TAXPAYERS in Newport could shell out up to £12 million to support the regeneration of an eyesore office building in the city centre.

As the Argus has previously reported, Cardiff-based Garrison Barclay Estates plans to convert the five-storey IAC building in Mill Street, formerly a Royal Mail sorting office, into offices and a hotel.

And now Newport City Council is planning on offering the company a loan of up to £12 million to make sure the plans go ahead.

A council report said the drab appearance of the 55,000 sq ft building and its closeness to the city centre painted an unfortunate picture of Newport as a whole.

“The adjacency of the south Wales main line ensures the derelict property is visible even to those passing through Newport via train,” it said.

“Its ongoing lack of use thus paints an unfortunate view of the city centre and its offering.”

The report also said, while Newport has a “wealth” of vacant office space, none of that within the city centre are not of a high standard.

“The tired accommodation is generally unappealing to potential tenants, particularly high-value, high-growth occupiers who prefer to be based in the more expensive but desirable office districts of Bristol and Cardiff,” it said.

“Nevertheless, the strategic location of the city centre and its relative affordability, improving quality of offer and transport infrastructure mean that it is an unexploited resource in terms of the development of high-quality office space.”

It said the success of the scheme would help the city capitalise on opportunities presented by improvements to railway infrastructure, developments in the city centre such as Friars Walk and the ending of the Severn bridge tolls next year.

"Even though Newport is commercially very competitive with Cardiff and Bristol, the need for a quality working environment and a good standard of leisure and transport access close to the workplace is rising up the list of priorities for those companies seeking new office accommodation," it said.

"The IAC building enjoys a favourable location in terms of providing this access, close to the rail station and motorway network."

The council will itself have to take out a loan in order to offer the loan to Garrison Barclay, but, the report says, the cost of this will be covered by the interest incurred when the company pays the money back. The council report says the loan must be repaid within 12 months of the scheme's competition or three years of it being handed over to Garrison Barclay, whichever is earlier.

Announcing the plans earlier this year, development director with Garrison Barclay Ian Carter said: "We chose the building because we see Newport as a city with fantastic potential which is just starting to be realised.

“The City Deal, M4 relief road and lifting of the Severn bridge tolls will only serve to bolster this position."

Garrison Barclay has previously said it hopes the development will be complete by the end of 2018.

The proposal could be signed off at a meeting of the council's Labour-run cabinet on Wednesday.

The meeting at Newport Civic Centre is open to the public and will begin at 4pm.

View the full report to be presented to council members at tinyurl.com/ycx9j99d