● Financial constraints
Most of the above items have already been dealt with. After an intensive period of competition SMG were successful and were appointed as Operator on time and with a very strong bid. After their appointment it was then Cobbetts role, as legal advisors, to reduce the relevant terms of their bid to an enforceable agreement between the Council and Operator committing the Operator to enter into an agreement for lease with the Developer pursuant to which the Developer would deliver an Arena which met and satisfied the key features of the Operator’s business plan. Thereafter the Operator would enter into the lease and commit to deliver the acts required to support the rent payable under that lease. What could be simpler?
Leeds Arena: Challenges
One of the challenges that evolved during the process was to manage the aspirations of the various public sector and private sector participants. It was vitally important to recognise that whilst Leeds always intended to deliver a high quality and distinctive building prioritising the requirements of the Operator, the focus was inwards facing rather than outward facing, but not everybody shared this view. Indeed there were plenty of people, including some of the Developers, who favoured an iconic status building over a functional cash-generating model. There was an important role here for both the Lead Officer at the Council and the Project Manager in managing and brokering the expectations of all parties to ensure that the clarity of this objective was not compromised.
But part way through the Developer selection process confidence in the market began to fall. Commercial land values began to deteriorate rapidly, the ability to borrow hardened and it was quickly apparent that the original proposals for funding the delivery of the Arena had become unsustainable. A set of unforeseen circumstances had emerged that threatened to scupper the entire project. We now faced a new and very difficult challenge. One half of the procurement was completed. We had an enthusiastic Operator appointed and fully engaged in the process but the other half was seriously impacted by the credit crunch. The problem was what to do now. We were half in and half out of a complex procurement structure with the need to be fair and transparent to all but there was a serious risk that confidence in the scheme was being undermined by the rapidly declining market.
Leeds Arena: Adapting to Extreme Circumstances
Fortunately by then the project team had evolved into a closely knit and integrated unit firmly committed to the delivery of this project. They had to respond quickly to rapidly changing circumstances and yet continue to work within the confines of the original procurement. It was now that the experience of the team and the clarity of their objective, to say nothing of their resourcefulness, became vitally important. Very quickly the team was able to formulate and consider a number of different alternatives to evaluate the risks to the
ASSET - Liverpool-10
project and the Council under the current strategy. Ultimately the decision made was to abandon the procurement process as circumstances had changed so radically that the existing structure proposed could no longer accommodate land values and build out costs. The Council then resolved to step in and to take on the role of the Developer on a city centre site that had recently become available.
It was only able to do so though because of the trust and confidence that had been established with the Operator and who in turn confirmed a willingness to proceed on that basis. Our role at that stage was to extricate the Council from the current procurement process and then to swiftly document new contractual arrangements by drafting and settling a new development agreement between the Council and SMG including a mechanism whereby the detailed site specific design of the Arena could be worked up.
Notwithstanding the collapse in the market the scheme remains viable and innovative and there has been no compromise in the original objectives or indeed in the quality of the design. It has now got planning permission and funding has been secured and I have no doubt it will proceed.
Leeds Arena: Lessons Learned
In our view the Leeds Arena could well provide a role model for similar future schemes. In today’s market, it is difficult to see how an Arena could be delivered otherwise than by means of close collaboration between the public sector and the private sector. Make no mistake that however ambitious and committed to the project Leeds were, this scheme could not have happened without the appointment of a skilled and experienced Operator and without that all important refined challenged and tested business plan. Similarly though no matter how much SMG wanted to bring major international stars to Leeds they simply could not have delivered the Arena without the ambition the project management skills and the commitment of Leeds as demonstrated by their taking on the role of an active Developer. Working independently neither of them could achieve success but working closely together they can and will deliver a showcase and innovative Arena.
We also learned that one of the keys to success was having an absolute clarity of roles with each team member clearly accountable for their contribution. Referring back to the design of the Arena where Leeds at a macro level provided the environment in which SMG could propose and fine tune through a challenging competitive dialogue process the design to deliver an Arena altogether and entirely fit for purpose. Leeds did not try to micro-manage any of the design despite the obvious temptations for some but stood back and allowed it to evolve through that process.
Another lessons learned was that Leeds recognised that they could not do it without specialist help and so they appointed and managed a strong, cohesive and creative unit of consultants and advisers, including, of course, the appointment of lawyers at an early stage, so that when a crisis, even one as overwhelming as the recession, did strike the project team were more than up to the task and could respond quickly and effectively to find the right solution to keep the project on track.
Tiffany Cloynes 37
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