Plans for affordable housing at the site are being halved in a blow to the city council
A deal for a landmark Bristol development featuring hundreds of new homes, office blocks reaching up to 19 storeys, and a hotel and conference centre close to Temple Meads station is set to become considerably more costly for the city council.
The local authority has already pledged £32m to remediate the derelict former diesel rail depot at Temple Island — previously earmarked for an arena and known as Arena Island before being scrapped by then-mayor Marvin Rees — and lay the groundwork for construction.
It has taken four years to decontaminate the site ahead of developer Legal & General overhauling the land with a £350m investment, which is expected to take roughly a decade to complete.
However, a Bristol City Council report now reveals the agreement signed with L&G in 2022 — which pledged that 40 per cent of the 520 homes would be designated as affordable and included the council guaranteeing office rent to the financial firm for 40 years, estimated at £2m annually — is no longer financially viable.
The report states that both elements have shifted considerably against the council’s interests, meaning it will be forced to absorb additional costs to keep the project, part of the broader Temple Quarter and St Philips regeneration scheme, on course.
The report, due to be ratified by the strategy and resources committee on Monday, July 13, confirmed that land value had fallen sharply owing to a 35 per cent rise in construction costs since 2022 and the introduction of new safety regulations. Yet simultaneously, demand and pricing for Grade A office space in central Bristol has climbed steeply.
All of this means that without a fresh agreement, the 2022 deal would be incapable of delivering the development.
The committee is therefore being asked to halve the proportion of affordable homes from 40 per cent to 20 per cent — a figure that became apparent months before L&G secured planning permission in April — though even this reduction is contingent on a grant from Homes England.
The council, which will sublet the offices, will also be required to pay a higher guaranteed rental income to L&G — a figure that is either unknown, yet to be agreed upon by officers under delegated authority, or not available to the public.
The report said: “As the prevailing rents for Grade A office space have increased significantly since 2022, it is proposed that the rental guarantee is now valued proportionately higher so that it can still contribute to the development viability.”
It noted that the figures were commercially sensitive and were contained within an exempt report.
The report said: “The proposed lease arrangement creates a long-term revenue commitment for the council.
“There is a risk that income generated from office occupiers may be insufficient to meet lease payments to L&G due to void periods, slower-than-anticipated occupation, market rent fluctuations, rent-free incentives, operating costs or wider market changes.
“This may create a revenue budget pressure, particularly during the early years of occupation.”
Finance officers stated: “Finance supports the principle of the proposed variation as a pragmatic route to progressing the scheme in current market conditions.
“However, members should be clear that the decision creates a long-term revenue exposure for the council and that the financial position will require active monitoring and management over the life of the lease.”






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