Agenda item

With reference to article 25 of the minute of meeting of the Enterprise, Planning and Infrastructure Committee of 9 November, 2010, the Committee had before it recommendations from that Committee to support proposals in a report by the Director of Enterprise, Planning and Infrastructure which summarised progress on the future funding and development of the Aberdeen Exhibition and Conference Centre Ltd (AECC). The Enterprise, Planning and Infrastructure Committee had been invited to make recommendations to today’s meeting on proposals for future activities which were designed to place AECC on a more sustainable financial footing.

The report reminded members of the previous decisions taken by the Council on 18 August, 2010 (article 17 of the minute of meeting refers).  Officers now sought to address outstanding issues by separating the operations of AECC from the management of the land and property assets within and around the AECC site, in order to focus the company’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 Council, so that 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 plan, possibly using funding raised through the creation of a Local Asset Backed Vehicle (LABV).

The report advised that, were this 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 report 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 reports submitted to Committee before any decisions were taken as to whether this provided 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 Enterprise, Planning and Infrastructure Committee –

(a)       note the recent decision of the Finance and Resources Committee (article 40 of the minute of meeting of 28 September, 2010, refers) to invest £1.068 million, as part of the Council’s capital programme (£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 this Committee for consideration the proposals that the Council negotiate, with AECC Ltd:

(a)       the reversion of all existing leases relating to land currently leased to AECC, and the transfer of ownership of all AECC owned buildings and assets, from 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 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 AECC to run concurrently with the management and operating contract above;

(d)       instruct officers to prepare and submit a report to both the Enterprise, Planning and Infrastructure Committee and this Committee outlining the options and terms for reverting all existing leases relating to land currently leased to AECC, and transferring ownership of all currently owned buildings and assets, from AECC Ltd to the Council;

(e)       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 AECC, to 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 AECC, with consideration to be given to the creation of a Local Asset Backed Vehicle (LABV) to help fund this development;

(f)         instruct officers to negotiate the possible inclusion of AECC buildings, the proposed new hotel and all other Council owned land in and around AECC, in any potential LABV;

(g)       instruct officers to prepare and submit a report to both the Enterprise, Planning and Infrastructure Committee and this 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 AECC; and

(e)       relationship, if any, between the joint venture development company and the City Development Company; and

(h)        instruct officers to ensure that the proposed management services contract for AECC Ltd was of sufficient value to replace the current AECC annual revenue grant.

The Convener moved, seconded by the Vice Convener:

that the recommendations of the Enterprise, Planning and Infrastructure Committee to support the proposals be approved and that the report be otherwise noted.

Councillor Young, seconded by Councillor Graham, moved as an amendment:

that recommendations (a), (b), (c)(a) and (c)(b) be approved.

On a division, there voted:- for the motion (9) – the Convener; Vice Convener; and Councillors Clark, Cormack, Dunbar, May, Leslie, McCaig, and John West;  for the amendment (5) – Councillors Cooney, Farquharson, Graham, Hunter and Young;  absent from the division  (2) – Councillors Crockett and Dean.

The Committee resolved:-

to adopt the successful motion.

            In terms of Standing Order 36(3), Councillor Young intimated that he wished the matter referred to in the preceding article to be referred to Council, and was supported by Councillors Cooney, Farquharson, Graham and Hunter.