Minutes:
The Strategic Lead for Economic Development and Neighbourhoods presented Members with a report containing proposals for the refurbishment of the Sun Inn and the regeneration of Market Street.
It was recognised that securing a hotel in Gainsborough should have a positive impact on the town in terms of its regeneration, improving market attractiveness, addressing a known demand for bed spaces and making an economic contribution in terms of new jobs and additional business rates. The Sun Inn had been vacant for over five years despite active marketing and a planning consent for a hotel. The building had been the subject of vandalism and the adjoining Chapel Alley was in a very poor state of repair. The building is located on the corner of Market and North Street and was considered a key gateway into the town centre. Upgrading Market Street would entice footfall from Marshall's Yard into the town centre. Market Street had a number of empty properties and dereliction adjoining the Sun Inn.
In progressing the Gainsborough Regeneration Delivery Plan (GRDP) and in discussions with Historic England to bid for a Townscape Heritage Initiative, officers had lobbied the owners of the Sun Inn to implement the hotel planning consent or refurbish the building. These discussions had resulted in the current proposals to assist in the delivery of the hotel with a ground floor restaurant and the wider regeneration of Market Street to accelerate the delivery of regeneration in the town centre.
The Council’s commercial advisors had confirmed that the cost of developing the Sun Inn as a new hotel was higher than the end value, as such there was a viability gap. The Council had acknowledged the need to support commercial development in Gainsborough through the Gainsborough Growth Fund (a grant funding regime) and through the creation of enabling funds for the GRDP. An options appraisal to assess the best way of delivering a new hotel had been undertaken. The conclusion was, given the existing planning consent that the owner was best placed to deliver this project based on their existing land interests, their expertise and vested interest, and to safeguard the Council from development risk.
The options considered included:
- investing in a hotel in an alternative location (eg Old Guildhall site; Thorndyke Way).
- investing in the proposed community hotel.
- the Council aquiring the Sun Inn site and developing a hotel itself.
- the Council acquiring and developing the Sun Inn site with its development partner once they are procured.
- do nothing and leave hotel development in Gainsborough to the market.
In February 2016 both Prosperous Communities and Corporate Policy and Resources committee agreed to the creation of the Gainsborough Regeneration Delivery Plan (GRDP) and a funding strategy including an enabling fund regime to support and deliver regeneration projects. Relevant to the consideration of this report were the proposals around developing the town centre, recognition that commercial development in Gainsborough was not viable without public sector intervention and the establishment of “gap funding” principles.
In July 2016, a special Prosperous Communities and Corporate Policy and Resources committee agreed to seek to procure a Development Partner for WLDC to develop the Council owned sites in the town centre, possibly in addition to the Housing Zone and parts of the Commercial Land and Property Agenda. In recognition of the lack of viability of the town centre sites and Gainsborough, these committees agreed to £5 million of enabling funds to bridge the viability gaps in developing these projects and effectively nil land value.
These decisions acknowledged the need for the Council to work in partnership with the private sector and provide financial support to developers to achieve a minimum return on investment to secure commercial development in the town.
The report therefore contained proposals for how to progress with the development of this area of Gainsborough.
Lengthy debate ensued with Members agreeing that regeneration of the derelict building was imperative for the regeneration of the surrounding area, however some felt that the financial proposals were not conducive to the Council’s budget management. Assurance was given that without the proposed agreement it was unlikely that the work would be undertaken, and the site left to deteriorate further.
Some doubts were expressed about the Value for Money aspect, however the multiplier effect and subsequent increased confidence in the town, whilst difficult to quantify, were likely to be substantial.
Although the majority of Members were, in principle, in agreement with the proposals, reservations were voiced regarding the proposed design, as the hotel was not felt to be architecturally aesthetic or attractive. It was verified that there could be scope for negotiation on design.
Some Members felt that the financial arrangements could be made more favourable to WLDC, however the proposals were felt to be the best option available at the present time. The Heads of Terms contained an overage clause, and there would also be income received from Business Rates, further details of which would be contained in a subsequent report, along with additional Value for Money consideration.
The recommendations within the report were then moved and seconded, and on being voted upon it was:
RESOLVED that:
a) the principle of a grant to the developer pursuant to a Grant Funding Agreement be approved, to deliver the redevelopment of the Sun Inn, which involves the creation of a new 54 bedroom hotel with an independent ground floor restaurant, subject to the approval of the policy principles by Prosperous Communities Committee;
b) the principle of entering into a 50/50 joint venture company with the developer to facilitate the regeneration of Market Street (including the acquisition of vacant shop units, refurbishment of shop units and environmental improvements to the area) as part of the Gainsborough Regeneration Delivery Plan, be approved subject to the approval of the policy principles by Prosperous Communities Committee; and
c) authority be delegated to the Chief Executive in consultation with the Chairmen of Corporate Policy and Resources and Prosperous Communities Committees to finalise both the requisite Grant Funding and Joint Venture Agreements (in accordance with the contents of the report and the legal and financial parameters), and to return to both Prosperous Communities and Corporate Policy and Resources Committees for approval prior to the execution of the Grant Funding Agreement and Joint Venture Agreement.