Agenda item

The Committee received a report of the Corporate Director of Resources which supported the Council’s Risk Management Strategy. It highlighted the strategic risks facing the Council and provided an insight into the work carried out by the Corporate Risk Management Group between January and May 2024 (for copy see file of minutes).

Councillor A Watson noted from the last meeting that there would be no financial liability to the Council from Milburngate until they agreed the lease.  He asked if there were any further updates on this.

P Darby responded that the Milburngate Project dated back to 2018 when the Council had agreed a head lease subject to contract requirements and the site being completed to all necessary standards.  The site had not been completed all defects rectified before the construction company had entered into administration. There were no financial liabilities to the Council until the developer completed the construction and triggered the head lease. It was noted that this was a complicated situation but that ultimately the development was not the Councils responsibility at this time. 

Mr C Robinson was concerned about the reputational damage that could be caused to the Council by the Milburngate development.

P Darby acknowledged the reputational risk involved and that state that the council were mindful of the reputational damage that could be caused to the development and the city itself.  It was reiterated that ultimately, the building was not the Councils until or unless the lease was triggered by the developer.  There was constant dialogue with Senior Officers each week to reach try and reach a conclusion.

Mr I Rudd asked if there were any penalty clauses or incentives for the developer to progress completion and avoid any further delays.

P Darby confirmed that there were no penalties from the Council and that the Agreement for Lease did not have a stop date but that there were contractual penalties between the funder and the developer and between the developer and the businesses that had signed up to occupy the development. 

Mr I Rudd queried what would happen with the head lease when the site was complete.

P Darby replied that if the site was completed by the developer in line with the conditions set out in the Agreement for Lease then the council would be legally bound to sign the head lease. The Council would then be responsible for leasing the hotel, residential and hospitality/leisure units to tenants over a 35-year period.  The Council would carry the risk of finding businesses to occupy the units to offset its headlease payment and would be responsible for the running costs, including maintenance of the building. At the end of the 35 year lease the council would be able to purchase the building for £1.

P. Darby highlighted that the decision to enter into the head lease was not to generate a surplus for the council. The Council had got involved to unlock the development and bring jobs to the city centre to boost the economy.  He added that negotiations were ongoing with the funder to try and resolve the situation.

Councillor A Watson asked that a presentation be given at a future meeting on Milburngate and head lease issues.

Councillor R Ormerod stated that the development was in his division and wanted to ensure that the Council’s media team got the right messages out to the public.

P Darby stressed that there were legal issues with the Milburngate development and the Council had to be careful about what was circulated in the public and suggested that if a presentation was required it would need to be in private.

Councillor B Kellett requested an update on the A690 slippage repair works and asked how much the repairs were going to cost.

P Darby confirmed that work had been ongoing behind the scenes to resolve the complicated land issues and to finalise the design, with repairs to commence shortly.  There was £13million in the budget and the Corporate Director of Neighbourhoods and Climate Change was in discussion with Network Rail to determine if all the works could be done together as there was no value to just repair Durham County Council’s land. The costs remain in line with the budget sum.

The Principal Risk and Governance Officer confirmed that works on the A690 should commence in October 2024.

Mr F Barnish commented that the Inquiry had published its final report in September 2024 on the Grenfell Tower tragedy in London and queried if Durham County Council had given anything to the coroner.

The Corporate Health and Safety Compliance Manager responded that the Council had not given anything to the coroner as they did not have any high-rise buildings that under the legislation that had any cladding issues. 

Mr F Barnish asked if the Council had any concerns regarding risks associated with the winter months like flooding and if the Council needed to prepare.

P Darby confirmed that the Council had a good cleansing regime in place for gullies and drains.  He added that this risk was included as a climate change risk.

The Principal Risk and Governance Officer acknowledged that there was a resilience forum that was carefully managed and geared up to respond to the autumn/winter months.

Resolved:

i)               That the report provided assurance that strategic risks were being effectively managed within the risk management framework across the Council be confirmed.

ii)             That an update presentation on the Milburngate development be provided at a future meeting.