Agenda item

Report of the Leader of the Council/Portfolio Holder for Regeneration and Growth

The Board considered the report of the Leader of the Council/Portfolio Holder for Regeneration and Growth regarding the proposed development at Crocus Place of Grade A Offices supporting the regeneration of the Southern Gateway.

The Board heard that there is a shortage of Grade A office space within the city, and this development will bring forward plans to address that. It is hoped that developers can submit plans in later March starting the planning application process.

RESOLVED to:

(1)  Commita fundingenvelopeas identifiedin exemptAppendixB fromwithinthecapital programmeand tofurtherprogresstheproposeddevelopmentofGradeA officespace accommodation inNottingham;

(2)  Continue with theadoptedapproach,forprogressingdesigndevelopment,asoutlinedin theLeaders KeyDecision 3309dated30October2018,including theextensionofadvisors contractsthroughthePerfect CircleframeworkbeyondRIBA Stage4, thusallowingthe project to moveforward with due diligence.

(3)  Delegate authority to the Corporate Director for Development and Growth, in consultation with the Portfolio Holder for Regeneration and Growth, to enter into contracts for both design development and construction, subject to expenditure being within the Project Financial Model and subject to the Business Case being signed off by the project appraisal group (PAG).

(4)  Delegate authority to the Director for Strategic Assets & Property, in consultation with the Corporate Director for Development and Growth and the Portfolio Holder for Regeneration and Growth, to negotiate and agree an appropriate pre-let commercial lease(s) for the

proposed office development that meets the requirements within the Project Financial Model and in advance of the Business Case being signed off.

(5)  Ensure that the proposed office development, once completed and occupied in accordance with the approvedbusinesscase,sits withintheProperty Trading AccountPortfoliooftheCounciland be managedundertheDirectorforStrategicAssets &Property,togetherwithall incomeand budgetsfor the propertybeingallocatedto the PropertyTradingAccountPortfolio.

(6)  Ensure that the proposed office development becomes a project within the Strategic Asset Management (SAM) Big Ticket programme and that the SAM Big Ticket income targets are re-profiled accordingly as detailed within the exempt appendices A & B;

Reasons for Decision

Thefeasibilityexerciseforthe SouthsideGradeA Office Development has been developedto amaturestageanda dateof22March2019is beingtargetedforthe submission of aPlanningApplication.

Advancedtalkswithpotential tenants are progressingwelland potentialspacerequirements could see leasesbeing agreedfor substantial,if not allthefloor space within thebuilding.

Furthercontracts, for construction, project managementand designwillneed to be entered into to take the project beyond the currentlyapproved RIBAStage4.

Thecurrent feasibilitystagecostestimateshavebeenincludedwithintheProjectFinancial Modelandthesedetails,togetherwiththeprojectedincometothePropertyTrading Account and SAM BigTicketare set out within the exempt AppendixA and B

Other Options Considered

Donothing– tonotcommitfurtherfundingfortheSouthsideOfficeDevelopment,at this stage,could leadto missedopportunitieswithleasingthebuildingand impacton the Council’s income and so this option was rejected.

Sitedisposal– thiswouldgeneratea capitalreceipt forthelandvaluebut wouldnot maximisethepotentialvaluefromthesite. This option was rejected because theinvestmentvalueand revenueincome generated through completingthe development is significantlygreater.

Thedo nothingand sitedisposaloptionshavebeenrejectedas theCouncilis in negotiation with potential tenantsand the Project Financial Model indicates ahealthyyield.