Purpose

To consider the update and any necessary decisions.  

Decision

The Cabinet:

1. 1.1 Supported the provision of additional funding in line with the Members Agreement and to recommend to Council:

·       An increase of £2,838,660 (Council 50% share of £3,722,660 less £884,000 approved contingency) in the budget for the Council’s share of the of the cost pressure.

·       An increase of £2,722,660 (LLP Partner 50% share of £3,722,660 less £1,000,000 reduction in consideration) to facilitate an expedited buy-out of the LLP Partner.

·       The total increase in the project budget of £5,561,320 is funded by (£2,850,000) of internal borrowing, short-term revenue budgets of (£150,000) and earmarked reserves of (£2,561,320).

·       An update to the Medium Term Financial Strategy to reflect the cost of financing the recommended funding approach and the savings identified to offset the cost of financing.

1. 1.2 Recommended to Council that the Investment Strategy, Prudential and Local Indicators shown at APPENDIX C (with amendments shaded yellow) are updated to reflect the budget increases and project funding in recommendation 2.1.1.
2. 1.3 Recommended to Council that all future windfall income, savings, asset sales and additional or earmarked reserves are prioritised to reduce the Council’s overall borrowing need and minimise the cost of finance in the revenue budget.
3. 1.4 Subject to the recommendations above being approved, Council is recommended to approve the buy out of the Limited Liability Partnership (LLP) Partner as soon as practicably possible and assumes full responsibility for completion of the project. To enable this, Council is recommended to approve a budget of £100,000 from repurposing short term major projects revenue budgets for legal support to transition from a LLP to an alternative governance model.
4. 1.5 Delegated to the Chief Executive in consultation with the Leader, Monitoring Officer and Section 151 Officer authority to take all necessary actions to complete the buy-out and implement an alternative governance model where the Council is the sole owner subject to costs remaining within approved budgets.
5. 1.6 Subject to Council approving the recommendations above and completion of the buy-out, Cabinet approved the proposed alternative governance model with the Council as owner initially having a “Management Board” comprising the three current LLP appointees and any subsequent appointees being approved using existing governance processes.  
6. 1.7 The Management Board should carry out an initial review of capacity and expertise for the various roles involved to deliver the project and that should be done in conjunction with the council's quantity surveyor and within 4 weeks of a Full Council decision to proceed. 
7. 1.8 Endorsed the creation of a new cross party Advisory Group, to provide an enhanced advisory and assurance role during the interim governance period and delegates authority to the Chief Executive, in consultation with the Leader and Monitoring Officer to establish the group to receive regular reporting and updates.
8. 1.9 Approved the implementation of a risk mitigation approach based around the enhanced risk mitigation section of this report. In addition, the Performance and Programmes Manager or in their absence, another member of the Major Projects Team will become the project’s Senior Responsible Owner.

Reasons for the decision

The redevelopment of the former Debenhams building is a key element of the Council’s wider programme of city centre regeneration and long-term investment in Lichfield district.

Over recent years, this programme has focused on strengthening the local economy, enhancing the quality and accessibility of public spaces, and improving leisure and cultural provision for residents and visitors. This has contributed to increased usage of leisure assets and reinforced the district’s attractiveness as a place to live, work and visit.

The former Debenhams site occupies a prominent and strategically important location within Lichfield city centre. Its redevelopment, as previously approved by the Council, will bring the building back into active use as a new leisure and hospitality destination, including an Everyman Cinema and complementary hospitality uses. The development is intended to support increased footfall, strengthen the evening economy and contribute to the ongoing vitality of the city centre.

Alternative options considered

Additional Funding

The Council could decide to not provide additional investment in the cinema project.