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A ITEM

REPORT OF THE CHIEF EXECUTIVE AND HEAD OF FINANCE AND ASSET MANAGEMENT – 12/140

WARDS AFFECTED: ALL

SUBJECT: TOWN HALL ACCOMMODATION – EVALUATION OF OPTIONS

RECOMMENDATION (S): Cabinet is recommended to: (i) note that this report and subsequent recommendations do not in any way

pre-empt a decision regarding the future of the Futurist Theatre; (ii) receive and note the content of this report in relation to the evaluation of the

options for the future accommodation of the Town Hall; (iii) approve the preferred option for the Town Hall Accommodation as being:

• accept the Homes and Community Agency (HCA) investment of £3.0 million into a Joint Venture with the Council to develop the Futurist and Town Hall sites in exchange for an equity share in the scheme;

+

REPORT TO CABINET

TO BE HELD ON

20 MARCH 2012

Key Decision YES PRIVATE AND CONFIDENTIAL – This is a public report except for the private and confidential appendices which contain exempt or confidential information.

Forward Plan Ref No 7

Corporate Priority: To deliver the Council’s vision to achieve the renaissance of the North Yorkshire Coast by 2020. Aim 2: Prosperous Aim 4: Quality Environment

Cabinet Portfolio Holder

The Leader

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• Utilise the £3.0 million funding from the HCA to purchase [SITE A] from the [VENDOR];

• Relocate the Customer First facility to an alternative Town Centre location;

• Relocate the Civic Function to [SITE A];

• Retain the CCTV Control Centre at its existing location;

• “Transfer” the Town Hall site into the Joint Venture (at a value of £2 million) together with £2.0 million cash, in exchange for the Council to receive £3.0 million to purchase [SITE A] and £1.0 million equity investment into the Joint Venture.

• Invest the Council’s land holding within the Futurist site to the Joint Venture in exchange for an equity share in the scheme;

Subject to approval of recommendation (iii), Cabinet recommends to Council the recommendations referenced in Option B (below), alternatively Option A: OPTION A – (Remain at the Town Hall) (iv) approve £5.7 million for maintenance to the Town Hall to be considered in

the 2013/14 Financial Strategy;

(v) decline the £3.0 million investment from the HCA for the Futurist / Town Hall development scheme.

OPTION B – (Relocate from the Town Hall) Cabinet recommends to Council: HCA Joint Venture for the Redevelopment of the Town Hall and Futurist Site: R1 delegate authority to the Acting Head of Legal and Support Services to enter

into partnership arrangements with the HCA including all necessary documentation in respect of the Town Hall / Futurist Development Scheme (the Joint Venture) to give effect to the recommendations in this report;

R2 accept the £3.0 million investment in the 2011/2012 financial year from the

HCA into the Joint Venture in exchange for an equity share in the scheme; R3 “transfer” the Town Hall site into the Joint Venture (at a value of £2 million)

together with £2.0 million cash, in exchange for the Council to receive £3.0 million to purchase [SITE A] and £1.0 million equity investment into the Joint Venture

R4 to note that the HCA’s valuation of the Town Hall is £2.0 million. This is

£250,000 lower then the Council’s independent valuation.

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R5 invest the Council’s land holding within the Futurist site to the Joint Venture in exchange for an equity share in the scheme, which will be dependant upon the value of the asset;

R6 accept [AMOUNT 1] from the HCA towards the acquisition of the interest in

the remaining two leasehold units within the Futurist building. Acquisition of [SITE A] R7 authorise Officers to negotiate the purchase of [SITE A] from the [VENDOR]

up to a maximum purchase price of [AMOUNT 2] (excluding Stamp Duty Land Tax);

R8 authorise the utilisation of the £3.0 million from the HCA to accelerate the

purchase of [SITE A] thus releasing the Town Hall and Futurist Site for redevelopment;

R9 authorise Officers to enter into conditional contract with the [VENDOR] for

the purchase of [SITE A]; R10 authorise a budget of up to £100,000 from the Capital Development

Reserve, to be spent at risk, to discharge the conditional contract including obtaining planning permissions;

R11 authorise officers to undertake a consultation / communication exercise with

key partners, and in particular staff. Remodelling of [SITE A] R12 to support, in principle, a budget of £1.5 million to be funded from borrowing

to remodel [SITE A] to meet the Council’s operational needs. Customer First R13 authorise officers to explore alternate locations, within the town centre, for

the hosting of the Customer First facility; R14 to support, in principle, a budget of £0.5 million to be funded from borrowing

to establish a new Customer First facility and an annual rental budget of up to [AMOUNT 3] (this may change from rental option to an acquisition, but will be subject to a further report).

CCTV R15 approve the retention of the CCTV control centre in its current location. Civic Function R16 to note that to retain the historic Town Hall building for the Civic function

would add a further £86,000 operating budget plus a further £120,000 to

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finance the capital works (up to £1.5 million); totalling an additional revenue growth of £206,000 plus the additional running costs of operating a new Town Hall;

R17 approve the relocation of the Civic function to [SITE A], subject to obtaining

satisfactory planning permission; R18 to approve that the Planning application for the relocation of the Civic

function to [SITE A] be submitted to an alternative Planning Authority to this Council’s Planning Authority;

Transitional Arrangements R19 appoint a transformation project manager (to work alongside the established

Project Team), from the current establishment, to manage and implement the new ways of working policy, which is based on the relocation of office accommodation and a new working culture;

R20 note the Customer First facility will remain in situ until either vacant

possession of the Town Hall is required for development or an alternative location is sourced.

Finance R21 note the net cash outflow totals £1.70m (excluding revenue) representing: See Appendix F – Private and Confidential Information – R21 Table R22 approve revenue budget growth for the additional cost of £260,000 for the

funding of the net cash flow (as above) together with net operational cost for operating [SITE A] and a new Customer First facility. For 2012/13 any additional revenue cost will be met from the Interim Budget (recommendation R25) and thereafter addressed through the Financial Strategy;

R23 note that the additional costs of staying in the current Town Hall, after

undertaking all of the required maintenance repairs is £465,000, some £205,000 more than purchasing and operating [SITE A] and a new Customer First Facility;

R24 note Officers are continuing to explore options to mitigate the additional

revenue costs of £260,000. These options include reviewing the borrowing costs, the potential savings from the news ways of working, increased business rate income, income from partners and potential reduced subsidy to the Futurist Building;

R25 approve an interim budget of £1.0 million to fund the additional cost of

operating two buildings (£450,000 over 2 years), relocation costs (£250,000) and Project Management Fees and Contingency (£300,000). This one off cost is to be met from Council Reserves.

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R26 approve the transfer of £220,000 from the Seaside Reward grant into the

Investment Management Plan. Other R27 delegate authority to Cabinet to receive further report(s) on the governance

arrangements for the Joint Venture with the HCA, the procurement procedure for the development partner and the profit share arrangements.

REASON FOR RECOMMENDATION (S):

• To deliver the Council’s vision of achieving the renaissance of the North Yorkshire Coast by 2020.

• To work in partnership with the HCA.

• Lever in external investment to the Borough of £3.0 million to accelerate the redevelopment of the Town Hall / Futurist site.

• Purchase a ‘new’ fit for purpose office accommodation.

• Opportunity to enhance joint working partnerships.

• Deliver a cultural change in the Council’s service provision.

HIGHLIGHTED RISKS:

• The Joint Venture is not delivered.

• Cannot purchase [SITE A] within budget or agree acceptable terms.

• Town Hall / Futurist Site remains vacant post 2014.

• Council owns two Town Halls and has to pay their running costs.

• Investment Management Plan is not delivered.

• Numerous financial risks.

• Objections from stakeholders.

• The Planning Brief for the Futurist and Town Hall is not adopted in a suitable format.

• Suitable Developer is not forthcoming.

• Suitable new Customer First facility cannot be delivered within budget.

• There is a significant retail impact on the Town Centre economy from the relocation of the Town Hall.

• Do not obtain planning permission for [SITE A].

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1. PURPOSE OF THE REPORT 1.1 The purpose of this report is to consider the following aspects:

• to provide feedback on the options that Members requested Officers to explore further following the Cabinet report in September 2011.

• to provide an update on the alternative sites that have been considered for a new Town Hall.

• to assess the retail impact assessment on the town centre of relocating the Town Hall employees to a remote site.

• to consider the HCA investment proposal of £3.0m into the Town Hall and Futurist redevelopment scheme.

• to consider the Council’s appetite for joining the HCA as a partner with an investment of cash and land holdings to take forward the development of the Town Hall and Futurist site.

• this report contains a preferred option to relocate the Town Hall, including the Civic Function, to [SITE A]. This is based on the financial appraisal, suitability, availability and the opportunity to deliver wider economic regeneration of a prime town centre location.

• Customer First to remain in the Town Centre to demonstrate the Council’s commitment to provide a strong face to face service with the public.

1.2 To assist the understanding of the construction of the recommendations a

summary of the appropriate recommendations is contained in the body of the report. These are referenced in Option B of the main recommendations.

2. INTRODUCTION 2.1 The historical context of Scarborough Borough Council’s (the Council)

ownership and occupancy of its existing Town Hall site in Scarborough is well documented. In summary, the Council’s current tenure derives from the reorganisation of the local government in England and Wales in 1974.

2.2 However, the links with municipal activities at the site began much earlier with

the predecessor Authority Scarborough Corporation, which occupied the site/ premises since it acquired it as a town house from a local family (Woodall) in 1899

2.3 Over the subsequent periods it extended the original town house, initially to

accommodate a Council Chamber (1903) and in more recent times to develop and expand along King Street and St Nicholas Street frontages circa 1962/64 and 2002/03.

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2.4 This evolution of the site and its accommodation provision has resulted in an

eclectic mix of historic and more contemporary buildings which have been integrated, though not particularly commodiously connected, over various storeys. The site has the benefit of limited off-street parking and service areas.

2.5 In defining the site for the basis of this report (see attached plan at Appendix

B), it is bounded by St Nicholas Street to the west; St Nicholas Gardens to the south east; the landward edge of the Futurist Theatre site to the east; and property boundaries of premises on St Nicholas Street and Eastborough to the north. The schedule attached provides further particulars relating to the various elements of the site, which is punctuated by the public highway, King Street. All the sites described lie within the Scarborough Conservation Area.

2.6 A full range of the Council’s services are based at and delivered from the site

which comprises a combination of ‘front facing’ and ‘back office’ functions. In terms of ‘front facing’ activities, where a public interface is a day to day requirement, much is facilitated through a ‘Customer First’ Centre which fronts onto St Nicholas Street. The Civic function of the Council, e.g. public meetings including Council and associated Committees is held in the historic Town Hall building.

2.7 In terms of staff based at the Town Hall, there are currently 340 who regularly

attend the premises. The Council’s main Call and CCTV centres are also based on the site. Car parking for operational and public comprises 75 spaces, predominantly accessed via King Street.

3. CORPORATE AIMS/PRIORITIES AND THE COMMUNITY PLAN 3.1 The Council’s vision is ‘to achieve the renaissance of the North Yorkshire

Coast by 2020’. 3.2 This vision is supported by our Mission Statement, ‘to be the best’. 3.3 Several of the Council’s four key aims are particularly relevant, not least

because and depending upon the outcome of Members’ deliberations it could help in:

• Aim 2 - Prosperous – regenerate our Borough by encouraging enterprise and innovation.

• Aim 4 -Quality Environment – encourage and support the development of a high quality built environment.

4. BACKGROUND 4.1 At its meeting on 20 September 2011 Cabinet considered an initial report

(reference 11/368) into the Council’s main office accommodation that detailed

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five options for Members to determine which, if any, merited further investigation.

4.2 For reference the five options were:

Option 1: Do nothing.

Option 2: Do minimum. Retention and refurbishment of existing Town Hall (and gardens) and all back office accommodation including CCTV and Customer First/Call Centres to a minimum standard to ensure certain legal compliance.

Option 3: Retention and refurbishment of existing Town Hall (and

gardens) and all back office accommodation including CCTV and Customer First/Call Centres to meet a modern and upgraded standard but with no major reconfiguration of office environment.

Option 4: Retention and refurbishment of existing Town Hall (and

gardens) to be utilised for Civic functions. Disposal of all other accommodation/land within the site for a redevelopment opportunity to include with and/or without CCTV and Customer First/Call Centres on the site. All displaced services to be relocated to an alternate site(s) elsewhere in the Scarborough area.

Option 5: Refurbishment of existing Town Hall (and gardens) to the

standard sufficient to maintain its status as a listed building and pending its and other accommodation/land disposal for a redevelopment opportunity to include with and/or without CCTV and Customer First/Call Centres on the site. All functions and services displaced to be relocated to alternate site(s) elsewhere in the Scarborough area.

4.3 An extract from that meetings Cabinet resolution was to:

(ii) direct officers to explore further options 3, 4 and 5….; (iii) subject to (ii) above, authorise officers to enter into a, ‘without

prejudice’, dialogue with any interested parties associated with possible alternative sites within the Scarborough area;

(iv) request a further report on the Accommodation Review in accordance

with the Action Plan outlined in this report. 4.4 A Review of the Town Hall Site Accommodation

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4.4.1 In order to place this report into context Members are reminded that a building condition survey of the Town Hall undertaken independently in 2010 supported the following commentary:

• The minimum investment in the next two years to maintain a minimum standard of accommodation is approximately £2.6 million, not including IT upgrade, electronic filing etc. A further £1.7 million of capital costs would be required for these elements.

• Over a 25 year term, maintenance costs for the buildings are likely to be in the region of £5.8 million (prior to works currently being undertaken to the historic Town Hall).

• Such an investment will only maintain the building and not address some of the restrictive internal layouts and remove the opportunity to deliver benefits in modern working practices.

• There are listed buildings with implied constraints to making them more efficient.

• The buildings have now an historic legacy in terms of geography, design and versatility which limit the level of benefits which can be achieved by the Council.

• The general infrastructure is now coming to the limit of its serviceable life. With the exception of York House annex the buildings have a pedigree exceeding 40 years in terms of construction elements.

• Accessibility for visitors to the site is limited and difficult due to the historic and geographic conditions of the site.

• The accommodation of around 7.4 hectares, at different levels, is now too large for the Council’s needs, yet not ‘attractive’ enough to encourage a collection of public service providers to co-exist on the site.

5. OPTIONS APPRAISAL

5.1 Option 3:

Retention and refurbishment of existing Town Hall (and gardens) and all

back office accommodation including CCTV and Customer First/Call Centres to meet a modern and upgraded standard but with no major reconfiguration of office environment

5.1.1 This option is predicated upon retaining and maintaining the entire site

infrastructure but with a significant investment in order to meet modern accommodation standards, but not including any major remodelling of office environments, which for the most part is self regulating due to the historic

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status and/or the as-built cellular construction of the more contemporary buildings.

5.1.2 This option would present little scope for improved or potentially shared

service delivery and so the significant capital investment, estimated to be approximately £2.6 million over the next 2 years, excluding IT/phones upgrade, would still not achieve the Council’s Vision and many of the overall objectives and therefore may be seen, in part, as wasteful. This would represent additional revenue growth to the Council’s Budget of £208,000 (£2.6m x 4% interest x 4% principal repayment). In addition the Council will lose the £3 million offered by the HCA and will incur further building maintenance liability costs post 2 years (£3.2 million = budget growth of a further £256,000).

5.1.3 The works under this option would include:

• Replacement of the metal framed windows with more modern, energy efficient windows, which are easier to maintain.

• Replacement of the heating system with a energy conscious heating system (biomass, solar thermal etc). The current boilers would have to be replaced with a sectional energy efficient model.

• Fixed electrics throughout the building would need to be updated.

• External stonework and masonry.

• Extensive overhaul of the flat roofs, which are time expired.

These works would not in the main address the existing deficiencies in the

building (The cost of the works exclude modernisation of the working practices).

5.1.4 There would however be significant disruption caused by the works, which

may therefore involve out of hours working (at a premium) or the temporary relocation of Council staff whilst the works were completed. These works could be undertaken on a phased basis.

5.1.5 Advantages of this option:

• The Council would continue to maintain a significant presence on the site, and in the Town Centre.

• An established Customer First facility.

• There would be no detriment, or perceived detriment, to the Town Centre lunch time economy.

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5.1.6 Disadvantages of this Option:

• A missed opportunity to combine the Town Hall site with the Futurist complex, thus frustrating a development to enhance the physical connectivity between the Town Centre and the Foreshore.

• Failure to secure the £3.0 million investment from the HCA, and even more significantly the loss of the regional regeneration agency in a partnership development for the Town Hall and Futurist site.

• The current Town Hall location and layout, together with limited dedicated on-site parking, are likely to limit further partnership working opportunities.

• It is difficult to expand the Customer First service without the major reconfiguration of the St Nicholas Street wing. The logical option would be to extend into the first floor of offices above Customer First, but this would require the extension of the lift access etc to comply with relevant regulations. The cost of these works would be significant.

• Detrimental financial implications on the Council’s Budget. 5.2 Option 4:

Retention and refurbishment of existing Town Hall (and gardens) to be utilised for civic functions. Disposal of all other accommodation/land within the site for a redevelopment opportunity to include with and/or without CCTV and Customer First/Call Centres on the site. All displaced services to be relocated to an alternate site(s) elsewhere in the Scarborough area.

5.2.1 This option is based upon retaining and refurbishing the existing Town Hall to

be utilised for the Civic function of the Council, e.g. meetings. The remaining elements on the site would, under this scenario, be offered for a redevelopment opportunity, subject to planning considerations.

5.2.2 The Civic function focuses upon and utilises the historic Town Hall building

encompassing 2 meeting rooms, office space above, Members’ Chamber and Mayoral accommodation. Should this function be relocated to alternate premises away from the site then it will be necessary to address planning issues both for any incoming activities to the building and at the recipient premises off site.

5.2.3 The expenditure to be incurred in refurbishing this Grade II listed building is

estimated to be £160,000 in the next two years (approved at Cabinet in September 2011), and a further £1.34 million over the remaining 23 year period of the condition survey (Historic Town Hall). Since that independent condition survey was carried out, further investigation of the fixed electrics in the historic Town Hall have identified additional works to those within the condition survey in the sum of £160,000. This highlights the risk that repairing

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an old building can bring to the fore the need for even more maintenance then can be identified from a detailed visual inspection.

5.2.4 The retention of the historic Town Hall but the disposal of the other

accommodation/land would result in the loss of car parking facilities in the upper and lower St Nicholas street level, and the main King Street car park.

5.2.5 The revenue growth of operating the new Town Hall site above the current

base budget is £260,000. To retain the historic Town Hall building for the Civic function would add a further £86,000 operating budget plus a further £120,000 to finance the capital works (up to £1.5 million); totalling an additional revenue growth of £206,000 (Total growth £466,000). Further to the additional revenue costs, the Council will forego the capital receipt for the Historic Building (£1.25 million circa) and the HCA may reduce part of all of their contribution which may impact on the overall development.

5.2.6 It is important to recognise that the way in which Council meetings operate is

continually developing. However the current Civic layout does not easily lend itself to the introduction of modern technology, for instance, large TV type screens for presentations. Not only would this be an expense to install, the modern systems would not be in keeping with the traditional settings.

5.2.7 The Board room at [SITE A], which could be established as a Civic function

area already incorporates this style of technology. R16 to note that to retain the historic Town Hall building for the Civic

function would add a further £86,000 operating budget plus a further £120,000 to finance the capital works (up to £1.5 million); totalling an additional revenue growth of £206,000 plus the additional running costs of operating a new Town Hall.

R17 approve the relocation of the Civic function to [SITE A], subject to

obtaining satisfactory planning permission. 5.2.8 The Council’s existing CCTV centre is also based on the existing site. The

centre houses high-tech equipment linked via fibre optic technology to cameras at sites around the Borough. Indications are that it would be relatively costly (approximately £250,000) though nevertheless possible to relocate from this base provided a 24 hour 7 days a week conveniently placed and secure alternative premises could be sourced.

5.2.9 Given that the current location is suitable for needs, and a redevelopment of

the Town Hall and Futurist would not be unduly compromised by the CCTV control centre remaining in situ, this expenditure is not considered to represent value for money.

R15 approve the retention of the CCTV control centre in its current location. 5.2.10 This option would require the relocation of the Customer First facility either as

part of the redeveloped existing site or to a new site within the Town Centre.

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Whatever the outcome for the Town Hall Accommodation Review, the Council is committed to maintaining a strong Customer First focused service delivery to the community in the Town Centre. The options open to the Council in respect of this are:

a) To utilise the historic Town Hall building.

This would centre around the main reception area being the focal point for visitors, with the office accommodation on the first floor being converted for the call centre, interview rooms and meeting rooms.

The Town Hall building does include at higher and basement floor levels a small number of offices/store rooms which could be utilised to accompany and support the civic function but which could be of limited suitability for such a use. There are obvious constraints to this solution, in that the main reception is not of sufficient size, and the access to the higher and basement levels does not provide adequate disabled access. In addition access to the main building for wheel chairs is through the adjacent gardens and side entrance.

b) Redeveloped Site

A Customer First facility could be incorporated into a new development on the present site. This would maintain a Town Centre presence, whilst providing an anchor tenant for the developer. It is unlikely that Customer First would occupy a St Nicholas Street frontage due to the cost of such and that the vision is to provide a gateway from the Town Centre to the Foreshore through this aspect.

Although the expectation would be that a developer of the overall site (lower and higher tiers) would draw down the land in one tranche rather than a phased approach, there may be opportunity for the present Customer First to remain in situ during the early stages of the redevelopment. However, this may result in a rental payment from the Council to the developer (post September 2013), which is when the Council would need to provide vacant possession of the Town Hall site.

In any event it is likely that the Customer First facility would need to be temporarily re-located whilst the development was being carried out.

c) Location to Temporary Facility

Officers have been working to identify a suitable site for either the temporary relocation, or a permanent basis for Customer First within the Town Centre. The proposed budget is [AMOUNT 3] for rental, with £500,000 for refurbishment costs. Listed below are the sites that have been considered, but ultimately discounted at this stage:

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(1) CF OPTION 1 (See Appendix F)

(2) CF OPTION 2 (See Appendix F)

However, the rental expectations in the main Town Centre are cost prohibitive (circa £90,000 per annum); and the other premises viewed were not of sufficient size or would have been expensive to re-configure for the Council’s needs.

There are still other premises and sites to consider, and Officers will continue to assess them for suitability.

R13 authorise officers to explore alternate locations, within the Town Centre,

for the hosting of the Customer First facility. R14 to support, in principle, a budget of £0.5million to be funded from

borrowing to establish a new Customer First facility and an annual rental budget of up to [AMOUNT 3] (this may change from rental option to an acquisition, but will be subject to a further report).

R20 note the Customer First facility will remain in situ until either vacant

position of the Town Hall is required for development or an alternative location is sourced.

5.3 Option 5:

Refurbishment of existing Town Hall (and gardens) to the standard sufficient to maintain its status as a listed building and pending its and other accommodation/land disposal for a redevelopment opportunity to include with and/or without CCTV and Customer First/Call Centres on the site. All functions and services displaced to be relocated to alternate site(s) elsewhere in the Scarborough area.

5.3.1 Cabinet, at its meeting in September 2011, approved £160,000 of expenditure

from the Capital Development Fund to undertake urgent, essential works, including electrical, external stonework and minimal redecoration, to the historic Town Hall to ensure that its condition continues to meet its Grade II listed building status.

5.3.2 A survey of the Oriel Window serving the south-east elevation of the Council

Chamber was carried out, and a contractor appointed to undertake the essential works to both the external and internal aspects. This work in still on-going and the completion date is anticipated to be May/June 2012. The nature of the deterioration, particularly to the internal elements of the window mullions and jambs has raised concerns that the other two windows, serving the eastern elevation, may also be compromised. In the past, probably during the 1950s, repairs were carried out to the windows using a cement skim which is harder than the sandstone elements, and over the years this has accelerated the deterioration of the sandstone it was placed to protect.

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5.3.3 A recommendation of the condition survey was that the fixed electrics in the historic Town Hall should be tested. The testing, together with a more detailed inspection, was undertaken during January 2012. There are a number of items which need to be addressed to comply with health and safety legislation, and the remaining elements are to be programmed over a two year period. The overall cost of these works will be in the region of £250,000. This is more than was anticipated following the condition survey of 2010, but it was always expected that once a thorough inspection was undertaken problems that were not identifiable through a visual inspection would come to light. The condition survey included for testing and re-wiring in the sum of £90,000. This is an additional cost of £160,000.

5.3.4 The essential works that are needed to ensure compliance with legislation will

be undertaken at a cost of £8,500 (immediately) with the potential for a further £30,000 within the next 18 months. The cost of the immediate works will be met from the budget originally approved by Cabinet in September 2011.

5.3.5 However, with the opportunity proposed through the HCA investment in to the

redevelopment of the Town Hall and Futurist site, until a decision is made on the retention, or not, of the building then the other non-urgent works will be placed on hold. This is because if the future use of the historic Town Hall building is not as is currently utilised then the reconfiguration works would include an element of fixed electric refurbishment.

5.4 Home and Communities Agency (HCA) 5.4.1 Discussions have been held between Officers and the HCA, who have now

taken over responsibility for economic regeneration from Yorkshire Forward. The HCA are committed to assisting local authorities realise their development proposals, utilising its existing assets together with targeted cash injections. The HCA currently owns the former Mermaid Public House and retail unit which form part of the Futurist complex and are currently negotiating, through the Council, to acquire the remaining two retail units. The HCA is providing the Council with [AMOUNT 1] to acquire the leasehold interests within these retail units. In the event that the cost of acquiring these interest exceed this level, the manner in which the balance is borne is dependant upon the date of the acquisition; before 31 December 2012 the Council is responsible for the balance (prior to formal setup of the Joint Venture); after the 31 December 2012 the Joint Venture is responsible for any additional cost. Completion of these negotiations will place the whole Futurist building in public ownership and combined with the Council’s adjoining sites may provide a development opportunity between St. Nicholas Street and the foreshore.

R6 accept [AMOUNT 1] from the HCA towards the acquisition of the interest

in the remaining two leasehold units within the Futurist building. 5.4.2 The HCA is aware of the Council’s aspirations to enhance the physical

connectivity between the town centre and the foreshore. This strategy requires the Council to relocate from its existing Town Hall offices.

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5.4.3 The HCA has come forward with a proposal to inject £3.0 million of its own

resources into the Town Hall/Futurist Development scheme. The intention would be to put the Council in funds to acquire alternative office accommodation and thereby release the Town Hall so that the entire site can be offered for development. The HCA’s investment would be in return for an equity stake in the overall development scheme in addition to the property assets that both parties would contractually put into the scheme in accordance with a Joint Venture between the HCA and the Council. The HCA’s business plan for the Joint Venture anticipates a return on their investment and therefore the Council will also receive a profit share.

5.4.4 The terms for the Joint Venture Agreement have not yet been finalised but

would represent an equity holding for each of the Council and the HCA in proportion to the level of investment (cash and asset holdings). The Joint Venture will deliver a development platform capable of being presented to the development market. A draft Planning Brief for the development of the Town Hall and Futurist site has been prepared and is currently out to consultation. The expectation is that the Joint Venture Agreement must be entered into prior to 31 March 2012 in order for the HCA to release the £3.0 million of funds.

5.4.5 Officers have held meetings with the HCA and will continue to do so during

the remainder of March to seek agreement on the terms and delivery expectations of the Joint Venture.

R1 delegate authority to the Acting Head of Legal and Support Services to

enter the Council into partnership arrangements with the HCA including all necessary documentation in respect of the Town Hall / Futurist Development Scheme (Joint Venture) to give effect to the recommendations in this report;

R2 accept the £3.0 million investment in the 2011/2012 financial year from the HCA into the Joint Venture in exchange for an equity share in the scheme.

5.4.6 The Council’s obligations under the Joint Venture agreement are to commit

transfer the Town Hall Site into the Joint Venture (valued at £2 million) and to transfer £2.0 million for expenditure by the joint venture parties (Total amount £4 million). In exchange the Council receives £3.0 million advance funding to support the purchase of [SITE A] and a £1.0 million investment in the Joint Venture.

5.4.7 The Council commissioned Colliers, from the Property Consultants Framework, to undertake an independent valuation of the Town Hall site. This resulted in a valuation of £2.25 million. The HCA commissioned Jones Lang LaSalle to undertake their valuation for the Town Hall site. This returned a valuation of £2.0 million. Officers are currently in discussions with both valuers to determine the reasons for the difference. For the purpose of this report the lower valuation of £2.0 million has been assumed. Should the valuation alter

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upward it will result in the Council’s Investment Value within the Joint Venture increasing in line with the valuation.

R4 to note that the HCA’s valuation of the Town Hall is £2.0 million. This is

£250,000 lower then the Council’s independent valuation.

5.4.8 The Council is to make the £2.0 million available in the following tranches and at the following times:

Tranche Amount Date of Availability £ 150,000 31 December 2012 £1,850,000 1 April 2013

5.4.9 In addition to the financial investment the Council will be required to commit

the following:

• “transfer” the Council’s land holding in the Town Hall into the Joint Venture.

• Invest the Council’s land holding in the Futurist site into the Joint Venture in exchange for an equity share in the scheme.

5.4.10 This will bring the Council’s investment to £2.0 million being £1.0 million

towards the acquisition of [SITE A] and £1.0 million cash investment in exchange for an equity share in the Joint Venture.

5.4.11 The Council’s investment will be funded from the Seaside Reward grant

received and earmarked for the Futurist Regeneration (£220,000), and the balance from the Investment Management Plan (IMP) (£1.78 million). For simplicity the Seaside Grant will be transferred to the IMP.

R26 approve the transfer of £220,000 from the Seaside Reward grant into the

Investment Management Plan. 5.4.12 At its February 2012 meeting, Council approved the Financial Strategy for

2012/13. The Financial Strategy included a provision to establish an IMP for future capital receipts above £0.5 million. Currently the balance in the IMP is zero, but it is anticipated that the Council will be in receipt of the sale proceeds from the sale of Dean Road depot by March 2013. Should there be a delay to this capital receipt then the Council will either have to borrow the remaining amount or restructure its reserves.

R3 “transfer” the Town Hall site into the Joint Venture (at a value of £2

million) together with £2.0 million cash, in exchange for the Council to receive £3.0 million to purchase [SITE A] and £1.0 million equity investment into the Joint Venture;

R5 invest the Council’s land holding within the Futurist site to the Joint

Venture in exchange for an equity share in the scheme, which will be dependant upon the value of the asset

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5.4.13 The draft Heads of Terms between the HCA and the Council are attached at Appendix C, but the main aspects are summarised below:

• The HCA is investing £3.0 million into the Town Hall and Futurist redevelopment for an equity share in the scheme.

• The HCA and the Council to establish a Joint Venture, incorporating a Governance Board, to facilitate the delivery of the redevelopment.

• The Council to offer vacant possession of the Town Hall by September 2013, with an option to rent aspects of the Town Hall back from the Joint Venture.

• The legal agreement for the establishment of the Joint Venture to be entered into by 31 March 2012.

• The £3.0 million HCA investment can be utilised by the Council to purchase alternate office accommodation to accelerate the release of the Town Hall site for redevelopment. (i.e. the Council uses the £3.0 million to purchase [SITE A]).

• The HCA to provide [AMOUNT 1] to the Council towards the cost of acquiring the remaining two retail units within the Futurist complex.

• The Council to transfer £2.0 million cash into the Joint Venture by April 2013.

• An initial payment of £150,000 to be transferred into the Joint Venture by the Council by December.

• Transfer the Council’s land holdings within the Town Hall to the Joint Venture to repay the costs of purchasing [SITE A].

• Invest the Council’s land holding within the Futurist site to the Joint Venture in exchange for an equity share in the scheme.

• There is a cooling off period in which the Joint Venture can be terminated. This cooling off period is until the Council secures the purchase (the conditions attached to the conditional contract have been fulfilled) of [SITE A] or December 2012, whichever is the sooner.

R27 delegate authority to Cabinet to receive further report(s) on the

governance arrangements for the Joint Venture with the HCA, the procurement procedure for the development partner and the profit share arrangements.

5.5 Retail Impact Assessment

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5.5.1 The Council commissioned England & Lyle Ltd to undertake an assessment of the potential impact on the vitality and viability of Scarborough Town Centre that might result from the relocation of Council services and Town Hall employees from the current Town Hall to alternate premises remote from the Town Centre (Copy of the report is at Appendix D).

5.5.2 The Council is aware that the weekday retail expenditure by its employees in Scarborough Town Centre during their lunch break, and before and after work, forms part of the overall pattern of expenditure in the town centre, and contributes towards the overall vitality and viability.

5.5.3 The purpose of the assessment was therefore to quantify the level of retail expenditure, compare it to the overall retail turnover of shops in the Town Centre and thereby assess the potential impact of a relocation.

5.5.4 The study also assessed the potential impact in the Town Centre that might result from the subsequent re-use/redevelopment of the Town Hall site for a variety of uses, including offices, retail, leisure, hotel and residential.

5.5.5 In order to assess the impact on any proposed relocation of the Council services and employees, on the vitality and viability of Scarborough Town Centre England and Lyle have undertaken the following key actions: a) A questionnaire survey of Town Hall employees to establish their average

week-day spending patterns in the Town Centre. b) A questionnaire survey of Town Hall employees in the week commencing

9th January 2012 to establish use of other town centre services during the ‘working week’.

c) A review of the 2007 Retail Study to identify retail turnover figures for

Town Centre .

d) A review of Floor Space Schedules for Town Hall Buildings provided by the Council.

e) A review of potential alternative use scenarios for constituent elements of

Town Hall estate provided by the Council (planning brief).

f) Estimated potential employment and expenditure likely to be associated with alternative scenarios for the Town Hall site using 2010 Employment Densities Guide (HCA, Drivers Jonas Deloitte) and expenditure per head data (2007 Retail Study).

5.5.6 At present 340 employees are based within these offices. A questionnaire

survey undertaken as part of this study in January 2012 indicates that on average these employees each spend just under £49/week on shops in Scarborough Town Centre as well as visiting other non retail service outlets in the town such as banks, building societies, leisure outlets, professional services etc. Collectively annual employee retail expenditure in the Town

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Centre is estimated at £0.86million. Notwithstanding the time of year of the survey it is considered that information collected provides robust estimate of expenditure levels on which to base estimate of likely impact.

5.5.7 The overall retail turnover of shops in Scarborough Town Centre was

estimated in the Council’s 2007 Retail Survey at £145.4 million. Adjusted to 2011 prices the total is £143.1m. A review of retail expenditure growth rates between 2007 and 2011 indicates that there is unlikely to have been any significant growth in this figure.

5.5.8 Town Hall employee expenditure in Scarborough Town Centre is therefore

equivalent to 0.6% of the total retail turnover of shops in the Town Centre. 5.5.9 If the Council was to relocate its services and employees from the Town Hall

site to an out of centre location elsewhere in the Town it could potentially result in the loss of this level of retail expenditure from the Town Centre. Whilst this could will have some adverse impact on turnover of shops in the Town Centre the scale of this ‘loss’, as a proportion of overall retail turnover in the Town Centre, is very small. It would not therefore result in a significant adverse impact on the turnover of the shops and the vitality and viability of Scarborough Town Centre as a whole.

5.5.10 Any impact could in part or in full be mitigated by the re-use /redevelopment of

the Town Hall site and buildings. The draft Town Hall and Futurist Development Brief suggest a range of potential acceptable alternative uses for the site in whole or in part. These include: offices. residential, retail, commercial, leisure.

5.5.11 Using average employment density rates, average expenditure/employee

rates calculated from the Questionnaire and average expenditure /head for residents taken from the 2007 Retail Study, adjusted to 2011 prices, it is possible to estimate the potential impact of the re-use /redevelopment of the Town Hall site under various land use scenarios. Three broad alternative development scenarios were tested:

• Option 1 – Re-use of existing accommodation for offices.

• Option 2 – Re-use of premises for mixed use of: offices, retail/leisure, residential and budget hotel + development of 20 apartments on King Street Car Park site.

• Option 3 – Re-use of premises for mixed use of offices, retail/leisure, residential and new build offices on King Street Car Park site.

5.5.12 For all three Options the projected level of retail expenditure from future

employees and residents on site matches or exceeds the level of retail expenditure generated by the existing use of the site by employees of the Council.

5.5.13 The 2007 Retail Study indicated that Scarborough Town Centre was in good

health especially in terms of its retail offer, although for a centre of its size and sub regional importance it lacked diversity with a restricted range of non-retail

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uses in the centre. This remains a fair description of the vitality and viability of the centre. The scale of any potential losses of expenditure from shops in the Town Centre is small in terms of the overall level of trade in the Town Centre is minor and assuming the Town Hall site can be re-used/redevelopment for alternative employment, commercial or residential uses, any adverse impact on overall vitality and viability is likely to be temporary. Relocation of the Council services from the Town Hall offices also provides the opportunity to attract other employees and uses into the town centre which may have the potential to increase retail expenditure in the town centre and therefore its overall vitality and viability in the long term.

5.5.14 To comply with the planning process required to relocate the Civic function a further retail impact assessment would need to be undertaken. The planning process would also require consideration to travel plans, highways issues etc.

5.6 Acquisition of [SITE A] – See Appendix F for whole of section 5.6 5.7 Other Sites Considered for the Relocation of the Town Hall - See

Appendix F for whole of section 5.7

6. CONSULTATION 6.1 The Project Board is alive to the sensitivity around this issue and the need for

consultation, but has had to weigh this up against the need to retain confidentiality in order not to compromise negotiations with third party organisations.

6.2 The report to Cabinet in September 2011 laying out the options to be explored

was a public report. 6.3 The Chief Executive has held meetings with the political Group Leaders to

inform them of the developments as they arise, but as Members will appreciate there have been dynamic developments during the past three weeks or so.

6.4 The Chief Executive has also attended staff team meetings during the past

three months informing them of the Council’s vision in respect of office accommodation, joint working and new ways of working.

6.5 It is essential that dependant upon the decision reached by Members that

further, more comprehensive consultation / communication is undertaken with the key stakeholders, to include both internal (staff and Members) and external (residents, partner organisations, suppliers, local businesses, Trade Unions and media).

6.6 Officers have had discussions with the Town Hall Superintendent with regard

to the implications that this report may have upon his role and accommodation. The Council will act sensitively with regard to this matter.

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R11 authorise officers to undertake a consultation / communication exercise with key partners and in particular staff.

7 ASSESSMENT 7.1 Officers were tasked to explore the three options identified by Members as

part of the Town Hall Accommodation Review.

7.2 The following table summarises the key advantages and disadvantages of

each of the three options considered: OPTION 3 – REMAIN IN SITU

Advantages Disadvantages

• Council presence remains in the Town Centre

• Additional operating cost of £465,000 pa

• Established Customer First Facility

• Lose the HCA Development opportunity + £3m investment

• Tradition • Restricted development opportunity with Town Centre and Foreshore

• No perceived retail impact on lunchtime economy

• Stifle joint working opportunities

• Traditional approach to working, restricting cultural change and potential budget efficiencies.

• Potential missed opportunity of levering new employees / facilities on current site

OPTION 4 – RETAIN CIVIC AND DISPOSE OF REMAINING SITE (MOVE TO [SITE A])

Advantages Disadvantages

• Tradition • Additional operating cost of £466,000 pa

• Town Centre Accessibility • Lose a proportion if not all of the HCA Development funding and support £3m

• Reduced capital value for the Town Hall Site (circa £1.25m)

• Split sites leading to inefficient working practices.

• Retain a Grade II listed building

• Potential for an under utilised building

OPTION 5 – FULL DISPOSAL OF THE TOWN HALL SITE AND RELOCATE TO NEW OFFICE ACCOMMODATION

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Advantages Disadvantages

• Least additional revenue growth option, with potential to mitigate.

• Perceived impact on Town Centre lunchtime economy

• Regional Development Agency (HCA) as partner, levering in £3m investment

• Adverse public reaction

• Opportunity to link Town Centre to Foreshore

• Accusation of selling the Crown Jewels

• Opportunity to enhance joint working

• Accessibility for Staff and issues for public meetings

• Release Town Hall site for regeneration and economic growth

• Better utilisation of council assets and reduce maintenance liability

• New Customer First Facility within the Town Centre

Summary

7.3 Financially the best option for the Council is to implement Option 5 and

relocate to new office accommodation remote from the Town centre whilst maintaining a strong Customer First presence in the Town. Although this option represents revenue growth of £260,000 (with options to mitigate) it is the most financially affordable and favourable to the Council.

7.4 In addition to the financial implications, Officers have engaged with an

independent retail impact assessor to consider the impact on the vitality and viability of the Town Centre should the Town Hall offices relocate. The retail impact assessment demonstrates that the relocation of office accommodation away from the Town Centre will have little quantitative material impact on the town centre economy and is well below the significant adverse impact test outlined in PPS4 that must be applied when planners assess the impact of proposals for out of centre retail development on existing town centre.

7.5 It has always been an underlying concern that should the Town Hall relocate

that development upon the exiting site is not delivered within an acceptable timescale or at all. The risks to the Council are significant in terms of finance, economic regeneration and public perception. Following intense negotiations between Officers and the HCA, a partnership agreement is being proposed to Members. The involvement of the HCA and their willingness to inject their own resources into this development opportunity provides significant reassurance that development will actually occur.

7.6 This opportunity is very timely and neatly draws together the various strands;

Town Hall accommodation review, planning brief on the Town Hall and

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Futurist site, the availability of [SITE A] and the capital receipt generated from Dean Road Depot disposal.

7.7 The impact of the national economic conditions and the impact it has on this

Council’s finances has accelerated the drive to deliver efficiencies incorporating new ways of working. In order to deliver these savings the Council has to embrace a cultural change, such as home working, open plan offices, clear desk policy and enhanced working relations with partners.

7.8 Whilst all of the above provide a clear direction that the preferred option is to

relocate the main office accommodation to [SITE A], including the Civic Function, there are still issues which require further work (planning permission to relocate the Civic function, building condition survey, consultation with key stakeholders, travel plan). Whilst agreement may be given to relocate the Town Hall main offices, it also reinforces the commitment to provide a strong Customer First service within the Town Centre. These residual issues should not detract from Members reaching a decision on the proposals presented in this report.

Financial Implications of option 5

7.9 The following table summarises the net financial implications associated with

option 5. See Appendix F – R21 Table

7.10 The Council will be required to borrow £1.6 million and use £0.1m from the

Capital Development Reserve. The additional revenue costs currently stand at £260,000 which will have to be accommodated within the forthcoming Financial Strategy. Officers will continue to examine opportunities to mitigate this level of budget growth.

7.11 In addition to the net cost of acquiring [SITE A] and re-establishing a new

Customer First Facility the Council will need to transfer £2.0 million from the Investment Management Plan into the Joint Venture. Being a partner in the Joint Venture there is an expectation that on completion of the scheme the Joint Venture will receive a capital receipt in which the Council will hold an equity share.

7.12 In addition a provision of £1.0 million will be required to fund joint running

costs, the cost of relocation and project management fees and contingencies. It is proposed that this amount be identified from the Council’s reserves.

R21 note the net cash outflow totals £1.7 million... R22 approve revenue budget growth for the additional cost of £260,000 for

the funding of the net cash flow (as above) together with net operational cost for operating [SITE A] and a new Customer First facility. For 2012/13 any additional revenue cost will be met from the Interim Budget

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(recommendation R25) and thereafter addressed through the Financial Strategy;

R23 note that the additional costs of staying in the current Town Hall, after

undertaking all of the required maintenance repairs is £465,000, some £205,000 more than purchasing and operating [SITE A];

R24 note Officers are continuing to explore options to mitigate the

additional revenue costs of £260,000. These options include reviewing the borrowing costs, the potential savings from the news ways of working, increased business rate income, income from partners and potential reduced subsidy to the Futurist Building;

R25 approve an interim budget of £1.0million to fund the dual running costs

of two buildings (£450,000 over 2 years), relocation costs (£250,000) and Project Management Fees and Contingency (£300,000). This one off cost is to be met from Council Reserves.

R19 appoint a transformation project manager (to work alongside the

established Project Team), from the current establishment, to manage and implement the new ways of working policy, which is based on the relocation of office accommodation and a new working culture;

8. IMPLICATIONS (a) Policy 8.1 The content of the report are in accordance with the Council’s policy

framework. (b) Financial 8.2.1 The financial implications are detailed within the body of the report, however

the following provides a brief summary of the financial transactions should Members approve the recommendations to relocate to [SITE A].

Net Financial implications of Option 5

£1.7m To be funded from: £100,00 (at Risk) from the Capital Development Reserve £1.6m from borrowing

Investment into the Town Hall / Futurist Joint Venture

£2.0m To be funded from the Investment Management Plan

Set up costs (Dual Running / Fees / Move costs)

£1.0m To be funded from Council Reserves

Ongoing Revenue Costs £0.26m To be included in the 2013/14

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Financial Strategy. This is the least additional cost option. Members will be aware that this will add to the £1.7m savings required to balance the 2013/14 budget. Officers to examine options to mitigate

8.2.2 The following provides a brief summary of the financial transactions should

Members approve to remain in the current Town Hall.

Maintenance liability associated with the Town Hall (over a 25 year period)

£5.7m Funding to be met from the Council’s Financial Strategy

Additional Revenue Costs £0.465m The ongoing revenue cost of funding the £5.7m maintenance liability

Loss of Investment from the HCA into the Town Hall / Futurist Joint Venture

£3.0m Loss of external funding

IT Upgrade / Electronic Filing £1.7m To be addressed through the Financial Strategy

The financial analysis assumes the full life costs accrue from day one.

(c) Risks 8.3 The main strategic risks are detailed on the risk matrix attached to this report,

including any suggested mitigation. (d) Legal 8.4 Depending upon the option/range of options Members wish to pursue there

may be legal implications relating, inter alia, to land and property. 8.5 There could be legal issues arising as set out in the Planning (Listed Buildings

and Conservation Areas Act) 1990 if it appears to the Secretary of State that reasonable steps are not being taken for properly preserving a listed building.

(e) Planning 8.6 If Members approve the relocation of the office accommodation, including the

Civic function, from the existing site to [SITE A] planning permission would be required as this would comprise a ‘sui generis’ use (change of use unrelated to other uses) under the Town and Country Planning Use Classes Order.

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8.7 If the Civic function remained in the historic Town Hall but all other office uses

were transferred to [SITE A] then planning permission would not be required, as [SITE A] already has planning permission for office use.

8.8 Any planning application that does become necessary as a result of Cabinet’s

consideration will of course be subject to public consultation. 8.9 This report includes a recommendation to refer the planning application for

the Civic Function to neighbouring planning authority. (f) Regeneration 8.10 Should Members decide to pursue the option of re-locating fully to [SITE A]

then the Council may as part of the planning process need to further consider the impacts on the town centre. Of course this would have to take into account any regeneration benefits of a redeveloped existing site.

8.11 A sequential assessment would require that alternate sites are assessed for

their availability, suitability and viability. The impact assessment would have to take account of what repercussions any proposal might have on existing, committed and planned public and private investment.

(g) Staffing 8.12 It is essential that staff are kept informed of the progress on this project, to

ensure they are fully engaged in the implementation of the New Ways of Working process and culture. The communication strategy associated with this consideration will ensure that staff are fully engaged.

(h) Crime and Disorder 8.13 There are no crime and disorder implications currently as a result of this

report. (i) Environmental 8.14 The environmental issues arising from this report are focussed initially upon

the existing accommodation environmental conditions. Options to be pursued will endeavour to improve those conditions for all users of future accommodation.

9. ACTION PLAN

Report to Cabinet 20 March 2012

Report to Full Council 23 March 2012

Agree Heads of Terms with HCA 31 March 2012

Enter into documentation with the HCA to formalise the Joint Venture

31 March 2012

HCA to transfer funds to Council 31 March 2012

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Establish Governance Board for Joint Venture March – June 2012

Planning Development Brief consultation February/March 2012

Finalise Planning Brief June 2012

Negotiate purchase of [SITE A] with the [VENDOR]

March 2012

Enter into conditional contract with the [VENDOR] May 2012

Communication Strategy March 2012

Communication Programme with stakeholders March 2012 (ongoing)

Identify Customer First site April 2012 (ongoing)

Submit planning application for [SITE A] September 2012

Undertake works to satisfy the conditional contract with the [VENDOR]

Complete by March 2013

Develop a scheme for the re-modelling of [SITE A] June 2012

Initial investment to Joint Venture (£150,000) December 2012

Develop and Implement New Ways of Working policy

April 2012 (ongoing)

Final investment to Joint Venture (£1.85m) April 2013

Vacant possession of Town Hall Site September 2013

Move into new offices September 2013

Jim Dillon Nicholas Edwards Chief Executive Head of Finance & Asset Management

Author: Nick Edwards & Martin Pedley Telephone No: 01723 23 24 10 E-mail address: ncik.edwards@scarborough.gov.uk Background Papers: CIPFA Property Conditions Survey, Scarborough Town Hall – August 2010 Retail Impact Assessment Investment Decision Report from the Home and Communities Agency. Draft Planning Brief for the Futuriist and Town Hall Development. Heads of Terms for Joint Venture Agreement with HCA

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APPENDIX B

PLAN OF TOWN HALL AND FUTURIST SITE PLAN KEY: 1 Georgian House (Listed Building) - Shops basement and ground floor. Flats

on other floors. SBC hold the freehold and the flats are on a 125yr lease. 2 Customer First on basement, ground and first floor levels and car parking/

servicing to rear. 3 SBC general office complex and car parking/servicing to rear (1962/64). 4 Town Hall (Listed Building) civic, some general offices and garden. 5 York House (Listed façade) – SBC general offices. 6 SBC/public car park on King Street. 7 Futurist Theatre site. 8 CCTV control centre The highway which runs between site 6 and site 3/5 is a public highway owned by NYCC. The areas indicated within the red line detail the extent of the Town Hall complex and is in SBC ownership.

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APPENDIX D

Scarborough Borough Council

Proposed Relocation of Council Services and Employees

from Scarborough Town Hall

Assessment of Impact on Scarborough Town Centre

January 2012

England & Lyle Ltd

Gateway House

Coniscliffe Rd

Darlington

DL3 7EH

01325 469236

info@england-lyle.co.uk

Introduction

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2. England & Lyle Ltd has been commissioned by Scarborough Borough Council to undertake an assessment of the potential impact on the vitality and viability of Scarborough Town Centre that might result from any relocation of Council services and Town Hall employees from the Town Hall and Council Offices, to new purpose built out of centre accommodation elsewhere in the town.

3. The Borough Council is aware that week-day retail expenditure by its employees

in Scarborough Town Centre during their lunch breaks, and before and after work, forms part of the overall pattern of expenditure in the town centre and contributes towards the overall vitality and viability of the Town Centre.

4. The primary purpose of this assessment is therefore to quantify this level of retail

expenditure, compare it to the overall retail turnover of shops in the Town Centre and thereby assess the potential impact of any relocation of employees to a site remote from the Centre. The study will also assess the potential impact on the Town Centre that might result from the subsequent re-use/redevelopment of the Town Hall, Council buildings and car park for a variety of uses including offices, retail , leisure, hotel and residential.

Background

The Site

5. Scarborough Borough Council occupies a number of buildings and service areas on the eastern side of Scarborough Town Centre – see Figure 1. The buildings principally comprise: The Victorian Town Hall (Listed Grade II); a range of later extensions built in the 1960s; and York House. York House comprises a number of smaller Mid C18 to Mid C19 properties that are Listed Grade II or II*. The available accommodation extends to approximately 5,500sqm, over several floors. At present not all this floorspace is occupied by the Council.

6. The Council also owns a car park on the eastern side of King Street that is mainly

used by Council officers. This area extends to 0.31ha in total and is potentially available for redevelopment.

7. There are currently 340 Council employees based at the Town Hall and Council

offices. This excludes employees from other agencies based at the Town Hall and which have been excluded from this exercise.

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Planning Background

Development Plan

8. The Development Plan currently comprises the Regional Spatial Strategy and the Scarborough Local Plan. The Scarborough Core Strategy is still in a draft form. As the RSS is scheduled for abolition in April 2012, key planning policy guidance is provided by the saved polices of the Scarborough Local Plan, which was adopted in 1999.

9. The Local Plan Proposals Map shows the whole of the Town Hall site lying within

a Conservation Area with land either side of King Street allocated under Policy S4 as a Regeneration Area. Policy S4 states:

“The redevelopment and / or rehabilitation and re-use of buildings and land in the King Street area, Scarborough, for a mixed development of retail, commercial and residential uses will be permitted provided that: a) The scheme will facilitate the retention, restoration and re-use of the listed

buildings on the site;

b) The development retains the historic form of King Street within the Old Town;

c) The scheme will include a pedestrian link through to St Nicholas Gardens;

d) The operational car parking requirements of proposed uses are met;

e) The development will provide an attractive elevation to views from the harbour. “

10. A range of other development management polices would also apply to any

subsequent redevelopment/regeneration scheme.

Futurist and Town Hall Development Brief (Draft)

11. The purpose of the Brief is to outline relevant planning considerations relative to the site, to shape the nature and type of any future applications for planning permission, and to inform the subsequent decision-making process.

12. A further function is to help generate interest from appropriate commercial

organisations, which could bring forward the regeneration/redevelopment of the site either in its entirety or in part. The Brief suggests a number of potential re-use / re-development scenarios for the Town Hall site but is not meant to be prescriptive. It confirms that a range of uses could be accommodated on the site, including offices, retail, leisure, hotel and residential, either within the existing buildings and/or through new build.

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Retail Study

13. In 2007 a Borough wide Retail Study was undertaken for the Borough Council by Martin Tonks. This assessment provides a range of base line information that is useful for this impact assessment in terms of estimated retail turnover of shops within Scarborough Town centre together with information on average retail expenditure levels per person. This study is currently being updated.

PPS4

14. Although not directly relevant to the current proposals for the Town Hall PPS4 provides useful guidance on the methodology to be used when assessing how new retail developments affect town centres.

Methodology & Results

15. In order to assess the impact on any proposed relocation of the Council services and employees, on the vitality and viability of Scarborough Town Centre we have undertaken the following key actions:

a) A questionnaire survey of Town Hall employees to establish their average

week-day spending patterns in the Town Centre b) A questionnaire survey of Town Hall employees in the week commencing 9th

January 2012 to establish use of other town centre services during the ‘working week’

c) A review of the 2007 Retail Study to identify retail turnover figures for Town

Centre

d) A review of Floor Space Schedules for Town Hall Buildings provided by SBC

e) A review of potential alternative use scenarios for constituent elements of Town Hall estate provided by SBC

f) Estimated potential employment and expenditure likely to be associated with

alternative scenarios for the Town Hall site using 2010 Employment Densities Guide (HCA, Drivers Jonas Deloitte) and expenditure per head data (2007 Retail Study).

Quantitative Impact

16. The 2007 Retail Study (Tables 7 and 20) estimates (on the basis of 2004 prices)

the turnover of shops in Scarborough Town Centre at £145.4 million from 33,370 sqm of net retail floorspace1. The vast majority of this turnover (£139.5 million) is derived from comparison (non-food) expenditure reflecting the relatively limited amount of food shopping floorspace in the town centre. Adjusting from 2004 to

1 This is based on average sales densities derived 2007 Verdict Grocery Report and the Mintel 2007 Retail Rankings

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2011 prices the turnover estimates are £143.1 million of which £135.3 is in comparison goods. The Pitney Bowes Business Insight Retail Expenditure Guide (2011) indicates that in the period 2008-2011 average ‘all-goods’ retail expenditure per head increased by just 1%. This is not a significant change and furthermore there has also been no significant change in terms of net retail floorspace available within the Town Centre since 2007. As a result we do not consider that any further adjustment needs to be made to the turnover data for Scarborough Town Centre detailed above.

17. Appendix 1 contains a copy of the questionnaire survey circulated to all 340

Town Hall employees. Completed forms were returned by 248 employees (73%). This is a robust response and provides a good basis for estimating expenditure by Town Hall employees as a whole.

18. Table 1 below details total and average weekly and daily week-day expenditure

in the town centre by all the 248 Town Hall employees broken down by broad category.

Table 1

Average Weekly Expenditure (£)

Average Daily Expenditure (£)

Lunch 2,097 420

Food 2,675 535

Non – Food 2,880 576

Leisure 767 153

Post Office 789 158

Other 2,871 574

TOTAL 12,072 2,414

19. Using the data in Table 1, Table 2 details average yearly, weekly and daily

expenditure per head of those who returned completed questionnaires

Table 2

Average Yearly Expenditure / Head (£)

Average Weekly Expenditure / Head (£)

Average Daily Expenditure / Head (£)

2531.36 48.68 9.73

20. Table 3 applies this average expenditure /head figure to all 340 Town Hall

employees in order to calculate total figures for average daily weekly and yearly retail expenditure by Town Hall Employees in Scarborough Town Centre

Table 3

Total Average Yearly Expenditure (£)

Total Average Weekly Expenditure (£)

Total Average Daily Expenditure (£)

860,662 16,551 3,308

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21. Total yearly retail expenditure in Scarborough Town Centre by Town Hall

employees is therefore approximately £0.86 million. This is equivalent to 0.6% of the total retail turnover in Scarborough Town centre of £145.4million.

22. A quantitative impact of just 0.6% would have little quantitative material impact on

the vitality and viability of Scarborough Town Centre and is well below the ‘significant adverse impact’ test outlined in PPS4 that must be applied when assessing the impact of proposals for new edge of centre/out of centre retail developments on existing town centres. There is no defined threshold at which point an impact on vitality and viability becomes significantly adverse as this will vary from application to application and town to town. However as a guide England & Lyle consider that any development(s) resulting in a quantitative impact on Scarborough Town Centre of less than 5% would not be considered to have a ‘significant adverse impact’ in PPS4 terms. It is also noted that the potential level of impact on the turnover of the Town Centre is substantially less than the 2.3% projected growth/head in retail expenditure projected by Pitney Bowes MapInfo in 2011-2012. (Pitney Bowes Insight Retail Expenditure Guide 2011/2012, September 2011)

23. The ‘loss’ of this level of retail expenditure from the Town Centre, whilst

impacting on some individual retailers more than others, will not therefore have a significant adverse impact on the vitality and viability of Scarborough Town Centre as a whole.

Re-Use/Redevelopment of Town Hall Site 24. Table 5 summarises the amount of accommodation currently available on the

Town Hall site:

Table 5

Floorspace (sqm)

Block 1 (West Extension) 866

Block 2 (Main Civic) 1,267

Block 3 (East Extension) 2,143

Block 4 (York House + CCTV) 1,222

TOTAL 5,498

Source: Scarborough Borough Council 25. The Draft Planning Brief for the Town Hall and Futurist sites indicates that the

Town Hall site could be reused for a variety of development options including offices, residential, retail, leisure, and hotel. It does not however provide any suggested floorspace figures for the alternative uses. It is not possible therefore to assess how many jobs these alterative uses might deliver and therefore what impact the reuse would have on the vitality and viability of the town centre

26. As part of a valuation exercise the Council officers have however sought to

identify potential re-use options together associated floorspace figures . Table 6

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lists these alternatives and the estimates of floorspace for each of the Blocks identified in Table 5.

Table 6

Option 1 Option 2 Option 3

Block 1 (Ground, Mezzanine and basement only)

Offices Conversion to Retail / Leisure

Conversion to Retail / Leisure

Block 2 (Incorporating upper floors of Block 1)

Offices Business Centre with Residential above ( 12 x 2/3 bed apartments)

Business Centre with Residential above ( 12 x 2/3 bed apartments)

Block 3 Offices 50 Bed Budget Hotel

Residential ( 30 x 2 bed apartments)

Block 4 Offices Offices Offices

King St Car Park Car Park Residential ( 20 x 2 bed apartments)

Offices (1500sqm)

27. Option 1 above assumes the 100% re-use of the all the Town Hall buildings in

their current format for other office based uses. Option 2 assumes a fundamental reconfiguring and change of use of the buildings to deliver a mix of commercial, hotel and residential uses. The only remaining ‘office’ element will be the lower floors of the main civic building. Option 3 is a variation of Option 2 with the hotel option being replaced by residential and offices being developed on the King Street car park rather than housing.

28. It is clear that the re-use/redevelopment of the Town Hall site for any of the three

options listed in Table 6 will bring with them significant numbers of new employees whose expenditure in the Town centre would replace in whole or in part the expenditure lost as a result of the Borough Council’s relocation. Even where residential uses are proposed this too will have a positive impact on the vitality and viability of the Town Centre as the shops will benefit directly from the expenditure generated by the residents of these new town centre dwellings.

29. In order to asses the potential impact of these re-use/ redevelopment Options

on the vitality and viability of Scarborough Town centre it is first necessary to:

• calculate likely employment generation rates from the floorspace and uses available and

• establish expenditure / head rate for future residents 30. The 2010 Employment Densities Guide prepared by Drivers Jonas Deloitte for

the HCA lists average employment densities for all main land use categories. These ‘rates’ can be used in the appraisal of potential employment in property regeneration and economic development projects. The figures contained in the DJD report are indicative of the levels of employment that could potentially be

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generated. They are very broad brush and similar development schemes could result in substantially differing figures depending upon individual circumstances

31. Table 7 below lists the average employment densities for the key alternative land

uses identified by the Council that could be accommodated on the Town Hall site following its vacation by the Borough Council

Table 7

Area per Full Time Equivalent (sqm)

A1 High Street Shops 19

A3 Restaurant & Cafes 18

B1(a) General Office 12

B1(a) Serviced Office 10

C1 Budget Hotel 1 employee/3 bedrooms + casual staff

32. The 2007 Retail Study indicates (Tables 2 and 15) that in 2007 the average

spend per head on both convenience and comparison goods in the Scarborough Area was £4,209 per annum. This was forecast to increase to £4,898 by 2011. Converted to 2011 prices the averages are £4,573 in 2007 and £5,268 in 2011.

33. Tables 8, 9 and 10 below detail the floorspace to be dedicated to each use and

the average number of new jobs and residents that might be delivered for each of the three re-use/redevelopment option listed in Table 6

Table 8 - Option 1 - Office use Continues

Floorspace (sqm) Jobs

Block 1 (West Extension)

643 50

Block 2 (Main Civic) 1177 98

Block 3 (East Extension) 2,151 178

Block 4 (York House + CCTV)

1,222 102

TOTAL 5,498 428

Table 9 Option 2 - Mixed Use

Floorspace Jobs / Residents

Block 1 (West Extension) Retail/Leisure

486 27

Block 2 (Main Civic) Business Centre

864 86

Block 2 (Main Civic) Residential

12 apartments 18 residents @ 1.5 persons /

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apartment

Block 3 (East Extension) Budget Hotel

50 beds 17 jobs

Block 4 (York House + CCTV)

1,222 102

King Street Car Park – Residential

20 apartments 30 residents @ 1.5 persons/apartment

TOTAL 232 jobs + 48 residents

Table 10 Option 3 Mixed Use

Floorspace Jobs / Residents

Block 1 (West Extension) Retail/Leisure

486 27

Block 2 (Main Civic) Business Centre

864 86

Block 2 (Main Civic) Residential

12 apartments 18 residents @ 1.5persons/apartment

Block 3 (East Extension) Offices

2,151 178

Block 4 (York House + CCTV)

1,222 102

King Street Car Park – Offices

1,500 125

TOTAL 518 jobs + 18 residents

34. Applying average expenditure/employee figures derived from the questionnaire

survey and average expenditure per head to future residents , derived from the 2007 Retail Study the Options 1-3 re-use/redevelopment scenarios listed above would result in the replacement annual expenditure levels listed in Table 11 below – assuming 100% occupancy:

Table 11 Options 1-3 Annual Expenditure (2011 Prices)

Employee Expenditure (£)

Resident Expenditure (£)

Total Expenditure (£)

Option 1 1,083,268 - 1,083,268

Option 2 587,192 252,864 840,056

Option 3 1,311,085 94,824 1,405,909

35. The figures in Table 11 demonstrate that the re-use/ redevelopment options

considered would generate at least an equivalent level of replacement retail expenditure for use in Scarborough Town Centre as is currently being generated by the Borough Council’s existing level of use of the Town Hall site. Re-

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use/redevelopment brings with it the potential to increase the level of available expenditure for Scarborough Town Centre generated by future uses on the site, depending upon the mix of uses delivered within the site and occupancy levels.

Qualitative Impact 36. As part of the 2007 Retail Study a ‘Health Check’ of the vitality an viability was

undertaken of Scarborough Town Centre. This concluded:

“5.3 There is only a limited range of uses other than retail in Scarborough Town Centre that contribute to the vitality and viability of the town. For a sub regional centre, diversity is not good. This partly reflects the fact that Scarborough is a seaside resort and the local economy has largely been based on tourism. The amount of retail, leisure and office floorspace in edge and out-of-centre locations has remained static since 1994 and there has been investment in the town centre. The potential capacity for growth in the immediate future is good with two identified town centre sites and two edge-of-centre sites. 5.4 The town centre environmental quality is quite good and there is a good choice of multiples and specialist independent shops. Towards the periphery of the town centre in the secondary frontages there are a number of charity and discount / bargain shops. However, the number of vacancies and amount of vacant floorspace is quite low.

5.5 Retailer representation and intentions to change representation is a strong indicator in Scarborough. The comparison sector is well represented in the town centre as are banks and financial services but there is a limited choice and range of convenience goods outlets exacerbated by the recent closure of Kwik Save. The town centre appears not to have re-established its convenience role that has declined since the out-of-centre Morrisons and Safeway stores opened in 1994.

5.6 There is also high level of retailer demand particularly from fashion and restaurant businesses. The proportion of vacant street level property has decreased in recent years but not to the point where there a shortage of units. Commercial yields on non-domestic property have recently decreased to a reasonable 7.25% which compares favourably with some but not all competing centres.

5.7 Accessibility is fairly good by most modes although motorists face congestion at peak periods when there is also a shortage of car parking spaces. The lack of a central bus station is also a weakness although the frequent park and ride service does help alleviate congestion and the parking shortage.

5.8 Customer and residents views and behavior indicate reasonable levels of satisfaction with the town centre. The main concern for both visitors and businesses is the availability of car parking spaces and toilet facilities. Perception of safety and crime are reasonably good and local crime levels are generally below the national average.

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5.9 In summary, Scarborough town centre performs well on most PPS6 indicators of vitality and viability and compares reasonably with some competing centres and other sub-regional centres in the region. The main strength is the choice and range of clothes and non-food shops and the pleasant pedestrianised high street shopping environment. The main weaknesses are the lack of diversity, the limited evening economy, perceived parking problems and possibly commercial yields. The main opportunity in the short to medium term is the three development sites, the new Park & Ride scheme and development of a “Cultural Quarter”. The main threat is the continued decline of the seaside resort as a holiday destination and also the development of town centre uses including leisure, retail and offices in peripheral locations. “

37. Whilst there have of course been some changes to retail provision/representation

within the Town Centre and the Borough as a whole since 2007, these have not been dramatic and as a result it is not considered that the potential loss of £0.86million of retail expenditure (0.6% of Town Centre retail turnover) will have a significant adverse impact on the health, vitality and viability of retail stores in the Town Centre.

38. However the Questionnaire Survey of Town Hall employees also asked about

their weekday use of non-retail services in the town centre e.g. banks, building societies, leisure outlets, professional services, health services. The findings of the Questionnaire reveal that of the 248 respondents 91% visited at least one non-retail service located in the town centre during the week of the survey. On average Town Hall employees visited between 3-4 non retail services in the Town centre during the survey week. Banks and Building societies were the most popular individual category of services visited, with employees sometimes making several visits throughout the week, followed by leisure outlets.

39. The 2007 Retail Study concluded that non retail services were not a significant

factor in the vitality and viability of Scarborough Town centre. On this basis the ‘loss’ of custom from Town Hall employees for non retail services in the Town Centre is unlikely to have a significant adverse impact on the overall vitality and viability of the Town Centre. Nevertheless the loss of significant local employer from the Town Centre has the potential to impact adversely on the vitality and viability of the already limited range of non-retail outlets in the Town Centre, which might weaken this sector further

40. Unfortunately however no data is available in terms of the number of overall visits

to non retail services in Scarborough Town Centre. It is not therefore possible to estimate what proportion of visits to non retail service outlets by Town Hall employees, contribute to overall footfall in the non retail service sector. At this stage therefore this study can only identify this particular issue as an area of potential concern. Of course if the Town Hall were to be reused/redeveloped in accordance with any of the alternative Options listed above then any such impact would in all likelihood be fully mitigated with the potential for increased trade for non-retail service outlets from the new occupiers/employees based on the site.

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Summary and Conclusions

41. Scarborough Borough Council currently occupies approximately 5,500sqm of office floorspace on a site on the edge of Scarborough Town Centre. The existing accommodation comprises a mix of historic properties and more modern extensions. The Council also owns the adjacent car park (0.31ha) east of King Street.

42. At present 340 employees are based within these offices. A questionnaire survey

undertaken as part of this study in January 2012 indicates that on average these employees each spend just under £49/week on shops in Scarborough Town centre as well as visiting other non retail service outlets in the town such as banks, building societies, leisure outlets, professional services etc. Collectively annual employee retail expenditure in the Town Centre is estimated at £0.86million. Notwithstanding the time of year of the survey it is considered that information collected provides robust estimate of expenditure levels on which to base estimate of likely impact.

43. The overall retail turnover of shops in Scarborough Town Centre was estimated

in the Council’s 2007 Retail Survey at £145.4 million. Adjusted to 2011 prices the total is £143.1m. A review of retail expenditure growth rates between 2007 and 2011 indicates that there is unlikely to have been any significant growth in this figure.

44. Town Hall employee expenditure in Scarborough Town Centre is therefore

equivalent to 0.6% of the total retail turnover of shops in the Town Centre. 45. If the Borough Council were to relocate its services and employees from the

Town Hall site to an out of centre location elsewhere in the Town it could potentially result in the loss of this level of retail expenditure from the Town Centre. Whilst this could will have some adverse impact on turnover of shops in the Town Centre the scale of this ‘loss’, as a proportion of overall retail turnover in the Town Centre, is very small. It would not therefore result in a significant adverse impact on the turnover of the shops and the vitality and viability of Scarborough Town Centre as a whole.

46. Any impact could in part or in full be mitigated by the re-use /redevelopment of

the Town Hall site and buildings. The Draft Town Hall and Futurist Development Brief suggest a range of potential acceptable alternative uses for the site in whole or in part. These include: offices. residential, retail, commercial, leisure.

47. Using average employment density rates, average expenditure/employee rates

calculated from the Questionnaire and average expenditure /head for residents taken from the 2007 Retail Study, adjusted to 2011 prices, it is possible to estimate the potential impact of the re-use /redevelopment of the Town Hall site under various land use scenarios . Three broad alternative development scenarios were tested:

• Option 1 – Re-use of existing accommodation for offices

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• Option 2 – Re-use of premises for mixed use of: offices, retail/leisure, residential and budget hotel + development of 20 apartments on King Street Car Park site

• Option 3 – Re-use of premises for mixed use of offices, retail/leisure, residential and nee build offices on King Street Car Park site

48. For all three Options the projected level of retail expenditure from future

employees and residents on site matches or exceeds the level of retail expenditure generated by the existing use of the site by employees of the Borough Council.

49. The 2007 Retail Study indicated that Scarborough Town Centre was in good health especially in terms of its retail offer, although for a centre of its size and sub regional importance it lacked diversity with a restricted range of non-retail uses in the centre. This remains a fair description of the vitality and viability of the centre. The scale of any potential losses of expenditure from shops in the Town Centre is small in terms of the overall level of trade in the Town Centre is minor and assuming the Town Hall site can be re-used/redevelopment for alternative employment, commercial or residential uses, any adverse impact on overall vitality and viability is likely to be temporary. Relocation of the Council services from the Town Hall offices also provides the opportunity to attract other employees and uses into the town centre which may have the potential to increase retail expenditure in the town centre and therefore its overall vitality and viability in the long term.

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Appendix 1 Employee Questionnaire

Page 45 of 45

Record of Employee Expenditure in Scarborough Town Centre

9th – 13

th January 2012

Lunch (£) Other Expenditure (£) Services Used

Food Non

Food

Leisure ( e.g. Gym,

restaurant,

cinema,

pub, betting

shop)

Post

Office

Other (e.g. optician,

travel agent,

hairdresser)

Bank /

Building

Society

Leisure Health Professional

Service (e.g. legal, estate

agent)

Other

Monday

Tuesday

Wednesday

Thursday

Friday

TOTAL

• Please supply total expenditure in Town Centre in each category - rounded to nearest £

• Please include both expenditure during ‘lunch hour’ and any expenditure in the Town Centre on journeys to and from work where

appropriate.

• For Services Used category simply indicate with a ü which service was used

All data is anonymous and aggregated.

Thank you for your assistance. Please return completed form to Martin Pedley by 15th January 2012