Revealed: The taxpayer millions going into boutique hotel deal on former Coventry Telegraph building

Taxpayers will pay more than £6.5million to developers to turn the former Coventry Telegraph building into a boutique hotel, CoventryLive can reveal.Coventry City Council is selling the rights to the land around the landmark site to the developers, who will build students 1,270 flats on it. The deal will see the council accept the open market value of the developed land as a security deposit and hand it back to the developers in instalments to help fund the otherwise ‘unviable’ hotel project. But a spokesman for the developer says the council’s cash input is a much more modest £160,000. We reported last week that the taxpayer would be helping to fund the costly luxury hotel development, which the council described as « not financially viable » on its own. The council would not disclose the figure but it is contained in confidential council documents seen by the Local Democracy Reporting Service. Those documents also show the authority’s legal team is reviewing whether the deal breaches state aid rules, although the report states the council is “satisfied” that this isn’t the case. A leading councillor has confirmed the figures involved and defended the deal as brining « economic benefits » to the city. Cabinet members backed the proposals this week and the deal is expected to be finalised at full council on Tuesday. How the deal works Far Gosford Developments Limited is turning the former Coventry Telegraph HQ into a luxury boutique hotel, in time for Coventry’s year as UK City of Culture 2021. But the plan is expensive and the market for a boutique hotel in Coventry city centre is described by the council as « relatively unproven ». Watch: Inside the former Cov Tel building

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The landmark building is bordered by land on three sites on Chapel Street, Lamb Street and Bishop Street. The council will give the developer 250-year leases on the land in return for £1 rent each. That means the council is forgoing around £623,000 in rent on the existing leases – although this has been described as « completely erroneous » by Cllr Jim O’Boyle, the cabinet member for jobs and regeneration. The developed land with 1,270 students flats are the luxury hotel on it has been independently valued at £6.58m. This is to be paid by the developer, or a partner developing the student flats, to Coventry City Council as Performance Security Deposits, and released back to them to fund the hotel work when certain milestones are met. The council will keep the cash if the developer does not meet these obligations.

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What Cllr O’Boyle says Cllr O’Boyle played down the use  of public money, saying the new scheme will be balanced by business rates for the authority, and an economic uplift for the city. He said: “That [the fact that the council is forgoing £623,000 in rental income] is true but it is a completely pointless figure. “It is £8,600 a year until 2106. The sites are on different leases and one runs for 90 years. So to say we are losing that is completely erroneous.

CGI of what the bedrooms in the 88-bedroom hotel could look like in the former CET building

“It is costing over £20million to build this hotel. The student accommodation is helping to fund the hotel, that is true and it is not a secret. “We did the same with the Co-Op building – we could have got £500,000 for the lease but we sold it for £1 to realise its true value. “We will get business rates from the student accommodation and the hotel, and there will be economic benefits as people will be spending in the city.” On the £6.58m, he added: « That is only worth that if the student accommodation buildings and the hotel are on it. Therefore the money will not go to anyone else other than us if it does not get developed. » What the developer says A spokesperson for Far Gosford Developments Ltd, said: “The total investment in the Coventry Telegraph regeneration project is £120m, which will include a unique new hotel and student accommodation which will bring economic activity and value to a vital area of the city centre. “This has been secured with a council cash input of the loss of ground rents of only £8,600 a year. The value of this input is around £160,000.” What the Conservative opposition says The leader of the opposition Conservative group on Coventry City Council said he was waiting to discuss the deal with council officers before deciding if it was « good value for tax payers. Cllr Gary Ridley told CoventryLive: « I couldn’t comment on a private document. But in terms of our position we will be discussing this. « It means more quality hotel development in the city centre which will be positive for the city of culture, we will be sitting through with officers getting the details next week. « We need to find out if this represents good value for tax payers. » What the development contains Works has already started on the scheme will create a luxury hotel, the likes of which form a key part of the council’s tourism strategy which highlighted the need to increase overnight stays. The 80,000 sq ft of commercial and event space will help to deliver 1,270 student units, and create 90 jobs. The hotel will also include a restaurant and bar and space for events, conferences, exhibitions and performances.

CGI of what the bedrooms in the 88-bedroom hotel could look like in the former CET building

UK-based Bespoke Hotels will operate the hotel. It is an independent operator founded in 2000 and manages more than 200 hotels in 21 countries – from Australia to America. With more than 8,000 employees and assets totalling £815million it manages 96 hotels in the UK alone.  Many original features of the Corporation Street building, including the panelled board room and Lord Iliffe’s apartment, will be retained as a reminder of the building’s former life. Local firm Coventry Demolition Company, based in Ryton-on-Dunsmore, has been stripping out the modern computer floors and suspended ceilings to reveal the original building and has carefully retained the 1950s features that will be a core part of the hotel design. The works also include the removal of asbestos to make the site safe for the future. Brian Harrabin, a director of CDP, has previously said the company decided to start work ahead of securing all of the funding and council legal agreements for the project, so as not to miss the 2021 deadline. Why Coventry needs more hotels Research has revealed Coventry needs at least 250 new hotel beds after lands the UK City of Culture title for 2021. Coventry has an acute shortage of hotel rooms and will be unable to cope with the expected visitor influx to the city. That’s the conclusion of industry experts projecting the economic impact of winning the bid, having looked at the growth in 2017 UK City of Culture Hull and Liverpool when it was European Capital of Culture. Coventry needs to build new hotels to meet the demand of the additional visitors as current average occupancy is already high, due to business use in the region. Visit our Facebook pages for Coventry and Nuneaton or visit our Twitter pages for Coventry and Nuneaton Watch our videos on YouTube and see our photos on Instagram Find old stories in our online Archives and search for jobs, motors and property, or place an advert or family notice here