Decision details

The report provides a further update of the costs of fitting out the first floor of the AMP development into an Enterprise Centre, and requests additional budget to complete it.

To approve a revised budget allocation of £655,000 to support the completion of the AMP Enterprise Centre, that is to be funded from the UKSPF Town Centre Improvement budget in the Capital Programme.

Reasons for Recommendations
The AMP first floor continues to remain void due to limited interest that commercial agents have identified to be associated to the current level of fit out and the necessary investment required of a prospective tenant within a challenging economic climate and within an environment of changing patterns of working.
The costs of completing the fit out of the first floor exceeds the Business Case assumptions approved in November 2023.
A Do-Nothing approach is unlikely to secure a tenant and the UKSPF Investment Plan Town Centre Improvement allocation has provided the Council with funding to complete the first floor of the AMP and provide facilities and terms that meet demand and support small and start-up businesses.
By developing the first floor into smaller commercial units the Council is not only maximising the chances of securing income for the Council through rental income but also encouraging regeneration in the Town Centre as well as encouraging new business start-ups in the local economy.

Alternative Options
The original business Case included a range of options that are listed below. These options have been reviewed and continue not be recommended on the grounds set out below.
Option One: Do Nothing
The Do-Nothing option continues not be recommended as the AMP is a high-profile Council flagship building. The Council has succeeded in letting all the commercial retail units which exceeds the original business case assumptions.
The original business case recommended an 18-month period of marketing the space prior to the Council committing to further investment. However, if the first-floor area is to remain void for a considerable period the Council could be at risk of financial pressure and reputational damage.
The UK SPF Investment Plan includes provision to fund the completion/fit out of the AMP first floor. A do-nothing option could result in loss of funding and reputational damage in respect to the Council management of the UKSPF allocation
Option Two: Residential Units
The Council could proceed to converting the first floor into residential units. However, this option would require a change of use planning consent as well as alternative funding source as the UKSPF grant cannot be used for residential purposes.
If the Council were minded to convert the first floor into residential units, it would incur a potential risk of a tenant exercising a Right to Buy at a later stage at a discounted market value.
The Council could consider converting the first floor into Temporary Accommodation units. However, the AMP is a high-profile flag ship development in the centre of Arnold. Temporary accommodation units would not be aligned to the objectives of regenerating and supporting start-up businesses within one the Borough’s key retail/business areas.
Option 3: Fund Fit Out from Capital Reserves and Borrowing
The option to borrow has been rejected as this would create financial pressures for the Council and an unviable business case.