Item 4 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 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 , 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 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

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.

There are two distinct strands to this option that deliver on all five essential objectives.

Enhanced Community Sports Centre

In addition to the works carried out in option 2 there will be remodelling to provide a new health and fitness facility, dance studios, a café, and third generation 5-a- side football courts. This will provide a well presented community facility that will generate significantly more income over the previous options. This option includes refurbishing the existing indoor athletics arena to an acceptable standard to facilitate the boxing event.

Museum Store

A basic museum store that meets the minimum standards for collection care is costed in this option. There will be no public access or partnership arrangement with the University with this model and, as a result, the likelihood of external funding is reduced.

Option 3 Cost Summary over 7 year appraisal period

Category £ Capital Cost £15,577,200 Capital Cost to GCC £15,577,200 Net Project Cash Flow £22,428,044 Mature year subsidy per annum £649,484

3.6 Option 4 - Strategic Partnership with University of Glasgow

This option is centred on a strategic partnership with the University of Glasgow and has been the subject of a number of discussions with the Principal and Vice Principal over the last year. During the period of detailed discussions with the University, the OC, Glasgow 2014 Ltd, floated the possibility of a relocation for the CWG boxing to the SECC. It was therefore decided to consider an option that did not incur all of the additional capital costs associated with the delivery of a suitable CWG games venue.

A more compact community sports centre has been costed here, centred on the Museum of Transport site. The former indoor athletics arena will be fitted out as an indoor five-a side football space requiring minimal physical intervention. This approach could be compatible with the possible future redevelopment of this space as a display venue for the Hunterian Museum.

There are two distinct strands to this option.

Joint Museum Store & Research Facility

This joint facility would have capacity to house the University collections along side the City’s objects currently housed at Maryhill. The facility would allow collections access to the joint resource for students and the public. A partnership such as this would be more likely to attract funding from bodies such as the Heritage Lottery Fund.

Enhanced Community Sports Centre with Capacity for University of Glasgow

In addition to Option 3 there would be a larger health & fitness suite and extra sports hall capacity to cope with the University of Glasgow requirement. The University Sports Union has provided a detailed programme of sporting activity that could take place at Kelvin Hall which would complement the programme elsewhere on their campus. This programme requires exclusive use of an eight court sports hall and two dance studios at peak times during term. The additional capital investment required to provide this extra capacity would have to be met by the University.

Option 4 Cost Summary over 7 year appraisal period

Category £ Capital Cost £16,802,752 Capital Cost to GCC £8,670,752 Net Project Cash Flow £15,383,748 Mature year subsidy per annum £348,097 3.7 Option 5 – Close / Mothball Kelvin Hall

This option meets none of the strategic objectives identified as part of the options appraisal process. The loss of a popular sports facility in a densely populated area, well served by public transport would represent a significant loss of amenity. Kelvingrove Museum & Art Gallery has brought millions of visitors to this part of Glasgow and the completion of the Riverside Museum will reinforce the city’s reputation as a cultural destination. A mothballed Kelvin Hall situated between these two important public spaces would lessen the impact of these developments. This option was not considered as part of the Financial Options Appraisal.

4 NEXT STEPS

4.1 It is proposed that CSG will engage with GCC DRS Project Management and Design, GCC Finance and Legal Services to examine Options 3 & 4 in more detail. The design, capital and revenue implications and legal considerations will be explored as part of this process. This proposal is made on the basis that the Ernst & Young study concluded that option 1 & 2 are not sustainable long term solutions for Kelvin Hall. Option 5, which was not considered as part of the appraisal, offers no legacy.

4.2 Option 4 would be taken forward in liaison with Glasgow University and would remain based on providing community sports facilities, additional dedicated sports facilities for University use and a shared museum research / storage facility. The feasibility of providing at some future stage, a display space for the Hunterian Museum would also be examined.

4.3 Option 3 would be a predominantly GCC funded option based on providing a community sports facilities to meet strategic demand in this densely populated area of the City, and museum storage facilities to meet the requirements arising from the termination of the lease at The Maryhill museum storage facility. It can also consider some of the City’s archives and records management storage requirements. In the light of the current constraints on GCC capital spending, the potential for phasing development and minimising the level of capital intervention into the building will be considered with a view to reducing the capital costs.

4.4 For both Options 3 & 4 the timing of development will be examined to take into account the Commonwealth Games in 2014, the projected opening date for National Indoor Sports Arena and Velodrome, the decant programme for the Riverside Museum and the aspirations of partner organisations, in particular, the University of Glasgow.

4.5 For Options 3 & 4, scenarios for the CWG Boxing competition taking place and not taking place will be considered. It should be noted however that a clear decision would need to be taken by the end of the calendar year if GCC wished to proceed with any of these options for the redevelopment of the Kelvin Hall prior to 2014. 5 RISK MANAGEMENT

5.1 External funding may not be realised. A stage 1 application for HLF funding is to be submitted by October 2010. Early commitment from the University will be sought on completion of a detailed scheme.

5.2 The risk surrounding the increased cost uncertainty relating to redevelopment of an existing listed building has been recognised. Dilapidation surveys and other site investigation data will be reviewed and updated as required during the next phase of design development.

6 BUDGET AND SERVICE IMPLICATIONS

6.1 Running costs and staffing implications have been examined by Ernst & Young in consultation with CSG for all the options considered.

7 FINANCIAL IMPLICATIONS

7.1 The development of Option 3 & 4 as outlined above to a more detailed feasibility stage will incur design fees of £95k.

7.2 Costs associated with the preparation of a Stage 1 HLF application will amount to £35K. The cost will include fees related to visitor research and legal fees. It is envisaged that an HLF Stage 1 application will be submitted by October 2010.

7.3 The University of Glasgow has committed to a contributing £45k to this cost leaving the council a commitment of £85k to take these proposals to the next stage.

8 PERSONNEL IMPLICATIONS

8.1 The personnel implications will be developed in parallel with the development of the preferred options.

9 LEGAL IMPLICATIONS

9.1 A Heads of Terms and a full Legal & Property Agreement with the University of Glasgow will be required if the strategic partnership option 4 is favoured.

10 ENVIRONMENTAL IMPLICATIONS

10.1 The refurbished Kelvin Hall will be designed taking into account the Environmental Protection Act 1990, and the Council’s commitment to Environmental Protection. The project will be managed taking full cognisance of the BSRIA Environmental Code of Practice for Buildings and their Services. Accordingly every consideration will be given to reducing energy use in the new facility with the result that active mechanical and electrical installations have been kept to a minimum. An energy management system to minimise the operation of energy consuming devices will be included in any scheme taken forward. 11 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 above 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 agree to consider a further report in the autumn regarding the outcome of this work.