Despite the fact work has not yet started on the events venue, the key players insist the project will eventually reach fruition, writes Eoin English
It's like an open wound in the heart of a growing city — a constant reminder of political promises, missed deadlines and above all, untapped potential.
As tower cranes soar above new apartment, office and hotel building sites across the city centre, the proposed Cork event site lies idle, save for its use as a car park and storage yard by developers BAM, who’ve built several blocks of student apartments on a portion of the former Beamish and Crawford brewery site.
Legal talks on the complex funding arrangements required to deliver the proposed 6,000-capacity entertainment venue drag on, the planning process drags on, as does the wait for work to start on a venue promised just weeks before the 2016 general election.
The stakes are high; the gains immense, a collapse very costly.
Yet, despite all the difficulties and delays since the original tender for €20m in state aid was sanctioned in late 2014, and the sod-turning in February 2016, Tánaiste Simon Coveney insists that all the key stakeholders are still on board and the fundamentals of the project remain sound.
The history of the complex saga involving multiple government departments, a local authority, a private developer embroiled in the National Childrens’ Hospital costs controversy, and one of the world’s largest entertainment companies, has been well-documented.
In 2013, the city council engaged consultants PwC to update its economic analysis on such a project, which again concluded the existence of market failure, meaning a venue would never be delivered by the private sector without the support of public funding.
Following a new invitation to the private sector, two developers, BAM and O’Callaghan Properties, came forward with sites and proposals.
In December 2014, on foot of a public procurement competition for a public funding contribution for the private development and operation of an event centre, BAM Contractors Ltd was deemed the preferred bidder for €20m of public funding — €8m from the city council and €12m from Government through the Department of Arts, Heritage and the Gaeltacht.
The total cost of the venue, a key part of BAM’s Brewery Quarter regeneration of the former Beamish and Crawford brewery site on South Main St, was estimated in their bid to be €50.4m.
Crucially, BAM’s bid confirmed that they would take the financial risk for all funding necessary for the delivery of the event centre above that level.
Once the bid was awarded, entertainment giants Live Nation, who couldn’t get involved in the process until the bid was awarded, began a detailed examination of the venue on an “operational design level”.
It later emerged the city council contributed €100,000 towards the €300,000 cost of this design process. Months passed with no sign of construction starting and concerns began to mount.
On February 20, 2017, BAM boss Theo Cullinane briefed city councillors at a behind-closed-doors meeting of council and explained that Live Nation now needed a bigger and more flexible venue to make it commercially viable.
As a result, costs had increased to €65m, he said, and another €12m of public money would be needed, plus another €6m contingency as full detailed design was not complete.
In subsequent costings of the emerging enlarged designs, the costs rose to €73.16m.
The city council engaged London-based entertainment venue consultants, IMD Group, to review the latest designs to ensure the operator-driven specs were the minimum necessary to meet the business plan which formed part of the original bid.
In a recent briefing to councillors, council chief executive, Ann Doherty, said that review confirmed that much of the cost increases have been driven by the need to run full-scale theatre performances similar to those held in the Bord Gáis Energy Theatre in Dublin.
“These performances are a central part of the business plan submitted with the successful tender,” she said.
On the construction costs side, the council engaged KMCS Quantity Surveyors to examine the costings of the enlarged design to establish why the March 2017 estimate of €73.2m was so significantly higher than the original cost in the 2014 tender.
The report said the cost increase came from a 20% increase in the size of the venue, combined with structural and specification changes driven by the operator’s design requirements, including a change in the orientation of the stage and a significantly different layout, design and scale to what was originally envisaged.
This, in turn, drove a modified structural design all of which have had a very significant cost impact, Ms Doherty said.
The council applied via the Department of Public Expenditure and Reform on March 28, 2017, for additional funding and spent months engaging with the lead government department, the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs on the issue.
Given the change in design and costs since the original public procurement process, the department sought legal advice, and told the council to do the same, on the implications to the integrity of the original procurement process of sanctioning additional funding.
BAM and Live Nation have also both agreed to up their investment in the project.
Live Nation, it is understood, has board approval to pump at least €30m into the venture, while BAM has already spent an estimated €10m on the venture to date, including site and design consultancy costs.
It took until last December before it was confirmed that public funding could be increased from €20m to €30m, and it was hoped that the way was finally cleared for work to start.
But another stumbling block loomed large when it emerged that the department was insisting that €9m of this must be provided by way of a genuine repayable loan.
The council has a different view and has sought additional legal advice on this position.
There has been a flurry of activity and renewed media interest since the Irish Examiner first reported in January on the latest funding complications.
The Tánaiste, who is in his third ministerial portfolio since this tortuous process began and who has repeatedly insisted that this venture “is not another false dawn”, is still trying to steer the process to a successful conclusion.
With one eye on the vital Brexit negotiations, Mr Coveney is also juggling the event centre process, with almost weekly meetings with the key figures involved. He has called for “cool heads” as the funding talks reach a critical phase.
Ms Doherty insists that everything possible is being done to deliver the venue in a “manner that would protect public funding”.
The sensitivities at play at this vital stage of the process became apparent last month when city officials declined to appear on camera for an RTÉ Prime Time report on the project.
Ms Doherty said because the process is ongoing, she could not have made herself or anyone else from the council available for interview.
“We did provide answers to specific questions which did not relate to the ongoing process,” she said.
“I feel that it is of paramount importance not to jeopardise the ongoing work on this project.
“Similarly we receive a number of Freedom of Information requests on the event centre and any of these that relate to the ongoing deliberations, functions and negotiations of the council or commercially sensitive information are being refused.
“I am well aware that this process has been the cause of considerable frustration for you, the elected members.
“A multifunctional event centre such has this is a bespoke project which has never been constructed before and it has resulted in considerable unforeseen challenges.
But even if the vital funding issues are resolved, there is still some road to travel before the foundations can be poured.
If a funding package is agreed, the details of the deal will be put to BAM who will then have to decide if they can deliver a sustainable event centre for the amount of public funding being made available.
The developers still have to secure planning and have been given an extension until July 3 to submit a raft of further information in relation to the planning application.
Pending a favourable planning decision, an appeal to An Bórd Pleanála is a possibility.
The council must update the current cost-benefit analysis and submit it to the Department of Public Expenditure and Reform for their review and approval.
And if that wasn’t enough, the preliminary submission made to the European Commission under State Aid Regulations and for which agreement in principle was received, will also need to be resubmitted.
The venue has been described as a combination of the 3 Arena, the Bord Gáis Energy Theatre and the National Convention Centre, capable of hosting large West End-style theatre shows with an orchestra pit, tennis, basketball or boxing tournaments, skating shows on a full-sized ice-rink, banquets, seminars, and trade shows.
Original planning documents suggested the venue proposed in 2014 could host 31 maximum capacity concerts, 78 reduced-capacity concerts and 32 stage productions in year one — almost 15,000 people a week attending events in the venue.
With an enlarged design, those figures have most likely increased.
Senior civil servants involved say protecting the public purse has been their sole focus — a classic case of nothing’s agreed until everything’s agreed.
Mr Coveney has repeatedly insisted that the sod-turning ceremony was not a political stunt.
In some kind of twisted irony, that photo-op may be one of the few things that is still keeping people around the table.
December: BAM is named the preferred bidder for €20m in State funding to help deliver a multi-functional events centre in Cork
February: Just weeks before the general election, Taoiseach Enda Kenny turns the sod on the project. The public is told the venue could be open by 2018.
August: It emerges that detailed internal designs on the venue are months from completion and that it won’t open by 2018, as predicted.
September: Demolition work and minor archaeological investigations start on site.
January: BAM insists the project is still on track.
Early February: The internal design is complete. But the then-Housing Minister Simon Coveney concedes that €10m more in State funding will be required.
February 20: In a private briefing to city councillors, BAM boss Theo Cullinane confirms that a larger venue is needed, that costs have soared, and that another €18m of public funding is required — €12m plus €6m in contingencies.
September: Cork City Council applies to the Department of Arts for extra funding. The request is subjected to rigorous legal scrutiny.
February: BAM and, by now, Tánaiste Simon Coveney say a funding deal has been agreed in principle. BAM says if the deal is agreed, construction could start in Q3.
May: Mr Cullinane concedes that timelines outlined in February will not be met, but says the project will be delivered.
August: BAM lodges planning application for the enlarged venue.
October: Planners request further information, citing concerns about the design. Legal advice from the Attorney General on the extra funding is still not ready.
November: Government includes South Main St area in urban regeneration funding programme to provide public realm upgrades in support of the development of the event centre.
December: Tánaiste confirms that legal advice clears an increase in State investment in the project from €20m to €30m — comprised of €21m grant aid and a €9m repayable loan.
January: It emerges that Cork City Council has questioned the loan element and is seeking new legal advice.
February 12: The third anniversary of the sod-turning passes.
February 18: The Cork branch of the Irish Hotels Federation (IHF) calls for “absolute confirmation” on event centre delivery as soon as possible.
February 28: The Cork Business Association, the IHF Cork, Vintners Federation Cork and Restaurant Association Cork unite in calls for “certainty, accountability and meaningful communication” on the project.
March 19: Tánaiste tells RTÉ’s Prime Time that the fundamentals of the project are sound.
March 21: Tánaiste calls for “cool heads” as talks on the funding package enter a critical phase.
March 22: It emerges that BAM has been granted an extension until July 3 to respond to a further information request from planners.
March 25: City council chief executive Ann Doherty defends the council’s handling of the entire process and says it is of paramount importance now not to jeopardise the ongoing work.
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