CROYDON IN CRISIS: Town Hall correspondent, KEN LEE, on the latest council bail-out for Brick by Brick over the bungled and unfinished refurbishment of the borough’s major arts centre
Croydon’s cash-strapped council is to step in and pick up another £69.2million-worth of costs associated with the bungled and unfinished refurbishment of the Fairfield Halls, according to a report going to next Monday’s Town Hall cabinet meeting.
And yet more consultants are having to be hired by the council to check on the work of Brick by Brick and its contractors, to decide quite how bad a job they managed to make of the prestigious south London arts venue and what work is needed now “to make the centre operational”.
By transferring the multi-million-pound cost over-runs from the Brick by Brick balance sheet, council officials hope to staunch their losses and make the house-builder a more attractive proposition to a potential buyer.
The council has loaned loss-making Brick by Brick £200million since it formed the company in 2015, and not a penny has ever been repaid – a significant factor in the council going bust last year.
Next Monday’s meeting will be the first in-person gathering to be held in the Town Hall Chamber since March 2020, though some special covid safety measures will be in place.
The papers released in advance confirm that talks have been underway with a sole bidder to buy Brick by Brick at least since April.
But as well as managing to build very few new homes on time and to budget, Brick by Brick’s management of the Fairfield Halls refurbishment project proved to be catastrophically poor.
The Fairfield Halls have been open for barely six months in the whole of the last five years.
In 2016, they closed for what was supposed to be a two-year project that was budgeted to cost just £30million.
Those works over-ran by more than a year, and after a reopening ceremony in September 2019, covid-19 saw the Concert Hall, Ashcroft Theatre and the new venue, The Wreck, forced to shut again in March last year.
Yet, even in that abbreviated opening period, it quickly became apparent to staff, performers and customers alike that there were very many issues with the works, which were incomplete and unfinished. In recent weeks, for example, workmen have been on site trying to fix leaks from the Halls’ roof which, it is suggested, were caused during the refurbishment works.
The report to Monday’s cabinet meeting says the council is in the process of scrapping its contracts with Brick by Brick for the Fairfield project, and taking the matter back to get the job done, properly. “There are apparently no disputes with contractors,” the report states, with a suggestion of a sigh of relief, “but there may be some accounts that need to be settled (currently do not have estimates for) and some works that were either not fully specified or outside the scope of the refurbishment that need to be undertaken to make the centre operational.”
“The Council is appointing specialist surveyors with particular expertise in venues similar to Fairfield Halls to see what additional works needs to be undertaken to make the building usable.” Note that: usable. Suggesting that it is not so now.
Elsewhere in the report it says, “In order to ascertain what is required quickly and the likely cost, the council has directly appointed Faithorn Farrell Timms (a specialist in concert venues) to undertake a survey of the property and to review the original contract documentation.
“It is possible that additional specialist advice or exploratory works may be required.
“This work,” the report states, portentously, “will then inform the basis of a contract to complete the refurbishment of the Halls.” Which confirms the widespread assertion that Brick by Brick had left the job uncompleted.
The report, drafted under the direction of Chris Buss, the council’s interim finance director, explains the background: “The refurbishment of Fairfield Halls was undertaken by Brick by Brick at what was intended to be at nil cost to the council as the arrangement was structured in such a way that the costs would be covered by the development profit from the adjacent College Green site…
“… This arrangement is no longer taking place, which means that Brick by Brick no longer has the capacity to fund the expenditure on Fairfield Halls.
“… It is proposed to treat all the costs incurred by Brick by Brick on the refurbishment as council capital expenditure rather than as a loan. The existing total expenditure is £69.261million… The impact of this is to reduce the level of indebtedness of Brick by Brick to the Council to £163,042,060.
“The existing contracts between Brick by Brick and contractors and consultants involved in the original refurbishment will be novated to the council to ensure that the council is able to enforce any warranties or guarantees under the contracts. There are however outstanding works to complete the refurbishment.”
Elsewhere, the borough’s elected councillors – few of whom will actually get to attend Monday’s in-person meeting in the Chamber because of covid restrictions – are given a stern warning. “In taking decisions under this report,” they are lectured, “members will need to be careful to separate what is in the interests of Brick by Brick from what is in the interests of the council…
“Fundamentally, these decisions need to be made solely having regard to what is in the interests of the council (allowing for the fact that the interests of the company are intertwined with those of the council).”
Councillors are also cautioned that “the exact mechanics of how this transfer will take place is still to be determined” and that it will “need to ensure that it does not inadvertently generate a tax liability for either the council or Brick by Brick”.
Read more: Conflicts of interest, incomplete contracts, unlawful payments – how the Fairfield Halls refurbishment cost Croydon £50m-plus
Read more:Making a Splash: big bailouts behind Brick by Brick’s buyers
Read more: ‘An accountant could have foreseen this more than a year ago’
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