Agenda item - Bartholomew Square, Moshimo Lease Alteration and Skylight Development Proposal

Report of the Executive Director, Economy, Environment & Culture

That Committee:

1)        Approves the grant of a new lease for the skylight extension including use of roof space at Bartholomew House.  In principle terms are summarised in Part 2 of this report.

2)        Approves the extension of the ground floor demise of the existing restaurant by way of a lease surrender and re-grant, to enable the expansion of the existing restaurant.  In principle terms are summarised in Part 2 of this report.

3)        Delegates authority to the Executive Director of Economy, Environment & Culture, Assistant Director Property & Design and Head of Legal Services to approve detailed lease terms.

22.1      The Committee considered a report of the Executive Director, Economy, Environment & Culture that requested approval of the proposed extension of the lease demise for the ground floor Moshimo restaurant that would enable the implementation of planning permission already granted under reference BH2016/03008. The report also requested approval of terms for the proposed Skylight extension; for a lease of the airspace of Bartholomew Square and roof space at Bartholomew House to enable the development of a new restaurant as proposed under the consented planning permission BH2016/03008.

22.2      Councillor Peltzer Dunn noted that professional advice and been sought on the proposal and rejected although the report did detail the grounds for that rejection. Referring to paragraph 3.9 of the report, Councillor Peltzer Dunn stated that it was unclear precisely how many jobs would be created during and after the construction, and that whilst the council would generate an increased business rate income, that would also mean a higher level of compensation should the council choose to re-acquire the site. Councillor Peltzer Dunn noted that Bartholomew Square was occupied by ordinary modern buildings that typically had a limited life and therefore, if the council decided to undertake redevelopment of the site, it would be hamstrung by the Moshimo development, should it go ahead. Councillor Peltzer Dunn stated that he believed paragraph 3.5 to be a fair assessment and he was surprised that expert advice had been rejected. Councillor Peltzer Dunn added that there was an inconsistency in the council’s approach when compared to Item 25 of the meeting’s agenda. Councillor Peltzer Dunn asked whether an expected capital value was asked for on the site. Councillor Peltzer Dunn surmised that he believed that Option 1 was not sensible, Option 3 left the council hamstrung and therefore, Option 2 was the reasonable course.

22.3      The Executive Director, Economy, Environment & Culture provided reassurance the officers had not gone against the professional advice obtained and they had been included throughout the negotiations. The professional advice on purely commercial terms was that the council may not want to lease the roof space at Bartholomew House. However, further advice had been given as outlined in the Part Two report on the wider benefits to the city, the council’s role in the city as asset owners and wider social and economic objectives and terms that might reflect that.

22.4      The Senior Estates Surveyor clarified that advice had not been sought on the developments impact on the council’s existing interests Bartholomew Square as that would be a very broad exercise and it would be difficult to assign value.

22.5      Councillor Bell stated that he was initially encouraged by the development however; he had increasing concerns about the liability to the council in terms of fire safety and fire escapes and security. Councillor Bell added that he did not see anything in the report in terms of cost-recovery for the increased measures the council would have to undertake. Councillor Bell noted his concern that the council would be liable to pay compensation of twice the rateable value if it wished to receive the site back at the end of the lease and the restriction the development would place on the opportunity to redevelop Bartholomew Square.

22.6      The Senior Estates Surveyor clarified that the additional costs accrued by the council in relation to the development, specifically fire safety plans and additional security would be met by the tenant. In addition, agreement had been made that the tenants would provide contribution to the repair and upkeep of Bartholomew House. On the issue of compensation at the end of the lease, this was a statutory obligation afforded to businesses under the Landlord & Tenant Act.

22.7      Councillor Wealls asked for clarification on whether the recommendations were steered by the administration or was an assessment and proposal put forward by officers adding that he would be interested to hear the view of the administration on the development proposal.

22.8      The Executive Lead, Strategy Governance & Law clarified that the protocol for reports was that the recommendations were consulted with Lead Members but ultimately, the report and recommendations therein were in the name of and put forward by, the relevant Executive Director.

22.9      Councillor Yates stated that the council had to consider the wider economic, regeneration and tourism benefits to the development and not commercial interest alone. Councillor Yates added that the proposals put forward were reached by balancing a number of factors with consideration of the medium term outlook for Bartholomew Square. Councillor Yates stated that overall, the proposals provided social, economic and tourism opportunities and made best use of the current space.

22.10    Councillor Peltzer Dunn asked for clarification that the terms negotiated were in accordance with Section 123 of the Local Government Act 1972.

22.11   The Executive Director, Economy, Environment & Culture confirmed that was the case and that was set out in paragraph 3.2 of the Part Two report.

22.12   Councillor Peltzer Dunn stated that in his view, an agent demonstrating prudential commercial property management would not have rejected the initial advice and there appeared an attempt to justify the scheme on other grounds. Councillor Peltzer Dunn stated that there may be short-term benefits to the development but this consideration was outweighed by the significant long-term financial risk to the council and he would not be supporting the proposals.

22.13   RESOLVED- That Committee:

1)        Approves the grant of a new lease for the skylight extension including use of roof space at Bartholomew House.  In principle terms are summarised in Part 2 of this report.

2)        Approves the extension of the ground floor demise of the existing restaurant by way of a lease surrender and re-grant, to enable the expansion of the existing restaurant.  In principle terms are summarised in Part 2 of this report.

3)        Delegates authority to the Executive Director of Economy, Environment & Culture, Assistant Director Property & Design and Head of Legal Services to approve detailed lease terms.