Plans to convert Perth City Hall into a food market collapsed yesterday after developers failed to convince councillors of the project’s financial viability.

Councillors agreed at a private meeting to suspend negotiations with Perth Market Place Ltd, the company behind the rescue plan for the Edwardian listing building.

The company, which had previously been identified as the preferred bidder for the long-term lease of the former Perth City Hall buildings, had been asked by councillors to fulfil four pre-conditions to any lease.

The pre-conditions were:

Councillors were told that some of the key information required in these pre-conditions has not been provided, particularly clarification and confirmation as to the funding arrangements for the proposed use of the buildings.

Councillor Ian Miller, leader of the administration for Perth & Kinross Council, said that council officials will now explore “all options” for the future of the building.

Councillor Miller said: “When councillors agreed to select a preferred bidder for the City Hall site in October we were extremely clear that there were a number of pre-conditions the bidder needed to satisfy before we could agree to any lease.

“These pre-conditions were necessary to address our ongoing reservations about the long-term viability of the bid.

“It is extremely disappointing that the bidder has failed to comply fully with these within the timescales set, providing vague and inadequate information in relation to key questions about the available funding to support their proposals.

“Perth City Hall has suffered several false dawns over many years, and I share the frustrations of the vast majority of the people of Perth and Kinross that we have still not found a solution to this key site. However, I am not prepared to simply continue making incremental progress with the bidder, when they have failed to provide us with the most basic of assurances.

“Suspending negotiations on the lease at this time will allow officers to bring back a report on all possible options for the site, so that councillors can make an informed decision at our next meeting on the best way forward.”

Perth City Hall timeline

2005 - The Hall became vacant and a consultation and tender process took place.

2006 - A plan for a mixed use retail development was given the go-ahead by the council.

2009 - The development failed due to the inability of the developer to secure funding, as the property market had changed and there was no longer a market for such a facility.

2010 - An independent economic assessment by Locum and Colliers of the current and foreseeable economic climate confirmed the demolition of City Hall and the creation of a civic square as the most beneficial option for the local economy.

2011 - The council gave planning consent for the Square.

2012 - Due to its listed building status, a consent to demolish the City Hall was required by Historic Scotland, which was turned down.

The council decided to remarket the building, following Historic Scotland’s decision that more evidence was required to demonstrate that there was no viable use for it.

2013 - After a 15 month period, only one bid was received. This was from Perth City Market Trust and was independently assessed by commercial property experts, Jones Laing Lasalle, and found to be “lacking in detail in relation to proposed commercial terms, business case and funding arrangements”, raising: “significant concerns regarding the ability of PCMT to deliver the project.”

In these circumstances, it would have been highly irresponsible for the council to accept this bid.

2014 - Planning and listed building applications have been received relating to proposals for a hotel on the site of Perth City Hall. The council’s development management committee approved these in May.

On Wednesday 25 June 2014 a meeting of full council approved a report recommending that the long-term lease of Perth City Hall is re-marketed for a further six month period. This time will give developers the opportunity to prove the financial viability and long-term economic impact of their proposals.

2015 – As a result of the re-marketing five proposals were received for the redevelopment of Perth City Hall. These proposals were evaluated by independent commercial property expert, Jones Lang Lasalle, who concluded that three of the bids were non-compliant with the specific guidelines outlined as part of the marketing process.

The remaining two bids were brought forward for consideration and at a meeting in October.

2016 – Councillors agreed to select Perth Market Place Ltd as the preferred bidder, and set 4 pre-conditions which must be met before the lease terms could be brought back to council for agreement. On 24 February 2016 councillors were informed that the bidder had not fully met these pre-conditions and were asked to make a decision on the next steps.