Decision details

(ii) To approve the proposed changes to the existing lease and

  recommendations set out in Confidential Appendix 1.

(ii) To delegate authority to the Chief Executive following consultation

  with the Leader and Executive Director of Growth and Prosperity to

  finalise the detailed terms of the agreements required and all other

  ancillary legal documentation to support the delivery of the

  redevelopment of the area.

As freehold landowner, the Council wishes to support the delivery of the

redevelopment of West Quay Retail Park (Plan attached at Appendix 2) over a period of time for a mix of uses consistent with its ambitions for the good growth of the city. The lease currently restricts opportunities for redevelopment and therefore needs to be altered to allow the leaseholder to develop schemes other than retail. Due to the considerable size of the area in question and the staggered expiries of the various occupational leases, comprehensive development in one phase poses significant challenges to delivery, so the leaseholder, Aviva has proposed an indicative redevelopment programme over a ten-year period in a number of phases.

Allowing changes to the lease as recommended in Appendix 1 acknowledges

the impacts of macroeconomic challenges faced by construction projects over

the past few years, gives the leaseholder certainty that it can undertake

Development over a period of time, but also allows the Council to continue to

actively monitor and support progress towards delivery of redevelopment in this area. The arrangements envisage delivery of an initial phase commencing in the next 12/24 months. The S.123 report that forms Appendix 3 suggests that the proposals represent better value to the Council than the existing status quo.

Do nothing. The existing buildings are nearing the end of their economic

life and require investment, however the market for “retail sheds” is weak

at present and many of the operators who would occupy are in a poor

financial state. There is therefore a risk that as leases expire units will

remain vacant impacting on the level of the Council’s rent share which will

reduce and also adding to the general decline of the area. Aviva have

also indicated that without this restructure they would be unable to justify

further investment in the site and/or buildings which would result in further

decline.

Take a surrender of the existing Headlease. This option would entail

the Council acquiring the interest off Aviva. This option would involve a

significant capital outlay and increase the Council’s exposure to risk as

the condition of the buildings decline and the income falls away, together

with the difficulties in dealing with a reluctant counter party.