Agenda item

Report of the Executive Director of Place (to be circulated)

The Cabinet considered a report of the Executive Director of Place, which provided an update on the Friargate development and sought approval to sub-lease part of the Friargate building.

A corresponding private report detailing confidential aspects of the proposals.

In 2013, the Council approved starting the Friargate Business District to regenerate the City, transform the Council and deliver savings, through the purchase of the first building on Friargate for occupation by the Council, The Councils operational office buildings would be reduced and agile and flexible working arrangements introduced to support productivity and efficiency gains from Council staff.

The report also recognised the importance of a second tenant and gave approval to negotiate with the Royal Institution of Chartered Surveyors (RICS) to help secure them as the second tenant on Friargate.

The RICS were the institution governing Chartered Surveyors globally and both strategically important nationally and as a second tenant to the Friargate scheme were likely to provide confidence to other potential private sector tenants.  The RICS currently had major offices in London and Coventry. The Coventry office was becoming obsolete and the RICS had been looking to relocate to new offices for a period of years. Many of the options under consideration were outside Coventry.

In 2013 discussions commenced between the Council, Friargate Coventry LLP and the RICS to secure the national HQ of the RICS as the second occupier of Friargate and build further space for letting to other occupiers.

In the absence of a second building under construction at Friargate there was an opportunity for the Council to negotiate terms directly with the RICS in order to sublet space in its building at Friargate and secure the RICS as the second tenant on Friargate rather than losing this strategically important business occupier to both Friargate and potentially the City.

If these negotiations proved successful this would require the Council to retain operational building capacity within its existing building portfolio for a quarter of the staff (470) intending to move to Friargate, whilst further discussions continued in order to try and secure early delivery of Building 2.

To that end the opportunity had now arisen for the Council to make a formal application to the West Midlands Combined Authority (WMCA) to secure up to £50m to bring forward development opportunities around Friargate to supplement the £100m already secured from the WMCA for City Centre South.

It was proposed that authority be delegated to officers (in consultation with the relevant Cabinet Member) to make such variations to the Collaborations Agreement (and other associated documents) that may be required to achieve the objectives set out in the report submitted. The Cabinet noted that such delegation would be limited only to the extent required to secure the sub-leasing of part of the Council’s building at Friargate to the RICS.

The Cabinet noted that the report had been considered by the Scrutiny Co-ordination Committee at their meeting on 18th January 2017, and that a briefing note outlining their recommendations was circulated.  In particular, in addition to endorsing the recommendations to Cabinet, they recommended that Scrutiny Co-ordination Committee be included in the reporting process relating to Friargate.  The Cabinet agreed to accept these recommendations.

RESOLVED that the Cabinet recommend that Council:

1.  Agree to amend the approved Kickstart strategy to co-locate staff to Friargate, by retaining existing operational buildings to house some of those staff and invest in these buildings in the event that the Council agrees to grant a sub-lease to the RICS

2.  Approve that officers be mandated to negotiate terms with the RICS to allow the Council to grant a sub-lease to the RICS to occupy space within its building at Friargate on terms as broadly outlined in this report and delegate authority to the Executive Director of Place and Executive Director Resources in conjunction with the Cabinet members for Finance and Jobs & Regeneration to conclude terms, make minor amendments or corrections and complete the necessary legal documentation.

3.  Delegate authority to the Executive Director Place and Executive Director Resources, in consultation with Cabinet Member for Jobs and Regeneration, to enter negotiations with the WMCA in order to secure a grant of up to £50m to secure further Friargate related development and to negotiate a new delivery framework with Friargate LLP subject to the terms of any such agreements being the subject of a subsequent formal report to Cabinet.

4.  Delegate authority to the Executive Director for Place and Executive Director for Resources in consultation with the Cabinet Member for Jobs and Regeneration and Cabinet Member for Finance and Strategic Resources to negotiate and make any necessary amendments or variation to the Collaboration Agreement and associated document between the Council and Friargate LLP only to the extent required to achieve the sub-leasing of parts of the building to the RICS.

5.  Approve the Council grant a lease extension to the RICS on their current premises at Westwood Business Park subject to a deal for the occupation of Friargate being finalised.

6.  Request officers to bring back a further report on buildings to be retained and investment to maintain them in use for operational purposes and any other mitigation measures.

7.  Authorise officers to negotiate a variation of the building contract to split a floor between the Council and RICS and to minimise any non-recoverable costs from not taking two and half floors