Agenda item

RECOMMENDATIONS         

The Executive is recommended to:

1)               Agree in principle to support the Soft Market Testing recommended Option 3 - the creation of Studio 2 and explore the shift to a more commercial operational approach.

Subject to the approval of the above recommendation, it is further recommended that:-

2)               Officers scope and tender the most cost-effective construction works to create Studio 2, engaging with NYC Align Property Partners and utilising preparatory work already completed, with cost estimates indicating a budget of £7 million.

3)               Develop a new Business Plan for HCC including investment in Studio 2, commercial operating models and the future vision for HCC supported by financial, operational, and sustainability plans.

4)               Delegate to the Corporate Director Resources, in consultation with the Corporate Director Community Development, Executive Member for Finance and Resources, Executive Member for Open to Business, the authority to approve the business case to implement the improvements to Studio 2 to the value of £7m and to undertake any associated decisions.

5)               Review and define the governance requirements for HCC.

6)               Actively pursue and secure future funding opportunities, including North Yorkshire Mayoral Investment, government grants, and other sustainability initiatives.  As part of the business case, consider rebranding HCC to broaden its market appeal and align with the strategic goals for the wider Yorkshire region.

7)               Scope and implement immediate sustainability improvements and develop a long-term strategy, including identifying external funding opportunities.

8)               Prioritise essential property maintenance repairs to ensure the safe management and operation of HCC and explore delivering essential works via a small in-house team utilising existing North Yorkshire procurement frameworks.

9)               Delegate authority to Officers to continue engaging with potential external operators or buyers of HCC, with further reports as required to be brought back to Members.

10)            Delegate authority to the Corporate Director Resources, in consultation with the Assistant Chief Executive for Legal and Democratic Services, to review and approve specific officer delegations, for the HCC Director, to support commercial operating.

Considered – A report of the Corporate Director Resources informing Executive of the results of the soft market testing (SMT) carried out by 31Ten for the Harrogate Convention Centre (HCC), and providing recommendations for the next steps including the development of Studio 2 and the consideration of adopting a more commercial operating model.

The Executive Member for Open to Business, Councillor Mark Crane, welcomed Paula Lorimer, the Director HCC, to the meeting and referred to the importance of the HCC to the economy of Harrogate. 

Paula Lorimer then gave an overview of the soft market testing undertaken and made the following key points:

·        Executive had agreed not to continue with the £57m redevelopment due to escalating costs, the prospects of large parts of the venue being closed for three years and failure to get Levelling Up funding.  The SMT had been undertaken to determine the best way forward.

·        The objectives set by the Council for the SMT were to look at ways of retaining the £45m benefit to the economy of Harrogate, protecting the public purse, reducing carbon emissions and exploring alternative operating models

·        Findings of the report indicated there would be little market interest in running such a venue and local authority venues normally operated at a loss.  Market feedback on the venue was positive, though Studio 2 could facilitate conferences better.  Ongoing maintenance was critical and further income could be leveraged from developing partnerships with local organisations.

·        Five options were identified, as set out at paragraph 3.9 of the report, with Option 3 being the recommended way forward: commercial investment of £7m in Studio 2 to create breakout spaces for larger conferences and an escalator for easier access, which was projected to generate an additional £1.5m in annual income

Gary Fielding, Corporate Director Resources, thanked Paul Lorimer, Nick Edwards and Paul Foster for their work on this and confirmed that the venue required investment.  There was a need for match and other funding to be sought and it was hoped that the Council’s willingness to invest would means others would be confident to come forward with funding.

Resolved (unanimously) – that

1)               Executive agree in principle to support the Soft Market Testing recommended Option 3 - the creation of Studio 2 and explore the shift to a more commercial operational approach.

2)               Officers scope and tender the most cost-effective construction works to create Studio 2, engaging with NYC Align Property Partners and utilising preparatory work already completed, with cost estimates indicating a budget of £7 million.

3)               a new Business Plan for HCC be developed including investment in Studio 2, commercial operating models and the future vision for HCC supported by financial, operational, and sustainability plans.

4)               authority be delegated to the Corporate Director Resources, in consultation with the Corporate Director Community Development, Executive Member for Finance and Resources, Executive Member for Open to Business, the authority to approve the business case to implement the improvements to Studio 2 to the value of £7m and to undertake any associated decisions.

5)               the governance requirements for HCC be reviewed and defined

6)               future funding opportunities be actively pursued and secured, including North Yorkshire Mayoral Investment, government grants, and other sustainability initiatives.  As part of the business case, consider rebranding HCC to broaden its market appeal and align with the strategic goals for the wider Yorkshire region.

7)               Scope and implement immediate sustainability improvements and develop a long-term strategy, including identifying external funding opportunities.

8)               essential property maintenance repairs be prioritised to ensure the safe management and operation of HCC and explore delivering essential works via a small in-house team utilising existing North Yorkshire procurement frameworks.

9)               authority be delegated to Officers to continue engaging with potential external operators or buyers of HCC, with further reports as required to be brought back to Members.

10)            Authority be delegated to the Corporate Director Resources, in consultation with the Assistant Chief Executive for Legal and Democratic Services, to review and approve specific officer delegations, for the HCC Director, to support commercial operating.

Reasons for Recommendations

Studio 2

Investing in Studio 2 will attract larger conferences that require more breakout spaces. Estimated at £7m this investment is expected to be repaid through increased income, presenting a clear invest to save opportunity.

This investment will help rebuild confidence in the venue, paving the way for future investments and funding.  Developing Studio 2 will enhance HCC’s economic impact by creating jobs and improving its viability as a financially sustainable venue.

Commercial Operating Model

The proposal includes exploring a commercially driven operating model for HCC as part of a broader business case.  This approach would align operations with other successful council-owned convention centres, offering greater flexibility and oversight.  It is anticipated that this change will enhance HCC's ability to become financial sustainable.

Strategic Partnerships

It is recommended to pursue strategic partnerships with local governments, universities, mayoral combined authority and other entities to expand HCC's services and create an innovative business plan.  Such partnerships could unlock new growth opportunities and funding, making HCC more appealing to a wider audience.  These collaborations would also align HCC's activities with regional economic development strategies, strengthening its long-term sustainability and potential for rebranding.

Incremental Capital Improvements Over Large-Scale Redevelopment

Instead of pursuing a large-scale redevelopment, which is unaffordable due to limited funding and potential operational disruptions, the proposal is to focus on phased, incremental capital improvements targeting external funding opportunities.  This approach would minimise disruptions, keep the facility operational, and ensure its gradual upgrade while maintaining safety standards.

Remaining Open to Market Opportunities for Freehold Sale or Lease

The Council is advised to remain open to market opportunities, including potential offers for the freehold sale or lease of HCC.  While initial market testing showed limited interest in a full sale, ongoing engagement with potential buyers such as a recent approach from a global conference operator may uncover new opportunities.  Staying receptive to these possibilities will enable the Council to act swiftly if a viable offer aligns with its long-term goals.

Prioritising Sustainability and Carbon Reduction Measures

Prioritising efforts to reduce HCC’s carbon footprint is essential for both environmental and financial sustainability.  A long-term strategy should be developed, focusing on carbon reduction and linking future investments to external funding opportunities.

Summary

These recommended steps aim to improve HCC's financial performance, operational efficiency, and sustainability while maintaining its contribution to the regional economy.  By focusing on practical, incremental improvements and strategic changes, the Council can ensure HCC remains a key asset to Harrogate and North Yorkshire.

Alternative Options Considered

The alternative options were set out in the 31Ten report and covered in section 3.9 of the report.