THE FUTURE of Shetland’s £13.5 million cinema and music venue Mareel has been secured after councillors agreed to take out a 99 year lease on the waterfront building.
The lease will cost the authority £1.1 million, but it will secure their investment, which now stands at £7.25 million.
Wednesday’s decision, made after a two hour meeting behind closed doors, means the building’s owners Shetland Arts can concentrate on running the popular cultural centre rather than worrying about its future.
Last December the SIC set up a £600,000 bridging facility to keep Mareel open after it went £1.5 million over budget having been completed 18 months behind schedule.
The council commissioned two forensic reports into the building contract by accountants PricewaterhouseCoopers and legal firm Brodies, which resulted in it setting aside a £1.2 million budget to secure the building, a sum which included the bridging facility.
An independent valuation later set the lease at £1.1 million, with the rest of the budget eaten up by administrative costs.
There remains an outstanding legal dispute between Shetland Arts and contractors DITT about who is responsible for the delays and extra costs, as well as defects which still have to be put right.
The council said Wednesday’s agreement wiped out any debts from Shetland Arts and ruled out any council subsidy to the building.
SIC leader Gary Robinson said: “I’m pleased and relieved that our capital investment in Mareel is now secured, as well as all the public money we and our partners have put into the project, a total of almost £14 million.
“Councillors are still under unprecedented pressure to cut budgets, and I know many folk were uneasy about the possible outcome of negotiations about the future of Mareel and maybe feared there’d be an open-ended council subsidy.
“There won’t be, but I’m hopeful that we and the other funders can now find a way to achieve long-term security for Mareel, into which so much public money has been invested.”
Shetland Arts chairman Danus Skene said the leasing agreement guaranteed Mareel would be retained as an arts centre for the next 25 years at least.
“This allows us to turn a corner. The last period has not been easy for anybody given the political and financial climate at the council, who have been quite aggressive about the whole matter,” he said.
“We have now cleared that and we are able to stop looking over our shoulder and get on with what we should be doing, which is running an arts policy and an arts centre.”
He added that he was optimistic the legal arguments with DITT could be settled in the near future, hopefully without the need to go to court.
For legal and financial reasons, the SIC is leasing the building from Shetland Arts and then leasing it back to them, thus avoiding any ongoing maintenance costs and VAT bills. The arts agency will pay for the upkeep of the building and does not pay VAT because it is a charity.
Robinson added that one lesson learned was that in future the council would ensure that any major capital investments were backed up by a security in the building itself, a measure that Creative Scotland alone among Mareel’s funders took.