The Arches - Worcester: Variation to Lease to 54-56 Foregate Street
That the Committee:
1. approves a variation to the lease of 54, 55 and 56 Foregate Street on the terms set out in the private report in support of The Arches – Worcester project; and
2. delegates authority to the Corporate Director - Finance and Resources and the Corporate Director – Planning and Governance in consultation with the Chair and Vice Chairs of the Committee to conclude negotiations and enter into all necessary legal agreements to complete the proposed variations and related works.
The Committee considered a progress report on this project. The Corporate Director – Finance and Resources highlighted the main points.
He explained that the demolition work will uncover two arches which are currently obscured by 56 Foregate Street, enabling them to be brought into use as potentially income-generating assets. It was therefore been proposed that these two arches form phase 2 of the project, thus obviating the need to acquire and convert two further arches. This was considered acceptable under the terms of the funding agreement, but was subject to formal approval.
Meanwhile, under the terms of the Cultural Development Fund grant, all capital and revenue cost of the project must be incurred by 31 March 2023. A total of £623,085 was subject to a risk of clawback by the Arts Council in the event that the work is not completed by the end of the funding period. It was estimated that the work will take 14 months from the date of agreement to proceed, and a request had been presented to the Arts Council for an extension of the deadline to April 2024. Should this not be approved, there was a risk that project funding may be lost if the works cannot be completed in time.
The Council had been in negotiations with Arch Co. to agree the terms for demolition of 56 Foregate Street. They were entitled to receive compensation for the loss of income from 56 Foregate Street. A proposal had been received from Arch Co. and was provided in a confidential Appendix to the report. Accepting the terms of the proposal would require a variation of the lease such that the two ‘uncovered’ arches would, in effect, transfer from the Council’s ownership to The Arch Co.’s, after five years.
The capital sum proposed in the Appendix could be met from the Arches – Worcester budget, which includes funding for demolition works of £350,000. However, this would reduce the funding available to meet the actual costs of the demolition. There would, therefore, potentially be an additional requirement for funding but estimated demolition costs have yet to be established
The Corporate Director explained that there had been a slight variation in that Arch Co. have required that a provision that the Council will not owe them any money at the date on which the contract commences.
The Committee noted the terms of the proposal and did not resolved to exclude the press and public as there was no discussion on this aspect.
Officers responded to questions from Committee Members.
In conclusion, Committee Members expressed support for the draft Heads of Terms and changes to the lease as set out in the appendix.
RESOLVED: That the Committee agree to:
1. approve a variation to the lease of 54, 55 and 56 Foregate Street on the terms set out in the private report in support of The Arches – Worcester project; and
2. delegate authority to the Corporate Director - Finance and Resources and the Corporate Director – Planning and Governance in consultation with the Chair and Vice Chairs of the Committee to conclude negotiations and enter into all necessary legal agreements to complete the proposed variations and related works.