Mareel funding decision to be made in private

Councillors will meet in private next week to discuss an approach from Shetland Arts for more SIC money to help bridge a seven-figure funding gap for the building of Mareel.

After an 18-month delay during the construction phase, the £12 million cinema and music venue is understood to have gone over budget by around 10 per cent.

As previously reported by The Shetland Times, the project’s other funders – including HIE, Creative Scotland and the European Regional Development Fund – have all pledged extra cash totalling nearly £600,000.

Mareel

But that is conditional on the SIC – which faces major spending troubles – being willing to stump up its 50 per cent share. The council contributed over £6 million to the original budget for the North Ness venue, which finally opened its doors in August this year.

Meanwhile legal wrangling between Shetland Arts and its contractor DITT is expected to continue beyond this winter. It is unclear exactly how much the arts body will need to meet its outstanding bills for Mareel’s construction.

DITT director Peter Tait said the firm was this week expecting to receive the remaining proportion of a £200,000 sum Shetland Arts was ordered to hand over earlier this summer. DITT believes it is still owed hundreds of thousands of pounds on top of that.

On 16th November, the contract administrator delivered a ruling on what proportion of the costs should be shouldered by each party. Mr Tait said that, as expected, neither DITT nor Shetland Arts was satisfied and it is likely both will be challenging the findings.

The troubled construction phase saw delays owing to various factors including bad weather and subcontractors going bust.

In its first three months, Mareel sold almost 28,000 cinema tickets – 70 per cent of the first year target.

Councillors will discuss the funding request behind closed doors at next Wednesday’s Full Council meeting. It comes less than a fortnight ahead of deliberations on making £3 million of spending cuts to the local authority’s annual inter-island ferries budget.

There have been suggestions that, rather than agreeing to hand over a one-off grant in excess of £500,000, the council may look at offering Shetland Arts a loan to cover its shortfall. Development director Neil Grant said he was unable to comment in advance of the crunch 5th December meeting.

The SIC’s political leader Gary Robinson, an outspoken opponent of the project, confirmed an approach from Shetland Arts had been received. But he did not want to predict how councillors might respond.

“There has been a formal approach to the council to contribute to the additional build costs of Mareel,” he said. “I understand that the other partners have indicated that they will contribute, and we will bring a report to the council in December for decision.

“I think we have to look at this in the context of all the council’s priorities. I can’t say at this stage how members will take to it, but clearly we haven’t budgeted for this so it will be a difficult decision, and the likelihood would be that any contribution would have to come directly out of reserves.”

On Friday, the council’s executive committee heard that despite already having banked £10 million of its targeted £15.6 million savings for 2012/13, the council will still have to draw £29 million from its oil reserves this year.

About Neil Riddell

View other stories by »

22 comments

  1. Johan Adamson

    This is surely capital spend, however, so would have to come out of the capital budget?

    Reply
  2. john ridland

    That ye old gravy train stalled for a wee while , ,, Ah but hark am sure i hear her being stoked again ,, Leaving da Browns Rd platform bound for da hill head via da sellaness tug station,,,,

    Reply
  3. Paula Goddard

    OOOOH ! Dont you dare SIC . Any community hall in Shetland has to find its own pot of gold to keep on offering the excellent facilitys and entertainment within their own community . Mareel has to run with its own cock-ups . They had months and months to sort all this out .. let them sort it themselves , and please SIC listen to your communitys next time they say No not a good idea !

    Reply
  4. In response to Johan Adamson’s comment, I’d just like to confirm that, in the event of the council deciding to offer a grant or loan to the Mareel project it would, by necessity, require to be sourced from reserves.

    According to the strict financial regulations that the council must adhere to, capital funds can only be spent to “create or enhance” an asset for the council. Given that Mareel is wholly owned by Shetland Arts, it clearly doesn’t fit the criteria for being a council asset. The original funding package consisted of £5m from the council’s reserves by way of a grant, plus another grant of £956,000 from the Shetland Development Trust of which the council is the sole trustee. The balance of the £12.2m funding package came from sources external to Shetland.

    Reply
  5. Colin Hunter

    This disaster should never have had a black farthing in the first place. There is no doubt in my mind that the whole thing will sink into obscurity. The only question is when! The sooner they pull the plug on it, the sooner we can knock it down and rid the Lerook waterfront of as great a carbuncle as has ever been seen.

    Reply
  6. Johan Adamson

    Thanks for explaining that

    Reply
  7. Johan Adamson

    Do the SIC not have the power to give capital grants? I think the NHS do, but I could be wrong.

    Reply
  8. Linda Tait

    Sorry, but you cannot be seen to be bailing out Mareel whilst cutting services for the elderly and children. It doesn’t matter where the money would come from, it sends entirely the wrong message about how this council will deal with the financial situation it finds itself in. Mareel cannot be another drain on Shetland’s resources – it has to stand (or fall) on its own two feet.

    Reply
  9. Sheila Tulloch

    Heyyy, good tae hear fae dee Gary!
    An splendid tae see you keep up wi da online forum.
    Tae back up Paula Goddard, if you can’t afford £163k tae support 2 country halls, you canna afford dis either. Have Mareel no been braggin aboot winderful cinema ticket sales since dey opened? Tinkin deyll aesy manage.

    Reply
  10. Kevin t Robertson

    If Mareel has done so well by already selling 75% of it’s years tickets could they not go to a bank for a loan rather than the council. Because we all know in a few months possibly a few years this loan will have to be written off like all the other fool hardy loans and grants the last councillors gave to white elephants.

    I really think if the council gives one penny more to this they are showing a real disrespect to all the Northern isles and Rural communities who has Ferries and Schools under threat. It was only two weeks ago they refused grants to two well run public halls.

    Reply
  11. To further clarify, the use of the council’s Capital Fund is governed by national legislation that prevents the council from spending (by way of grant or loan) on any project which doesn’t create or enhance an asset for the council.

    On the other hand, the Zetland County Council Act makes provision for the council to spend its General Reserve Fund “for any [other] purpose which in the opinion of the council is solely in the interests of the county or it’s inhabitants.”

    I won’t make any comment on the merit, or otherwise, of the funding bid prior to the meeting on the 5th of December.

    Reply
  12. Johan Adamson

    I agree with you Linda but what happens to Shetland Arts if it doesnt pay its bills? We are already collectively responsible for this building, maybe a loan is the best option, so it has to be paid back? And what happens to the other funders if SIC doesnt support it. We surely lose this money?

    Reply
  13. Johan Adamson

    Presumably there is not a council grant or loan scheme at the moment available to anyone, either Shetland Arts or a country hall?

    Reply
  14. ian tinkler

    Johan, we already have lost money. Why throw good money after bad?

    Reply
  15. Sheila Tulloch

    Presumably the same as the South Nesting Hall application?
    They had secured outside funding too.

    Reply
  16. Robert Simpson

    The Council should grant Mareel the money, so secure HIE’s match funding.

    Then Shetland arts should sell some equity in Mareel to the private sector and make a donation to the council. To the rough value of the grant should just about do it…

    Reply
  17. David Spence

    Something important to keep in mind at this time of upheaval is that this kind of thing is exactly what the reserve fund is *supposed* to be for. Yes it has been misused, grossly in some cases, in the past, but that shouldn’t prevent it being sensibly used in one-off cases like this. Investing in Mareel is the equivalent of investing in every hall and similar venue throughout the isles, lets hope common sense prevails.

    Reply
  18. Johan Adamson

    Two wrongs dont make a right, so not supporting Mareel will not help the South Nesting Hall. But support of Mareel surely means opening the floodgates to funding applications from all the halls which need work. At least the halls havent already spent the money in expectation that they will be supported, I suppose. But can we afford to support all the halls and Islesburgh, the Garrison and Mareel etc? Will SLAP or another source of finance be able to help?

    Reply
  19. Ian Tinkler

    Investing in Mareel is the equivalent of investing in every hall and similar venue throughout the isles!?. Pardon, what utter codswallop. Investing in Mareel is pouring cash down the drain while other similar venues throughout the isles are forced to close for lack of funds. Lets hope common sense prevails and for once the cash tap is turned off.

    Reply
  20. Sheila Tulloch

    But obviously that hasn’t happened David. By turning down the halls, they have set ‘the bar’, and Mareel is no different. They have banged on enough over the last few months about the councils dire financial situation. This is hardly an essential service.
    Actually, I am more worried about how the likes of Clickimin & especially the Garrison stay afloat, now that Mareel will be effectively ‘nicking all their gigs’.

    Reply
  21. Mark Manson

    If the additional cost in Mareel is due to unforseen construction issues that is one thing but if any of the additional cost is due to changes made to the original spec of the building this is another thing entirely.
    If the latter is the case had there been something in place to hold people responsible for staying within budget I am sure there would have been a different outcome.
    Mark Manson
    November 28, 2012

    Reply
  22. john ridland

    Oh David , David ,David ,,, If There were any comon sence ,We and the S.I.C an Shetland would,nt be in the s**t pitt were in just now,,,,,!

    Reply

Your Comment

Please note, it is the policy of The Shetland Times to publish comments and letters from named individuals only. Both forename and surname are required.

Contributors must observe normal standards of decency and tolerance for the opinions of others. Comments are moderated. Moderators have been instructed to approve or reject comments but not to edit them. Comments may therefore be withheld due to one incautious phrase in an otherwise acceptable contribution.

The views expressed are those of contributors and not of The Shetland Times.

The Shetland Times reserves the right to decline or remove any contribution without notice or stating reason.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>