Economy & Culture Scrutiny Committee

Members were advised that this report seeks approval for a further loan, with conditions, and subject to clarifying and agreeing acceptable funding terms with Welsh Government. The report also sets out the rationale for the loan, including economic benefits. Committee had the opportunity to explore these, the financial and legal implications for the Council, risks to the Council and the next steps and timelines. Members were reminded that Appendices 2, 3, 5 and 7 contained exempt information and were asked not to refer to these in public session. Members were advised that there had been an update to Appendix 2 and that Officers would go through these changes with them in the confidential session. For this item, the Chairperson welcomed Cllr Goodway - Cabinet Member, Investment & Development; Jon Day – Operational Manager – Tourism and Investment and Ken Poole – Head of Economic Development. The Cabinet Member was invited to make an opening statement after which Members were provided with background information on the report from Officers. The Chairperson invited questions and comments from Members. Members noted that Park House is an iconic listed building, integral to Cardiff's maritime and industrial heritage. They discussed in detail the rationale for the Council's involvement in the project to restore the building and prevent further deterioration. Members noted that the Council has a duty to protect and preserve heritage properties and that failing to act would pose significant risks. Members were advised that with limited commercial interest in Park House, the building is likely to deteriorate further, and the Council could eventually be forced to intervene to prevent it from becoming a public health or safety hazard. This would likely result in higher costs than the proposal set out in the Cabinet report. Officers explained that the Council does not want to acquire the property as another heritage building, given its already significant portfolio of such properties and the associated maintenance costs. This would expose the Council to 100% of the risk. The Cabinet Member and Officers further advised that the proposal before Cabinet involves partnering with a private entity, thus sharing the risks. The business is believed to have a strong chance of success. Discussing the condition of the building, Members were reassured by officers that a top-tier team of experts, endorsed by Cadw, has been assembled to restore the building. They were assured that the restoration will comply with all necessary regulations, including Health and Safety and Listed Building consents. Members raised concerns about the chimneys, and officers agreed to ensure that they have been thoroughly inspected. Members noted that one of the appendices to the report to Cabinet referenced a structural engineer’s report, which addresses key aspects of the building’s condition in relation to obtaining Listed Building consent. Members appreciated the explanation that this report was referenced but not included in the Cabinet papers, however they considered that the structural engineer’s report should be made available to them, either in full or as a confidential document, and that officers should clarify whether the Council can rely on this report given it was not commissioned by the Council. Members noted that, contrary to initial expectations, Welsh Government has declined to provide a grant for the project. However, it has approved the use of the Council’s Transforming Towns fund to offer a loan for the project. The Welsh Government has extended the repayment period, though Members were unclear whether the loan term is seven or eight years as both were referenced by witnesses. Following further questions on the loan, Members were advised that the loan is at zero interest, in line with the Transforming Towns scheme. Members noted that the Council’s pool of recyclable Transforming Towns funds is fluid, with funds being lent and repaid according to the terms of each loan tranche. Members inquired whether the terms and conditions of the various Transforming Towns loan tranches are publicly available. Officers agreed to investigate and provide an update. Members noted that Welsh Government has declined to share the risks equally, leaving the Council to bear 100% of the financial exposure if the business fails. The Cabinet’s recommendation is contingent on the Council clarifying and agreeing upon the funding terms and conditions with Welsh Government. Members acknowledged that both options for Park House carry risks, either acting or doing nothing. Officers explained the risks to the Council, particularly during the first three years of operation. If the business fails within year 1-3, the Council would face financial loss. Members were keen to understand how effectively the risks would be mitigated, noting several safeguards, including the first property charge, a debenture, and a personal guarantee. Members were advised that Tom Simmons, the business operator, has a strong track record with successful start-ups in Pontcanna, attracting business from both outside Cardiff and Wales. He was recently awarded Best Restaurant in Wales by the AA. Members noted that Savills’ report indicates growth in the marketplace and highlights a gap in the boutique sector, which this proposal seeks to address. Members were advised that the investment in Park House is expected to increase its value; Due diligence reports support the business's potential for success and that the Council will conduct its own risk assessments and take necessary action to mitigate risks. However, Members acknowledged the building's chequered history and the challenges in making the space financially viable. They were also aware that some of Tom Simmons’ other business ventures have faced difficulties, including charges against companies of which he is a director and a prior venture in London that required external intervention to continue operations. Members noted that if Cabinet approves the recommendations and finalises the terms with Welsh Government, the anticipated timeline for completing the works on Park House is between 18 months and two years. Members recognised the risks involved in both options for Park House, either doing nothing or proceeding with the proposal. They noted that the Legal Implications at point 44 of the report aptly summarise this: “The issue concerns whether the potential risks and liabilities described in the report and the associated appendices are proportionate to securing the stated economic development objectives and thus in the best interests of local taxpayers and residents.” Minority Opinion - Cllr Brown-Reckless Cllr Brown-Reckless wished that her minority opinion be noted as follows: - She objected to the amount of information classified as exempt, believing that more details should be available in the public domain to enable proper scrutiny. - She disagreed with the Council’s proposed role in the project, expressing concern that public funds were being used to support a private business, while the Council is exposed to all the risks without benefiting if the business succeeds. - She suggested that the Council should instead acquire and restore the property itself, potentially selling it for a profit or working with a private enterprise to restore and then sell it to a third party. This would allow the Council to directly benefit financially from the improvement in property value. - If the project cannot succeed without Council funding, she proposed the Council should consider calling in the existing loan security, forcing a sale of the building, and taking possession. In this scenario, future public funds could be used to restore the building with the Council as the owner. - She also objected to the interest-free Transforming Towns loan and the loan term extension. RESOLVED – That the public be excluded from the meeting at this point during consideration of this item as the Committee discussed exempt information of the description contained in paragraphs 14, 16 and 21 of Schedule 12A of the Local Government Action 1972. The public may be excluded from the meeting by resolution of the Committee pursuant to Section 100A(4) of the Local Government Act 1972 during discussion of this item. AGREED: that the Chairperson, on behalf of the Committee, writes to the Cabinet Member conveying the observations and recommendations of the Committee when discussing the way forward.

Members were advised that this report to Cabinet covered a number of issues. During this scrutiny Committee could explore the latest regarding the Multi Storey Car Park, the proposed Pre-Contract Service Agreement payment, the Indoor Arena update, the Exclusivity Agreement extension regarding the Red Dragon Centre, the implications of all of these proposals for the Council, key risks and mitigations, and the next steps and timelines. Members were reminded that Appendices 1, 2, 4, 5, 6 and 7 contained exempt information and were asked not to refer to these in public session. For this item, the Chairperson welcomed Cllr Goodway - Cabinet Member – Investment & Development; Neil Hanratty – Director of Economic Development; Chris Barnett – Operational Manager – Major Projects; Richard Crook – Interim Operational Manager – Major Projects and Michael Bawden – Engagement and Communications Officer – Major Projects. The Cabinet Member was invited to make an opening statement after which Members were provided with a presentation from Officers. The Chairperson invited questions and comments from Members. Members noted the update on the Indoor Arena provided in the Cabinet report and were particularly interested in the images of the proposed arena in Appendix 8. Members were reassured that the arena’s lighting design ensures none of the lights face residential areas—both existing and planned housing. Members were advised that Photovoltaic (PV) Panels are planned for the roof of the MSCP. Officers aim to decide within the next three months regarding whether these will be capital or revenue funded. Regarding Electric Vehicle (EV) Charging Points, Members were advised that the specific level(s) of EV chargers to be installed have not yet been determined, as the EV market is evolving rapidly. The Council will need to stay responsive to developments in this area. Additionally, there is ongoing exploration of the possibility of incorporating a dedicated charging zone on the ground floor. Members noted that while a green roof is considered a desirable addition, it is not a priority over the PV panels and EV charging points. Members discussed Suicide Risk in relation to the MSCP design. Officers advised that they will consult with the design team to explore further measures that could be taken to mitigate suicide risks associated with the MSCP. Members sought reassurance on the costings for the MSCP and noted that the JCT contract is a fixed-price contract, including a capped figure for remediation costs. Officers advised that work is ongoing to reduce these remediation costs, meaning that the overall cost will not increase and may even decrease. A discussion took place around the specific company the Council is contracting with. To clarify this point, Members requested that the full name and company number of the contracting company be provided along with details on how this company is related to its parent company and whether there is a parental guarantee in place. Members suggested that officers consider the public art installation ‘The Lost Girl’ in Aberaeron as a potential inspiration for an art installation at the Indoor Arena. They suggested that the piece could reflect the experiences of people who have come to live in Cardiff. Members noted that the management company for the Indoor Arena would be responsible for managing event traffic and pedestrian flow. Officers advised that there would also be traffic management plans in place, with two exits from the MSCP to facilitate smoother egress. Members acknowledged that the construction of the MSCP frees up land, enabling the long-term redevelopment of the Red Dragon site to progress. They also noted the extension of the ‘Exclusivity Agreement’ with Aviva and were informed of the reasons behind this decision. Members highlighted the importance of clear and early signage for pedestrians and cyclists when road closures are required for the site redevelopment. They stressed that these diversion routes should be safe and accessible. Minority Opinion - Cllr Brown-Reckless Cllr Brown-Reckless wished that her minority opinion be noted as follows: - She objects to the extent of information categorised as exempt, arguing that more details should be available to the public to enable proper scrutiny. She believes that exempting information hinders transparency and accountability. - Cllr Brown-Reckless stated that, given the significance of the MSCP to the overall redevelopment project, she should have been given the opportunity to scrutinise the financial viability of the MSCP during the meeting. She felt that proper financial scrutiny of such a key element of the project was essential. RESOLVED – That the public be excluded from the meeting at this point during consideration of this item as the Committee discussed exempt information of the description contained in paragraphs 14, 16 and 21 of Schedule 12A of the Local Government Action 1972. The public may be excluded from the meeting by resolution of the Committee pursuant to Section 100A(4) of the Local Government Act 1972 during discussion of this item. AGREED: that the Chairperson, on behalf of the Committee, writes to the Cabinet Member conveying the observations and recommendations of the Committee when discussing the way forward.

Members were advised that this item was to discuss Committee’s proposed work programme for the remainder of the municipal year. The report was outlined to Members. RESOLVED: · Members agreed the nominations for the Filming in Cardiff Inquiry as, Cllr Wong, Cllr Jenkins, Cllr Lewis and Cllr Shimmin. · Members agreed the nominations for the Visitor Levy & Regulation Inquiry as, Cllr Wong, Cllr Jenkins, Cllr Lewis and Cllr Shimmin. Members agreed to approve the work programme and the publication of a Forward Work Programme.

Members were advised that this item provided an update to Committee on correspondence since the last meeting. The report was outlined to Members. RESOLVED: to note the report.

None received.

Tuesday 19 November 2024 at 4.30pm.