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ITEM EX5 - ANNEX 1

EXECUTIVE – 6 JULY 2004

LOCAL GOVERNMENT OFFICES IN CENTRAL OXFORD

WEST END PROJECT CITY/COUNTY COUNCIL HQ OFFICES
July 2004

1. Structure of this Paper

This paper explains the background of the West End project, briefly summarises the existing City and County Council HQ offices, outlines the work already ongoing within the Councils to improve the efficiencies from their operational property and then outlines a range of options (and their implications) for the Councils for providing accommodation in the future. Financial and feasibility issues are also highlighted.

2. West End Project Background

The Oxford West End Project is moving forward to its next stage. There is widespread support from stakeholders and communities for changes to the West End that would create an urban quarter of the highest quality with a broad range of uses.

Building on the work undertaken to date, consultants are now working to examine the feasibility of improving/relocating the rail station and to also create a holistic development framework for the overall West End area. David Lock Associates are leading this study; through their work and the integral consultation with stakeholders and communities, an overall framework within which to plan the future of the West End area will be achieved.

The City and County Councils are key landowners within the Oxford West End. This gives the opportunity for the public sector to proactively promote and initiate change. It would be helpful for the Councils to examine options to use their existing freehold properties and consider moving to new civic building(s) which could make a significant contribution to the project.

Through their work David Lock Associates will examine physical options for developing new civic accommodation, within the West End, for consultation. However, their work must be undertaken in conjunction with a review of the two Councils’ individual/joint space requirements. The remainder of this paper examines this latter issue.

3. City Council Summary of Current Occupational Premises

As at December 2003 the City Council employed approximately 525 staff within c5, 900sq. m, across 5 main occupational buildings – summarised in Appendix (download as .doc file), Table 1. CB Richard Ellis (CBRE) were instructed by the City Council in December 2003 to review the City’s existing accommodation with a view to achieving a rationalisation of buildings, and a cost saving , whilst retaining some flexibility for the future.

CBRE have examined a number of short term cost saving options to reduce operational property costs. They highlight in their report that more than half (by floor area) of the City Centre accommodation held by the City Council fails to meet modern office standards and hence there are considerable inefficiencies in the usage of the space.

CBRE have concluded that if modern accommodation was available the staff could be accommodated within an estimated 5,000sq.m. or possibly less if more modern working practices were widely adopted.

The current estate has an estimated realisable value in the order of £ 5.4m million. (This estimate excludes the 1897 Town Hall building which has significant potential value).

4. County Council Summary of Current Occupational Premises

The County Council currently employs c 1052 staff, within approximately 11,200sq.m, in the 3 main HQ buildings and other freehold and leasehold premises listed in Table 2. The County Council is currently undertaking a review to examine options for using the space available more efficiently, in particular by adopting Modern Workstyle.

Using similar space standards as applied by CBRE for the City Council to estimate future space need within modern accommodation, it is estimated the County Council could operate within 10,000sq.m. Further reductions in the amount of space required should be achieved by use of Modern Workstyle.

The estimated realisable value from the three main HQ buildings is in the order of £13 million subject to planning consents being obtained for redevelopment of the main sites.

5. Range of Options for the Provision of City and County Council Premises

The Councils have a wide range of options from retaining their existing buildings through to full-scale rationalisation of the existing estate and development of new office accommodation. Should the development of new premises be feasible there would be the option for the Councils to share appropriate accommodation and hence gain economy of scale efficiencies through the development and running of the new building(s).

Members may prefer that the Councils should retain separate premises. However if the development of new joint premises is to be investigated further it raises questions relating to the identity of the two Councils and public perception and access.

There could be the opportunity to share a single Council Chamber and associated facilities – Members views on the possibility of sharing such facilities are now sought.

Finally, it is currently envisaged that even in the event of sharing physical accommodation it is not expected that in the short term there would be joint provision of services/support functions. However sharing physical accommodation could be a precursor to shared services/functions in the future.

(Already certain areas are working more cohesively for example a Procurement Strategy for the County Council is currently being prepared and is addressing the potential for shared procurement of a wide range of support services for both Councils.)

In summary options for consideration are:

Option 1: Do Minimum.

The two Councils retain their existing buildings and make efficiency improvements already identified.

As mentioned above the City Council has been working with CBRE and their report concluded that there is scope to rationalise the number of buildings within the portfolio offering the City Council the opportunity to gain efficiencies in annual running costs. Proposals currently exist to reduce annual occupational property running costs by up to £250,000, by 2005/6 (see report elsewhere on the agenda).

A review has recently been undertaken (as part of the Review of Assets) of the case for moving some or all of the County Council's HQ out of central Oxford. Work to date has indicated that there is no economic or strong operational reason to do so and there could be adverse transport and operational consequences that may impact on staff morale and retention. It should however be possible to reduce the amount of space needed by moving to a ‘Modern Workstyle’, with more efficient design and space planning for new buildings that would improve the working environment, and possibly by relocating some of the current functions out of the city centre as part of the County-wide review of assets. Current proposals are to consolidate activity into the following premises: County Hall; Macclesfield House and Speedwell House. The cost of refurbishment is estimated at c£2.9m though savings can be made through terminating leases at Clarendon House and at Albion House (saving £135,000 rental per annum)

Option 2: Rationalise Existing Estate and Develop New Separate Premises within Oxford’s West End Quarter.

This option allows the Councils to upgrade their occupational estates but to also retain independent identities.

It would involve the two authorities requiring in the order of 5000sq.m accommodation for the City and up to 10,000sq.m for the County.

Option 3: Rationalise Existing Estate and Develop New Joint Premises within Oxford’s West End Quarter:

1. with joint civic chambers and office accommodation or
2. with joint office accommodation but separate civic chambers

This option allows the Councils to upgrade their estates and gain economies of scale from sharing premises. Even where premises are shared it would still be possible to create independent identities for the two authorities through careful design.

There will also be variations within these joint ‘models’, allowing, for instance, shared front counter service but separate democratic functions. A combination of additional Council and partner organisation services could be included if appropriate and feasible – for instance, a library, museum, other leisure services, day or family centres, nursery/crèche, central government functions, TVPA, tourist information centre, affordable housing for key Council workers.

6. Financial Implications/Feasibility Summary

Any development cost for new premises would have to be funded through sale proceeds from the existing estate and/or from revenue savings from surrendered leased premises used to repay financing costs under the Prudential Code; though there is a cash-flow issue, as proceeds would be realised post construction and hence borrowing or developer forward funding routes would need to be considered.

In simplistic terms it would cost in excess of £20million to build premises for both Councils in construction terms alone and current premises are valued in the order of £18-19 million – this excludes the Town Hall, which is of significant value. These figures must be treated only as initial approximate estimates.

Savings on lease rentals would be achieved, equating to £360,000 per annum and a further smaller annual saving in running costs would be expected.

7. Conclusion and Next Steps

There is the opportunity for and potential benefits from, new accommodation for the City and County Councils being secured as part of the West End Project. There is a range of options and it is not necessary to give a firm commitment to the amount or location of space required at this stage. However, it would be helpful to establish the scope for relocation and for sharing of civic and back office functions. An accord agreed by both Councils would help the development of options or a preferred proposal as the project progresses. The desirability/acceptability of sharing premises for the civic/public functions is a political issue and should be discussed at Executive level. Any decision to co-locate those functions must be sustainable with full commitment from both Councils.

Following the response from Members to this paper, further guidance will be issued to David Lock Associates to assist them in the preparation of the West End Development Framework. David Lock Associate’s options will be available for discussion later this summer with their work being completed in September this year.

Depending upon the guidance received from Members, further investigation is required as to the practicalities of providing appropriate premises for the Councils. The Councils may decide that a joint working group to examine the possibilities for working and locating together may be appropriate.

Martin Lyons Neil Monaghan
Property Coordinator Head of Property

Oxford City Council Oxfordshire County Council

June 2004

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