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The long-awaited restoration of Preston’s former Park Hotel has moved a step closer after councillors agreed to forgo a potential future affordable housing windfall in order to get the project off the ground – and reduce the risk of the building burning down in the meantime.
A plan to reinvent the historic landmark as a 65-room ‘apart-hotel’ – more than a decade after it was last in use as offices – was given the green light by Preston City Council’s planning committee back in February.
However, the project – which also includes the construction of hundreds of new apartments on the site, overlooking Miller Park – has since been held up by a wrangle over payments to be made by developer The Heaton Group depending on the profit the scheme ultimately makes.
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When planning permission was granted, the firm argued that the development would not be financially viable if it was subject to the council’s usual policy demanding 30 percent of the new properties were offered at a discounted ‘affordable’ rate.
With 321 apartments to be created across two newly-built blocks alongside the hotel – and a further six as part of the refurbishment of a Grade-II-listed property known as ‘number 8 East Cliff’ – a total of 98 of them would have had to be sold at less than market value.
While the authority accepted the developer’s case and waived the affordable requirement, it also put in place a safety net known as a ‘review mechanism’ to reassess the profitability of the project at a later date. That way, if the scheme were to make more money than currently forecast, the council would be able to claw back some of the cash and use it to fund the creation of affordable housing elsewhere in the city.
However, The Heaton Group has since claimed that the arrangement is threatening to derail the scheme, because of the uncertainty it creates for investors. Town hall planners recommended that committee members should therefore agree to remove it for the sake of ensuring the hotel – which is considered a local heritage asset, although not a listed building – is salvaged.
Head of development and building control Natalie Somers said the derelict site was plagued by antisocial behaviour and warned: “We really don’t want this building to go up in flames.”
“Either we agree this now and prevent delay – or we allow delay and it causes further risk [and] further deterioration.
“We’ve got a balance to [strike] here. If there’s any further delay, those heritage assets, which are so important to Preston, could go and then the council potentially have to answer why we didn’t do enough to secure the future of them,” Ms. Somers said.
The Local Democracy Reporting Service (LDRS) last year obtained pictures showing a group of youths roaming the upper floors of the 140-year-old former hotel – often likened to a Disney-style castle – which a nearby resident said at the time had been subject to repeated vandalism.
It has stood disused since 2011, when it was vacated by its last occupant, Lancashire County Council, which had used the building as offices since the hotel shut its doors in 1950 – after almost seven decades as Preston’s premiere place to stay.
A price worth paying?
The committee was told the hotel building would need “significant investment to bring it back to its former glory”. Tom Flanagan, the agent for the project, said it was for that reason any delay related to the review mechanism could prove so damaging.
Reading from a statement provided by The Heaton Group, he said: “It provides uncertainty to lenders and causes delays in the sale of apartments. For a scheme…where there are already significant risks associated with the sensitive conversion of existing buildings, combining this with money being tied up for a longer period of time makes this a risky investment for a funder.”
Mr. Flanagan added that the hotel and number 8 East Cliff were falling into increasing disrepair and that the “opportunity of saving [them] is reducing”.
Several committee members initially appeared unpersuaded of the need to sacrifice the potential receipt of affordable housing finance in order to secure the future of a piece of Preston’s history.
Cllr Carol Henshaw, in whose City Centre ward the hotel stands, said she did not see how the review mechanism would “actually stop this project going ahead”.
Council planning officer James Mercer said viability reviews caused particular difficulties for the developers of apartment schemes, because of the fact they are undertaken during a window dictated by the percentage of properties that have been sold. If the review is not completed by the time the upper threshold within that window is reached, no further flats can be offered for sale until the process is completed.
Mr. Mercer said it posed “upfront cashflow issues” for apartment developments, because – unlike housing estates, which are completed in phases – blocks of flats are necessarily built in their entirety before residents start moving in. That removes the option of basing the review window on the percentage of properties occupied, which would be less problematic, as it allows sales to continue regardless of when the assessment concludes.
Tom Flanagan told the meeting that as a viability review can take up to six months, funders would likely be more attracted to the “blank canvas” offered by an easier to develop site, free from any such complications.
James Mercer also suggested a review would, in any case, be unlikely to find an increase in the future profitability of the scheme – the outcome needed in order to generate a cash contribution towards affordable housing – because the cost of restoring the hotel was only likely to increase with the passage of time.
Security questions
The LDRS approached The Heaton Group to ask why the site had proved so difficult to secure from vandals and intruders, but had not received a response by the time of publication.
It is unclear whether the firm is yet in control of the hotel building, which was last year still in the hands of The Local Pensions Partnership – which administers Lancashire County Council’s pension fund – at the time the LDRS reported on the spate of break-ins.
Paul Butler Associates, which is acting as the agent for the apartments proposal, said in March 2023 that The Heaton Group would take ownership of the site should planning permission ultimately be granted for the suggested scheme.
While approval was given by the city council’s planning committee in February this year, the lack of agreement – until now – over the review mechanism means the permission has remained pending.
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