A report has shed more light on plans for Lichfield District Council to purchase full control of a new cinema development within the next two years.
The local authority’s overview and scrutiny will discuss the proposals at a meeting this week.
The move would see the council insert a clause in the agreement with Evolve Estates, the owners of the former Debenhams building which is due to house the new multi-screen facility, which would agree to a future £3.5million buyout fee.
It follows a previous £5.7million agreement to help get the Limited Liability Partnership (LLP) joint venture off the ground in the first place.
A report to the overview and scrutiny committee by deputy leader, Cllr Andy Smith, said that Evolve Estates had sought the new buy-out commitment from the council.
Although the full details were redacted of exactly why the local authority’s partner in the development had wanted such a clause that would see the £3.5million deal concluded within two years, the report said the company remained committed to the cinema project and the broader city centre regeneration plans.
“Evolve Estates’ purchase of the Three Spires shopping centre has been a positive for the city and district. They are a very present landlord, aligned with the Council’s ambition to ensure a vibrant city centre shopping experience for residents and visitors.
“In the last twelve months we have seen long term vacant units on the site populated with brands such as Starbucks, Edinburgh Woolen Mill and latterly KFC.
“In October 2022, full council supported entering a joint venture with Evolve Estates to bring forward an ambitious place-shaping ambition for the district, to introduce a high-quality cinema operator and complementary food and beverage outlets to add to the already well-established independents the city enjoys.
“Due diligence undertaken proved for full council that Evolve Estates was the right commercial partner, with an aligned ambition for the site and understanding of the greater benefits the development would bring to the remainder of the city centre regeneration aspirations of the council.
“None of the above points has changed. Evolve Estates remain a committed partner, determined to deliver the cinema complex at the heart of their Three Spires estate – and this report seeks final sign off from cabinet, and a recommendation to full council, that we do the same.”
Cllr Andy Smith, Lichfield District Council
The report added that Evolve Estates was “not seeking payment for the value of the asset -the Debenhams building – it is putting into the LLP” as part of the clause.
It also identified that if the local authority did not seek to take up purchase option within the timescale then it could still be left with a bill to settle.
“If the council decides not to purchase Evolve Estates’ shareholding, then Evolve Estates will be entitled to sell its holding on the open market.
“In the event it did not achieve the pre-agreed price of £3.5million on the open market, then the council would fund any gap between its sale price and £3.5million.”
Cllr Andy Smith, Lichfield District Council
“Concluded the deal for a 25-year lease for a cinema operator”
Details have still to be confirmed about the operator of the new cinema, but Cllr Smith added that the deal was now in place with both the unnamed chain and the majority of the food and beverage units being created as part of the project.
His report added that agreement in the buyout clause was now one of the last remaining hurdles for the development.
“Several months of work by our partners in Evolve Estates has now concluded the deal for a 25-year lease for a cinema operator to move to Lichfield.
“The ability to exchange contracts with that cinema operator awaits only the conclusion of the LLP now.
“Alongside the cinema operator, Evolve Estates has successfully pre-let all but one of the food and beverage and leisure units that will be created within the centre.
“Again, exchange of contracts for these leases awaits only the conclusion of this LLP deal.
“If the LLP amendment set out is approved, then these contractual negotiations can be concluded and then work on site can commence to complete the development. Once completed, and associated obligations on Evolve Estates as development lead achieved, the development would ‘go live’ and the clock would start on the buy-out clause.
“At that stage, and assuming cabinet and full council decide to buy out Evolve’s shareholding, then the council will become the 100% owner of the development, its risks and financial benefits.”
Cllr Andy Smith, Lichfield District Council
The report will be considered at a meeting of Lichfield District Council’s overview and scrutiny committee tomorrow (30th November).
If the market, who make money out of investment, are not willing to invest in this project I’m very worried that LDC seem to think they know better.
It seems their partner are getting the best of both worlds with a guaranteed out and LDC then taking all the risk. The draw of the cinema to other potentential tenants for 3 spires will benefit the owners of 3 spires who will have no risk.
Cinemas are loss leaders – they do not provide an investment return. What makes the money is their ability to draw restaurants.
LDC are a local authority and they should not be risking council tax in making investments. Leave investment to those who know what they are doing. This sort of onvestment should be ultra vires.
Hey, Lichfield Council, I have this bridge to sell you …
If LDC just for 30 seconds look back at the last 25 years UK entertainment market, then take a long hard look at forecasts for next 10 years [let alone 25] they will never go ahead with this. How many retailers in Spires have a 25 year lease? But then most of LDC people will not be around to pick up the pieces of such a bizarre deal
So it would appear that Evolve are negotiating a situation where they cannot lose. It would also seem they are giving Lichfield Council the ‘hurry up’ on property they have not been able to lease and will charge the council costs if it does not meet their timeframe. Even if the deal cannot be struck the council will still be liable for any shortfall in the sale price if the property goes on the open market. This, of course, gives Evolve every opportunity to unload buildings they have not been able to lease with total impunity.
Much as a cinema would be desirable this is by no means a commercial certainly. The council seems to always back themselves into a corner. The sums of money involved and the potential fallout for this scheme could be very damaging.
LDC seems to have adapted that old saying “build it and they will come” to something that more suits the desperation that now seems to accompany any plans for development in Lichfield.
After years and years of the Friarsgate farce that has now seen a temporary car park created for a select few, LDC now seem to be following the mantra: “Build anything! Now! Sod the cost!”
It really does seem LDC has managed to position itself between a rock and hard place as regards this cinema plan. Agree to the Evolve deal and pay more out so the developer can walk away. Or don’t pay, lose the Debenhams site and any hope of a cinema.
Why has been allowed to spiral downwards this far? Why is it only residents asking questions on here now that we have finally been given access to a lot more information that was only previously available to councillors?
Correct me if I’m wrong but it was not so long ago that LDC were telling us they don’t have enough money in the coffers to fund a decent Leisure Centre but have suddenly found money far in excess of what was needed for said centre to fund this madcap idea that they can run a cinema and make it commercially viable. Who is scrutinising this? Labour and LibDems where are you on this?
Nottingham issuing a S114 notice now. They thought they could run an energy company! LDC thinks it can run a cinema and wants to spend around 75% of its annual budget on it. I blame diplomatic Dave Cameron and his Localism Act that allowed councils to do anything a business can do without the skill or shareholder risk. Look at the cuts pencilled in after the General Election some £19bn to unprotected areas like local govt. Some 50% again of the cuts that Osborne did 2010 opnwards. Iceberg ahead!
This update sounds desperate by LDC, as nothing has happened since Doug Pullone was parping on about work starting on the cinema in his videos this time last year.
It’s heads I win, tails you lose LDC. Why is a private business not expected to take any commercial risks? It will make a profit if things go well (unlikely) and still walk away with a profit if they don’t. Meanwhile Lichfield will have lost communal assets which the Council seems not to value in the form of the bus/coach station and the multi-storey car park. A cinema would be nice, but not at this price.
If I were a cynical company. I would plan to get the council to purchase an asset, we are unbale to get any interest in. Get the council to spend all of the money on refurbishment.
Get them in a long term contract. Wait for the council to go bankrupt.
Then buy it back for pennies.
“If the council decides not to purchase Evolve Estates’ shareholding, then Evolve Estates will be entitled to sell its holding on the open market. In the event it did not achieve the pre-agreed price of £3.5million on the open market, then the council would fund any gap between its sale price and £3.5million.”
The council decides not to buy the share, Evolve Estates sells it on the open market for 1p and then the council has to give Evolve Estates £3,499,999.99 and get nothing in return. That’s how that would work, isn’t it? I hope I am have misunderstood because it looks the council has agreed to potentially give Evolve Estates up to £3,499,999.99 so that someone else can own the share and that sounds very stupid.
What the heck is wrong with our council? We live in a beautiful city but they don’t respect it, that is the problem. No doubt they keep claiming their meeting allowance which we pay for.
Just a bit confused, the shadows in the photo seem to suggest the sun is in the North West?
@Crispy – I think it’s just an artist’s impression! It hasn’t been built yet to my knowledge…
@Kathleen – I for one really want to see this completed it will be excellent for our city for both our residents and the wider economy. Not sure how the council building this is “disrespectful”? What an odd thing to say…
Not a very bright artist then?
Typical, Joe Public “We want a cinema, we want a cinema “.
Now it’s on the way, is Joe Public against it? 🤔
@Night watchman… No I don’t think Joe Public are turning against the cinema. What is happening is that people are perplexed by the complex arrangements trying to set it up. This seems to happen with many ongoing projects LDC are involved in; Friasgate, Leisure Centre and Pedestrianisation to name just some.
Many local places seem to take such decisions in their stride. Lichfield is good at dogs dinners. Critically there is much concern at the finance involved. They are making this cinema into a make or break situation. The consequences for Lichfield could be serious.
Is Evolve still a going business