Minutes:
The Committee considered the following report:
“1 Relevant Background Information
1.1On the 24 August, Members agreed to proceed with a revised Developers Brief for commercial leisure and cultural purposes for a 58 acre site at the North Foreshore on the basis of a clearly defined end date for the receipt of developers’ submissions containing all the due diligence information required to assess the commercial robustness and financial viability of the proposed scheme.
1.2 The Development Brief was advertised in the local papers on the 7 December 2012, the council website and in the European Official Journal. Developers were invited to submit development proposals to acquire up 58 acres for a Commercial Leisure / Cultural Scheme. The Developers Brief clearly highlighted the due diligence information that developers were required to submit to the Council by the closing date, or the development submission would be deemed to be non-compliant by the Council. The clearly defined end date for the Development Submissions was the 24 January 2013.
1.3 The Council received one development submission from James Schiavo of China Sun Asia Pacific Ltd by the closing date, 24 January 2013.
1.4 An Evaluation Panel was established to assess the Development Submission. The Evaluation Panel comprised the Council’s Estates Manager, Divisional Solicitor, Financial Accounting Manager and North Foreshore Project Manager. The Panel used the evaluation criteria outlined in the Development Brief together with a scoring matrix as agreed by the Panel prior to the receipt of the Development Submissions.
1.5 The Evaluation Criteria
· Financial offer for the Development Site.
· Track record of the Developer and project Development Team to deliver and operate similar Cultural Leisure Development Scheme.
· Financial viability of the project and the economic capability of the operator to fund, deliver, and operate the development scheme.
· Quality of the Development Proposal
· Delivery of the project within a reasonable timescale.
1.6 China Sun Asia Pacific Ltd’s Development Proposal
China Sun Asia Pacific Ltd Development Submission outlined details of their proposed scheme for the site which comprises:-
Sports City
· International Training Facility (indoor & outdoor pitches)
· 7,200 / 8,000 seat Football Stadium & NI Sports Museum
· Junior Stadium
· 3,000 seat Indoor Sports Arena
· 100 bed Hotel
· Sports & Media Educational Campus
Media City
· Sound Stage
· Post Production & Distribution Facilities
· Offices.
2 Key Issues
2.1 The Development Brief clearly outlined the information required from Developers / Consortium Members / Organisations involved in the Development Submission to ensure a compliant bid and to enable the Council to undertake a due diligence exercise.
2.2 The information requested included:
i. Detailed Company / Consortium information from all the Parties who will be entering into the legal Development Agreement.
ii. Detailed financial information and bank details to be provided from all parties who will be signing the Development Agreement with the Council. It stated that sufficient financial information must be provided to demonstrate that the company has the financial and economic standing to undertake and deliver the project.
iii. Detailed breakdown of development cost and the amounts and sources of funding for the capital and revenue cost of the scheme. The Developer had to provide evidence of ability to secure sufficient finance to deliver the project. A comprehensive business plan demonstrating the long term financial viability and to avoid the need for public funding support.
iv. Details about the Development Proposal, scheme content, the occupiers and end users.
v. Development Programme.
vi. A financial bid offer to the Council for the acquisition of the 58 acre site (envisaged to be by way of long lease).
vii. Details of the proposed tenure and development/legal framework required between the Council and the Developer/Consortium
viii. To provide evidence of market research undertaken to support proposal; and provide an outline of the economic & social benefits to the local area, to the city and to Northern Ireland.
ix. A risk analysis to assess the robustness of the development proposal.
x. Information on the environmental Impact in the context of the site and its environment, and to provide information about the proposed environmental mitigation measures/improvements.
xi. To provide a methodology for consultation with public, statutory, community and other relevant organisations to deliver the project.
xii. Details about the Delivery Team, their role in the project and previous experience of delivering similar leisure / cultural development schemes in the last ten years. Client references were required to demonstrate previous experience of delivering similar leisure / cultural schemes in the last ten years.
2.3 Development Evaluation
2.4 The China Sun Asia Pacific Ltd Development Submission was assessed by the Evaluation Panel as lacking in substantial detail to be able to demonstrate to the Council that the proposed Commercial Cultural Leisure scheme is commercially sustainable and financially viable.
2.5 It is not clear from the Development submission who China Sun Asia Pacific Ltd actually is because no company background or financial information was submitted to demonstrate that they have the financial and technical capacity or track record to fund and deliver large scale commercial culture leisure schemes.
2.6 It is proposed that a new company will be formed to enter into the Development Agreement. However it was vague on whether all the parties identified in the Development Submission are fully committed to the project, either as part of the development consortium, or as end users leasing the facilities. There was no evidence of commitment or detailed company information provided concerning the parties identified.
2.7 China Sun Asia Pacific Ltd has not complied with the requirement of the Development Brief, because no financial information has been provided by China Sun Asia Pacific Ltd or by any other Party to enable a robust company due diligence to be initiated and to confirm the financial and economic standing of the Company. The Council needs to be satisfied that the potential parties to the Development Agreement are financially and economically robust to undertake and deliver the project.
2.8 An outline development appraisal showing a breakdown of capital cost and revenue income for the development scheme was provided. China Sun Asia Pacific Ltd is not proposing to fund the road infrastructure works, which was a requirement of the Brief. There was no evidence of available funding or commitment in principle from the potential funders of the amounts to be provided for each component of the scheme. A Business Plan was not submitted to be able to demonstrate the market analysis, the demand for the project or the long term financial viability of the project.
2.9 The Development Proposals comprises of a sports city and media city but there was no evidence of the potential end users commitment in principle to leasing or managing the proposed facilities. Parts of the development proposals extended beyond the 58 acre site on offer from the Council into areas that cannot be developed because of existing site constraints. It would appear that China Sun Asia Pacific Ltd is proposing a phased development approach which could be completed with five years. They are expecting the Council to fund and build the road infrastructure which is contrary to the Development Brief.
2.10 The Development Submission did not provide any detailed information concerning the potential social and economic benefits of the scheme. No figures were provided for the potential number of jobs created, number of visitors, and number of people trained or investment leverage.
2.11 China Sun Asia Pacific Ltd did not provide a robust risk analysis or possible mitigation measures. The information provided did not fully address all the potential risks of developing a difficult brown field site. In particular they provided very little detail about the environmental issues. China Sun Asia Pacific Ltd appears to have very little understanding of the potential environmental liabilities of a former waste landfill site, and the work required to mitigate this liability. It was unclear how they proposed to create a quality environment with attractive open spaces or how their design principles will deliver a good quality development scheme for the site. Council officers are also concerned that the consortia have made no requests for site visits or technical information about the site.
2.12 China Sun Asia Pacific Ltd indicated that they have carried out public consultations; however they did not provide a proposed methodology for how they intend to engage with the community, potential stakeholders and future users of the facilities during the delivery of the project.
2.13 P Durnien is the Project Manager for the scheme, supported by local consultancy firms. No evidence was provided to demonstrate that they have the experience and technical capacity to design and deliver large scale cultural leisure schemes, and no client references were provided with the submission.
2.14 They made no financial bid, either in the form of a capital premium or proposed rent to the Council for this 58 acre site. China Sun Asia Pacific Ltd has requested a 200 year lease.
2.15 The China Sun Asia Pacific Ltd Development Submission was assessed by the Evaluation Panel as lacking in substantial detail to enable a robust due diligence exercise and to demonstrate that their proposed Commercial Cultural Leisure scheme is commercially sustainable and financially viable.
2.16 Conclusion
The Council and DCAL have been in discussions with Mr P Durnien and China Sun Asia Pacific Ltd for the last two years concerning a potential cultural leisure scheme for the North Foreshore. The Council has publicly issued calls for Expressions of Interest and two Developers Briefs requesting detailed Development Submissions. Mr Durnien and China Sun Asia Pacific have been provided several opportunities to provide detailed information which has not been forthcoming despite their assurances that they have worked up detailed proposals and have all the funding in place to finance the scheme.
2.17 The Council agreed to proceed with a Developers Brief for commercial leisure and cultural purposes for a 58 acre site at the North Foreshore on the basis of a clearly defined end date of the 24 January 2013 for the receipt of developers’ submissions, which would contain all the due diligence information required to assess the commercial robustness and financial viability of the proposed scheme.
2.18 China Sun Asia Pacific Ltd has not complied with the Council’s request. The detailed information has not been provided, and in the absence of such information the Evaluation Panel was unable to undertake a detailed assessment of the commercial cultural leisure proposal for the North Foreshore.
2.19 In subsequent recent correspondence with Mr Durnien concerning the Development Submission, it was indicated by the Director of Property & Projects that there was insufficient information to enable a due diligence assessment and a report was to be submitted to the SP&R Committee to that effect. Mr Durnien subsequently provided further information concerning the potential funder and a process for the provision of further information on the basis of exclusivity. However, at present there are no grounds on which the Council could enter into an exclusivity agreement with this consortia and the evidence suggests that the Council should be sceptical about the deliverability of these proposals.
2.20 The Committee is requested to consider the following options for the next step for this development process.
2.21 Option One
To request clarification information concerning the China Sun Asia Pacific Ltd Development Submission, and to be given two months to provide all the information already requested in the Development Brief. A final deadline at the end of two months would be imposed i.e. 2 June 2013. The current development process would end if China Sun Asia Pacific do not supply all of the information requested by the Council by 2 June 2013 to enable a due diligence report to be completed to confirm the financial robustness of their Development Submission. This period would not however be on any exclusivity or preferred developer basis.
2.22 The site has been sterilised for the last two years due to discussions with Mr Durnien and China Sun Asia Pacific Ltd concerning their proposed interest in developing a Cultural Leisure Scheme. Despite best endeavours by the Council with ongoing dialogue, the issue of Expressions of Interest and two Development Briefs seeking detailed development proposals, there is still very little information to demonstrate the commercial robustness and financial viability of the project. There is a lost opportunity cost to the Council as there has been little progress in securing a viable project, and potential missed alternative development opportunities for this site.
2.23 Option Two
China Sun Asia Pacific Ltd is informed that the Council will not be proceeding with the commercial cultural leisure proposal for the North Foreshore because insufficient information was provided by the clearly defined end date of the 24 January 2013 to be able to comply with the requirements of the Development Brief and to be able to demonstrate the commercial viability and sustainability of the proposed development.
2.24 This option would enable the Council to potentially expand the development of the proposed Cleantech Environmental Technology Cluster proposed for the North Foreshore Bio Economy Environmental Resource Park, as contained in the Council’s Investment Programme. Currently the Council has an ERDF Funding application for £8 million for infrastructure works to create the environmental resource park. There is considerable market interest from the cleantech sector to invest at the North Foreshore and the potential to create jobs and leverage private investment.
3 Resource Implications
3.1 Human Resources
Staff Resource, primarily in Property & Projects, Financial Services, & Legal Services, to progress.
3.2 Asset & Other Implications
The development of this site represents a major regeneration opportunity for Belfast and has the potential to create significant economic and social benefits
3.3 Financial Implication
No financial bid was received
4 Equality and Good Relations Considerations
4.1 None at this time
5 Recommendations
5.1 It is recommended that the Committee considers which option should be adopted.
5.2 Option 1 – Grant a two month extension with a final deadline of 2 June 2013 for China Sun Asia Pacific Ltd to comply with the Council’s request for all of the information outlined in the Development Brief. This two month period would not be on an exclusivity or preferred developer basis.
5.3 Option 2 - China Sun Asia Pacific Ltd is informed that the Council will not be proceeding with the commercial cultural leisure proposal for the North Foreshore due to the lack of due diligence information required to comply with the Development Brief.
Given that there were no other commercial cultural leisure submissions received on 24 January, it is also proposed that Council considers further expansion of the development of the proposed Cleantech Environmental Technology Cluster proposed for the North Foreshore Bio Economy Business Park.”
The Committee agreed to adopt Option 1.
Supporting documents: