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Item 4 Glasgow City Council 1St April 2010 Executive Committee

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Item 4 Glasgow City Council 1St April 2010 Executive Committee Item 4 Glasgow City Council 1st April 2010 Executive Committee Report by Councillor Archie Graham Executive Member for Commonwealth Games Contact: George Black, Chief Executive Ext 74739 THE FUTURE OF KELVIN HALL OPTIONS APPRAISAL Purpose of report The Purpose of this report is 1 to update the Committee on the progress made on the options appraisal for the re development of Kelvin Hall; and 2 to seek approval for funding for the next stage of project development. Recommendations It is recommended that Committee 1 notes the update on progress made on the options appraisal for the redevelopment of Kelvin Hall; 2 approve funding of £85,000 as detailed in the report to take the two preferred options to a more detailed stage, to complete a master planning exercise and to support a Stage 1 HLF application; and 3 Agrees to consider a further report in the autumn regarding the outcome of this work. Ward No(s). Citywide Local member(s) advised yes no consulted yes no 1. INTRODUCTION 1.1 Glasgow City Council has been working with Culture & Sport Glasgow to identify a sustainable legacy use for Kelvin Hall. Development and Regeneration Services, Project Management & Design, have prepared costed outline designs as part of a feasibility study. Ernst & Young were commissioned to carry out a financial options appraisal. 2. BACKGROUND 2.1 Opened in 1927 and designed to complement the municipal display of Kelvingrove Park, Kelvin Hall hosted the city's contribution to the Festival of Britain, the Exhibition of Industrial Power in 1951. Annually, it housed the Christmas carnival and concert and in between, a wide range of national and international exhibitions. 2.2 Since 1987 Kelvin Hall has been the venue for athletics training, international indoor athletics and has been a popular community sports centre. The Museum of Transport which relocated to Kelvin Hall from its original home in Albert Drive in 1987 has been one of the most popular visitor attractions in Scotland. 2.3 The indoor athletics track will become redundant with the opening of the National Indoor Sports Arena (NISA) in 2012. The major sporting events that have been synonymous with the Kelvin hall will now be held at NISA, allowing the staff at Kelvin Hall to focus on an uninterrupted programme of sport and fitness. The Museum of Transport will close to the public in spring 2010 and will be vacated by spring 2011 when the Riverside Museum opens. 2.4 2014 Commonwealth Games 2.4.1 Kelvin Hall was identified as the Boxing venue for the 2014 Games in the City’s winning bid submission to the Commonwealth Games Federation. GCC has identified £11m (at 2007 prices), as part of its capital planning projections for this purpose and for the overall redevelopment of the venue to provide a lasting legacy. 2.4.2 The organising company (Glasgow 2014 Ltd) are currently re-examining this position, as part of a Games wide feasibility venues assessment exercise, and assessing whether it would be more cost effective to stage the boxing at the SECC. The outcome of this assessment will be known by the summer of this year. 2.5 Maryhill Stores 2.5.1 A significant part of Glasgow’s Museum Collection is currently housed at a leased store in Maryhill. Among the contents of the stores are the interiors from the Ingram Street tearooms, the only original set of Mackintosh tearoom interiors to survive. In addition to the tearooms, the Maryhill store houses the nationally significant Glasgow history collection and the Scottish archaeology collection. 2.5.2 The lease on this facility will run out in 2011 and while this may be extended for up to two years, the owner has intimated that there will be no long term renewal. This leaves the city with the options of entering into another lease elsewhere or finding a suitable council property that can be readily adapted. Kelvin Hall is the property that has been identified for that purpose. 2.6 The University of Glasgow 2.6.1 The University of Glasgow currently deliver a significant portion of its sports programme at Kelvin Hall. The Service Level Agreement between the University and the council expires in 2011. The University have expressed an interest in considering a further long term agreement with Culture and Sport Glasgow. Subject to agreement, this would secure future rental and facility management payments. 2.6.2 The University’s Hunterian Museum is in need of a storage facility along the lines of the Glasgow Museums Resource Centre at Nitshill. A joint storage and research facility at Kelvin Hall is an attractive option for both the University and GCC/CSG and would build on the joint working agreement already in place. 2.6.3 The University has requested that the possibility of displaying Hunterian Collections within the space of the current athletics arena be considered. 2.7 Previous Funding Strategy for Redevelopment of Kelvin Hall 2.7.1 Initial proposals for Kelvin Hall focused on disposing of the Bunhouse Road car park adjacent to the river to a housing developer, moving car parking inside the building, thereby raising capital for the development. While this is no longer viable, due to the downturn in the economy, there are a number of uses or combination of uses that are being considered that could secure external funding. 3 ERNST & YOUNG FINANCIAL OPTIONS APPRAISAL 3.1 Ernst & Young hosted a workshop with representatives from GCC, CSG and Glasgow 2014 Ltd in May 2009, to establish the strategic objectives for the appraisal process and to identify options. The Strategic Objectives identified by CSG GCC and Ernst & Young at the workshop were categorised as essential and desirable. Category Evaluation Objective Community Sport Facility To provide a community sports facility to a standard of quality sufficient to meet sportscotland criteria and increase use by patrons. Analysis of the city’s sports provision using sportscotlands Facilities Planning Model (supply & demand) has identified a city wide shortfall of sports hall provision. Loss of any sports hall capacity in an area of high density population that enjoys excellent public transport links would have a negative effect on the City’s plan to redress this shortfall. Commonwealth Games Venue To provide a boxing venue for the 2014 Commonwealth Games that meets the bid document scope and CGF requirements and that is available to meet OC timetable requirements. Building Legacy To ensure the legacy of the historic building through renovation or development that meets the necessary building consents in line with the listing and heritage of Kelvin Hall. Museum Stores To provide a cost effective store before the expiry of the current lease for the museum that will retain current accreditation levels. Public Sector Subsidy To substantially reduce or eliminate the existing subsidy provided by Glasgow City Council. University of Glasgow To develop a strategic partnership with Glasgow University in order to maximise investment into Kelvin Hall. Private Sector To maximise income from the private sector. 3.2 The financial appraisal was undertaken using an Excel model over a 7 year appraisal period from 2009 – 2015. The model demonstrates the development and operational cash flow projections using information provided by CSG. 3.3 Option 1 - Do Nothing The do nothing option means that there would be no investment on the vacated spaces beyond the basic maintenance of the building fabric. The residual sports centre would continue to operate as before with a small reduction in staffing costs. The condition of the sports facility is a cause for concern however and while there would be no remodelling of the facility in this option, there are significant building elements such as the mechanical and electrical installations that require investment. This life cycle work is necessary if the building is to continue in operation. Option 1 Cost Summary over 7 year appraisal period Description £ Capital Cost £2,454,100 Capital Cost to GCC £2,454,100 Net Project Cash Flow £13,752,278 Mature year subsidy per annum £1,510,854 3.4 Option 2 - Minimum Work to CWG Boxing Requirements This option is similar to option 1 in that not all the essential objectives are met. In addition to the essential life cycle works there would be additional capital works to improve the appearance of the building and make the building suitable for a CWG overlay. The legacy would be enhanced due to the improvements to the building fabric and the prestige enjoyed in the wake of the games. The existing indoor sports arena would be stripped out and the support accommodation would be refurbished to provide a flexible event space that could provide future income revenue streams. Option 2 Cost Summary over 7 year appraisal period Category £ Capital Cost £3,627,100 Capital Cost to GCC £3,627,100 Net Project Cash Flow £14,160,748 Mature year subsidy per annum £1,337,444 3.5 Option 3 - Minimum work to meet all essential objectives This option uses more of the Kelvin Hall footprint for revenue earning and saving functions and the upgrades to the building systems will provide a more efficient building. There are no partnership proposals incorporated in this option and, as a result, there is large capital investment required from GCC. The overall revenue subsidy is, however, significantly reduced from the previous options. The cost for this option includes for upgrading the existing indoor athletics arena for use as a boxing venue for the 2014 Games. It is anticipated that a significant saving on capital required can be realised in the next phase of design development for this option without adversely affecting revenue generating capacity.
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