Minutes:
Prior to consideration of the following article, the Vice-Convener invited Mr Brian Horsburgh and Mr Ed GIlliespie, AECC Board Members to provide the Committee with information regarding the current operation and future of AECC as envisaged by the Board, and to answer any questions members might have in this regard.
In the course of their address, Mr Horsburgh and Mr GIlliespie provided the Committee with extensive information regarding the AECC’s current position and emphasised the importance of the Council consulting with the Board in any future proposals the Council was considering for the AECC. Thereafter members asked a variety of questions to Miss Wood and Mr Campbell.
Councillors Fletcher and Milne declared interests in the following item of business as members of the Board of Aberdeen Exhibition and Conference Centre (AECC) and left the meeting prior to the Committee’s deliberations.
The Convener declared an interest in the following item of business as a former member of the Board of Aberdeen Exhibition and Conference Centre (AECC) and left the meeting prior to the Committee’s deliberations.
Councillor Farquharson was in attendance as a substitute for Councillor Milne and Councillor Young was in attendance as a substitute for Councillor Crockett.
With reference to article 17 of the minute of meeting of the Council of 18 August, 2010, the Committee had before it a report by the Director of Enterprise, Planning and Infrastructure which provided an update on activities relating to the future funding and development of AECC and sought comment on proposed future actions for the future which were designed to put the AECC on a more sustainable financial footing.
The report reminded members of the previous taken by the Council regarding the AECC as well as existing issues. Further to these decisions, officers had progressed this matter and now sought to bring all of the issues together by:- separating the operations of the AECC from the management of the land and property assets within and around the AECC site, in order to focus the AECC Ltd’s attention on the need to manage, run and maintain an efficient and sustainable exhibition and conference venue; transferring all property and land assets currently owned or leased by AECC Ltd to the City Council, so the Council assumed full responsibility for the future development of these assets; and suggesting a possible way forward for developing the land and property assets, through the creation of a joint venture development company charged with developing the assets according to an agreed asset development plan, possibly using funding raised through the creation of a Local Asset Backed Vehicle (LABV).
The report advised that were the Finance and Resources Committee to approve the recommendations contained within the report, it was anticipated that a clearer focus on the operation, management and maintenance of an exhibition and conference centre, without the distractions caused by the need to develop property and land assets, would enable AECC Ltd to have an even greater focus on generating profits from events, conferences and ancillary services.
The paper also suggested how these assets might be better developed, and the Council’s debt reduced in the process, by creating a joint venture development company with private sector developers/investors and. by potentially attracting private funds into a Local Asset Backed Vehicle. The exact nature of any proposed joint venture development company or LABV would need to be further investigated and appropriate papers submitted to Committee before any decisions were taken as to whether this provides the best means for developing the property and assets within and around the AECC.
The current operating situation of the AECC was described in Appendix 1 to the report.
The report recommended:-
that the Committee:-
(a) note the recent decision of Finance and resources Committee to invest £1.068 million, as part of the Council’s capital programme for (£368k from this year’s budget and £700K from next year’s budget), in new hard standing to accommodate the erection of temporary expansion facilities for future Offshore Europe exhibitions (subject to planning approval being received) and to instruct officers to report back on progress until completed;
(b) note the current AECC trading situation which was summarised in Appendix 1 to the report;
(c) comment on the proposals outlined below and to refer to the Finance and Resources Committee for consideration:-
that the Council negotiate, with AECC Ltd;
a) the reversion of all existing leases relating to land currently leased to the AECC, and the transfer of ownership of all AECC owned buildings and assets, from the AECC to the Council;
b) an agreed “buyout” fee (based on the market value of the leases), which would immediately be used to repay an equal amount of the AECC’s current outstanding debt to the Council;
c) a contract, of sufficient value, to enable AECC Ltd to manage, operate and develop the business of the AECC, subject to suitable performance targets being met; and
d) a full repair and maintenance lease over the buildings and assets currently owned by the AECC to run concurrently with the management and operating contract above;
(d) to instruct officers to prepare and submit a report to both the Enterprise Planning and Infrastructure Committee and Finance and Resources Committee outlining the options and terms for reverting all existing leases relating to land currently leased to the AECC, and transferring ownership of all currently owned buildings and assets, from AECC Ltd to the Council;
(e) to instruct officers to undertake a procurement exercise, using the appropriate process, to identify suitable development and investment partners interested in establishing a joint venture development company to assume responsibility for the future development of all Council owned land and buildings in and around the AECC. This development would be undertaken on the basis of a pre-agreed 20-30 year development plan, which included the construction of a four star hotel, and which took full account of the future business development needs of the AECC. Consideration would be given to the creation of a Local Asset Backed Vehicle (LABV) to help fund this development;
(f) to instruct officers to negotiate the possible inclusion of the AECC buildings, the proposed new hotel and all of other Council owned land in and around the AECC, in any potential LABV;
(g) to instruct officers to prepare and submit a report to both the Enterprise Planning and Infrastructure Committee and the Finance and Resources Committee outlining the proposed;
a. Terms for creating the proposed joint venture development company
b. Terms for creating a LABV,
c. Assets to be included in the LABV and the terms relating to their inclusion,
d. Long-term development plan for Council owned land and buildings in and around the AECC
e. Relationship, if any, between the joint venture development company and the City Development Company
(h) to instruct officers to ensure that the proposed management services contract given to AECC Ltd was of sufficient value to replace the current AECC annual revenue grant.
The Vice-Convener, seconded by Councillor John West, moved:-
that recommendations (a) and (b) be approved and that recommendations (c), (d), (e), (f), (g) and (h) to be considered by the Finance and Resources Committee be supported.
As an amendment, Councillor Young, seconded by Councillor Allan, moved:-
that recommendations (a), (b) be approved and that recommendations (c)(a), and (d) to be considered by the Finance and Resource Committee be supported.
On a division, there voted:- for the motion (8) – the Vice-Convener; and Councillors Clark, Corall, Cormie, Jaffrey, Penny, Robertson, and John West; for the amendment (5) – Councillors Adam, Allan, Boulton, Farquharson and Young.
The Committee resolved:-
(i) to adopt the motion; and
(ii) to request that Corporate Communications prepare a press release on behalf of the Committee regarding this matter.
Councillor Young intimated in accordance with Standing Order 36(3), that he wished the report on the future funding and development of AECC dealt with in the preceding article be referred to Council for decision. In accordance with Standing Order 36(6), the Vice-Convener ruled the request incompetent.
The Convener rejoined the meeting at this point, and resumed the Chair.