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REPORT

Third Report of the Council on the proposed East Forum building at West Cambridge

The COUNCIL beg leave to report to the University as follows:

1. Following the Discussion on 15 March 2005 of their Second Report on the proposed East Forum building (Report published in Reporter, 2004-05, p. 478; Discussion remarks published in Reporter, 2004-05, p. 565), and their Notice responding to the Discussion which was published on 27 April 2005 (Reporter, 2004-05, p. 615), the Council set forth this Third Report to seek final approval for the project.

2. The three main objectives of the East Forum project are:

(i) to act as a social focus for the West Cambridge site, providing catering and other facilities to supplement those already embedded in Departments on the site;
(ii) to provide Cambridge Enterprise with office space, including incubation space to accommodate early-stage start-ups, and a seminar centre;
(iii) to foster collaboration between the University and business, by co-locating relevant tenants.

As indicated in the Second Report, the project is to be self-financed, through a donation and through a collaboration with a commercial developer.

3. The East Forum is now expected to comprise three buildings:

(1) Cambridge Enterprise Building. This will provide approximately 2,400 sq.m. of space for Cambridge Enterprise, comprising offices for Cambridge Enterprise staff, incubation space, and a seminar centre. The costs of this building, including construction, fees, VAT, and Infrastructure Fund levy, will be met in full by a donation of up to £8m from the Hauser Raspe Foundation.

(2) Café/Atrium. This will provide approximately 600 sq.m. of space for the relocated West Café, and for informal social space. The cost of this building, including construction costs, fees, and VAT, together with the cost of external works within the perimeter of the East Forum site, will be met in full by the Infrastructure Fund as described in paragraph 4(9).

(3) Lettable Building. This will provide a minimum of 3,500 sq.m. of space. It will be developed by the Developer, at the Developer's cost and risk. Dependent upon approval from the planning authority, the size of the Lettable Building may be larger (up to around 5,000 sq.m.); in this event the payment into the project by the Developer will increase on a sliding scale.

The design and layout of the three buildings within the site is not yet determined. The Lettable Building will be free-standing; the Cambridge Enterprise Building and the Café/Atrium are likely to be self-contained but physically connected. The intention is that the design of all three buildings should be practical, economical, and attractive.

4. The recommendations in the Second Report, seeking approval in principle to the project, and to collaboration with a Developer, were approved by Grace 3 of 27 April 2005. The Council noted in their Second Report that several matters would need to be resolved before final approval could be sought in a Third Report. The Council are satisfied that those matters, which are set out below, have now been satisfactorily resolved:

(1) Intellectual property rights (IPR). At the time of publication and discussion of the Second Report, uncertainties about future University IPR policy raised questions about the role and size of Cambridge Enterprise, and hence about its accommodation needs. The University's IPR policy has now been settled.

(2) Business Plan for Cambridge Enterprise. A business plan for Cambridge Enterprise, which has now been separated from Research Services Division, was presented to the Council in April 2006, as part of the re-structuring of Cambridge Enterprise. The proposals for the re-structuring of Cambridge Enterprise are the subject of a separate Report (see p. 683).

(3) Selection of Developer. Following advertisement in the Official Journal of the European Union and a formal selection process (including the taking up of references) Turnstone Estates Ltd has been selected as the preferred Developer partner for the project. Turnstone has previously acted as the Developer partner on buildings for Peterhouse, Cambridge City Council, and the Department of Constitutional Affairs (for the new Cambridge County Court), and has a joint venture at Waterbeach with St John's College.

(4) Heads of agreement with Developer. The principles of the heads of agreement with Turnstone have now been agreed. They are that Turnstone will pay a premium to the University as consideration for a lease of 125 years of the site of the Lettable Building; that the infrastructure contribution from the Lettable Building will be met from this consideration; that Turnstone will bear all the letting risk in respect of the Lettable Building; and that University agreement will be required if any tenant of the lettable building is to occupy more than 1,000 sq.m. Turnstone will also carry the construction risk on all three buildings.

(5) Donation agreement. The principles of the donation agreement with the Hauser Raspe Foundation are that, subject to the agreement of the Regent House to the recommendations of this Report, the Hauser Raspe Foundation will provide a donation to meet the costs of the Cambridge Enterprise Building, as set out in paragraph 3(1), up to a maximum of £8m; and that the donation will be made in stages corresponding to stages in the completion of the building. It is also expected that the agreement will specify that the Cambridge Enterprise Building will be used for at least 25 years for entrepreneurial activity and that the donation will not confer on the donors any privileged access to Cambridge Enterprise or University-owned IPR.

(6) Running costs of the Cambridge Enterprise Building. A financial appraisal of the East Forum project has been undertaken by Cambridge Enterprise with input from the Estate Management and Building Service (EMBS). It shows that, under reasonable assumptions, the project produces net positive cash flows of £1.371m over a 25-year period; this produces a net present benefit to the University of £817,000, compared to a 'do nothing option' under which Cambridge Enterprise remains in its current accommodation.

(7) Capital cost to the University of the Café/Atrium. At the time of the Second Report it was not clear whether the cost of constructing and fitting out the Café/Atrium could be fully funded from within the project, as the amount a Developer would pay for the lease was unknown. The figure now agreed with Turnstone will enable the full costs of constructing and fitting out the Café/Atrium to be funded from the available budget, so that no capital cost will fall on the University.

(8) Operations of the Café/Atrium. The Planning and Resources Committee have agreed that the University Centre should operate the Café/Atrium, for at least three years. This will enable the established West Café operations to be moved into the Café/Atrium. The temporary planning consent for the existing wooden West Café building will then expire; the building will be removed and the site reinstated. Alternative uses for the building elsewhere will be sought. The operating costs of the Café (heating, lighting, staffing, food supplies) will be met by the University Centre out of the Café income, as in the current West Café. It is expected that the Café/Atrium will include a cash dispenser. The servicing costs of the Atrium, of £45,000 a year, will need to be borne as part of the West Cambridge site maintenance costs, and these costs have been included in the financial appraisal.

(9) Infrastructure Fund. The East Forum project will at worst have a neutral effect on the West Cambridge Site Infrastructure Fund. This is because all expenditure on constructing, fitting out, and furnishing the Café/Atrium, and on infrastructure and landscaping within the East Forum project site, will be kept within the amount of money produced from the Developer's payment and the Infrastructure Fund levy from the Cambridge Enterprise Building. No other contribution will be sought from the Infrastructure Fund towards the project. The Café/Atrium itself, as a site-wide facility, is exempt from the Infrastructure Fund levy.

(10) Fees. Professional fees and EMBS project management costs incurred by the University for the East Forum project since 1 April 2006 are being accounted for in the project budget and will be recovered in full from the donation and from the Developer's payment.

5. As set out in more detail in the Second Report, policy issues arising from the mix of activities within the East Forum will be dealt with in the following way:

(1) No special privileges for tenants of Lettable Building. No tenant of the Lettable Building will have any preferred investor status in spin-out companies, nor any special access to University intellectual property.

(2) No special privileges arising from donation. The donation will not give rise to any special privileges, such as privileged access to University intellectual property, for any individuals or companies (including Dr Hermann Hauser and Amadeus Capital Partners) who are connected with the Hauser Raspe Foundation.

(3) Future use of University space. The agreement with the Donor is expected to provide that the Cambridge Enterprise Building will be used, for at least 25 years, for entrepreneurial activity. This will be broadly defined (to include, for example, incubation space) so that it does not commit the University to maintaining the staffing of Cambridge Enterprise at any particular level.

(4) Selection of tenants for the Lettable Building. The Developer will be responsible for the choice of tenants, subject to planning restrictions applicable to the West Cambridge site and end-user restrictions embodied in the Head Lease.

6. The Council recommend as follows:

I. That approval be given for construction of the East Forum buildings as proposed above and on the site indicated, with the full costs to the University of the Cambridge Enterprise and Café/Atrium Buildings being met by the donation from the Hauser Raspe Foundation and the premium payment from the Developer.

II. That the University approve the lease of the land identified in this Report for the construction of the Lettable Building to the Developer for a period of 125 years.

29 May 2006ALISON RICHARD, Vice-ChancellorD. W. B. MACDONALDVERONICA SUTHERLAND
 A. J. BADGERJAMES MATHESONLIBA TAUB
 Z. BARANSKIMARTIN REESBEN WHEELER
 RICHARD BARNESG. A. REIDJOAN M. WHITEHEAD
 RUTH KEELINGDAVID SIMONRICHARD WILSON
 D. LOWTHER  

A plan of the proposed site for the new building is also available:

Note of dissent

We are concerned that the co-location of Cambridge Enterprise with selected professional service firms may give rise to conflicts of interest; it is very likely to give rise to the appearance or suspicion of such conflicts. Cambridge Enterprise should be in town or in a science park; spin-out companies should be in a science park with their peers and competitors, or in low-cost premises; and the development of West Cambridge should focus on academic departments.

Attempting to kill two birds with one stone is seldom wise as one ends up missing both.

ROSS ANDERSON
NIGEL BROWN
MIKE CLARK
BOB DOWLING


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Cambridge University Reporter 7 June 2006
Copyright © 2006 The Chancellor, Masters and Scholars of the University of Cambridge.