Drummond Arms , Crieff
Perth and Kinross Council · 20 November 2024
Back to Finance and Resources Committee — 20 November 2024 and its agenda
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PERTH AND KINROSS COUNCIL FINANCE & RESOURCES COMMITTEE 20 NOVEMBER 2024 DRUMMOND ARMS, CRIEFF Report by Strategic Lead – Economy, Development & Planning (Report No. 24/321) 1. PURPOSE 1.1 This report provides an update on the status of the Listed former Drummond Arms Hotel in Crieff, which has laid empty since 2006 and was added to the Buildings at Risk Register for Scotland in 2012. Despite the efforts of a community group to acquire and redevelop the building, its condition has continued to deteriorate to the point where Council has had no option but to serve a Dangerous Buildings Notice in the interests of public safety. 1.2 Following acquisition in 2019, the redevelopment efforts by Drummond Arms Regeneration Limited (DARL), established as a separate legal entity by the Crieff Community Trust, have not succeeded. With no prospect of any further grant funding, or a viable re-use, DARL will have exhausted its cash reserves by March 2025 and the Directors have therefore decided to voluntarily wind-up the company at that time. They have written to the Council seeking help to address the public safety risk by stepping in to acquire the building and mitigate the risk it poses. If DARL is liquidated while the building is still in its ownership the Drummond Arms would become ownerless, and the Council would inevitably need to step-in at that time in the interests of public safety. 1.3 Therefore, it is recommended that, as a last resort, the Council immediately acquires the building at nil value in order to manage the process in an orderly manner. A further consideration is the impact on Crieff of road closure should the building fail. Given the failed attempts to secure a viable redevelopment, it is inevitable that the Council will be required to seek Listed Building Consent to demolish the building and clear the site at an estimated cost of £3 million. In the medium-term the cleared site will be redeveloped for affordable housing by the Council and/or another Registered Social Landlord. 2. RECOMMENDATIONS 2.1 It is recommended that Committee: • Notes the current status of the former Drummond Arms Hotel and the intention of Drummond Arms Regeneration Ltd to wind-up the company • Agrees to acquire the building at nil value and mitigates the public safety risk in compliance with the Dangerous Buildings Notice • Agrees to instruct officers to apply for Listed Building Consent and Building Warrant to demolish the structure
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• Agrees to allocate up to £3m from the 2025/26 Capital Budget to cover demolition costs. • Instructs officers to prepare a development plan for the provision of a flatted affordable housing development in line with the Council’s Corporate Asset Management Strategy. 3. STRUCTURE OF REPORT 3.1 This report is structured over the following sections: • Section 4: Background/Main Issues • Section 5: Proposals • Section 6: Conclusion • Appendices 4. BACKGROUND / MAIN ISSUES 4.1 The Drummond Arms was completed in 1874. It is a category ‘B’ listed building that ceased to trade as a hotel in 2006. The ground floor of the premises was occupied as a branch of the Royal Bank of Scotland until they also ceased to trade from the premises in 2012, due to concerns over the condition of the building. The Drummond Arms was added to the Buildings at Risk Register for Scotland in 2012. 4.2 The Crieff Community Trust (CCT), realising the precarious situation that the building was in, embarked on a right to buy bid in 2014. Drummond Arms Regeneration Limited (DARL) was set up in 2019 by CCT when they successfully took title of the abandoned building that by then was blighting the town centre. DARL’s objectives were to respond to community’s needs through facilitating the refurbishment and regeneration of this large derelict, but important, building. 4.3 Since DARL took ownership of the building, works including stripping out have been undertaken to put it in a more advantageous position for redevelopment. It has however continued to fall into significant disrepair and the updated structural survey that DARL commissioned (Appendix 1) in August this year, indicates deterioration to the structural elements and timbers which will result in significant costs to secure the building and make it safe in the short/medium term. The structural engineering report concludes: “It can only therefore be concluded that a roof collapse would present a significant risk of further progressive collapse, either to individual building elements, or to the front façade – particularly if the façade bracing was struck and damaged by falling debris. The collapse hazard would affect the building itself and areas surrounding the building, including the pavement and road to the frontage. It is our view that the current condition of the roof timbers and ongoing rapid decline will lead to a further loss of integrity and roof collapse in the short to medium time- period.”
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Given the state of this deterioration and the cost of preserving the structure, with no prospect of a viable redevelopment, demolition is now the only realistic outcome. 4.4 Just over £1 million of grant funding has been spent in assessing, securing, clearing and making the building safe, and additionally purchasing the adjoining ground floor bank to facilitate future development. This has been funded mainly through grant awards via the Council; including the Scottish Government’s Town Centre Regeneration (report 19/170 refers) and Placed Based Investment Funds, (reports 20/204 and 21/149 refer) with £897,444 paid. A further £150,450 was funded through the Scottish Government’s Community Led Local Development Fund; £10,000 from the Council’s Open for Business Fund; and £5,000 from the Vacant Property Feasibility Fund. In addition, DARL secured two further grant awards: £120,000 directly from the Scottish Government’s Investing in Communities Fund to pay a project coordinator over the period 2018-2022; and £5,000 from the Architectural Heritage Fund. Appendix 2 provides a summary of both the grants awarded via the Council and a summary of spend by categories of works. The Scottish Government has confirmed that given the grant awards were made in good faith in line with scheme objectives, there will be no clawback. 4.5 Over the past couple of years DARL continued to instruct significant specialist contractors to try and move the project forward and attract a potential investor/occupier. However, specialist contractors in structural waterproofing and timber conservation of buildings that are either listed or in a conservation area, inspected the site on 6 March 2024. They reported that that the roof timbers are now beyond repair. 4.6 Furthermore, significant works are now required to make the building safe in compliance with a Dangerous Buildings Notice served on 29 October 2024 asking that all essential works be commenced by January 2025 and completed by June 2025. Primarily, and as a minimum, this involves removing the roof structure, removal of chimneys and the removal of the high street facing dormer windows. The structural engineer’s report attached at Appendix 1 provides detail of the condition of the building at present. Because of these works, the removal of the asbestos in the building would also have to be addressed at significant expense. 4.7 With many of the statutory consents in relation to previous works having now expired, the making safe option will require many of the same permissions that full demolition of the building require. Large scale machinery such as cranes would be required to secure the structural stability of the building to undertake the necessary works. The cost of these safety-related works has been estimated at more than £2 million by cost consultants CDA commissioned by DARL. This is not dissimilar to the estimated cost for full demolition of £2.70 million also costed by CDA (£3.64 million for partial demolition if the facade was retained). It should be noted that these costs are subject to potential future inflation and that heritage funding bodies would not support any partial or full demolition proposals.
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4.8 DARL has intimated that while it has available funds to cover the cost of the recent updated structure report, drone survey, a part-time development coordinator, directors’ insurances, scaffolding inspections and accountancy fees until March 2025, they do not have the funds available to operate beyond this date nor to undertake the required works to make the building safe. Therefore, the Directors have concluded that, having exhausted all funding options, they intend to place, DARL into voluntary liquidation at the end of March 2025, otherwise they would be insolvent. 4.9 DARL has failed to re-develop the site and as they have no financial means to continue beyond March 2025, its directors have therefore written to the Council seeking its intervention including a managed transfer of ownership title. This letter is attached at Appendix 3. 5. PROPOSALS 5.1 The Council has evaluated the request from DARL from a public safety perspective, considering the prominent location of the site in the centre of Crieff, and with regard to the Council’s strategic priorities. Subject to funding availability, the site will be re-developed for community benefit, specifically affordable housing. 5.2 This is an exceptional set of circumstances given the scale of the building and its critical location. The legal responsibility for building safety and compliance with legislation rests with owners, not the Council. However, in this case the Council has extraordinarily little option but to intervene, to protect the public from the risks posed by this dangerous building, and the potential economic harm a (partial) closure of the A85 would cause. 5.3 Therefore, as a last resort, it is recommended that the Council acquires the Drummond Arms building from DARL and, subject to securing the necessary statutory consents, undertakes demolition works to eliminate the risks posed. The estimated costs of up to £3 million are proposed to be included in the 2025/26 Capital Programme. 5.4 Following demolition and clearance, a plan for the site’s redevelopment will be worked up for future Committee consideration. 6. CONCLUSION 6.1 The Drummond Arms Hotel in Crieff is beyond economic repair or redevelopment. Its community owners are not able to finance necessary works to make the building safe in compliance with the Dangerous Building Notice. Drummond Arms Regeneration Limited, established by the Crieff Community Trust, has now sought the Council’s assistance. It is recommended that the Council acquires the site at nil value and takes appropriate action to ensure public safety. In all likelihood, this means demolition. This action will also secure the site for the future benefit of the community, including the provision of affordable housing.
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Author Name Designation Contact Details Jonathan Janes Estates and Commercial Investment Team Leader EPLCommitteeReports@pkc.gov.uk Approved Name Designation Date David Littlejohn Strategic Lead- Economy, Development & Planning 13 November 2024 APPENDICES • Appendix 1 - Narra Structural Report – June 2024 • Appendix 2 - Breakdown of expenditure funded from Council grant awards. • Appendix 3 – Letter from DARL Directors to Councillor Laing
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ANNEX 1. IMPLICATIONS, ASSESSMENTS, CONSULTATION AND COMMUNICATION Strategic Implications Yes / None Community Plan / Single Outcome Agreement Yes Corporate Plan Yes Resource Implications Financial Yes Workforce No Asset Management (land, property, IST) Yes Assessments Equality Impact Assessment No Strategic Environmental Assessment Sustainability (community, economic, environmental) Legal and Governance Yes Risk Yes Consultation Internal Yes External Yes Communication Communications Plan Yes 1. Strategic Implications Community Plan/Single Outcome Agreement 1.1 This report supports the following priority within the Community Plan 2022-27. (i) Reducing Poverty (including child poverty, fuel poverty and food poverty) by potentially provided affordable housing in Crieff. Corporate Plan 1.2 This report supports the following objective within the Corporate Plan:- (iv) Communities are resilient and physically, digital and socially connected by potentially increasing the supply and availability of rural housing. 2. Resource Implications Financial 2.1 The costs of acquisition and demolition have been estimated at up to £3m. It is proposed to allocate the £3m in the Capital Budget for 2025/26. Workforce 2.2 No workforce implications.
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Asset Management (land, property, IT) 2.3 The proposal has an asset management implication as a new asset will be added to the Council’s portfolio. The building is being listed on the Buildings at Risk Register for Scotland and a Dangerous Buildings Notice that has been served by the Council on 29th October 2024 asking that all essential works be commenced by January 2025 and completed by June 2025 to make the building safe. The Council will be responsible for the building management until demolition and for the site re-development. 3. Assessments Equality Impact Assessment 3.1 Under the Equality Act 2010, the Council is required to eliminate discrimination, advance equality of opportunity, and foster good relations between equality groups. Carrying out Equality Impact Assessments for plans and policies allows the Council to demonstrate that it is meeting these duties. The proposals have been considered under the Corporate Equalities Impact Assessment process (EqIA) with the following outcome: (i) Assessed as not relevant for the purposes of EqIA Strategic Environmental Assessment 3.2 The Environmental Assessment (Scotland) Act 2005 places a duty on the Council to identify and assess the environmental consequences of its proposals. The proposals have been considered under the Act and no further action is required as it does not qualify as a PPS as defined by the Act and is therefore exempt. Sustainability 3.3 Under the provisions of the Local Government in Scotland Act 2003 the Council has to discharge its duties in a way which contributes to the achievement of sustainable development. Under the Climate Change (Scotland) Act 2009 the Council also has a duty relating to climate change and, in exercising its functions must act: • in the way best calculated to delivery of the Act’s emissions reduction targets; • in the way best calculated to deliver any statutory adaptation programmes; and • in a way that it considers most sustainable. The proposals to demolish a dangerous building and re-develop the site for the benefits of the community including provision of affordable housing is considered to be the most sustainable.
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Legal and Governance 3.4 The Strategic Lead – Legal & Governance has been consulted and there are legal implications in acquiring a dangerous building and in its demolition. These legal implications could be more complex if DARL, the current owner, was to to go into voluntary liquidation after March 2025 leaving the building without owner. Risk 3.5 There are no direct risk implications arising from this report other than those reported with the body of the report” 4. Consultation Internal 4.1 The Strategic Lead – Finance & Business Support, the Strategic Lead – Legal & Governance, the Strategic Lead – Property Services and the Strategic Lead – Housing & Communities have been consulted. External 4.2 The Council has communicated with Drummond Arms Regeneration Limited (DARL) set up by Crieff Community Trust. 5. Communication 5.1 Communications will be undertaken with Drummond Arms Regeneration Limited (DARL) and Crieff Community Trust. Communications will also be undertaken with residents and interested parties in the community. 2. BACKGROUND PAPERS 2.1 No background papers.