By Felix Nobes and Les Reid
MILLIONS of pounds worth of city taxpayers’ assets are set to be used to bail out otherwise ‘unviable’ plans to transform the former Coventry Evening Telegraph offices into a flagship ’boutique’ hotel, we can reveal.
Construction of the ‘high-end’ 1950s-style hotel at the landmark Corporation Street building had been set to start last month.
But Coventry city councillors on its ruling cabinet will next week discuss controversial proposals to sell more council land and buildings nearby, some derelict, on massive 250-year leases.
The proceeds would be gifted to the hotel’s developers rather than returning the money to council coffers.
Existing rental income would also be written off at those buildings which have remaining lease terms of between 38 and 89 years, potentially resulting in a further hit to taxpayers. Leases across the development site will be extended to 250 years.
Yet details of the financial implications for Coventry taxpayers will be discussed behind closed doors in a private session of next Tuesday’s cabinet meeting of ruling Labour councillors, after an initial public discussion.
The meeting’s agenda report states: “Details of the revenue implications to the council are set out in the private report.”
It says: “Due to the significant costs involved in refurbishing such an iconic set of buildings and the relatively unproven market for higher end hotels within Coventry, the development of a hotel on its own is not financially viable.
“In order to facilitate the delivery of the hotel, there is an opportunity to cross-subsidise its development through the disposal of adjacent sites at Chapel Street, Lamb Street and Bishop Street to deliver two residential blocks, possibly including student accommodation.
“The land receipt the council would ordinarily receive for these sites will then be used to contribute towards the capital cost of funding the hotel element of the wider scheme.”
It adds: “Whilst analysis has shown that there is a shortfall of high quality bed space in the city centre, the market for this type of hotel development is currently relatively unproven so there is uncertainty around the strength of demand that would secure the necessary investment to bring the scheme forward.
“This coupled with the costs and risk of redeveloping existing buildings (including high abnormal costs relating to asbestos and the capping of the basement) means that the overall scheme requires a partnership approach between FGDL and public bodies to bring a viable scheme forward.”
The report also states: “An independent red book valuation undertaken by Cushman and Wakefield has demonstrated that the overall development faces significant viability pressures due to the costs of delivering the hotel element of the scheme.”
The nearby additional land and buildings would be sold to developers Far Gosford Developments Ltd, spearheaded by city architect Ian Harrabin of Complex Development Projects Limited, or the accommodation providers, on 250-year head leases.
They are in addition to buildings already sold on long leases, including the hotel site.
Far Gosford Developments Ltd already owns a majority of the 11 long leasehold interests on the total 2.6 acre regeneration site, where the council owns the freehold.
The sale price for the buildings will be decided by a valuation by the Royal Institute of Chartered Surveyors, which the council report suggests will ensure legal obligations to fix a fair market rate. Council lawyers will also evaluate whether there is any risk the project could be deemed to be unlawful ‘State Aid’, the report adds.
The valuable and unusually long new 250-year head leases would be granted across the total site.
The council report adds: “These lease arrangements will allow for Far Gosford Developments Limited to access the private and public development funding necessary for the scheme to go ahead.”
Council officials will hope the loss of the land sale proceeds will be offset by the boutique hotel and the two new accommodation blocks helping to revitalise the city centre economy ahead of City of Culture year 2021.
The former purpose-built four-storey 1950s Evening Telegraph building opposite the Belgrade Theatre is unique. It includes the former giant industrial print room in the basement, and the period boardroom and living quarters of owner Lord Iliffe on the top floor.
The ambitious scheme – for years championed by council leaders – would see the creation of about 90 themed bedrooms, a ground floor restaurant and bar, meeting rooms, penthouse suites, a rooftop bar and space for performances, conferences and exhibitions.
Initial planning approval for the hotel and accommodation for more than 1,200 students was granted by the council last summer.
The cabinet report adds: “The delivery of high quality hotel developments in the city centre is a priority for the council due to the huge influx of visitors during City of Culture 2021, the role they play in boosting the city’s image and inward investment potential, the need to provide suitable accommodation to service the city’s growing economy and the lack of ‘upmarket’ hotels currently operating within the city centre.”