Harrogate Borough Council’s cabinet is to recommend to the full council, at its meeting on 13 October 2011, that the council engages in negotiations with a number of land and property owners to establish details of acquisition costs and terms on a number of sites which have been assessed as part of the review.
The sites that are under consideration:
- Hornbeam Park
- Central House, Beckwith Knowle
- Dunlopillo site, Pannal
- Police Station site, North Park Road
Each of the sites has been assessed against a base case option of staying in their current main office buildings, as well as an option which would see them consolidate on fewer of our existing office sites. At this stage no preferred site has been selected.
Background to the review
The council’s main office buildings (Crescent Gardens, Knapping Mount, Springfield House, Scottsdale House and Victoria Park House) have been acquired on an ad-hoc basis over a number of years. There has been significant under-investment in the proper planned maintenance of the buildings. Customer contact arrangements are spread over several locations and the dispersed nature of the buildings results in staffing inefficiencies and inhibits the development of a “One Council” culture.
Why is the council reviewing arrangements now?
Because the council cannot continue to under-invest in the proper maintenance of its premises in the way in which it has over the past 25 years. Key decisions, eg over the future of Knapping Mount Annexe, are overdue. Before investing significantly in the existing portfolio of buildings, the council wishes to look at the cost-effectiveness of alternatives – not just as an office accommodation issue but as one which could bring wider benefits in terms of the council’s key priorities.
The reasons for the review are therefore to:-
- address the current backlog and future capital investment requirements in office premises.
- optimise the potential for staff efficiency savings through consolidating staff in fewer buildings
- realise the economic benefits of the re-use of those buildings from which the council may choose to relocate
- maximise the beneficial impact on other council corporate priorities (the Economy, Housing, the Environment)
- foster a “One Council” culture which supports the council through its development as an organisation equipped to address future financial and other challenges
- provide for residents an open and accessible town hall in which support for all council services can be provided
What has been done?
In 2010 a high level appraisal was undertaken looking at the potential benefits of a combination of options based on retention of/relocation from the five main office premises. As a consequence, two options (partial or full relocation) were selected for more detailed investigation.
The current phase of work has been to test whether any of these options were deliverable in terms of specific site availability.
What is happening now?
The completion of the Business Case.
Four sites have been benchmarked against a base case option (the status quo option) as well as an option five which would consolidate office staff on the current buildings, with the exception of Knapping Mount site which would be disposed of. Corporate Real Estate Specialists DTZ have assisted the council in this process.
The assessment comprises:
- A 25-year financial analysis of the running costs of providing replacement offices on each of the sites (benchmarked against the base case). This includes all day-to-day running costs (heating, lighting, etc), non-domestic rates and future planned maintenance requirements, discounted to provide a comparable Net Present Cost.
- A qualitative assessment, looking at issues such as the quality of the accommodation, accessibility, environmental sustainability, economic impact and risk.
The two assessments are brought together in a value for money ranking.
What does it show?
The assessment shows that, in financial terms over a 25-year period, several options for relocation are cheaper than the base case (status quo) option.
There would be significant beneficial impact from releasing the existing council offices for re-use for other purposes. This re-use would provide an economic stimulus estimated at £30 million including:-
- conversion of Crescent Gardens to a Boutique Hotel
- housing (including affordable housing) development on the Knapping Mount site.
- disposal of Scottsdale House as office accommodation.
The short-term capital costs of facilitating relocation would need relatively modest staff efficiency savings (of up to 2%) to cover the revenue costs of the capital investment. Studies elsewhere have indicated this is well within the level of staff efficiency achievable from consolidating staff on a single site.
What happens next?
The council is being asked to make a decision on whether it wishes to look at any of these options in terms of firming up costs, including costs of acquisition of the sites. If it wishes to do so, a further report will be presented to Council in the New Year.
Key questions for the council:
The council needs to consider some fundamental questions in determining its way forward on this issue, including:-
- Is it right that the council should be looking to determine its long-term office accommodation needs?
- Is the premise that the current planned maintenance backlog cannot continue into the long term future (the 25- year profiled) correct?
- Is the contention that cultural change could be brought about by consolidating staff in fewer offices supported and seen as necessary in ensuring that the Council meets its corporate objectives?
- What weight is given to the economic benefits assessment carried out as part of this process?
- Is there an acceptance of the contention that staff efficiency savings could be made through office consolidation?
- Is there confidence that, in the long term, some of the options assessed offer better solutions than the base case (status quo) option?
- Is there confidence that, in the short term, the early-year, upfront costs can be satisfactorily offset by the level of staff savings necessary to do so?