PAPER E

Committee: RESOURCES SELECT COMMITTEE

Date: 20 NOVEMBER 2002

Title: UPDATE FROM THE PROPERTY ASSET MANAGEMENT TASK GROUP

REPORT OF THE CHAIRMAN OF THE PROPERTY ASSET MANAGEMENT TASK GROUP

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SUMMARY/PURPOSE

The Property Task Group has been established by the Resources Select Committee to review the Council's long-term office and storage requirements and bring forward recommendations. Some 25 issues had been identified for potential change (see appendix attached). The Task Group is now bringing forward a major proposal to address several of these issues through a scheme of acquisition and disposal of various property assets. This scheme is being recommended to the Resources Select Committee for further recommendation to the Council's Executive.

The review includes recommendations for :

1. Replacement of Library Headquarters

2. Development of the Guildhall

3. Development of Corporate Storage for Education, Finance, Planning and Electoral Services

4. Possible Replacement of the Wight Bus Fleet

BACKGROUND

In 2001 the Council set up the Property Task Group to recommend proposals for the best use of Council owned assets and to lead on Phase III of the Council's Accommodation Review. The main aim of the Review is to improve the utilisation of assets within existing budgets by co-location of users to create economies to fund better service facilities and service provision. Because of the numerous issues to be addresses and their complexity, the Task Group is working to put proposals in several tranches which means that the review will be on-going over several years according to agreed priorities. Members will recall that the first of these proposals involving the Council's ICT server farm and Coastal Management Offices is now underway and shown in bold on the appendix attached. The Task Group meets regularly with Officers from all Directorates and has taken the opportunity to inspect all the properties involved to see at first hand service conditions, talk to staff and prioritise actions.

The Task Group is now putting forward this scheme for recommendation.

THE SCHEME

It is the Task Group's view that both the Library Headquarters at Parkhurst and Forest Road Stores have reached the end of their useful lives and the opportunity exists to provide a replacement by way of a new building of sufficient capacity to consolidate numerous elements of Council storage.

The Task Group is proposing that the Council purchases the freehold of a brand new office/warehouse building at Somerton known at 4 and 5 Mariners Way, Somerton, at a price of £470,000 (Four Hundred and Seventy Thousand Pounds). This building has a floor area of some 1300 square metres on ground and mezzanine levels, is of traditional construction with all services connected, there is good access and parking for some 26 vehicles. The building has an average height at eaves of 6m providing 7,800 cubic metres of useable volume compared to a total of approximately 4,000 cubic metres at Forest Road and Library HQ. This is a "shell" building and will require adaption and fitting out to accommodate the uses proposed. A design and specification is being worked up with an estimate for this work capped at £150,000.

By acquiring and adapting this building it will be possible to accommodate the following uses:

· Library Headquarters offices, book collation, book storage and library vehicles.

· Storage of artefacts and documents at The Guildhall freeing up space for Phase II of the Museum of Art.

· Education Stores from Forest Road, Newport.

· Stored items and files for Finance (Forest Road), Planning (Dodnor) and Electoral Registration (Daish Way).

· Stored artefacts at 8a Clarence Road, East Cowes.

It is proposed that library and education staff shall manage this new facility and there will need to be some staff training in terms of storage management and document handling. Liaison and delivery of stored documents will be via the existing courier service, which needs to be varied accordingly. Having developed a new Library and Storage Headquarters the Council will then have available the following savings and surplus assets that can either be sold, surrendered or reused:

· Land at Parkhurst for 39/40 dwellings.

· Maisonette at East Cowes consisting of two bedrooms.

· Land at Forest Road, Newport (see below).

· Possible sale of Carisbrooke Depot (see below).

· Surrender lease of Unit 12 at Dodnor.

· Surrender occupation of Unit 4 at Daish Way.

· The Guildhall storage area will be available for the museum.

· Repairs backlog at existing establishments is resolved.

Given that through the above proposal the site at Forest Road, Newport, will become vacant, the Council is being recommended to consider reusing that site to accommodate the Wight Bus Fleet, which is currently parked and managed from Carisbrooke Depot. Whilst the depot at Carisbrooke works reasonably well and is centrally located, accessibility is less than perfect and there is a possibility of generating a capital receipt. For reuse at Forest Road, the Transport Manager is continuing to work up details on this idea but they remain unclear at the time of writing this report.

In order for the proposals to proceed it will be necessary for the Council to acquire 4 & 5 Mariners Way before the surplus property is sold. The Council’s Officers have negotiated a provisional price for the new property after an extensive search for replacement premises and believe it is the best value solution for the Council at the present time. The developer has indicated that should the Council proceed with the purchase of these buildings he will speculatively build another 10,000-15,000 square feet of factory units at Somerton. The full cost of the move is shown on the attached Business Plan. The forward purchase of the building will minimise disruption to the Services concerned and prevent any unnecessary moves.

The Library HQ site together with the Council owned surrounding land and buildings is subject to a Planning Application for 39 dwellings. The tenants of the buildings enjoy security of tenure and will be entitled to compensation based on Rateable Value although can be offered suitable alternative accommodation by the Council as an option. 8a Clarence Road is a two bedroom flat with access from Ferry Road and can be offered for sale on the open market. The Council has interest from adjoining landowners for both the Forest Road and Carisbrooke Depot sites, previously reported to the Executive, and any sale will depend upon the preferred solution for the Transport fleet and accord with Council’s policy where a marriage value occurs.

Both the existing Library HQ and Forest Road stores are in poor condition with a total maintenance backlog estimated at £250,000. The Council will save this amount if the proposals go ahead. The estimated net benefit of the proposal is a capital saving of £62,000, ignoring the maintenance backlog.

In terms of revenue, the proposed moves will allow the Council to surrender the lease of Unit 12 Dodnor Industrial Estate saving some £15,000 pa. Further savings will be made through the amalgamation of various current facilities into one unit and the improved use of the Guildhall. Total annual savings are estimated at £17,000 plus the opportunity cost of storage at the Guildhall estimated at £5,000 pa. Full details of which are shown on the Plan attached.

The Council is being asked to agree recommendations to proceed with the advanced purchase of 4 & 5 Mariners Way at a price of £470,000 (four hundred and seventy thousand pounds) together with a budget of £150,000 (one hundred and fifty thousand pounds) to fit out the property. The Council is also being asked to support the disposal of the Library HQ site at Parkhurst, 8a Clarence Road, East Cowes and either the Forest Road site or Carisbrooke Depot depending upon a suitable scheme being finalised with the Transport Manager.

CONSULTATIONS

Service managers have been extensively consulted and support the proposals above. Task Group members have inspected with officers all the properties concerned.

LEGAL IMPLICATIONS

The Council is the Freeholder of the Library HQ, Forest Road site, the Guild Hall and the Council occupied areas at Carisbrooke Depot. 8A Clarence Road is also freehold and will be sold with the benefit of a long Lease to East Cowes Heritage Organisation Limited, who occupy the ground floor of the building, for 125 years from 1996 at a ground rent of £25 per annum. Unit 12 Dodnor is still occupied by the Council, however the Lease has recently expired and whilst officers are currently in negotiations with the Landlord, possession can be given up on 6 months notice at present.

The unencumbered freehold title of 4 & 5 Mariners Way would be acquired.

FINANCIAL IMPLICATIONS

The Executive has previously agreed the accommodation Phase 3 review and the principal of “ring fencing” capital receipts for subsequent moves, subject to a business plan for each tranch of moves. This scheme involves the forward acquisition of new property.

PLANNING

4 & 5 Mariners Way has planning consent for office, light industrial and warehouse use. 8A Clarence Road, East Cowes has previously been used as a flat and there are established uses for the land at Forest Road and Carisbrooke Depot. A planning application has been submitted on the Library HQ site and adjoining Council owned land. Any consent obtained is likely to include a condition requiring improvements to the existing private roads which provide access to the site.

RISK

The main financial risk to the Council of the proposed scheme is a down-turn in the property market and falling values between acquiring the units at Mariners Way and selling the Council owned surplus assets. For example a 10% fall in the property market in this period would reduce a surplus balance of £62,000 to a small deficit.

OPTIONS

1. Support the proposals to acquire 4 & 5 Mariners Way prior to disposal of the surplus property described.

2. Amend the proposals above.

3. Reject the proposals.

RECOMMENDATIONS

Option 1.

BACKGROUND PAPERS

Depot at 21 Whitcombe Road, Carisbrooke - Executive

Library HQ, Parkhurst – Executive

Previous Accommodation Review Papers – Executive

Contact Point: David Lovell, Asset Manager F 823266

MRS M LLOYD Chairperson Property Task Group

MIKE FISHER Strategic Director of Corporate and Environment Services

BUSINESS PLAN

CAPITAL

Expenditure	£
Capital cost for 4 and 5 Mariners Way	470,000
Fit out based on £115 ps metre	150,000
ICT connection	15,000
Acquisition costs, including stamp duty	15,000
Total	650,000
Plus contingency, say, 5%	33,000
	£688,000
Savings
Sale of existing Library Headquarters, Parkhurst	550,000
Sale of 8a Clarence Road, East Cowes	50,000
Sale of Forest Road site / Carisbrooke Depot**	150,000
	750,000
Balance	£62,000
Maintenance Backlog
Library Headquarters	125,000
Forest Road	125,000*
	£250,000

* An estimated figure. No Condition Survey has been undertaken on this building due to its poor condition.

** If the Depot is sold allowance will need to be made for the provision of a new facility.

REVENUE

Expenditure	£
Estimated annual running costs of 4 and 5 Mariners Way, including rates, Electricity, gas, water, insurance, maintenance and contingency	35,000
Total	£35,000
Savings
Annual running costs of Education Stores	25,000
Annual running costs of Library Headquarters	11,000
Surrender of Unit 12 Dodnor Industrial Estate	15,000
Annual running costs of 8a Clarence Road	1,000
Total	£52,000
Annual Balance	£17,000
Opportunity cost of storage at The Guildhall	£5,000

No	Property	Issue	Comments	Action
1	County Hall	Maximise use.	Are the right occupiers in the right places within the building?	Questionnaire being sent out to Service Managers.
2	Chairman’s Support	Needs to be near the Chairman.	Examine relocation.	Outstanding challenge.
3	County Hall	New I C T staff for e-government initiative.	Need more space.	Alternative accommodation being considered
4	Members’ Suite	Needs closer link to Committee Select Service.	Relocate service.	Moving to Floor 4, Rooms 416 and 414.
5	Committee Room 1	Badly located for regular use.	Consider relocation.	Recommended to move to Ground Floor, Room 122, currently used by Payroll.
6	County Hall	Best Value Team cramped.	Appropriate location.	Outstanding challenge.
7	County Hall	Personnel cramped.	Appropriate location.	Outstanding challenge.
8	ICT Server Base	Urgent 2nd base/larger space.	Pending I C T instructions.
9	Seaclose	Development Control cramped.	Flexibility within building.	DIP system being worked up.
10	Bugle House	Training expansion/permanent Wightcare location.	Flexible leasehold interest.	Lease due to expire in 2006. Alternative locations being considered for services, including Enterprise House, Northwood House and County Hall.
11	Quay House	Potentially surplus.	Use as additional accommodation or dispose of.	Recommend sale. Guide price £140,000.
12	Quay House/ Cothey Bottom	Relocate team.	Museum Workshop Team best placed at Cothey Bottom.	Business Plan being worked up. Costs estimated to be in the region of £30,000.
13	Salisbury Gardens	Surplus capacity.	Second floor offices.	Coastal Management Team relocating from County Hall.
14	Wight Leisure/ 17 Quay Street/ 42 Quay Street	Relocate combined operation.	Combined operation close to services, e.g. Ryde.	Relocate Wight Leisure to Northwood House. Business Plan to be worked up. Consider disposal/retention of 17 Quay Street.
15	Library Headquarters	Poor building.	Service needs to be relocated to suitable accommodation.
16	Traffic Education Centre	Poor location.	Service needs to be incorporated in the Highways Team.	Relocate to Newport Quay adjacent to Jubilee Stores.
17	Jubilee Stores	New staff for Highways Section.	Office at capacity.	Move Car Parks staff to County Hall and the Contracts Team to Jubilee Stores. Consideration being given to relocating the service close by.
18	Property at Carisbrooke Depot	Unsuitable location.	Forest Road?
19	Education Stores, Forest Road	Poor quality building.	To be relocated to a more suitable unit.
20	St Nicholas House	Possible redevelopment opportunity.	An asset the Council could capitalise.	Valuable asset providing extensive Council accommodation. Any proposal will depend upon suitable alternative accommodation.
21	Northwood House	Surplus capacity.	First floor offices.	Currently being considered for Wight Leisure.
22	Records Office, Hillside	Public Records at capacity.	Poor service facility. Question location.	Alternative sites being considered.
23	Seaclose	Potential extension.	Phase II side extension space available.	Estimated cost of works approximately £1m.
24	The Guildhall	Maximise use.	First floor, second phase. Displays for exhibition space.
25	Clatterford Centre/ Archaeology	Clatterford could expand into adjacent premises/develop.	Archaeology satisfactorily located but could relocate if better premises were identified.	No suitable alternative accommodation identified.