Sunday, 30 November 2014

Knowle relocation project: District Council cabinet meets Wednesday 3rd December: analysis of proposals

This coming Wednesday evening, the District Council's cabinet will be discussing the latest proposals - to relocate from Knowle - not to Skypark, but to Honiton/Exmouth:
Futures Forum: Knowle relocation project: volte face: the District Council will not be moving to Skypark: "Development at Knowle and changes to destination to be considered by cabinet"

Looking at the report on relocation in the Agenda for the cabinet meeting of 3rd December:

Here are the most important points - together with observations from the EDA blog:

Relocation Update – key decision

Purpose of report: To advise members of latest developments regarding the relocation of EDDC HQ from Knowle. In particular to make Members aware that marketing of Knowle and Manstone sites is completed and further discussions with bidders are in progress and, to advise Members of changed circumstances and proposed changes to the preferred new HQ site.


1. Note project progress following the previous update report of 4 June 2014

2. Recognise emerging changes to the relocation project agree the following:
a. The marketing exercise for Knowle and Manstone has resulted in a range of offers and, following a detailed assessment process, we have received price, form and quality of development propositions that merit further detailed negotiation toward selection of a preferred developer.
b. Leading offers for Knowle do not include options to sell Manstone in which case EDDC can choose to retain Manstone for the foreseeable future as a depot function and continued employment use.
c. The reduced offer for EDDC’s Heathpark site no longer represents a sufficiently persuasive level of capital receipt and will not be pursued further.
d. The retention of Heathpark in EDDC ownership means that this now represents the most cost effective and straightforward location to develop a new headquarters building for the Council.
e. Relocation to Skypark is no longer a viable proposition based on the reduced offer for Heathpark and combination of Knowle market value and prudential borrowing.

Page 42 of next week’s cabinet papers:
“Also, a key plus point regarding Skypark was the prospect of a turn-key guaranteed maximum price arrangement to completion of a new HQ that would minimise uncertainty and reduce risk”.
This reads as if EDDC were expecting their new HQ to be constructed (by whom?)ready to move into at a fixed price (turn-key). They say in their paperwork that it was only after “due diligence” and a “legal opinion” on 4 June 2014 that a situation about the need to take account of EU regulations was revealed, coincidentally around the time that the supermarket was reducing the price it was prepared to pay for the Heathpark site.
Of course, we cannot know what went wrong for sure as all costs and cost deliberations have been kept secret not only from the public but also from the majority of councillors of all parties.
This debacle urgently needs Overview and Scrutiny and/or Audit and Governance intervention – and possibly a report by internal and/or external auditors so that those involved can learn from their mistakes and other councillors can understand what was being done in their name and work out how to stop it happening in future.
Presumably the Cabinet will recommend one or more of these actions at their meeting next week.
The bases for EDDC keeping the Skypark numbers confidential were:
a. That they were works in progress and not finalised; and
b. They were commercially confidential due to ongoing negotiations to purchase Skypark land and build offices.
Once Skypark is absolutely rejected by Cabinet, these criteria no longer hold true, and EDDC will presumably now need to disclose the papers requested under FoI legislation.
All this secrecy hints at an attempt to negotiate a single tender deal. For the sums involved this could never have been in the public interest. EU rules are designed to open up public procurement to competition. Will we ever know the truth?

Well the EDDC relocation panel and their developer friends will be disappointed – what spoilsports those EU regulators.
I understand this means Capital Procurements over 5m EUR (and design/engineering services worth over 414K) have to comply with Europe wide open tender competition.
EU regulation is for public authorities to advertise for tender and professional services in the Official European Journal OEJ
Surely this was flagged up by their bedfellow consultant and his employers Davis Langdon.
Note EDDC will also have to comply with OEJ ruling for major redevelopment at the Knowle.

f. The East Devon Business Centre (EDBC) should preferably be retained and could potentially be combined within a new EDDC HQ development.

From a correspondent:
‘As the EDA website correctly points out, EDDC recognises that local government reorganisation is in the offing.
But Chief Executive Mark Williams has already stated that in the event of local government reorganisation, the Knowle would have to be sold. Save Our Sidmouth (SOS) recently issued a press release highlighting his comments. If the Knowle will be sold for this reason, as Williams predicts, then logically so would the new HQ at Honiton and the surplus space at Exmouth. Why, then, are we proposing to spend £10 million + on a new building that can only be sold for a fraction of that cost?
The extremely lame offering from EDDC is that the new building could be used as a bigger East Devon Business Centre. Unfortunately, that idea has been scuppered by their recently commissioned Carter Jonas report, prepared when they wanted to close the Business Centre and use the funds to build Skypark, which concluded that the Business Centre was out of date, under-used and losing money….
Is the (latest!) relocation plan best for business? | East Devon Alliance

g. In the interim, Exmouth Town Hall has been vacated by Devon County Council Services and represents a new opportunity within the relocation plan.
h. A new HQ in Honiton can be restricted in size and cost to a 170 desk equivalent scale with an improved Exmouth Town Hall for 80 EDDC staff as a main satellite office in the District’s largest community.

Does this mean that 50% of staff will be made redundant in the next two or three years? And if 50% of staff are to be lost, surely the newer part of Knowle offices would accommodate the rest as EDDC has made it clear that for much of the time, some staff will be constantly on the road or hot-desking?
Or will so many people be working so often from home that they will have to declare this for tax purposes?

i. As part of its commitment to more mobile working and accessibility, the Council will offer a service presence as customers require in future at locations elsewhere in the District.
j. That relocation continues to make financial and operational sense on a whole life cost basis, specifically 20 yr. projections combining capital receipt and repayment of prudential borrowing versus existing office running cost and unfunded expenditure on existing building repair, maintenance and

3. Authorise the Deputy Chief Executive (Development, Regeneration and Partnership) in consultation with the Office Accommodation Executive Group to take forward further actions in pursuit of the above recommendations and Project Plan

4. Agree that further reports are produced for Cabinet and Council on project progress and to seek formal approval for any disposal of Knowle

Financial implications: ...
Legal implications: ...

Risk: Low Risk
This report does not commit the Council to sell Knowle or Manstone sites and recommends actions that remove the additional complexity of a new site acquisition.
This in one among a series of reports that has sought Cabinet and Council decisions on project actions and advised on project progress. As well as a managed and monitored risk review process, the regular reporting process and Member Executive Group oversight means that risk is reviewed and mitigated.
Decisions in this report enable officers to pursue negotiation with buyers for Knowle, further refine the new opportunity for Honiton/Exmouth offices and confirm that sale of Heathpark is no longer financially attractive withthe resultant impact on Skypark relocation viability.

It is NOT Plan B!
1. You did not factor into your Skypark choice that the supermarket destined for Honiton might change its plans (evidence: you told tenants of the East Devon Business Centre to start looking for new premises).
2. You did not know at the start of your deliberations that there would be space at Exmouth Town Hall (evidence: Devon County Council only recently announced that it would be vacating its space at Exmouth Town Hall).
3. If Exmouth had really been a viable alternative to Skypark, EDDC would have investigated the Rolle College site.
And, surely, with the empty space at Exmouth Town Hall, DCC is charged with getting best value for it. How can EDDC be sure of securing it?

EDDC: Please stop calling it “Plan B” – there was no Plan B! | East Devon Alliance

This is a disaster for East Devon Business. How can we cover the AONB with building developments if the supermarkets are losing profitabiity? We need more supermarkets on the outskirts of every town – with large car-parks to ensure that oil prices are maintained. Who could have forecast that the Great Recession would continue and intensify despite five years of austerity for the poor and the homeless young? Cut business taxes and provide subsidies for international corporations, our only hope to re-float the economy. Otherwise there will be nowhere for philanthropists to buy donations for the Food Banks of East Devon.

The report contains a reminder of overall project risks further in this report.

Links to background information:
 Cabinet Minutes 5 Feb 2014, Minute 180
 Report on Relocation Update, Cabinet 4 June 2014

Attached Appendices
 Cost Model for Refurbishment of all Knowle Office Buildings
 Cost Model for Refurbishment of 1970 Office Building and Complimentary New Building

Link to Council Plan: 
Relocation meets a range of priorities in the Council Plan. It will provide future resilience and improved working for the council to continue to design and deliver services that suit our residents, businesses and visitors’ needs. EDDC is also committed to making the best use of its assets including the longer term certainty and efficiency that modern offices will provide with operational flexibility alongside more mobile working across the district.

The Cabinet report in June 2014 committed to report back later in the year principally regarding marketing of the Knowle and Manstone sites and, progress on Skypark as the preferred relocation site.
This report now updates Cabinet on those matters and seeks agreement to a number of recommendations principally to agree to enter into negotiations with a preferred bidder for the sale of Knowle and develop in detail plans for our Honiton and Exmouth assets as relocation sites in preference to the sale of Heathpark, Honiton and a development at Skypark. 

WHY DIDN’T THEY ASK ALMOST ANYONE BUT EDDC COUNCILLORS AND OFFICERS? THE SIGNS WERE THERE …9th February 2014 EDA deplores EDDC’s Skypark choice, as costs spiral in the office relocation fiasco. | East Devon Alliance
27th February: Knowle sale and Skypark spend voted through, under veil of Cabinet minutes. | Save Our Sidmouth and Skypark | Search Results | Sidmouth Independent News | Page 6
Why didn’t they ask almost anyone but EDDC councillors and officers? The signs were there … | East Devon Alliance

Knowle/Manstone Sites ...
Skypark ...
Honiton Heathpark ...

Exmouth Town Hall ...
Other Considerations: Site Preference Process ...
Financial ...

In moving from a scenario of new site acquisition to using existing owned assets the Council is reducing risk, cost and complexity within the relocation project. We also now know that there are developers offering bids for the Knowle of sufficient value to merit further negotiation. Previously, the project costings were based on estimated market values. We now know what values developers are offering for Knowle and can calculate accordingly following further negotiation.
The risks associated with staying at Knowle remain with the added intelligence that no developer has proposed to retain the former hotel building or other existing buildings individually or as part of a larger development.
As part of the selection interviews, the bid proposers were asked for their view on the challenges and risks of their development proposal including matters of finance, track record and planning.
The Council has taken independent planning advice on the proposals and a selected preferred developer will be expected to engage promptly with the planning authority.
Previously identified risks are recognised and mitigated within the process.
Delay to planning permission (e.g. Judicial Review) is reflected in a cost profile that includes extended borrowing within the overall project budget. The Council’s Development Management Committee will consider any planning application in the normal way; obviously the outcome of any planning application cannot be assumed as each application is considered on its planning merits.
Relocation will be dependent on a developer securing planning permission meaning that the Council will not be left homeless.
The project budgeting includes a combination of mitigations of risk not least contingency throughout and borrowing projections that include added time to manage delays through judicial review or similar challenge.
Overall 20% contingency has been identified through design and build to allow for unplanned expenditure. Council has decided that it wants to relocate having fully considered the risks in remaining at Knowle compared to moving to new offices. There is no developer interest nor value in the existing Knowle buildings. There is outstanding basic repair cost and significant cost to any efforts to refurbish or modernise the current buildings with no prospect of capital receipt to help fund such expenditure.
Bidders have considered planning issues in preparing their bids including an independent planning statement commissioned by the Council as landowner. 

When you finally settle on your new HQ... do be careful that
a) if you have to tender, you check the rules
b) use this handy checklist to make sure that the companies tendering are not bid-rigging, which seems to be a particular problem in public sector procurement. So big that there is actually a hotline to report it.
Better safe than sorry.
Another bit of help for our struggling councillors | East Devon Alliance

The preferred developer will carry out preapp discussions promptly. The Council will not enter into unconditional contract with a developer for the Knowle without planning permission in place. Once permission is obtained by the
developer the risk substantially diminishes allowing Council new build/refurb at Honiton and Exmouth to commence. At the same time, other risk factors need to be mitigated through keeping to a construction timetable to avoid construction cost inflation (currently at 7.1% pa – BCIS Tender Price Indices). Members should be aware that Judicial Review or call in are factored into risk
analysis and management.

Geography ...

As we know from the previous Economic Impact Assessment, Sidmouth is estimated to experience a reduction in economic activity through the Council’s move. Those benefits will be redistributed between Honiton and Exmouth. Development of the Knowle for residential and/or care facilities would bring economic benefits of construction jobs, new residents’ spending as well
as the additional potential for purchase of local services and possible new employment. Overall there will be an economic uplift distributed around the district.

… or just a touchdown hot-desk base for those ever-roving, lower-level employees destined to roam the outer reaches of the district for ever whilst their Lords and Masters enjoy life in their new Honiton HQ.
Could “working for EDDC at Exmouth” become the new Siberia?
“Real Power” to Exmouth with EDDC move | East Devon Alliance

All efforts now are towards saying what a sensible and brilliant idea EDDC upper echelons have come up with for Exmouth and Honiton presence.
So why did they waste hundreds of thousands of pounds of OUR money on Skypark?
From their press release we learn:
“It is clear there is a need to increase service provision for housing benefits, Council Tax, housing advice and register and debt advice in both Exmouth and Honiton and there would be significant demand led presences in Sidmouth and Axminster.
“The council would provide surgeries in other towns as they do in Cranbrook, Seaton, Ottery St Mary, and would experiment with frequency and range of services depending on demand.”
It must have ALWAYS been clear that Exmouth, Honiton, Sidmouth and Axminster needed to be close to accessible services and that the need for these services would only increase as development increases. (Oddly Seaton doesn’t seem to need them – perhaps it will be left stateless when new mergers take place!).
Yet, given all of the above, Skypark was chosen. Why?

If Honiton and Exmouth now makes so much sense why waste hundreds of thousands of pounds on Skypark? | East Devon Alliance

Residential, retirement and or care facilities would offer a mix of other benefits to Sidmouth including social, health and wellbeing considerations along with new residential facilities and the freeing up of existing homes in the area.

The Future of Knowle
It is worth restating the key reasons why this Council has committed to move from the Knowle to new Headquarters: 
1. Essential repair works to existing buildings will cost £1.566m . There is no funding allocation (capital receipt or otherwise) to cover this cost. Such repairs would not include any redecoration, refurbishment or rebuilding. No internal restructuring or modern office working would be provided.
2. In buildings of this age and design there is little doubt that they will present further problems even after repair and/or refurbishment.
3. Refurbishment of all of the existing buildings will cost up to £15.9m. This can reduce if only newer parts of the office spaces were refurbished and with minimum additional build but the cost will still be of the order of £7.7m without a significant capital receipt to cover the costs nor any uplift in value to the site or buildings (see two attached cost model reports).
4. No market interest has been shown in retaining and refurbishing any of the existing buildings. All bids were made only for a site vacated by EDDC and cleared. Bids received all covered the upper car parks, office and depot space.
5. Bids received make clear that to derive a meaningful capital receipt from the Knowle requires EDDC to leave.
6. Suggestions that the Council can retreat to the 70s/80s blocks and derive a significant receipt from sale of the former hotel are unviable. The Council has considered the possibility (including a reduced size of workforce) and found that it fails on the basis of cost, lack of asset uplift in value and absence of market interest.
7. Knowle has annual energy costs of £83,900 pa compared to a predicted energy cost for Honiton/Exmouth combined of £33,700 pa. Even after repairs, Knowle energy costs would still be double those of the Honiton/Exmouth alternative.
8. Based on Dept. of Energy and Climate Change (DECC) current fuel price indices, gas has increased on average 18.8% pa between 2003 and 2013 whilst over the same period, electricity has increased on average by 11.9% pa. Allowing a modest 10% pa inflation rate for energy and 2% for general inflation, the total savings in running costs of Honiton/Exmouth over Knowle are of the order of £5.55m over 20 years.
9. New build at Honiton and refurbishment of Exmouth Town Hall will be funded via capital receipt and prudential borrowing. Over a whole life period of 20 years the spend will pay for itself with savings accruing thereafter.
10. The outcome of a departure from Knowle will be new and refurbished modern offices with low maintenance and minimised additional maintenance costs. 

For East Devon District Council
Revision J - 21 November 2014 - BREEAM VERY GOOD

For East Devon District Council
NEW BUILDING, KNOWLE, SIDMOUTH - BREEAM Very Good and Excellent Options Review
Revision F- 21 November 2014

The agenda for the Cabinet next week makes reference to:
The Office Accommodation Executive Group,
the Office Accommodation Project Executive Group and the
Member Executive Group.
We have heard only of a fourth group: the “Office Relocation Working Party”.
Is the “Member Executive Group” a jargon phrase for the Cabinet?

Left hand, right hand, upper hand, under hand – or no hand at all? | East Devon Alliance

To conclude, further comments from a posting on the blog of Cllr Claire Wright:

EDDC drops HQ move to Skypark. We’re going back to Honiton now, it says


1. At 06:59 pm on 25th Nov Paul wrote:

Yup - several £100k in consultants fees planning a move to Skypark now shown to be utterly wasted.

As other people have said, a plan to do an expensive and complex (and hence risky) move in a time of austerity is foolhardy. If EDDC had been more open about their thinking, their cost estimates and most importantly about really listening, discussing and considering other people’s views, we could probably have reached this point in February and not wasted (say) £500k on consultants.

If only the Cabinet risked paying for this wastage out of their own pockets, then they might have been less arrogant with OUR money.

2. At 03:40 pm on 26th Nov Sandra Semple wrote:

I live in Seaton. I need to visit EDDC HQ. Catch 9.00 am bus to Honiton, arrive Lace Walk 9.40, walk to HQ, arrive HQ 10.00 am, next bus back 12.40, arrive Seaton 13.30, total travelling time 4.5 hours.

3. At 11:53 pm on 26th Nov Conrad Black wrote:

Well, it seems that our elected representatives are hell bent on proving conclusively that they are incapable of commercial judgements?

The original decision, which, having cost a million or more, is suddenly unsound? For this to be the case those that made the decision in the first place are by implication equally unsound and it is high time they left for pastures new having cldearly exceeded their use by date.

If it were essential to have a central structure then it cannot be acceptable to run split sites. The savings are not there. If they had been, then the split site would have been part of the original consideration from the beginning - and it was not. So you find it difficult indeed to put any faith in the decision making process to date.

Consultants have been expensively employed to find, one might be obliged to conclude - on the basis that council officers have admitted to re-writing their ‘independent’ reports before presentation to Councillors, rather less than independent advice. In other words money of the public purse appears to have been used in what might be interpreted as ways that are not consistent with the duty of local government officers, to offer independent advice. If that were true it would create a situation of the gravest kind for the reputation of government itself.

What is truly sickening is, in the middle of this debacle, the checks and balances, the Councillors responsible for monitoring what the executive are doing, and responsible for calling decisions to account, have utterly failed. Disaster falls upon disaster and still they do nothing.

To paraphrase Flanders and Swann, “These Councillors now our contempt is beneath, they fail their voters and their time will be brief. They fail to react when some folly is done, and despite our concerns direct action is none.”

Of one thing we are now certain - this plan is a concerted vendetta against Sidmouth. It seems convenient to Honiton representatives to forget that Sidmouth is the second town of the district, behind Exmouth. Honiton is third, but wants to ‘punch above its weight’. Curiously it is not more central than Sidmouth, is not as well served by infrastucture to the district, and does not provide the level of income either. The business of the district is Tourism. But this council cannot stomach the fact that the living comes from the seaside towns, and there is no other industry waiting to rush in to provide extra employment.

And the Councillors of the seaside towns are equally to blame for failing to stand up for the people they are elected to represent. Where was the furore when Skypark was to be foisted upon us?

The time has come for them to show their colours. I wonder what colour independents or UKIP use?

4. At 11:50 am on 27th Nov Damien Mills wrote:

Clearly, this is a farce of Brian Rix proportions!

Earlier this year we were told Heathpark wasn’t an option because without the revenue generated by its sale there wouldn’t be enough money in the pot to build a new HQ there. The following comes from the council’s own East Devon Extra newsletter of February 27, 2014.

Options: considered and discounted

Heathpark, Honiton: This option could have been straightforward in the sense that the council owns the site. However, a new build on the site would preclude its sale and therefore reduce the overall financial package that could help fund relocation.

Now we’re asked to believe a new HQ at Heathpark is ‘the most cost effective and straight-forward location to develop a new HQ building for the council’; if that is the case then it seems to me that it wasn’t ruled out previously on the grounds of affordability, as we were asked to believe, but because EDDC’s ruling elite were so intent on pursuing their SkyPark vanity project.

That aside, what concerns me more than anything now, is the pressure EDDC will now come under to approve whatever plans for the Knowle are put forward by its preferred developer.

In Richard Cohen’s latest relocation report [http://new.eastdevon.gov.uk/media/526937/031214-cabinet-agenda-public-version.pdf], he readily acknowledges that should the preferred bidder not secure planning permission the sale will collapse and that this could present major difficulties:

‘… costs will be incurred on the accommodation before a receipt is received. The most significant risk being the potential tender does not securing [sic] the necessary planning permission at which stage the Council would have already incurred significant outlay in its new accommodation, mitigation will be taken where possible but this risk will remain.’

Aside from the risk identified above, it seems to me there’s an even greater risk that the preferred bidder, conscious of the corner into which EDDC has contrived to back itself, will push the limits of what might reasonably be granted planning permission. After all, they will be safe in the knowledge that if the planning committee dare say no to their plans the council is, not to put too fine a point on it, up a dirty river, in a vessel that’s sinking fast, with a paddle nowhere in sight!

EDDC drops HQ move to Skypark. We’re going back to Honiton now, it says - Claire Wright

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