Belfast Metropolitan College’s ongoing failure to sell two former teaching buildings in Belfast city centre has thrown into question the value for money of its new £211 million campus at the Titanic Quarter, auditors have found.
The decision to take responsibility for selling the Brunswick Street and College Square East properties rather than transferring the assets to a contractor, as originally envisaged, was undermined by the property market crash and has left the college facing a multimillion-pound shortfall, the critical report by the NI Audit Office concluded.
The modern Titanic Quarter campus in east Belfast, which opened in 2011, was delivered through a so-called Public Private Partnership (PPP) agreement – whereby a company builds and then operates a facility for a public sector organisation in return for an annual fee over a set contract period.
Auditors found many failings in how the college negotiated its PPP agreement with preferred bidder Ivywood Colleges Limited (ICL) to pay it £5.6 million a year for 25 years.
In early drafts of the deal, the ownership of the Brunswick Street and College Square East properties would have been transferred to ICL when the Titanic site was completed.
But with negotiations taking place at a time when property prices were still rising, college bosses decided to change this clause, instead choosing to retain ownership of the buildings and pay a capital contribution to ICL – a sum that ended up at £15 million.
Having obtained valuations for the two buildings in 2008 totalling £22.5 million, the college decided that selling them itself and paying £15 million to ICL represented better value for money. It also intended to use the money obtained from selling the buildings to cover a £5 million upfront outlay for subleasing the land at the Titanic Quarter.
But by the time the college was in a position to put the ‘for sale’ signs up in 2011 the property market was in dramatically poorer health.
The buildings still remain unsold, with the college having spent in excess of £1 million in securing and maintaining them in the interim.
The college is primarily funded by Stormont’s Department of Employment and Learning (DEL).
Neither the department nor Belfast Met would comment on the report, claiming it would be inappropriate to do so before the matter was discussed by members of Stormont’s Public Accounts Committee in June.