Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: Yes
Salford City Council - Record of Decision
1. The tender process for the Islington Mill project proceeding.
2. Islington Mill Arts Club as the contracting organisation for the Islington Mill/New Islington Mill project and that:
3. The City Council and Islington Mill Arts Club draw up and enter into a grant funding agreement (subject to a successful ERDF (European Regional Development Fund) funding bid).
4. The council underwriting and financing public sector match up to a maximum value of £1.5 million.
5. Negotiation continuing with the owner of New Islington Mill to secure the sale of the property to the council and;
6. Should it be necessary, purchasing the property ahead of a decision on the ERDF funding.
Discussions with Arts Council England and their advisors has indicated that we need to make meaningful use of the period of time, up to the expected decision on ERDF funding by progressing the procurement process. Subject to a positive decision on the funding, the project could then be progressed without delay to achieve a programmed start on site in January 2021.
Prior to the submission of the ERDF funding bid draft Heads of Terms were agreed with the owner of New Islington Mill to sell the property to the Council. However, it has since emerged that the owner has also been in discussion with another interested party.
If the owner were to sell New Islington Mill to another party, then the ambition of the City Council and Islington Mill Arts Club (IMAC) to refurbish and expand managed workspace for a creative industries hub centred on Islington Mill could not be fully achieved.
Medium: The key risks identified are as follows: -
1. One of the key reasons for bringing this report forward now (ahead of a decision on the ERDF funding bid) is that one element of match funding for the project (£858,000 from Arts Council England) is at risk, unless tangible progress is demonstrated on moving the project forward.
Discussions with Arts Council England and their advisors has indicated that progressing the OJEU procurement process ahead of the ERDF decision would enable the project to progress as quickly possible should funding be confirmed.
2. Prior to the submission of the ERDF funding bid draft Heads of Terms were agreed with the owner of New Islington Mill to sell the property to the Council. However, it has since emerged that the owner has also been in discussion with another interested party.
If the owner were to sell New Islington Mill to another party, then the ambition of the City Council and Islington Mill Arts Club to refurbish and expand managed workspace for a creative industries hub centred on Islington Mill could not be fully achieved.
Continued negotiation with the owner of New Islington Mill is therefore crucial to mitigate against this risk.
3. The Council has agreed to underwrite and finance public sector match up to a maximum of £1.5 million in the ERDF funding bid. The Council will endeavour to secure funding from a range of potential sources to offset this amount. However, the key risk to the Council is that some/all of this funding cannot be secured.
- Salford City Council Grant (secured)
- Arts Council England Grant (secured)
- IMAC fundraising (secured)
- Heritage Lottery Fund (secured)
- ERDF Capital Grant (decision expected June 2020)
- Public Sector Match to ERDF (City Council to underwrite, finance and work to secure additional funding to offset)
Legal Services has attended two meetings with the Contact Officer and Procurement to discuss this Project. Legal Services is aware of the funding, procurement and contract structure as detailed above. The Council has previously undertaken projects with a similar grant funding and contract structure such as New Bailey Gateway.
Legal shall draft and advise on the grant funding agreement between the Council and Islington Mill Arts Club (IMAC) referred to in the report. It will be important to ensure that this grant funding agreement flows down any requirements placed upon the Council by ERDF onto IMAC.
IMAC will be the organisation which tenders for and enters into the works contracts referred to. Accordingly the Council will not be the contracting authority for the purposes of the procurement regulations in this scenario, but will be providing on-going advice, assistance, and support to IMAC, to ensure that IMAC complies with relevant legislation and the Council’s own procedures, which will be obligations under the grant funding agreement with and required by ERDF.
Legal services will remain engaged with the relevant officers and procurement throughout this process, and advise and assist where requested, including drafting and reviewing documentation.
The council committed, in December 2019, to continue developing the ERDF funding bid, a decision is expected in June 2020, and any associated costs will be funded from the approved 2019/20 capital programme.
In January 2020 the council committed up to £1.5m, 50% of public sector match funding required. This report sets out the options being explored to reduce the gap, with potential contributions from ECF, Arts Council and HLF.
If none of the target funding can be secured in the next financial year the council will finance 2020/21 costs from the approved place programme.
Beyond 2020/21 would be subject to the normal capital bid / agreement process.
The proposals to progress option 3, at this stage are set out to reduce the risk and secure the Arts Council match of £858k.
Option 3 requires a grant funding agreement with IMAC and SCC.
The council is in negation with the owner of New Islington mill and should it be necessary, purchases the property ahead of a decision on the ERDF funding.
Procurement Advice obtained : Christine Flisk ext 6245
As the funding will be passed to IMAC through the formulation of a grant funding agreement the council will not act as the contracting authority for the 3 packages identified. As outlined within the report the IMAC will have to follow public sector procurement regulations to ensure compliance with the funding organisations. The procurement team will work closely with IMAC to ensure compliance with the Public Procurement regulations required by ERDF.
The following documents have been used to assist the decision process.
* This decision is not subject to consideration by another Executive Lead Member /Director
Publication date: 23/03/2020
Date of decision: 23/03/2020
Decided at meeting: 23/03/2020 - Property / Regeneration Briefing
Effective from: 31/03/2020