Tuesday, 17 March 2015

Knowle relocation project: deciding to sell >>>>>>>> Cabinet: Wednesday 11th March >>>>>>>>>>>>>>>> report from Cabinet member Cllr Ian Thomas

One of the few non-independent District Cllrs to have their own blog is Cllr Ian Thomas, Cabinet Member for Economy:
Cabinet - East Devon District Council
Trinitymatters.co.uk website of Cllr Ian Thomas EDDC - Home

 The Cabinet met last week to consider the plans to sell Knowle:
Futures Forum: Knowle relocation project: deciding to sell >>> Cabinet: Wednesday 11th March
Futures Forum: Knowle relocation project: deciding to sell >>> Cabinet: Wednesday 11th March >>> reports
Futures Forum: Knowle relocation project: deciding to sell >>> Cabinet: Wednesday 11th March >>> more reports

 This is Cllr Thomas' entry from last Friday:


A new future for The Knowle? - EDDC Cabinet resolves to leave Sidmouth…Featured

The Knowle - SidmouthThe Knowle - Sidmouth
Cabinet has resolved that EDDC should leave its aging premises at The Knowle in Sidmouth, for a new much smaller purpose built office in Honiton and refurbished Exmouth Town Hall. A move, I understand originally mooted in 2008 and more actively pursued since 2011, has taken a large step forward. 
Tonight this was overwhelmingly supported by a joint meeting of the Overview & Scrutiny and Audit & Governance Committees
A final decision will now be made by Full Council on 25th March.
Knowle Update
Pegasus Life has been appointed as preferred developer for The Knowle at an offer price between £7M and £8M, they are looking to providing a residential development of retirement and extra care facilities.
Not all of the Knowle site is to be sold, only the existing built area of 1.1ha and a further 0.8ha around the current buildings. This will leave the remaining area of over 3.5ha available for transfer to Sidmouth Town Council, to be managed as parkland.
Finances
A detailed analysis, professionally audited and assessed, concluded that all options to leave The Knowle are better than staying. The most cost effective, twin Honiton and Exmouth sites.
A budget of £2.2M representing the capital costs, less the capital receipts, was agreed to build the new accommodation and refurbish the existing Town Hall in Exmouth.
Moving from The Knowle is expected to save the council £6M over 20 years. It will also move council jobs from Sidmouth to Honiton and Exmouth, with the economic effect of the council’s activities retained within East Devon.
Sidmouth will share in the economic benefit of the project, through construction of the Pegasus development and activity of subsequent residents, Honiton and Exmouth from new offices and refurbishment.
Risk
Short term borrowing will be required prior to receipt of proceeds from sale of the Knowle site.
Initially £9.2M, with an additional estimated interest of £0.3m. This represents a potential risk, in that if the council borrows this sum, but planning permission is not secured by Pegasus Life, then the sale of The Knowle would not progress or the Council potentially be left with large borrowing and a redundant Knowle site.
I was assured this risk would be minimised, in that no such short term borrowing would be entered into before a full, unconditional, contract between EDDC and Pegasus Life.
Once repayment of the short term loan has been completed, the Council will be left with a fixed interest loan of £2.1M over 20 years, which would attract interest of £0.6M.
Residual values
In the debate, I questioned how ‘residual values’ have been considered.
Using the construction estimate of £2,439/m2, and a building size of 2,776m2, overall construction costs at Honiton are expected to be £6.77M. However, the market value of the resulting premises is estimated to be only £3.25M. From an investment point of view, this indicates that there is an immediate deficit on the project, of £3.52M.
The senior financial officer explained ‘residual value’ had not been considered as part of the evaluation, as the project seeks to provide accommodation for the council to complete its own business, rather than as an investment.
A personal conclusion…
There is no doubt in my mind that current facilities at The Knowle are unsuitable to provide appropriate modern office accommodation for the authority over the next 20 years, as it remains essentially an aging converted hotel.
Considering the District with 'fresh eyes', there is clear logic in locating our main facilities in Honiton (geographic centre of the area) and Exmouth, as the main population centre.
Whilst the financial case in investment terms is not overly compelling, as a means of providing the appropriate accommodation in the right locations at a sensible cost, the proposed solution is attractive when compared to staying at The Knowle.
Papers presented to Cabinet and other Members recently are complex and extensive. Recognising that the relocation project has been in the stewardship of the Executive Group of just four senior Members since 2013, I proposed to Cabinet remaining Members should be invited to inspect the underlying model, figures and assumptions, in an informal session in advance of a final decision to be made by Full Council on the 25th March, to ensure that the best possible decision is reached.
I do hope that this invitation is taken up.

3 comments

  • Ian
    Ian Monday, 16 March 2015 23:48 Comment Link
    Mr Gardner, I think you may have misunderstood the reason for my suggestion.
    As a business analyst for part of my career I am familiar with modelling financial and business performance as a basis for decision making.
    I highlighted during the debate the significant features of the scenarios which were apparent to me,.from an investment and risk perspective.
    My point regarding the chance being made available for colleagues to have the opportunity to inspect and informally ask questions of the project team, was driven by the fact that the material presented is extensive and demanding for members with different experience.
    Whatever the ultimate decision (my personal view is in the article) I am keen that all colleagues are as familiar with the key levers in the modelling etc as they feel the need to be individually and that, as a consequence, the decision Full Council comes to on the 25th is the best 'quality' decision possible.
    Hope that helps?
  • Mr G Gardner
    Mr G Gardner Monday, 16 March 2015 20:17 Comment Link
    I am confused by the last paragraph in the above item. Is Cllr Thomas concerned that if only 4 people actually know what has gone on in this project then others don't have enough information to make a sound decision? If so why did he not vote against it at Cabinet last week? if he is worried about the main process behind a project of this size he should speak up now before the Council makes a potentially catastrophic decision for the tax payers of the district - it is his duty as an elected representative.
  • Peter Whitfield
    Peter Whitfield Sunday, 15 March 2015 08:46 Comment Link
    It's interesting that every comment coming from EDDC councillors and officers about the open space issue refer only to quantity - not a mention of quality or amenity value. The upper terraces immediately in front of the old hotel are dismissed as "only xha". They are the best part commanding the outlook to the sea.


Trinitymatters.co.uk website of Cllr Ian Thomas EDDC - A new future for The Knowle? - EDDC Cabinet resolves to leave Sidmouth…

 As the East Devon Watch blog (no friend of the District Council Cabinet) notes, there seems to be some disquiet here:

WHO REALLY DECIDED ON KNOWLE RELOCATION?

We have all assumed that the (wholly Conservative) EDDC Cabinet was involved after all, that is what they are for. But there is an intriguing sentence in (Cabinet Member) Ian Thomas’s critique of the project on his website:
” … Recognising that the relocation project has been in the stewardship of the Executive Group of just four senior Members since 2013, I proposed to Cabinet remaining Members should be invited to inspect the underlying model, figures and assumptions, in an informal session in advance of a final decision to be made by Full Council on the 25th March, to ensure that the best possible decision is reached.”
Now, Councillor Thomas is a Cabinet member and his responsibilities are listed as:
Economy Portfolio Holder
Asset management forum
Budget working party
Capital Strategy and Allocation Group
Joint bodies:
Seaton regeneration programme board (Chairman)
Representative on outside bodies:
Exeter Science Park – board (Director)
Exeter University Innovation Centre Board
Now, if someone as senior as this says he was excluded fron discussions and decision-making on this multi-million pound spend, what does this say about the Cabinet style of managing the district? It appears that there is an “Inner Cabinet” of only four Conservative councillors which excludes not just backbench councillors but also other cabinet members, including the Economic Portfolio Holder, from its secret discussions.
This is obviously an urgent matter for the Overview and Scrutiny Committee. Which begs the question: how can they be a check and balance on the Cabinet when the Cabinet is so flawed?
Who REALLY decided on Knowle relocation? | East Devon Watch
Tory Cabinet member has a number of reservations about Knowle relocation costs | East Devon Watch
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