Minutes:
The Committee considered the undernoted report:
“1 Relevant Background Information
1.1 One of the key projects in the Council’s Efficiency is the development and implementation of an accommodation strategy which rationalises the City Centre office accommodation for the Council freeing up leased accommodation for use by the private sector in support of the Council’s City Financing Strategy and realising potential capital receipts on surplus BCC buildings. The strategy will also aim to establish accommodation facilitates modern ways of working in to office environment.
1.2 The majority of the Council’s city centre staff (1,142 staff) are currently accommodated in four locations - City Hall, Cecil Ward Building, Adelaide Exchange and Lanyon Place, with the latter two buildings leased from private landlords. This accommodation is augmented by the ISB Building, Wellington Place (CAC), Dunbar Link and Maysfield LDC. The accommodation at Duncrue Complex is currently excluded from the accommodation strategy given its ongoing operational requirement. The associated annual rent and rates accommodation costs for currently leased city centre premises is £1,034,950.
1.3 There is an opportunity for the Council to exercise lease break options in both Adelaide Exchange (September 2017) and Lanyon Place (January 2017) at no financial penalty to exercise the options. Should these break options not be utilised Council’s tenure will automatically extend to the end of the Lease terms; August 2022 and November 2020 respectively.
1.4 The Accommodation Group was re-established by the Strategic Policy & Resources Committee, on the 24 September 2010 to review existing accommodation commitments and consider the future accommodation needs of the Council.
1.5 The Strategic Policy & Resources Committee of 8th June 2012 agreed that an Economic Appraisal and Options Report should be undertaken in respect of the Council’s office accommodation in order to recommend a way forward for development of a Corporate Accommodation Strategy for the Council. CIPFA Property was appointed to provide an initial analysis of the Council’s existing office accommodation and provide high level recommendations.
1.6 The high level CIPFA Property evaluation identified a ‘workstyle solution’ based on modern ways of working that could potentially provide the optimal outcome for the Council. However, it was not considered that such a solution could universally be implemented with any degree of success given the existing nature, range and provision of services across the Council. It was recognised that this solution may not fit services and Strategic Policy & Resources Committee on 21 June 2013 agreed to pursue an ‘estates solution’ that embodies the principles of best practice of workspace provision and where suitable to develop and employ more modern ways of working tailored to suit service delivery.
1.7 A market site search of currently available property was concluded on behalf of the Council in October 2013 by CBRE estate agents who identified a list of 14 potential locations. This site search concluded there were no options available of sufficient size in suburban locations to facilitate a totally decentralised approach to the Council’s eventual accommodation solution.
1.8 Deloitte were appointed to undertake the Economic Appraisal and Options Report based on a shortlist of locations indentified in the CBRE site search and also to include 4 Council owned sites (ISB Building, Maysfield, Gasworks Northern Fringe, Ormeau Avenue).
2 Key Issues
2.1 Economic Appraisal
Building on the high level CIPFA Property analysis of the Council’s existing office estate that identified the potential for revenue savings Deloitte have undertaken a detailed economic appraisal that assessed the various options available to Council in developing a Corporate Accommodation Strategy on the identified site location options, to include.
· Ownership v Leasing
· Purchase of existing building v new purpose built
· BCC owned site v 3rd party site
· Locational & regeneration Issues
· Centralised (city centre) v de-centralised (neighbourhood working model)
· Collaboration with other public sector bodies
· Potential for provision of additional accommodation for 3rd party letting
· LGR & reform of local government /future proofing
· Opportunities for flexible working; touch-down desks, home working etc where there is also scope within the Leisure Transformation Strategy to accommodate outreach office space in the community
· Opportunities arising from the Council’s Investment Programme
· Financial Implications & potential for efficiencies
· Potential for alternative sources of funding for either capital or enhanced revenue expenditure (e.g income) depending on the option(s) adopted
2.2 Deloitte were provided with information in respect of the Council’s current office estate (size, running costs etc) together with current staff numbers/locations and future staff projections resulting from both LGR and natural growth on which to assess need and office space requirement.
2.3 The Economic Appraisal and Options Report undertakes a detailed assessment of need, identified options for full appraisal, highlight the benefits and opportunities and sets overall objectives for the Strategy and is summarised in Appendix 2
2.3 Monetary/Non-Monetary Assessment:
The economic appraisal has concluded:
· ownership is preferable to leasing options
· building new premises is preferable to refurbishment options
· confirms development of a ‘campus style’ approach for the Council’s office estate (proximity to City Hall) as opposed to decentralisation and area based working – duplication of costs, services etc
· Estimates of savings on annual running costs has been identified at £1.2M annually from building and owning a new single building in the city centre over current running costs of the Council’s existing office estate. Besides the savings on leased property this also includes savings associated with the ISB building and the Learning & Development Centre.
· Council requirement is for 100,000 sq ft in addition to City Hall & CWB
· Accommodation needs to accommodate additional circa 270 staff from LGR staff transferring and natural growth in service provision requirements
2.4 Recommendation:
The preferred option recommended in the Deloitte economic appraisal is to acquire a site and build new premises.
The preferred site for the new premises is Clarendon House site (adjacent to CWB) being the optimal location of the available opportunities.
The capital cost associated with acquisition, demolition, build, decant, fees etc for Clarendon House is estimated £21M.
2.5 Optimal Timing: Given the respective break options in the Council’s leased accommodation (Adelaide Exchange, Lanyon Place) in 2017 any alternative premises need to be available for occupation by end of December 2016 which leaves approximately just under 3 years to complete the project.
The Council has the opportunity to progress the purchase of Clarendon House, presently on the market, for which Committee had sanctioned conditional bidding. Valuation advice has been obtained from Land & Property Services to inform the bidding process. Such opportunity to acquire a development, that meets the Council’s identified drivers for the Accommodation Strategy, may not be available in the future.
The Director of Finance and Resources has confirmed that if the Committee agreed that the Council should seek to purchase the site, within the value for money limit, the purchase of the Clarendon House site could be funded by a cash payment from the 2013/14 Capital Financing Budget, thus avoiding a future loan liability for this phase of the project.
If the purchase was successful, the Director of Finance and Resources would work with the Director of Property and Projects to develop a financing model for the new build, fit our and decant phase of the project, including the impact of transferring staff and resources from central government as part of Local Government Reform.
2.6 Risk
Deloitte have examined 10 associated risks identified with delivery of the Council’s Accommodation Strategy ranking the provision of a new building as relatively low risk with only a negative public perception (medium/low) and lack of support/buy-in to the recommended option (high) potentially impacting.
2.7 Accommodation Steering Group
The Members Accommodation Steering Group considered the broad findings of the Economic Appraisal at its meeting on 4th February 2014 and agreed that a report should be taken to the next Strategic Policy & Resources Committee based on the Economic Appraisal findings to progress the Accommodation Strategy.
The Accommodation Steering Group also endorsed 5 key design principles for the Council’s Corporate Accommodation Strategy identified in the Economic Appraisal
1. The City Hall and Cecil Ward Building will both be retained
2. The Council’s office accommodation should be flexible and adaptable
3. The standard of accommodation does not need to be Grade A, good Grade B is an acceptable standard
4. The building should be designed to BREEAM standard of ‘excellent’ or above
5. The city centre office estate should follow a ‘campus style’ model
The Accommodation Steering Group has also highlighted:
· The potential for leasing out any surplus office space in a new City centre office development and utilising the ground floor as retail potential that would bring active street frontage.
· Potential within the Leisure review to explore incorporation of city centre leisure facilities in the provision of new accommodation.
· Branding of any new Council office block utilising the World Trade Centre licence currently held by the Council.
· Requirement or otherwise to include staff car parking with new accommodation.
· The need for full consideration of Green issues and energy efficiency in the delivery of any accommodation solution.
3 Resource Implications
3.1 Finance
The Director of Finance and Resources has confirmed that if the Committee agreed that the Council should seek to purchase the site, within the value for money limit, the purchase of the Clarendon House site could be funded by a cash payment from the 2013/14 Capital Financing Budget, thus avoiding a future loan liability for this phase of the project.
4 Equality and Good Relations Considerations
4.1 The
longer term delivery of the Councils Corporate Accommodation
Strategy will take account of equality issues.
5 Recommendations
5.1 It is recommended that Members note the findings of the Economic Appraisal and work undertaken in respect of the Corporate Accommodation Strategy through the Accommodation Steering Group and agree to that the Council should seek to purchase the Clarendon House site for the future development of City Centre Office Accommodation for the Council .
5.2 The Committee is asked to note that the If the purchase is successful, the Director of Finance and Resources would work with the Director of Property and Projects to develop a financing model for the new build, fit our and decant phase of the project, including the impact of transferring staff and resources from central government as part of Local Government Reform.”
The Committee adopted the recommendations.
Supporting documents: