Scandanavian Hotel site faces 12-month delay as new legal row holds up development

Aug 21 2008 by David Bartlett, Liverpool Daily Post

A KEY landmark building, compulsorily purchased by Liverpool Council three years ago to be redeveloped for 2008, will remain derelict for at least another year, it emerged last night.

Chinatown’s derelict Scandinavian Hotel was supposed to be converted by developers Downing into a boutique four-star hotel in time for Capital of Culture year – but today remains empty and abandoned.

The building’s future is also tied up in a row over its value between former owners Chinese businessman Jimmy Wong and property developers Frenson on one side and Downing on the other.

Frenson claims the council has violated the spirit of the CPO order by paying a “derisory” £600,000 for the site, which the company claims is worth £3m. The Land Tribunal is now to be asked to value the site on the corner of Duke Street and Nelson Street – a process likely to take at least another year.

Last night, Downing admitted it had been unable to find a hotel operator, and was reviewing its plans for the site, and could not say when the Scandinavian would finally be re-developed.

Wrangling drags on over fate of empty city hotel

The former Scandinavian Hotel in Liverpool has sat empty since the 1980s. It now looks likely to sit derelict for at least another year. Chief Reporter David Bartlett investigates

SITTING at the entrance to Liverpool’s Chinatown district, the former Scandinavian Hotel has been a subject of controversy for many years.

The front of the building, which dates back to 1859, was owned by Chinese businessman Jimmy Wong and the 1950s warehouses at the back by developers Frenson.

During its recent past it has faced demolition, and Mr Wong had even hoped to create Chinatown’s largest restaurant alongside a Chinese museum.

But, in 2004, after much debate, Liverpool Council announced it was to purchase the building compulsorily so developers Downing could convert it into an 80-bedroom hotel, 42 apartments, and commercial space.

During the public inquiry into the CPO, the council said work would start in 2006 and finish in the summer of 2007, and “thus be completed in advance of the celebrations and events surrounding Liverpool’s selection as the European Capital of Culture in 2008”.

The order was confirmed in July, 2005, and finally enacted by the council in June, 2007, with only six months to go until the start of Capital of Culture.

In April, 2005, Frenson and Mr Wong were offered £1.55m by surveyors Keppie Massie on behalf of Downing, which was rejected.

In May this year, they were eventually paid just £600,000 – the price set in June, 2007, when the council took possession of the building.

The sum has been described by Max Stone, a director of Frenson, as “derisory”.

He said the council has refused to explain the difference in the figures, and is now taking the matter to the Land Tribunal. He believes that, in offering such a figure, the city council has acted in “bad faith” in the spirit of its CPO powers.

“I think that it shows that Liverpool City Council is an unworthy custodian of compulsory purchase powers,” he said. “They have no regard for their statutory obligations.

“The rationale for the CPO was to have the landmark site redeveloped in time for 2008 – that is what was declared to the inspector.”

Frenson owns a large estate in the Ropewalks area of Liverpool, next to the Scandinavian site.

THE estate was originally sold for £7m by the post-Militant cash-strapped Labour council in the form of 309 properties to Charterhouse Estates.

Mr Stone was a shareholder and director of the company.

In 1992, Charterhouse collapsed, owing the council £3m, and in 1993 Mr Stone helped set up Frenson, which bought the estate from the receiver for £5m.

Holding such a large amount of property, Frenson has in the past come under criticism for not having been quick enough to develop its portfolio.

But the company says it will only develop the property in line with demand.

Mr Stone added: “The council has expressed concern about the progress of regeneration in Ropewalks, but their implementation of this CPO has hardly given leadership.

“What I would like to see is a development there, and yes, I would like to be properly paid.”

Under the development agreement, seen by the Daily Post, Downing had the right to acquire the site from the council “at cost” and Keppie Massie were specified as the surveyors.

Mr Stone claims there was a “clear contradiction” between the appointment of Keppie Massie as surveyors to value the site as they are known to be Downing’s letting agents.

He said London-based surveyors Matthew and Son have priced the site at £3.2m.

LAST night, a spokesman for Keppie Massie said the £600,000 price tag was “fair and equitable”.

He said that the £1.55m offer was made in the knowledge that prices could go up as well as down.

“When further research was carried out it became apparent that the development cost on the building because of the requirements were more complicated than first envisaged,” said the spokesman.

He said the company “absolutely refuted” any suggestion it had not acted properly.

Downing also said the market conditions had been very different in 2005 when the £1.55m offer was made.

The company’s development director, Paul Houghton, said the £600,000 figure was arrived at through an “independent valuation”.

“There is nothing unusual in the fact Keppie Massie undertook the valuation.

“They were appointed by the city council and the fact they have worked for Downing in the past is irrelevant.”

Mr Houghton admitted the company had been unable to secure a hotel operator.

“[This is] partly because of the lengthy process involved in acquiring the site and the obvious uncertainty this has caused.

“The hotel market in Liverpool has significantly changed in the interim with Hilton, Ramada Plaza, Jury’s and others committing to the city.

“Downing is reviewing how best to take forward the Scandinavian site but it’s very difficult to progress and secure funding when you don’t know the value of the land. We await the decision of the Land Tribunal with great interest.”

Last night, Labour opposition leader Cllr Joe Anderson said: “I am annoyed about this and the council has to take some responsibility for this situation.

“The council forced these people out and yet the building remains derelict – we need a new initiative to get this moving.”

Last night, the city council said it was unable to comment on the case.

“It is about to be referred to the Land Tribunal, and these issues will be considered there. As such, it would be inappropriate to comment at this stage.”