A further £1.7million could be added to the bill for the new Lichfield cinema development in order to fund a deal to bring a new food and drink business to the city.
Lichfield District Council has already agreed to pump more than £5million into launching the joint venture with Evolve Estates, owner of the Three Spires shopping centre, to transform the former Debenhams unit.
The local authority then also agreed a deal to buy out their partner within two years of its opening – with the figure expected to be in the region of £3.5million.
A report by deputy leader Cllr Andy Smith to the council’s overview and scrutiny committee next month has confirmed that more cash will now be needed to make the development – now branded as the Three Spires Quarter – a reality.
It said that the as yet unnamed food and drink anchor tenant was a national company that was “well-recognised as a high-quality brand throughout the UK”.
But in order to bring the business to the city alongside the Everyman-operated cinema, Cllr Smith said the money would need to come from council rather than private coffers.
“Capital contributions on schemes like this, with the type of brands we are seeking to attract are quite normal, as evidenced by the other council’s we have spoken to about the anchor food and beverage tenant.
“Discussion has been held with our partners, Evolve Estates about the contribution needed for this deal to proceed.
“In December 2023, council considered and approved a recommendation from cabinet following a request from Evolve Estates that a buy-out clause be included into the agreement. This inclusion enables Evolve Estates to divest themselves of their shareholding two years after practical completion of the development.
“For that reason only, Evolve Estates has said it would not be willing to fund any part of the capital contribution proposed by the tenant.
“Therefore, if a capital contribution is to be made it will fall entirely on the council to make it. A contribution of this scale does not form part of the approved budget for this project.”
Cllr Andy Smith
The overview and scrutiny committee will discuss the £1.7million required to secure the agreement of the food and beverage outlet – to cover costs on developing the unit and possible rent-free incentives – to move to the city centre.
Cllr Smith’s report says cash to foot the bill could come from the proceeds of the sale of land for residential development on the former Tempest Ford site.
“At present, there are no uncommitted resources available to provide funding for the £1.7million capital contribution. However, the council does have some options available to improve the payback period.
“The council is currently marketing an element of the Birmingham Road Site. In the event this capital receipt is more than the capital contribution, £1.7million could be used for funding. The estimate of capital receipts from this area of the site provided by the council’s property advisors is between £4million and £5million.
“If the council does not use this capital receipt for funding, and maintains the approved risk ‘headroom’, then to ensure the funding gap does not increase, budgetary savings would need to be identified to offset the capital financing costs.”
Cllr Andy Smith
“Halo effect”
The report said the spending the money to attract the unnamed tenant would create a ‘halo effect’ whereby other companies would also seek to take up units nearby.
It added that the deal with cinema operator Everyman meant the council was also required to bring in one food and beverage business from a shortlist of eight alongside them.
Cllr Smith’s report added
“This anchor tenant brand attracts other food and beverage and leisure providers to a location. Their interest in coming to Lichfield has already led to other outfits making contact about space in the venue alongside them.
“This is no doubt why the partnership is so advanced with the letting process for other units and the interest the site has generated, with minimum marketing needed.
“As with the imperative to be able to draw other providers to the site, equally important of course – both for the site and for the vibrancy of the city centre as a whole – is our ability to draw people to Lichfield from both inside the district, the county and broader region.
“A brand like this anchor tenant will support this aspiration far more than an unknown, regional operator could.
“The experience of other towns and cities is that having this tenant located with them draws visitors from far and wide, which can only benefit the wider city economy.”
Cllr Andy Smith
The report will be discussed at the overview and scrutiny committee meeting on 3rd April.
