly based upon a successful bid application and to explain why members were being asked to make this decision at this stage was due to the 3-week timeframe of acceptance once a successful bid is confirmed. As well as the recommendations requiring approval from Policy and Finance Committee and Full Council, this was the earliest opportunity to ensure the decisions hit each meeting in the correct and most timely manner. He confirmed that One Public Estate have been flexible in a bid to assist the council with its decision-making process by holding back the confirmation of the bid. Finally, he confirmed that the council would require a delivery vehicle in order to deliver the scheme and this is addressed in recommendation 4.  Savills have also been asked to complete a valuation appraisal of the building in its current state, this work should be completed and ready to share with members at the Policy & Finance Committee in July.

The Chair stated that since the council took on the arcade in 2017, it had been much improved and there was nothing wrong with taking on asset and improving it. He advised members that he believed what we had been presented at the meeting would be an improvement and the council should do everything it can to ensure this asset was looked after.

Upon invitation of the Chair the Leader of the Opposition, Councillor Gunner, stated he disagreed with the Chair, he explained that if the proposal was accepted by the committee, it would mean that the council would spend somewhere in the region of £10 million. He outlined his main concern was that spending £7 million with no return was not a good decision to make and he advised members that they needed to find a way for the asset to pay for itself. Councillor Gunner then proposed an amendment which was seconded by Councillor Cooper;

That the Committee

·       Defers this decision pending further information.

·       Asks officers to complete the exploratory work on a sale of the Bognor Regis Arcade as outlined in section 6 of this report - both with and without planning permission - and report their findings back to this committee to consider alongside the redevelopment option of the upper floors with the Brownfield Land Release Fund.

·       Asks officers to consider the feasibility of the option of wholesale redevelopment of the entire site whilst retaining the northern facade, and to report the outcome of their work to this committee to consider alongside other options. And;

·       Asks officers to outline the full costs of the "do nothing" option on the Arcade for comparison, for the committee to consider alongside other options.

He continued to express his concern at not having all the information clearly laid out in front of members for their full consideration, to address the 3-week timescale, the Chair would have the power to call an urgent meeting of the committee within that timeframe in order for officers to come back with the information that is needed for members to make a full and considered decision.

The Legal Services Manager advised the Chair that the amendment had been presented too early as the recommendations within the report had not yet been proposed and seconded, therefore the was no proposal to amend. The Chair then requested a small amendment be made to recommendation 2, after further advice from the Legal Services Manager the agreed additions for recommendation 2 were ‘and with the Chair of the Economy Committee’. This addition was seconded by Councillor Walsh.

ii.   It delegates authority to the Chief Executive in consultation with the Section 151 Officer and the Chair of the Economy Committee to deliver the project including selection of the appropriate delivery vehicle, subject regular updates to the Economy Committee.

The recommendations were then proposed by Councillor Stanley and seconded by Councillor Northeast.

The Chair then returned back to the amendment proposed by Councillor Gunner and seconded by Councillor Cooper. As there were no comments at this point on the amendment from the committee the Chair invited the Regeneration Consultant to give members his advice where he outlined in detail the consequences and risks of accepting the amendment as proposed by Councillors Gunner and Cooper.

The Vice-Chair then explained his thoughts behind not accepting a ‘do nothing approach’ and why he believed it was not a viable option for consideration, he then moved on to the demolition point where he advised that this option would be not only costly and take years to complete it would also be a loss to the area. In summing up he stated that the council needed to get to grips with the wrong decision made in 2019 and unfortunately that would result in a cost and that was today’s cost that was to be felt.

The Leader of the Council was then invited to speak where he stated that he believed the decision to purchase the arcade was possibly the best decision made by the administration in 2015. He stated that the offering available to the town now was far greater than what was before. He went on to say that the opportunity to retain and preserve listed buildings should be done where possible and therefore he could not support the amendment as it was currently laid out.

Support for not accepting the amendment from other committee members was voiced, it was stated that the arcade was a central and well-known community asset. The Chair then invited the proposer and seconder of the amendment for their final comments where they urged members to consider the gravity of the decision before them. Councillor Gunner disagreed with the  advice given by the officer in relation to making the decision without all of the information before them. Turning to vote the amendment was declared LOST. 

          The substantive recommendations were then put to the vote and;

The Committee

          RESOLVED that;

i.    It agrees to the refurbishment of the Bognor Regis Arcade upper floors to provide private rented apartments, at an overall project cost of £7,991,069, subject to the formal offer from One Public Estate of a Brown Field Land Release Fund grant and subject to the addition to the capital programme of that sum by the Policy and Finance Committee.

ii.  It delegates authority to the Chief Executive in consultation with the Section 151 Officer and the Chair of the Economy Committeeto deliver the project including selection of the appropriate delivery vehicle, subject to regular updates to the Economy Committee.

The Committee

          RECOMMENDS TO POLICY AND FINANCE COMMIITTEE that;

iii.            the project cost of £7,991,069 (including the Brownfield Land Release Fund grant) be added to the capital programme.

the Council accept the BLRF fund grant if it is offered.