Catch 22: The Alchemy of Regeneration

Siraj Izhar 2004

In Compulsive Beauty, Hal Foster discusses how the surrealists at the start of the 20th century sought out the outmoded in the urban landscape. [1]
For the surrealists, the outmoded provided the subject for a revolutionary transition from 'cultural destitution' to 'revolutionary nihilism' through 'the contradictions between old cultural forms and new social formations'. This was the site of the surrealist battle but by the end of the century, such contradictions intensified in the cultural landscape as the coming of the digital 'revolution' brought increasing tempos of technological obsolescence paralleled by cultural dissonance. In this landscape, the strike project chanced upon its dream place for such a ‘surrealist confrontation with old cultural forms in the uneven development of productive modes and social formations’. In 1992, strike occupied a derelict Victorian public lavatory right by Nicholas Hawksmoor's baroque masterpiece, Christchurch Spitalfields, adjacent to the City of London's 'Square Mile', the global concentration of late capitalist financial institutions. A derelict public lavatory below a thriving commercial street is nothing but an ideal of the outmoded; an useless antique listing in cultural destitution outside of consumer relations of exchange.

Spitalfields was the site of change throughout the 1990s: with the heritage restorations of its Georgian terraces, the expansion of the City made inevitable by the closure of Spitalfields Fruit and Vegetable market, alongside EU (European Union) regeneration grants allocated to the neighbourhood. These elements overlapped synchronically. But Spitalfields was not Lower East Side in New York, nor the Isle of Dogs, the site of London’s Canary Wharf. The constituency here were eager for regeneration, landlords vying for availability of European public money to renovate their properties.
Thus whilst rents for A1, B1, A3 (planning classifications for commercial use, A1 being shops, B1 being offices, A3 being catering establishments as bars and restaurants) were in the region of £7-10 per sq ft around Commercial Street in the mid 1990s, they typically rose to £15 to £25 per sq ft by the late nineties. [2]
This meant a silent exodus of small-scale tenants, mainly first generation migrant workshop enterprises engaged in cottage or textile industries, now replaced by design and PR companies from the ‘knowledge industries’ engaged in the immaterial economy.
Regeneration is an abstract form of appropriation; the properties so remain but their use value is appropriated from one constituency and given onto another through the agency of public funds. Change of use effects an increase in exchange value; thus the alchemy of regeneration.

PUBLIC LAVATORY 1997-1999

For strike the art project, as the incumbent at the derelict public lavatory, regeneration gave an opportunity for its agenda of continued and permanent usage, thus establishing a permanent base for its operations in the neighbourhood. Strike’s strategy – and its vision was strategic, not tactical - was not the temporary alternative art venue but an autonomous self instituting project which would shoulder the civic responsibility of securing the necessary finance and planning consents and rebuild a derelict building to return it to public use albeit in a different manner.
A new organisation was set up, in 1997, in the form of a registered charity with a non-profit mandate to oversee the project and prevent commercial gain from the development - this was strike foundation.

Being an autonomous project, strike foundation’s interest was to keep capital investment as low as possible as capital costs would reflect future rents and determine the level of commercial activity required to sustain the project. The working budget for capital costs was £100,000 with a potential maximum of £120,000 - half of this, £62,000 would come from regeneration grants as the derelict lavatory was a heritage Grade 2 listed property. The grant money was for restoration of the basement, the Victorian cast iron railings and pavement lights.
If such were the sole operating details, the regeneration could have benefited strike’s charity.

The beaurocratic process alas was far more convoluted, riven throughout with a conflict of interest between strike, and the architects working closely with the regeneration agency and the landlord. In this circuit of interests and ambitions, a direct conveyancing operation – normally an internal negotiation between landlord and tenant - became a multiparty negotiating ring in which the charity was inevitably the weakest player. [3]
Further, whilst a simple faithful restoration of the derelict space to return it to public use was strike’s objective the architects extended the regeneration brief with proposals to expand the area of the property from 590sq ft to 700sq ft.
This not only required wholesale excavation and structural works but in the process a critical red line was crossed: what was once too small for commercial viability became commercially viable and thus exposed the property to the speculation on the market.

Thus not surprising by 1999 when the 25 year lease was at last concluded in the form of an agreement (to allow the regeneration grants to be paid) the rent had risen from £10,000 per annum for the 590 sq ft derelict space to £25,000 per annum.
And not unexpectedly the cost of the development rose steadily from £120,000 to £180,000 -as feared the excavation works proved far more complex than the architects anticipated. [4]
The paradigms for strike’s charity to adopt now were limited; regeneration had meant strike had been co-opted to serve as a speculative developer at riskier financial margins of A3 business in the area. But given strike's understanding of the economy of subculture and its social constituency, recouping this money within the 3 year programme planned was possibly within reach though this was now a high risk venture.
The problem lay not only in the excess expenditure but that the development was susceptible to purely commercial use and liable to be forced to operate in this field long term if the landlord sought to.

Phase 1 and Phase 2

The development of Public Life was broken into 2 phases:
Phase 1 of the Public Life project was to put the subterranean space back to public use. Phase 2 was to enclose or semi-enclose the pavement above as that would provide the project with visibility on the street and split the project space spatially from a single cell to two with demarcation of use for production and consumption. Without this Public Life's operation was restricted to the single space (which nonetheless gave it an operational singularity as all activities took place in the one space: bar activities, music, visual projections, film screenings…)

Visibility above ground was a sensitive matter in a location outside Christchurch and dependent on planning consent from Tower Hamlets council. Despite receiving council regeneration grants to renovate the property as a digital gallery with ancillary bar (culture industry speak) planning consents were still not secured on 2 fronts. Strike’s charity had no consent for cultural use of the premises but had to operate under A3 which permitted the bar but not the music, internet broadcasting, etc.
Further without formal planning consent for the 'mixed use', neither was it possible to secure the credit required for capital expenditure to install the internet server infrastructure - and that depended on a protecting enclosure at ground level. Whilst a letter from the Planning Department in spring 2002 to strike's lawyers astounded them in terms of its ferocity, negotiations were proceeding with the help of a sympathetic local councillor.
But as time passed, there was the danger that the project would lapse into a nighttime economy. Thus work had to proceed with haste.
Not surprisingly the landlord waited and watched without concluding the 25 year lease that he and strike foundation were contractually bound to. This was prime commercial property.

In liaison with local architect Chris Dyson, Strike worked on proposals for Phase 2.
Dyson proposed a translucent Teflon mesh structure.
This would have provided an inside/outside feel whilst allowing activities like wireless networking on the pavement. Dyson’s design referred back to the silk weaving tradition of the Huguenots who built Fournier Street, the symbol of the wealth of the area in Georgian times. The Teflon mesh was equally an amorphous entity, partly immaterial (what Dyson termed ‘the Silk Worm’). Symbolically it was right for a project based on digital media and immaterial creative processes and an autonomous economic structure which had feedback principles built into it.
Tetsuo Kogawa in his essay ‘Towards polymorphous radio’ [5] discusses the issue of scale with regards autonomous activities. For strike the term ‘polymorphous’ was apt and it sought to provide public symbols for this dimension of cultural production in our cityscape.
Kogawa talks in particular about micro radio which had a defined territorial reach.
The internet - the principle technology of communication at Public Life - however lacks such structure. Paul Virilio in The Overexposed City comments that in the new information space made possible by the internet, the difference between ‘near’ and ‘far’ disappears and that the new technological time has no relation to any calendar time of events…[6]
For strike to be able to experiment with such possibilities was key to its agenda but a different climate of planning provisions were need - this was beyond the vision of Tower Hamlets Council planners. [7]
The heritage orientated planning process would not be responsive to such proposals. Strike then worked on another approach, one to be incrementally implemented. This would use bicycles to enclose the space. Not being a fixed fence, such a scheme would have eluded the planning committee and its strictures. And a new public facility would be produced in the process with a kinetic sense of boundary. However this would still require a minimal supporting structure.

END GAME

It was now 2003 and Public Life was entering its third year of operation. The charity’s lawyers had been busy on 2 fronts for over a year. On one, there was no progress from the council planning committee to mandate the use for which strike had received grants to convert the property from the very same council.
By now though pressure through another arm of the Council was being applied on the planning officers concerned.

Equally, the lease remained incomplete; and without it the banks could not forward the £82,000 mortgage payable negotiated with Public Life. Thus the £100,000 now owing to the landlord in accrued rent was still awaiting completion of the lease.
Public Life however was now close to the steady £4000 a week gross income [8] required by the banks for its business forecasts - as such it was a going concern.
Equally as such it was extremely vulnerable to speculative interests; from the business perspective, it was possibly advantageous for the landlord to forfeit the rent and the lease to recover the property. This aggressive move was getting more likely with the passage of each month and it came in October 2003.

Belatedly at a meeting at the council’s planning office on the 28th of October 2003 [9], provisional agreement was reached to enable strike foundation to apply for use of the former public lavatory as ‘digital art and music venue’ with bar.
A later meeting on site laid the possible parameters for the above ground enclosure.

However litigation on completion of the lease continued. The legal cost being born by Public Life meant that even if planning consents now came in, the resources would no longer be there to install the infrastructure needed to serve the charity’s objectives. Further litigation could expose the trustees to risk and the author’s allocated time on the board was to due to expire on the 31st December 2003 [10].

On the 4th of December 2003, at the author’s request the Charity Commission at last visited the site. Their advice, not entirely consonant with the charity’s lawyers, gave the trustees little room for manoeuvre. Accepting their advice as impartial, the trustees agreed that the cost of continuing the legal process was beyond the means of the charity and neither was there clarity on protection (under a ‘Beddoes Order’) from personal loss against litigation costs. And even if strike foundation successfully concluded an expensive legal process, it would have depleted the very resources it needed to fulfil its objectives.
Catch 22.
The trustees agreed to suspend operations on the 1st of Jan 2004 if the lawyers failed to secure a stay on legal proceedings. This was not successful.
On the 24th of Jan 2004, the charity and the trading company passed into the hands of liquidators and the former public lavatory was re-appropriated by its landlord to begin life again.
Perversely as Public Life of course. [11]

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[1] Hal Foster, Compulsive Beauty, MIT Press 1993
‘I want to suggest that the surrealist concern with the marvellous and the uncanny, with the return of familiar images made strange by repression, is related to the Marxian concern with the outmoded and the nonsynchronous, the persistence of old cultural forms in the uneven development of productive modes and social formations; more, that the first supplies what the second can not do without: its subjective dimension.’

[2] To illustrate, a £10 per sq ft space would cost £10,000 per annum rent for 1000sq ft. Using industry benchmarks, the gross income for an A3 business should be in the region of ten times the annual rent in order for the business to be breaking even and paying due wages to staff.

[3] The regeneration grants were to be paid to strike foundation for works to restore the Grade 2 listed property and that these works were to be in ‘favour of the landlord’ as phrased in the lease agreement. i.e. the charity would have to pay open market rent on the works carried out by the regeneration money. At every opportunity, the author maintained that to avoid commercial exploitation of these works in future, planning guidelines needed to be in place. Alas there was no dialogue between the Regeneration department of the council and the Planning department.
In this circumstance, strike’s trustees could have abandoned the project in 1999 though the position at the time was that given the costs already incurred, strike should be allowed to transfer to another property not simply forsake the entire project and pass on its initiatives and benefits to the landlord and his architects. Failing that it should see the project through.

[4] The full itemised cost of the Public Life’s development came to £188,660.78 with 62,000 coming from regeneration grants for heritage works.
Given the excess expenditure, the trading company Public Life Limited set up to run the bar could no longer be a subsidiary of the charity as that would have handicapped its borrowing capacity on the open market.
Aside from excess costs due to the excavation works, further costs were incurred with the delay in securing planning consent for the glazed box within the cast iron railings. This took 6 months and had to be constructed in toughened laminated glass.
Public life Limited needed to pay for all capital costs above the £120,000 allocated by strike’s charity and its mandate was to gift-aid any future profits to the charity. As trustees aside from the author could not carry liability for borrowing, this liability was restricted to the author who was the sole shareholder of Public Life Ltd. The agreement with the remaining trustees was that this arrangement would last 3 years. So long as the company stayed in negative equity, the single shareholding was a necessity.

[5] Tetsuo Kogawa Toward Polymorphous Radio http://anarchy.k2.tku.ac.jp/index.html

[6] Paul Virilio, The OverExposed City from Rethinking Architecture, Routledge 1997

[7] Strike canvassed all immediate neighbours about its proposed use and supplied their references to the Planning Department. Equally the local police at Bethnal Green reported not a single incidence of misbehaviour or public disturbance for the 3 years of Public Life activity.

[8] Pushing income above £4000 a week would have made the project dependent on purely commercial activity. The author's judgement was not to exceed this threshold with an evening economy as that would adversely affect the long term balance of projects.
To see Public Life's actual performance refer to the annual accounts lodged with Companies House.
Public Life's gross income for 2000/2001 was £130,673 [exVAT], £169,406 [exVAT] 2001/2002. The final year's income would have been in line with the 2nd year's but litigation costs would have swallowed up its reserves to the detriment of the charity.
In terms of staff remuneration, all Public Life staff were paid £5 or £6 per hour on a self employment basis; the director’s drawings from Public Life Ltd were £2080 in the first year, £4160 in the 2nd year and £28,000 in the 3rd year - below what was agreed with the trustees and accountants Messrs Halperns, and the companies' charters. Circumstances required that resources be prioritised for repaying capital costs.
Performing artists were neither paid nor charged for using the Public Life (with the exception being New Years eve when staffing costs would be doubled).

[9] Attended by the Director of Planning, Tower Hamlets Council, one ward Planning officer, one assisting Councillor, Director of the Council’s Regeneration agency and the author as director of Public Life and strike foundation

[10] To enable the author to leave the board of Public Life Ltd and relinquish his shareholding, an option considered was to transfer Public Life to a group of 10 collectives based at the premises each with a shareholding of £10,000. That would have raised £100,000. This would have meant that strike foundation would no longer be a beneficiary of the proceeds from Public Life Ltd but that the charity would be free to embark on fresh projects having completed this project. This option proved organisationally unworkable given the disparate resources of the collectives involved..
Continued involvement of the author beyond January 2004 had to be resolved another way; the trustees would review the shareholding and liability beyond that date once the litigation course was completed. The proposal floated was to split the single shareholding into 3, each a 3 yearly rotating shareholding held by 3 autonomous groups including at least one overseas voluntary sector organisation.
Shares had to be returned to the trustees but could be renewed by the trustees at the end of each 3 yearly period.

[11] The mathematics at time of transfer to liquidator would have been thus: the landlord was claiming repossession and payment of rent; Strike foundation was demanding completion of the lease. Strike foundation was also counter-claiming £188,660.78 from the landlord in the eventuality that the lease failed to be granted.
On completion of lease £106,000 was due to the landlord of which £82,000 was to be paid through a mortgage from National Westminster. As a charity could not take liability for the mortgage, the lease had to be assigned to Public Life Ltd, the trading company. Whilst the lease was assignable in accordance with the contractual agreement, it had not been granted yet. Rents could not be paid outside the covenants of the lease and that was not there.

© 2004 The author. All Rights Reserved.