Meeting documents

1. THE ISSUE

1.1. The purpose of this report is to provide the viability report on a possible new build Council office in Keynsham as requested by Cabinet in January 2009, when approval was given to proceed with option 2 (Keynsham New Build plus the retention of Lewis House and the Hollies).

1.2. The reasons for undertaking a review of the accommodation strategy were agreed as part of the January Cabinet Report and are as follows:

Create a more joined-up approach with other public service providers to improve services for the public

• Integrate other public service strategic and commissioning roles in the broad-based partnership with NHS Bath and North East Somerset but also, over time, potentially involving the police and others.

• Develop a combined public sector approach for contact with the public

Provide a better working environment to improve performance

• Consolidate all strategic and administrative functions into as few offices as possible.

• Use the office integration as a catalyst for further development of a `one Council' culture

• Develop a modern working environment making best use of information technology, records management and flexible working.

Reduce the Council's carbon footprint

• Reduce the Council's carbon footprint by improving energy efficiency of its buildings and by reducing business travel

• Reducing the space required for new offices through flexible working

• Enable the public to gain access to services locally more effectively by web, phone or through one- stop-shops.

Support regeneration of the local economy

• Rationalise office provision in a way that supports and develops the local economies taking into account relative levels of need and prosperity.

Maintain strong community leadership and civic pride

• Retain the Council's democratic decision making presence in the centre of Bath within the Guildhall

• Retain the Hollies in Midsomer Norton.

• Enable public sector and voluntary sector partners to make better use of the Council's facilities for public and partnership meetings.

Produce a sound business case for any changes in office accommodation

• Improve the standard of offices, reduce energy use and help protect the Council from rising energy costs, with no net increase in the ongoing cost of administrative and strategic office accommodation.

• 40% saving in office space

• Cost neutral as a minimum with a view to finding savings

The pattern of office provision emerging from the achievement of this vision could be:-

• No more than two / three strategic and administrative headquarters occupied by the Council and NHS Bath and North East Somerset.

• A multi-agency one-stop-shop in each of Bath, Keynsham and Midsomer Norton.

• Improved access to Council services through other local Council facilities, such as libraries.

1.3. This report however, highlights some further options for consideration as over the last 10 months, the Council's wider `Change' programme has been launched which looks to improve efficiency and create savings across the Council. This programme is split into four key workstreams (Workplaces, Service Redesign, Support Services and Customer Services). The aim of this `Change' programme is to improve the service to our customers by changing the way we deliver our services and ultimately the way we work. This `Change' programme will have an effect on the long term accommodation strategy, resulting in the need for further options which consider how the Council may operate in the future.

1.4. The report sets out the next steps and seeks formal approval on how to proceed.

2. CONTENTS

This report is structured as follows:

• Recommendations

• Keynsham Office Development and Regeneration Report

• Accommodation Options Analysis

• Conclusion

• Benefits Summary

• Corporate Priorities

• Financial Analysis Summary

• Next Steps

• Risk Management

• Equalities

• Rationale

• Other Options Considered

• Consultation

• Advise Sought

3. RECOMMENDATIONS

3.1. Cabinet to note the implementation of the medium term office plan in order to resolve the issue of lease expiries in Bath. Further details of this plan are contained within Appendix 3 of this report. The February Budget Report will include this work, but the plan is self funding and generates a saving.

3.2. Cabinet to note the outcome of the Viability and Urban Regeneration Study, summarised within this report in section 4, which confirms that the Council's plan for a new build office within Keynsham is viable and deliverable.

3.3. Cabinet to confirm the intention to pursue option C of the office accommodation plan and report back in August 2010 when we have proposals from developer partners.

3.4. Cabinet to recommend that we proceed to seek a development partner for the redevelopment of the Keynsham Town Hall site.

3.5. That the Chief Property Officer reports back to Cabinet upon receipt of developer proposals for the Keynsham Town Hall site, prior to their appointment and commencement of detailed design and construction.

4. KEYNSHAM OFFICE DEVELOPMENT AND REGENERATION REPORT

4.1. Keynsham Urban Regeneration

The Cabinet decision in January 2009 focused on both re-provision of Council offices and regeneration of Keynsham town centre, particularly the Council-owned Town Hall site.

The work of King Sturge, together with that of Consultants employed to assist the Council prepare Regeneration Delivery Plans, has highlighted that the Town Hall site is key to regeneration of the town, and the Council's presence as the significant office-occupant would be the catalyst.

The soft market-testing carried out to date indicates that without a significant "blue-chip" office occupant to take a "catalytic" role in redeveloping the Town hall site, redevelopment will not happen and, in the current market, there is no evidence of an alternative major occupant other than the Council.

The clear implication is that unless the Council takes a significant new-build office space on the Town Hall site, it will not be redeveloped, and there will be no catalyst for the regeneration of the centre of Keynsham.

The option of continuing to occupy the Riverside block, following a substantial upgrade, has always been available but it needs to be appreciated that the Council remaining at Riverside will effectively remove the opportunity for Council's presence to "kick-start" regeneration of the town centre using its own property.

4.2. Keynsham Viability Report

King Sturge has assessed the feasibility, viability and deliverability of the Keynsham new-build element of the preferred option from a market point of view. In summary, a conventional development appraisal shows that, based on realistic rent levels and purchase price, the Council's office scheme is viable and deliverable. However, the scheme is marginal (from a developer's perspective). This is based on office use only rather than the mixed use as shown currently in the master-planning work for the site.

5. ACCOMMODATION OPTIONS ANALYSIS

Work has commenced on the rationalisation of property within Bath, as part of a Medium Term Office Plan. The plan will see two leasehold buildings vacated when the leases expire in 2010 and 2011, with staff relocating to a refurbished Lewis House. In order to accommodate all of the required staff, `New Ways of Working' will be implemented which will enable staff to work at an average 3:2 staff/workstation ratio. Further details on this plan are incorporated within Appendix 3.

Below is a summary of the longer term options for consideration by Cabinet. Further details may be found within Appendix 5.

5.1. Assumptions / Givens

In respect of the proposed options the following assumptions / givens have been made:

1. The Guildhall will remain as the Political Seat of Power.

2. One Stop Shops will be provided in Bath, Keynsham and Midsomer Norton.

3. There will be 12 landing sites located across the BaNES area.

4. Existing staff number has been retained throughout the models.

5. The Keynsham options allow for the provision of a new library and visitor centre which will display local Roman artefacts.

6. The size of the new build and the finances, allow for Council and PCT staff only. No allowance has been made for further partner organisations at this stage.

7. The estimated savings identified within the financial analysis are against property costs only and do not account for any departmental savings that may be realised in the future.

8. Separate Business Cases are to be developed to cover the Guildhall, Historic Records, Data Centre, Facilities Management and Command Control.

5.2. Option A: Do Nothing: Retention of all current council offices

The existing buildings are considered to be inefficient with regards to the use of space, office layout, separate internal offices and the need to replicate reception facilities. In addition, the accommodation provided is under utilised due to the ways of working employed by Council staff and services. The Carbon Management Plan also targets the office portfolio for a reduction in energy use, which will be unachievable with this option.

With the changes that are being faced by the Council in terms of the need to reduce spend, integrate with the PCT and other public sector bodies and the effect of the `Change' programme, it is considered that the `no change' option is not feasible. Due to the above issues, this option is designed to act as a benchmark against which to compare the other options for financial modelling and overall comparison purposes.

5.3. Option B: Keynsham New Build plus retention of Lewis House and the Hollies

This is the original option approved from the `Replacement of Council Offices' report in January 2009 aimed to locate council staff across 3 locations - Bath, Keynsham and Midsomer Norton. The intention was to develop a new headquarters for the Council in Keynsham, which would help to regenerate the area.

A phased approach is necessary to develop this option;

• Phase 1: demolition of the Town Hall and some retail outlets and replacing it with a mixture of new shops, a One Stop Shop, a new library, Council offices and space for third parties. (The Council staff would remain within Riverside whilst the development takes place).

Phase 2: development of the remaining retail outlets and fire station site

Phase 3: redevelopment of Riverside.

Key Findings:

Staff/Workstation Requirement:

Existing Portfolio 1951/1563

New Portfolio 1951/1306

Change in size to Office Portfolio (net internal area)

Original size 23,902 sq m

New size 13,804 sq m

Space Reduction 10,098 (42.3%)

Average Area/Workstation 10.5 sq m

Average Area/Person Housed 7.0 sq m

This option is viable. It achieves the required reduction in office space, creates an annual saving and delivers all of the objectives of the project. The scheme also allows for the integration of the Council and PCT staff and provides a new headquarters for the Police. Discussions are ongoing to redevelop the fire station and thus this option aims to achieve a more joined up approach with other public services, to benefit customers.

5.4. Option C: Keynsham New Build plus Lewis House, the Hollies and Northgate

This option is an adaptation of Option B above, which was the preferred option by Cabinet in January 2009, it however looks at a reduced size of new build office (1,836 sq.m less). The future outlook for the Council is to a degree uncertain given the public finance situation and the likely impact on local government and its activities. There is a risk inherent with Option B that should the Council reduce in size, vacant space in Keynsham may not be able to be filled by other organisations. This will result in the Council having to pay rent on empty floors.

Option C looks at retaining Northgate House in order to accommodate the existing staff numbers while avoiding committing the Council to the risk of having vacant space at Keynsham or elsewhere. The lease for Northgate House expires in 2016 when the Council outlook will be more certain.

Key Findings:

Staff/Workstation Requirement:

Existing Portfolio 1951/1563

New Portfolio 1951/1307

Change in size to Office Portfolio (net internal area)

Original size 23,902 sq m

New size 13,641 sq m

Space Reduction 10,261 (43%)

Average Area/Workstation 10.4 sq m

Average Area/Person Housed 6.9 sq m

This option is the most viable and again achieves all of the objectives of the project. The space savings and financial savings are higher than option B due to the reduced new build size. The option incorporates the requirements of the Council/PCT Integration and provides the Police with a new headquarters and allows for potential for future integration with the Fire Service.

5.5. Option D: Riverside Refurbishment plus retention of Lewis House and the Hollies

This option was reviewed as a comparison against Option B - Keynsham New Build.

The viability report shows that, if the Council remains in Riverside, the regeneration of Keynsham Town Hall site would be postponed for the foreseeable future, resulting in a vacant town hall site. It is very unclear as to whether the Keynsham economy could attract a developer to the site without a `blue chip' client. The development of the Town Hall site is the catalyst for further regeneration in Keynsham as this is the main gateway to the town and will attract investment outwards. By regenerating Riverside at the edge of town you essentially need to pull the town centre over before any other areas are regenerated and this is considered unlikely.

Whilst B&NES will maintain a presence in Keynsham under this option, it is unlikely to attract other public and private sector bodies to the area to maintain or increase the local economy once the Cadbury's site closes. All other visions set out previously in this report will be achieved.

For this option Lewis House, the Hollies and Northgate House will be retained to ensure that the existing staff numbers can be accommodated.

Key Findings:

Staff/Workstation Requirement:

Existing Portfolio 1951/1563

New Portfolio 1951/1359

Change in size to Office Portfolio (net internal area)

Existing Size 23,902sq m

New Size 14,477 sq m

Space Reduction 9,425 (39.5%)

Average Area/Workstation 10.6 sq m

Average Area/Person Housed 7.4 sq m

This option is not viable as it fails to achieve the regeneration of Keynsham and does not provide the Police with the opportunity for a new headquarters, resulting in the potential loss of creating closer ties with this public sector body. The Council will also be left with a redundant and derelict Town Hall office which is unlikely to attract other `blue chip' clients. The option fails to generate the target office space savings and fails to generate annual savings.

5.6. Option E: Bath New Build

This would provide the Council with a new headquarters on the Bath Quays South site, including accommodation for public sector partners, with a one stop shop retained in the centre of town. Retention of the Hollies and Keynsham Town Hall would be required.

The previous Cabinet Report issued in January reviewed new build opportunities within Bath but they were not considered to be appropriate at that particular time. The south side of Bath is in need of redevelopment and the site available is of significant size and could easily attract other developers/'blue chip' clients. The Council may also wish to consider linking the Bath Quays South site with any redevelopment of Avon Street Car Park and Coach Park.

Out of the current Keynsham facilities the Council would only retain Keynsham Town Hall in the longer term as a One Stop Shop and this does not support the vision/objective to `support regeneration of the local economy'. Indeed there would be a significant negative impact on Keynsham should the Council withdraw on such a scale. All other visions set out previously in this report will be achieved.

The financial summary does not take into account provision of a much larger redevelopment which could create a considerable income for the Council.

Key Findings:

Staff/Workstation Requirement:

Existing Portfolio 1951/1563

New Portfolio 1951/1306

Change in size to Office Portfolio (net internal area)

Existing Size 23,902 sq m

New Size 15,451 sq m

Space Reduction 8,451 (35.4%)

Average Area/Workstation 11.8 sq m

Average Area/Person Housed 7.9 sq m

This option is not viable and will lead to a decline in the Keynsham local economy when the Council move staff away from the town. The option fails to achieve the required space saving and increases costs to the Council.

5.7. Properties to be Retained by Option

5.8.  Summary of options against objectives

5.9. Conclusion

In conclusion, option C is the preferred option and achieves all of the project objectives and the highest annual savings. Option B which is viable, holds a potential risk should the Council downscale due to public sector finance pressures or otherwise, resulting in vacant space within the new office build. The risk register provides some possible mitigation solutions to this. Options D and E are not viable. Remaining in Riverside is not recommended due to the high cost of the low quality accommodation albeit there is a proposal from the head lessee to refurbish Riverside but at a similar rent to the new build. A new build office in Bath is also not viable.

5.10. Benefits Summary

The benefits which can be achieved from our preferred Option C are detailed within Appendix 4 and summarised as shown overleaf:

• Direct

o 43% Reduction in floor area

o 10% Net Reduction in running costs (36% Gross Reduction)

o 26% Reduction in occupancy costs

o 70% Reduction in carbon footprint (Based on Industry data)

o Provision of modern office accommodation

o Improved IT systems - right tools for the job.

o Increased flexibility

o Provision of easier and simplified access for customers

o Incorporation of partner working

• Enabling

o Improved Customer Satisfaction

o Improved staff satisfaction

o Reduction in staff sickness

o Increase in staff retention

o Reduction in calls to helpdesk

o Reduction in IT system downtime

o Increased recycling

o More efficient working

o Departmental efficiency savings

6. CORPORATE PRIORITIES

• Building communities where people feel safe and secure
• Improving life chances of disadvantaged teenagers and young people
• Sustainable growth
• Addressing the causes and effects of Climate Change
• Improving transport and the public realm

The proposals contained within this report support all five of the Council's priorities. Any change to the existing offices position will not only provide an opportunity to improve the Council's carbon footprint, and sustainable growth, but it will create an office estate that responds to the business needs and a workplace which will facilitate an environment conducive to promoting and effective and efficient service. It is a major opportunity to change the way the Council functions to enable more resources to be focussed on delivering high quality service outcomes for citizens, to make best use of technology and to modernise working practises.

7. FINANCIAL ANALYSIS SUMMARY

7.1. Long Term office plan - 2013 onwards

The preferred option from January 2009 created savings of 4.4% per annum, the financial information below covers the revised Long Term Accommodation Strategy.

7.2. Financial Assumptions

The main assumptions are as follows:

• Savings shown are based on property savings only. As a result of this project Service Departments will be able to find efficiency savings.
• New build office is planned on the space standard of 12 sq.m/workstation Net Internal Area
• Staff to workstation ratio is an average of 3:2
• Includes for the re-provision of a library in Keynsham
• It is assumed that none of the vacated properties will be sold, but transferred to the Commercial Estate.
• Revenue takes into account assumed rental income from vacated properties
• The Keynsham new build office will be leased from the developer and not funded by the Council
• The Keynsham rental is assumed at A321/sq.ft
• The potential income from the release and re-development of the Guildhall has not been taken into account.
• Gradual repayment of Pilot Scheme funding to reserves from 2011 - 2014.
• No costs have been included for any changes to Facilities Management service
• The cost of accommodating staff at St Martin's is allowed for based on minimal IT infrastructure works, Mouchel are seeking clarity from Govt Connect over shared IT Rooms. If this is rejected then there will be additional costs.
• An historic records store is included to replace the space lost from the decant of the Guildhall.
• Landing sites have been included based on using existing council space within libraries, youth hostels, nurseries etc
• It is assumed that the developer will provide a completed building with the Council fit out works limited to new furniture and IT network, server and equipment installations.

8. NEXT STEPS

This report has considered the options for consolidating the property portfolio of Bath and North East Somerset Council as well as promoting a strategy for effective and efficient working. The report has also defined the likely cost and key issues and benefits arising from each option. A high level programme has been included in the appendices of this report, highlighting key activities and approximate timescales anticipated. The key next steps are as follows:

• Consultation on draft Scheme - January 2010
• Issue Developer OJEU Notice - April 2010
• Appoint Contractor for Lewis House - April 2010
• Commence Works to Lewis House - May 2010
• Developer Approval by Cabinet - August 2010
• Works Complete - Lewis House - October 2010
• Vacate Trimbridge House - November 2010
• Trimbridge House Lease Expiry - November 2010

9.   RISK MANAGEMENT

The risk register is available as a background paper to this report. High level risks, typically associated with a project of this nature, have been identified based on an assessment by the Council. The risk register outlines the potential key risks, risk ratings and also proposed risk mitigation strategies. The highest risks at this stage are considered to be:

10. EQUALITIES

A full EIA has been carried out using corporate guidelines, based on the recommended option. There are no perceived discriminatory or particularly negative consequences for any group, on the grounds of race, gender, disability, faith, sexuality or age.

A consultation with the Worker Challenge Groups was undertaken, with only the Lesbian, Gay, Bisexual and Transgender engaging in the process. However, their consultation feedback has informed the assessment of a couple of issues and we will ensure that the findings are clearly presented and discussed with the project group.

Follow up with the Disabled Workers Group and Black and Minority Ethnic Workers Group will be scheduled once the project starts up following Cabinet decision.

11. RATIONALE

Having regard to the options and financial analysis work, Option C is the most affordable and deliverable option that will meet the objectives set out above

12.  OTHER OPTIONS CONSIDERED

Other options considered are listed within the January 2009 Cabinet Report.

13. CONSULTATION

Cabinet Members; Trades Unions; Overview & Scrutiny Panel; other B&NES Services; Service Users; NHS Bath and North East Somerset Integration Project, Section 151 Finance Officer; Chief Executive; Monitoring Officer

Consultation has been limited at this stage of the search. Once a decision is made on the preferred option full consultation will commence with all relevant parties. Appendix 7 of this report contains the proposed Communication Strategy which links to the wider `Change' Programme consultation strategy.

14. ADVISE SOUGHT

The Council's Monitoring Officer (Council Solicitor) and Section 151 Officer have had the opportunity to input to this report and have cleared it for publication.