So at last we know the full extent of the deal that has been done regarding the sale of Millennium House – a prime site within our city. I was accused in an extension of this note which I received from the council that I was “going on a fishing expedition through the council files”. I regret that statement. I responded by saying that I have both a right and a duty to ensure that the council runs properly by scrutinising its activity. It is my job as an opposition councillor to do that and I do it to the best of my ability.
The sale finally completed later than anticipated on 19th February. A truly open and transparent council would have made that clear rather than suggesting that I as a councillor should go to the Land Registry for the facts!
I make no comment about what is below. I leave it to the people of Liverpool to say whether or not they think the best possible value has been achieved through this means of disposal or whether tenders should have been invited on the open market.
From the Council
I can advise you now however that the sale of Millennium House was completed on Thursday 19th February 2015. In relation to the sale price, in assessing the market value of Millennium House an independent valuation was commissioned which reported that the market value of the building with vacant possession was £3,525,000. As Millennium House contains the Council’s main lifestyle gym, rather than close and lose the facility (including £500,000 of income from the Universities) it was agreed that as part of the deal with the developer, Signature Living (SL), the Council would take a part lease back of the premises to provide a new expanded and enhanced gym. As such the independent valuation was used to inform the overall financial deal with Signature Living. As reported to Cabinet in April 2014 the Council received both a premium for the building together with other incentives in relation to the gym to ensure that the overall transaction represented best consideration for the Council in line with the independent valuation. Details of the transaction were as follows:-
Incentives: Capital contribution by Signature Living to the fit out of the gym £240,000
Discounted rent for the gym accommodation over the lease term (10 years): £286,260
Rent free period of 20 weeks: £ 44,045*
Overall value to the Council: £3,570,305
(* Cabinet report indicated an initial rent free of just 8 weeks which equated to £17,616)
The above figures were based on the gym layout and draft specification at the time the 4 April 2014 Cabinet report was prepared. The layout and design of the gym was subsequently altered by the parties, with Signature Living also making an increased capital contribution to the gym. The revised incentive package is £581,710 giving a revised total of £3,581,710.
This figure does not include the increased income as a consequence of the expanded gym and associated facilities including the Juice Bar and Salon, which an additional income of c.£75,000 pa is projected, which over the lease term equates to c. £750,000. When this is factored into the overall deal above then the total financial benefit to the Council over the lease term including the premium is £4,331,170.
As evidenced above the overall financial transaction to the Council represents best consideration, as reported to Cabinet at the meeting on 4 April 2014. The Council as a result of the deal has improved its gym offer which has not only protected the income the Council receives from the Universities but has also seen an increased take up in membership. The disposal of the building to Signature Living has also meant that there has been a seamless transition between the Council vacating the premises and Signature Living acquiring it, with no void costs having to be picked up by the Council. The scheme by SL will fill a gap in the tourism market for a unique football themed hotel with the project levering in £15m of private sector investment, creating 60 part and 100 full time jobs.