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ITEM CG5

CORPORATE GOVERNANCE SCRUTINY COMMITTEE - 4 MARCH 2004

REVIEW OF PROPERTY ASSETS

Report by Director for Resources

  1. On 27 January the Executive considered a report (EX10) which updated the Executive on progress with regard to the Review of Property Assets and resolved to:

    1. authorise further work to test the office hub and service cluster options in the northern part of the County, to allow a more detailed assessment of the robustness of the options and the extent to which the success criteria were being met, the work to include a financial appraisal of the preferred options;

    2. invite the Corporate Governance Scrutiny Committee to consider and comment on:

      1. the findings of the further work; and

      2. the specific reviews of smallholdings, staff and fire service housing, traveller sites, leasing policy and composite sites;

    3. consider the outcome of the further work and specific reviews, together with any comments from the Corporate Governance Scrutiny Committee, in June 2004;

    4. agree to the principle of taking a 10 year lease on office accommodation in Abingdon to meet the short and medium term Social & Health Care office needs and other corporate needs on the basis that the capital receipt from the sale of Champion House should be used to part fund these proposals.

  2. This report advises the Scrutiny Committee of the work undertaken so far, the work to be undertaken between now and May and sets out proposals arising from four specific reviews that have been undertaken as part of the Review.

  3. The purpose of this report therefore is to:

    • inform the Committee of work undertaken so far on the Review of Assets;

    • inform the Committee of the work to be undertaken between January and May 2004; and

    • invite the Committee to consider and give comments to the Director for Resources on the proposals arising from the four specific reviews undertaken as part of the Review of Assets.

Progress on the Review of Assets

  1. The Executive approved the Business Case for the Review of Property Assets on 8thJuly 2003 and requested that options for meeting the objectives of the review were reported to them in January 2004.

  2. The objectives of the Review are given in Annex 1.

  3. The following work has been undertaken so far:

    • The creation of Steering and Working Groups and a Project team

    • A risk assessment workshop

    • The development of a project specific database of County Council property to aid decision making including information on individual properties such as tenure, running costs and maintenance backlog

    • A review of all relevant County Council service strategies and plans and meetings with all business managers, heads of service and service managers to asses current and future property needs

    • Contacts with partner organisations to assess opportunities for sharing property

    • A Members/partners workshop to allow input in to the review

    • Gaining specialist advice on ICT, records management and travel

    • An analysis of the current portfolio and future needs and the development of proposals for the reorganisation of property to meet the objectives of the review

    • Reviews of smallholdings, traveller sites, fire and staff housing and leasing policy (the conclusions of which are given in this rent)

    • Involvement in the Corporate Governance Scrutiny Committee Review of the Community Use of Schools

    • The development of a communications strategy and the secondment of a communications manager to deal with communications for this Review and the Reorganisation of Central Offices

    • The commissioning of option appraisals to consider the provision of corporate learning and development facilities, the future of the Council’s Headquarter offices and ways of providing accommodation for staff at the Cricket Road centre

  1. The work has shown the potential opportunities and limits for reorganising property to meet the success criteria. In terms of offices, there are many separate facilities which are at present mostly used by a single service. They often occupy buildings that have had a series of users, are inflexible, in poor condition and are not designed to meet current or future needs. Some of the offices are not well located for staff to reach their clients and the poor quality of premises was the most frequent comment of those staff consulted. There is substantial scope for improving working conditions, efficiency of use and flexibility.

  2. There appears to be scope for reorganising service properties but not to the same degree as offices, as service premises have particular design and locational requirements which reduce their flexibility. Few opportunities involving schools have been identified at this stage, but there is scope for the increased community use of schools and perhaps for incorporating County Council uses directly linked to education.

  3. The work has concluded that the best way to achieve the success criteria could be to reduce the number of offices and provide a network of flexible office hubs, smaller satellite offices and touchdown facilities at a local level and the clustering of services on fewer will also be considered.

    4. Further Work

  4. The Executive accepted this conclusion and resolved that further work should be undertaken to test the idea of office hubs and service clustering by look specifically at the northern part of the County, to assess the extent to which the success criteria are met under the different options and to carry out a financial appraisal of the preferred one.

  5. Work is being undertaken to assess options for rationalising offices in to hubs, satellites and touchdown facilities and opportunities for services to be clustered. An assessment will be made of the optimum number, size and location of these facilities and an analysis will be undertaken of the extent to which the success criteria are met. The proposals will be whole life costed and a financial appraisal undertaken.

  6. A reorganisation based on this model would affect between ten and twenty percent of property and measures to improve the condition of remaining property will therefore be assessed. This will explore ways of improving working conditions, allowing the introduction of modern workstyles, improving service delivery, improving accessibility and environmental standards. This will be whole life costed over a 60 year period and consider the alternatives of bringing property up to an acceptable standard within ten or fifteen years. An assessment will be made of how the success criteria are met.

  7. This office hub/ service clustering model will be compared with the alternative of increasing repair and maintenance funding to a sustainable level, continuing to look for opportunities for small scale property rationalisations and continuing to deal with accommodation needs as they arise within available funding. This approach will also be whole life costed.

  8. The implications of continuing with current levels of repair and maintenance expenditure will also be considered.

  9. The findings of this work will be reported to this Committee in May.

    10. Specific Reviews

  10. The reviews have been carried out as part of the Review of Assets but separately from the main review as each topic represents a relatively self contained part of the property portfolio that raises issues of principle about why and how that property is held or managed.

  11. The conclusions of each review are briefly summarised below. The full reports are available in the Members Resource Centre.

    1. Traveller Sites

The review has considered whether County Council ownership of permanent traveller sites is appropriate and / or desirable. It investigated whether there is an obligation for the Council to retain ownership of the sites and considers the advantages and disadvantages of retaining, disposing of, or leasing out the sites.

Consultation has taken place with the Oxfordshire Traveller Management Unit (OTMU), Legal Services and Atkins. Wider consultation has not been undertaken at this stage, due to the sensitivities of the issues involved.

The OTMU is a unit set up by the County Council and Thames Valley Police and consists of the County Council’s Traveller Liaison Officer and a Police Inspector. The unit reports to the County Council (Community Safety).

The Council owns six traveller sites at:

    • The Furlong, Standlake;

    • Woodhill Lane, East Challow;

    • Ten Acre Park, Sandford;

    • The Sturt, Oakley Wood;

    • Middle Ground, Wheatley; and

    • Redbridge Hollow, Oxford.

All sites are managed by Westgate Managed Services (WMS) under a five year contract which expires on 31 March 2005.

There is a wide variety of site management arrangements across the country. According to ODPM Guidance, the most common pattern is for sites to be owned and managed by the same authority (63%), followed by the site being owned by one authority and managed by another (24%). A minority of local authority sites (13%) are managed by a non local authority body.

The options considered were:

    • disposal of the sites

    • retention of ownership and management in-house

    • retention of ownership and contracting out management (the current arrangement); and

    • retain ownership and grant leases

The advantages and disadvantages of each approach are set out below.

Disposal of Freehold

The potential advantages / disadvantages of selling the sites are as follows:

Advantages

    • No staff time required to manage the sites;

    • No ongoing liabilities, such as repairs and maintenance;

    • Potential to generate capital receipts.

Disadvantages

    • Loss of control of sites restricts the Council’s ability to deal with the future provision of sites;

    • Restricts the Council’s ability to take a strategic approach to traveller issues;

    • A valuable source of funding would be lost for the refurbishment of sites, as ODPM grants are not available for private sites;

    • The repair and maintenance liability is not unduly onerous;

    • Uncertainty over who would want to purchase the sites and their likely value.

Retention of Ownership and Management In House

The potential advantages / disadvantages of retention of ownership and in-house management are as follows:

Advantages

    • Allows a strategic approach to be taken towards Traveller issues, as the County Council would be responsible for both site management and the management of unauthorised encampments. Efficiencies could be developed in the joint use of staff between these two areas;

    • Assists in the management of unauthorised encampments, as Travellers could be more easily directed onto County owned sites;

    • More effective control could be exerted over sites;

    • More appropriate staffing controlled by OTMU. Problems could be dealt with directly, rather than having to go through a third party;

    • Improved access for residents to services, such as education and health;

    • Income / profit from sites received by the County Council;

    • A one stop shop for the settled community for Traveller issues.

 

Disadvantages

    • It would be a significant step, requiring additional staff / training, etc, as Council staff have no direct experience managing permanent sites;

Retention of Ownership and Contracting out Management

The advantages (as identified by the ODPM guidance) and disadvantages of contracted out management are as follows:

Advantages

    • Potential to save money

    • Local authorities are able to tap into years of specialist site management experience by using a particular company;

    • It takes away the inconvenience from local authority officers, having to be on call in the evenings and at weekends;

    • A private company may sometimes be able to act more quickly than a local authority, where potentially there are many people and departments involved.

    • A specialist company only carries out site management, so can be more expert and focused than a local authority, where site management is one small task among many.

Disadvantages

    • It prevents a strategic approach being taken by the County Council, as it splits the responsibility between the management of permanent sites and the management of unauthorised encampments;

    • The Council has an ongoing financial liability (repairs, water rates, etc);

    • It takes up much staff time managing the contract;

    • It can be difficult getting management information, with which to judge the performance of the contract;

    • There is a lack of national contractors able and willing to carry out this type of work;

Retention of Ownership and Grant Leases

The potential advantages / disadvantages of granting a lease are:

Advantages

    • No staff time required to manage the sites;

    • Responsibility for day to day management and the cost of repair and maintenance rests with the leaseholder;

    • Site residents would have more control over the management of the sites.

Disadvantages

    • Loss of control of sites restricting the Council’s ability to deal with the future provision of sites;

    • Restricts the Council’s ability to take a strategic approach to traveller issues;

    • It is uncertain whether ODPM Grant funding for the refurbishment of sites would be available;

    • The repair and maintenance liability is not unduly onerous and ultimately still rests with the Council;

 

In light of this review, the proposals are that:

    • ownership of the sites should be retained as this assists the Council in providing traveller services and no significant advantages would arise from disposal,

    • leases should not be granted as the conditions are not right, but that this should be kept under review, and

    • future arrangements for management should be reviewed by the Director for Community Safety.

      b. Smallholdings

The whole of the smallholdings estate was declared surplus to the Council’s requirements in 1992 and since then approximately 2,000 acres have been sold, with 1,000 acres remaining. The current arrangement is for phased disposal of parts of the estate when it is appropriate to do so. This is usually when land is allocated for development or when the Council receives suitable offers for land from third parties, for example from housing associations. The Council is currently negotiating further disposals of this type.

The options considered were continuing with phased disposals or disposal of the whole estate now. Worst and best case estimates of potential receipts over the next ten years if phased disposal is continued with are £750,000 and £7,500,000 (at today’s values). There may be opportunities for significant receipts from disposal of land in the next five years at Chipping Norton, Eynsham, Cassington, Leafield, Bampton and Benson. There would be further receipts from the remaining holdings over following years.

Disposal of the whole estate now would raise an estimated £2,500,000. Covenants could be placed on the land to seek to secure further payments if the value of land increased in the future. Details of the cost of running the estate will be available at the meeting.

In light of this review the proposal is that:

    • phased disposal of smallholdings is continued, as in the medium and long term this will maximise capital receipts for the Council.

      c. Staff Housing

The Council has 99 staff houses, 90 of which are freehold properties. The Council also has 38 fire service houses. The fire service houses have not been reviewed due to the uncertainty caused by consideration of regional management and development of an Integrated Risk Management Plan. It may be appropriate to review them at a later date.

Rents for staff housing do not cover the running and repair and maintenance costs of the property as most properties are rented to caretakers who pay a rent based on a percentage of salary rather than a market rent. The housing is generally not in good condition. The work has considered the purpose of staff housing, whether the type of housing is appropriate, how it is managed and whether there are better ways of providing the service.

The conclusion is that it is not possible or desirable to treat all of the property in the same way, but that perhaps 25 properties could be transferred to a housing association, with the Council retaining nomination rights. The association would be responsible for repair and maintenance, but further work is required to assess how the management arrangements would work and whether there would be any overall benefit to the Council. A further 5 properties offer scope for redevelopment and a capital receipt. 25 properties should remain in Council ownership, because they form parts of schools for example, and the remainder are either occupied by secure tenants, are leased in, or form part of an existing redevelopment scheme. This approach could provide a capital receipt of approximately £2 million.

It is proposed that:

    • Further work be done on the possibility of a transfer of some property to a Housing Association and that this should assess the advantages, disadvantages and financial implications. Consultation with Learning & Culture is also needed.

    • a further report is considered by the Corporate Governance Scrutiny Committee in May 2004.

      d. Leased/Composite Sites

The review of leased and composite sites considered current Council practices, with the intention of improving future management arrangements.

It is proposed that:

    • new management arrangements should be put in place for what have been know as composite sites

    • property management arrangements should be simplified and set out in writing

    • management practices should be changed to reduce costs associated with managing low value leases which comprise the majority of lease agreements

  1. The report includes an action plan showing the actions that need to be taken to make these improvements, who takes lead responsibility and a timescale.

JOHN JACKSON
Director for Resources

Background Papers: Nil

Contact Officer: Mark Tailby, Projects Officer Resources Tel: (01865) 816012

February 2004

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