Decision - Charter House Hotel - Disposal

To reach agreement on future plans for the property.

Note: The title and description have been updated since publication of Edition 9 of the Forward Plan.

Note: Item has been deferred on the 10^th March at the request of the Director due to Overview & Scrutiny Committee requirements for consultation.

Note: Item moved to the 11^th June cabinet at the request of the Director.

Note: Item deferred to a later date at the request of the Director.

Note: Item deferred to 17th September Cabinet at request of the Director.

1.      That Cabinet approves and authorises:

(a)           The disposal of the Charter Hotel on a 150 year lease to a successful bidder for a premium and a peppercorn rent, following a marketing exercise, full evaluation of informal bids and recommendations by the council’s appointed agents.

(b)           That once offers have been evaluated a further report will be prepared to enable Cabinet to consider the proposals, select a preferred developer and authorise the detailed terms to be settled by the Director of Finance & Resources and the Solicitor to the Council.

The hotel disposal on a long lease has most advantages given the likely favourable market reaction and speed of response which would enable the building’s deterioration to be addressed at the earliest opportunity.

1.      Consideration was given to the possibility of working with joint venture partners to establish a training hotel to improve the training and employment prospects for those who face barriers to employment. This is a new concept which could in the long term help local people find the skills and opportunities for employment in a sector which delivers 10% - 20% of the local workforce.  However, it represents a high risk strategy which would take some time (about 2 years) to work up and a suitable partner would need to be found. It is untried in this country and would take a large amount of feasibility and preparation work to see whether the idea is viable and realistic particularly for this building. This timeframe would impact on the deteriorating state of the building fabric thus worsening the situation and could impact on any premium, rental income and marketing opportunities.

2.      The training hotel concept also provides a financially higher risk project. It will require revenue resources to implement and manage the project and to date no financial resources have been identified. Considerable capital investment will be required through the partnership and the council will need to identify capital resources from within the capital programme. A detailed business plan will be required that demonstrates the feasibility of the project both for the initial investment and the ongoing viability of the project as a long-term business. It is unlikely that this option would produce a premium or capital receipt, however, there is the potential for some rental income to be generated. The legal issues would need to be more thoroughly evaluated e.g. in respect of the appropriate procurement route, governance arrangements and the on-going operation and maintenance of the building.

3.      The long lease disposal is outlined in paragraphs 3.8-3.11. It would be a more straightforward financial transaction for the authority, quicker and easier to deliver than a training hotel. It will produce a capital receipt, will address the urgent issue of the deteriorating building more quickly, will readily appeal to hotel operators and create employment for an established local market.

4.      For these main reasons and the other factors identified in this report the disposal option is considered as the most beneficial and appropriate way forward. Elements of the untested training option could be incorporated into the marketing brief and potential developers signposted to the Tourism Futures service provided by City College. This would enable the council to test the market view and provide information for other projects where a hotel element is contemplated, such as Circus Street and Patcham Court Farm.