CHANGE OF USE AND FREEHOLD SALE DALBY HOUSE DALBY WAY COULBY NEWHAM MIDDLESBROUGH

EXECUTIVE MEMBER FOR RESOURCES

COUNCILLOR NICKY WALKER

DIRECTOR OF STRATEGIC RESOURCES

PAUL SLOCOMBE

Date 29 May 2008
PURPOSE OF THE REPORT

1.To report on a request by the new owners of the Parkway District Centre Coulby Newham to redevelop Dalby House, Dalby Way and to make recommendations.

BACKGROUND AND EXTERNAL CONSULTATION

  1. PBN Property Limited of Adelaide House Hawthorne Business Park Falcon Road Belfast BT 12 6SJ (PBN) are proposing to carry out a major refurbishment and extension of the Parkway District Centre at Coulby Newham. Concurrently they have also agreed the approved terms (Approved at Individual Executive on 20 February 2006) for the transfer of the two Council owned public car parks as previously agreed with the former owners of the District Centre, Burford Beta Limited. This is progressing separately from the matters which are the subject of this report.
  1. The PBN proposals represent the first phase of a major two stage project .This first phase comprises the creation of an additional 78,000 sq ft of retail space both within the current centre by means of the reconfiguration of shop units and externally through the construction of stand alone retail units.It is the proposal to provide these new external units that involve the Dalby House site and associated landscaped areas. It is also intended to reconfigure the main entrance to the District Centre which will result in significant improvement to the approaches to the Rainbow Leisure Centre and the Library. There is also the intention to provide public toilets within the Centre which, in terms of customer offer, will be a significant improvement and also alleviate pressure on the facilities at the Rainbow Leisure Centre.
  1. The site now occupied by Dalby House was let by the Council to Clearstone Investments Ltd by means of a development agreement and 125 year ground lease which commenced on 4 July 1996. The office block constructed as a result of that transaction is now vacant and the head leasehold interest has been purchased by PBN from Clearstone Investments Ltd. This purchase by PBN was carried out at risk with the aim of facilitating the proposed redevelopment albeit in advance of Council approvals as freeholder of the Dalby House site and development control authority in the context of their wider proposals for the District Centre. They have also, again at risk, bought out the occupational under- lease in Dalby House.
  1. In order to progress this part of the increase in the retail offer they have requested that the Council approves a change of use for the Dalby House lease to allow retail developmentent and subsequently transfers the freehold interest in Dalby House together with adjacent minor areas of landscaping.

OPTION APPRAISAL/RISK ASSESSMENT

  1. Any option appraisal should have regard to the substantial investment planned by PBN for the Parkway Centre. The most cursory of assessments leads to the conclusion that this inward investment is of major significance in terms of economic regeneration generally and in particular in bringing the Centre up to a modern standard appropriate to its importance and location. Appendix A sets out statements provided by PBN in support of their request in respect of Dalby House as set out at Paragraph 5.
  1. Any risks for the Council insofar as Dalby House is concerned will be covered through terms governing any approval to the requests set out at Paragraph 5. The terms are analagous to those usually adopted for developments on vacant Council land and provide reasonable controls and safeguards.The principal difference is that the applicants (and especially their their funders) have requested a build period of five years.This is longer than usual but is stated to be a requirement to give comfort that the necessary pre-lets can be secured.
  1. In the circumstances of this case and in particular the purchase at risk of Dalby House it is felt that this is a period which can be recommended.
  1. Appendix B sumarises the pricipal Heads of Terms agreed.

FINANCIAL, LEGAL AND WARD IMPLICATIONS

10.Financial – A payment of £150,000 plus costs has been provisionally agreed to reflect the Council’s agreement to the actions set out at paragraph 5 above.The attached Plan No VAL 5090 shows the extent of the lease of Dalby House by stippling and by heavy black verge those areas of landscaping proposed to be transferred along with the freehold of Dalby House itself.

  1. Were the Council’s freehold interest in Dalby House and associated landscaped

areas to be put to auction it may be that a greater capital receipt could, in theory,

be realised on a hope value basis given the known involvement and interest of

PBN and their wider proposals for the District Centre.

  1. By way of comparison the Council’s land sale in Marton Road (Middlesbrough

College relocation) merited approval of a disposal at less than best consideration

because of the wider regeneration benefits. In this instance a receipt of some

magnitude is on offer and the regeneration benefits on offer are similarly of some

significance.

13.Ward Implications – There will be signifcant and hopefully beneficial implications. It is understood that there has been local and Ward Councillor consultation by PBN about their proposals for the District Centre. In addition letters have been sent to all three Ward Councillors apprising them of the subject application.

14.Legal Implications – Other than progressing the legal documentation there are none.

SCRUTINY CONSULTATION –This is not consider necessary in this instance.

RECOMMENDATIONS

  1. That the terms provisionally agreed for the variation of the lease at Dalby House

and the subsequent transfer of the Council’s freehold interest be approved.

REASONS

16.In order that the redevelopment which is an integral part of the wider development proposals for the Parkway District Centre Coulby Newham can be implemented.

BACKGROUND PAPERS

17. No background papers were used in the preparation of this report.

AUTHOR: Peter Metcalfe

TEL NO: 727076

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Address: Mouchel Business Services Ltd Rede House Corporation Road Middlesbrough TS1 1 LY