Agenda Item No
The Vale of Glamorgan Council
Cabinet Meeting: 7 October 2013
Report of the Cabinet Member for Regeneration, Innovation, Planning and Transportation.
Penarth Pier Pavilion. Review of Business Case and Revenue Support proposals.
Purpose of the Report
1. To provide Members with an update on the development of the scheme undertaken to date.
2. To seek approval to a scheme of revenue support.
1. That the progress made to date be noted.
2. That Cabinet approve the Revenue Support Scheme proposed and that the Director of Resources, in consultation with the Head of Legal Services and the Leader be given authority to enter into an appropriate drawdown agreement with Penarth Arts and Crafts Limited.
Reasons for the Recommendations
1. To provide a full update on the proposal.
2. To provide appropriate authority for the revenue support and the legal agreement proposed.
3. Members will be aware that Cabinet has previously agreed provisions relating to the Penarth Pier Pavilion Project. Under minute C1325, 18th May 2011, it is noted that Cabinet was updated on the bids submitted to the Heritage Lottery Fund and the Big Lottery Community Asset Transfer Fund by Penarth Arts and Crafts Ltd (PACL) to support the refurbishment project.
4. The financial implications of the project would be a commitment to £800,000 as set out in the Capital Programme to contribute to both the capital costs of the PACL works and the works required to upgrade the wing shops and to be incurred in the 2011-13 period dependent upon the other funding approvals from the Heritage Lottery Fund and the Big Lottery Community Asset Fund. In addition, a capital grant of up to £70,000 would have to be provided in Year 7 of the project to cover the external maintenance cost estimate and it was noted that, if approved, the revenue implications would amount to £20,000 per annum for a period of five years.
5. In order to protect the Council's position in regard to any funding contributions, PACL would be required to enter into appropriate deeds of grant prior to any monies being released. In addition, the Council would place a legal charge over the lease to protect its investment and allow the Council to step in and control the project if necessary. In order to protect the Council's position in regard to regeneration works to the Pavilion, PACL would be required to enter into an agreement for lease with the Council.
This was a matter for Executive decision and it was RESOLVED -
(1) T H A T the provision of a grant, to a maximum of £800,000 as set out in the Capital Programme, to Penarth Arts and Crafts Ltd. towards capital costs associated with the project and based upon an appropriate funding agreement be approved.
(2) T H A T the draft Heads of Terms be endorsed and officers authorised to make variations to the terms as necessary subject to the agreement of the Leader and the Cabinet Member for Economic Development and Regeneration.
(3) T H A T the terms of revenue support to Penarth Arts and Crafts Ltd. for the first five years of the project, amounting to £20,000 per annum, be agreed.
(4) T H A T the terms of the first tranche of external repairs as set out in the project's Maintenance Plan schedule for year 7 be agreed, that sum not to exceed £70,000.
(5) T H A T negotiations with existing tenants of the wing shops adjacent to the Pavilion be authorised in order to enable improvement works on adjacent buildings.
(6) T H A T the Director of Legal, Public Protection and Housing Services in consultation with the Director of Finance, ICT and Property be authorised to prepare, vary, complete and execute the necessary grant, licence and lease agreements with Penarth Arts and Crafts Ltd. on such terms and conditions as they deem appropriate after consultation and agreement with the Leader and the Cabinet Member for Economic Development and Regeneration.
6. The refurbishment scheme has now been on site since October 2012 and the scheme is nearing completion. A series of opening events are planned between September and December 2013 and the details can be found on the dedicated website http://www.penarthpavilion.co.uk/
7. Earlier in the year a review of governance arrangements was undertaken and a new Board of Trustees and a Pavilion Director are now in place.
8. The Project Team have been providing update reports to the range of project funders and the scheme remains on course in terms of programme and cost.
Relevant Issues and Options
9. The Pavilion Director has reviewed the Project Business Plan originally produced in 2009 and has provided to officers a new business plan indicating the business model to be utilised and the expected visitor numbers and income levels which might be achieved. The Business Plan has been submitted to provide the base data in support of the revenue grant now being sought in line with the original approval.
10. Officers have reviewed the Business Plan and, although the document sets out a methodological assessment of operational matters, opportunities and income streams, officers have identified that the risks to the deliverability of this project still centre on the financial viability of the first few years of operation. The bid to the Council seeks funding support over the first five years of operation as per the original discussions of 2010-11 and proposes a revenue support grant of £20000 per annum over that period.
11. The view of officers is that the inherent risk to the project is the validity of the financial projections contained in the report during the first 12-20 months of operation as this is the period within which any shortfalls in income projections could seriously impact upon cash- flow requirements.
12. In order to give appropriate levels of support officers propose that the revenue support be targeted to the first 20 months of operation at the Pavilion and that 20 monthly payments of £5000 be made to provide, overall, the £100,000 of revenue support agreed in 2011.
Resource Implications (Financial and Employment and Climate Change, if appropriate)
13. That the capital grant of £70,000 be included in the capital programme and that the revenue support will be funded from the Grants Provision.
Sustainability and Climate Change Implications
14. The report has no sustainability or climate implications, although clearly the scheme to refurbish the pavilion has taken into account sustainability credentials and practices.
Legal Implications (to Include Human Rights Implications)
15. An appropriate drawdown agreement will need to be drafted and agreed by the parties.
Crime and Disorder Implications
16. There are no crime and disorder implications.
Equal Opportunities Implications (to include Welsh Language issues)
17. The report has no equal opportunity implications.
18. The proposal would support the Corporate Plan in its promotion of the regeneration of the area of the Penarth Promenade
Policy Framework and Budget
19. This report is a matter for Executive decision by Cabinet.
Consultation (including Ward Member Consultation)
20. Local Ward Members have been consulted.
Relevant Scrutiny Committee
21. Economy and Environment.
John Dent. Major Projects Manager - 01446 704617
Operational Manager Legal - Committee Reports
Head of Finance
Estates Group Officer
Rob Thomas - Director of Development Services