Agenda item - Disposal of 43 Belmont Street and Adjacent Land

Report of the Executive Director for Economy, Environment & Culture

RESOLVED:

(i)            That the committee agrees in principle to the disposal of Belmont  Street Annexe and 26 and 27 St Peter’s Street.

(ii)          That prior to the final decision, this committee receives a report providing further information on the social value impact of displacing current occupiers and considers mitigating measures, such as a rental cap, that may be taken to ensure alternative accommodation at New England House is affordable.

36.1    The Committee considered the report of the Executive Director Economy, Environment and Culture which sought approval for the disposal of Belmont Street Annexe and adjacent land, to provide a capital receipt for reinvestment in the Council’s urban investment portfolio.

36.2    Councillor Wealls noted the views of the tenants and their appetite to moving to New England House expressed in the report, but in an email received by councillors today the tenants seemed concerned about the move. The Assistant Director Property & Design said that the Council had engaged with the tenants and understood their needs. The tenants had known for some time that the building would be redeveloped, and had benefited from lower rents. The Council wanted to make sure that this kind of work was kept within the city, and space within New England House had been made available to accommodate those at Belmont Street.

36.3    Councillor Wealls said the report stated that there were only 4 tenants, but he understood that there were 20. The Assistant Director Property & Design said there were four leases, and two tenants who had a lease employed freelance illustrators, so there were around 25 people working in the building.

36.4    The Chair noted that there was a Green Group amendment and asked Councillor Gibson to propose that amendment.

36.5    Councillor Gibson said that two bids had been made for the property, and one of the factors which should have been considered when deciding on the successful bid was social value. There was no reference to social value in the report, and so the amendment called for further information on the social impact of moving the current occupiers. He formally proposed the following amendment:

That the following recommendations be added to the report with further amendments as shown in italics, and renumbering as required:

2.1 That the committee agrees in principle to the disposal of Belmont Street Annexe and 26 and 27 St Peter’s Street; That the committee authorises the freehold disposal of Belmont Street Annexe and 26 and 27 St Peter’s Street to the adjacent owner and agrees to the surrender of rights to use the adjacent garage,

2.2 Prior to the final decision, that this committee receives a report providing further information on the social value impact of displacing current occupiers and considers mitigating measures, such as a rental cap, that may be taken to ensure alternative accommodation at New England House is affordable.

2.2 That the committee authorises the Executive Director of Economy, Environment and Culture, Assistant Director Property & Design and Executive Lead Strategy, Governance and Law to agree terms and take any necessary steps to facilitate the recommendation at 2.1

2.3 That the committee authorises the retention of the net capital receipt to be used with capital receipts from previous disposals approved by Policy, Resources & Growth committee, to add to the “investment capital pot” that is being built up to acquire commercial investment property or properties, in support of the asset investment rebalancing strategy in accordance with the council’s AMP and budget strategy.

36.6    Councillor Mac Cafferty seconded the amendment.

36.7    Councillor Bell referred to the amendment and said that everyone understood the need for social value to be considered. However, this was a commercial rent and there was nothing in the report to indicate that the rent at New England House was not affordable. He noted that there were two tenants at New England House who were only using it for storage and that they would be relocated in order to provide space for the tenants at Belmont Street, and asked what the current situation was with them. The Executive Director Economy, Environment and Culture said they currently still using New England House, but if Belmont Street were sold the purchaser had said that the current tenants could remain for a year and so there would be time for the others to be relocated.

36.8    Councillor Wealls asked officers to give the difference in cost per square foot of the two buildings. The Assistant Director Property & Design said it should be noted that the two properties were very different and so it would be difficult to make a direct comparison. The space at New England House was 2670 square foot, with a rent of £9.55 per square foot and so the rent per annum would be £25,499, and there would be a service charge of £11,000 giving a total annual charge of £36,499. Belmont Street was 4767 square feet, but 1200 of that was storage, so the size was 3567 square feet, the rent was £4.90 pre square foot and so the annual rent was £22,850 and tenants paid for their own repairs. However, if the property were not sold the Authority would have to look at market rents, and the rent would increase to £6.69 per annum giving an annual rent of £31,000, and would have to do some work to the building to bring it up to standard and the tenants would be charged for that with a service charge of £26,000, and so the overall cost would increase to £57,000.

36.9    The Committee agreed to accept the proposed amendment.

36.10  The Committee noted the information contained within Part Two Item 43.

36.11  RESOLVED:

(i)            That the committee agrees in principle to the disposal of Belmont  Street Annexe and 26 and 27 St Peter’s Street.

(ii)          That prior to the final decision, this committee receives a report providing further information on the social value impact of displacing current occupiers and considers mitigating measures, such as a rental cap, that may be taken to ensure alternative accommodation at New England House is affordable.