Business case for Knowle relocation project

J Woodward made this Freedom of Information request to East Devon District Council

This request has been closed to new correspondence from the public body. Contact us if you think it ought be re-opened.

The request was partially successful.

Dear Ms Symington,

I would like to make a formal request under the Freedom of Information Act 2000. I am also making this request under the Environmental Impact Regulations 2004 which require disclosure on the part of Local Authorities.

I would like you to provide me with the full business case for relocation from the Knowle; this would include the most current case stated, as well as the historical documentation – and would cover analysis of the options, the costs of these options and the reasons for choosing and rejecting any options.

This request is being made with direct reference to the FOI/EIR request https://www.whatdotheyknow.com/request/r...

The author makes clear that:
“1. I asked for the most recent business case but was pointed to a web page on the EDDC site and the agenda for a cabinet meeting in July of 2013, neither of which contained the business case requested.
“If you do not have a business case, please state this.
“If you have a business case but are unwilling to disclose it, please say so and clearly state the grounds for withholding it.”

The documents and web links provided by you on 13th May 2014 with regard to this request do not provide an adequate answer to my request for ‘the full business case’.

I look forward to receiving a complete answer to my own request for information.

Yours sincerely,

Jeremy Woodward

East Devon District Council

Thank you for submitting a request for information. We will respond to your request as quickly as possible, within the 20 working day statutory deadline under the Freedom of Information Act 2000.

For updates on this case, please quote your unique reference number 101000646626 .

---------------------------------------
Customer Service Centre
East Devon District Council
Web: www.eastdevon.gov.uk

Kate Symington, East Devon District Council

Mr Woodward

 

Thank you for your request for information. You have asked for the
following documentation:

The full business case for relocation from the Knowle. This would include
the most current case stated as well as the historic documentation and
would cover any analysis of the options, the costs of these options and
the reasons for choosing and rejecting any options.

 

As you will appreciate, with such a large and complex project, this is not
simply a case of pulling out a document helpfully entitled “the business
case” and so, in considering your request, we have sought a standard
definition of the term “business case” and are working on the following
principal:

A justification for a project on the basis of its proposed commercial
benefit

 

With this definition in mind, the information which we feel falls within
the scope of your request is as follows:

Cabinet report March 2015

Cabinet report February 2014

Cabinet report July 2013

Cabinet report July 2010

 

These documents are already reasonably accessible to the public via other
means but we accept that they are lengthy documents and so we have made
efforts to assist your interpretation by highlighting the sections of the
reports which we feel fall within the above definition of a “business
case.”

 

In addition to the above reports, you may also wish to browse through our
dedicated relocation webpages here
[1]http://eastdevon.gov.uk/moving-and-impro...
which include a section entitled “reasons for the decision to relocate”
which we feel also constitutes the business case. I have copied and pasted
relevant sections of this webpage for your information below and for ease
of access for you.

“The financial imperative for the council to move was a fundamental
consideration in the decision taken by members. Like all public bodies,
the council has a duty to live within its means, protect frontline
services in so far as possible and ensure best value for council tax
payers.  The council recognises the need to operate from buildings which
are affordable and cost efficient and the modelling demonstrates that the
council will be  much better off if it relocates and saving money from Day
1 of the move. 

The detailed analysis also shows that in direct comparisons of operational
expenditure between staying at Knowle (with no repairs) and moving to
Honiton/Exmouth offices, there are savings of £6m over a 20 year period if
the council moves. 

Knowle is much bigger than the council needs and this ex hotel can only
offer office accommodation/facilities which are outdated and not conducive
to the way we work.  Our new and refurbished office space will reflect our
new ways of working and will include functional and usable areas with
fully accessible, modern reception areas for our customers and visitors.  
There will be better facilities for our members including a fully
functional council chamber better equipped with audio/visual equipment to
support council business and the democratic process. 

The decision to relocate to both Honiton and Exmouth provides the council
with a unique opportunity to operate from its two largest towns.”

 

Turning now to the committee reports referred to above – I will outline
each in turn and specify where we believe the requested detail can be
found. You are, of course, at liberty to read through the reports in their
entirety should you wish to and it may be that we will differ in opinion
over what should and should not be included within the business case. We
have however, interpreted this as closely to the standard definition as we
can.

 

Taking first the Cabinet report dated March 2015:

The highlighted sections of this report deal specifically with the
following areas:

“Headline financial issues tested through the Grant Thornton Model are:

 The most cost effective option is to refurbish Exmouth Town Hall and a
new build office at Honiton Heathpark. Options of Honiton alone and
combined with Exmouth are all more cost effective than staying at the
Knowle with ‘do minimum’ investment let alone any significant
modernisation. Over the 20 year period the district will be £2.8m better
off if the Council moves. This compares with being £3.9m worse off by
staying and carrying out ‘do minimum’ investment works at Knowle.

 The Knowle site is to be sold for £7-8m and that leaves 3.5196 hectares
of publicly accessible parkland available to the ownership of Sidmouth
Town Council.

 Alongside the capital receipt, the Council will prudentially borrow
£2.1m from the Public Works Loan Board over a 20 year period.

 Every year from when the Council moves, the savings in operating costs
are greater than the loan repayments. For the loan period the savings
improve every year in comparison to the repayment sum.”

 

“The report further addresses the process and associated recommendations
required to dispose of the identified Knowle site for development and to
meet the requirement that the Council secure best value. In pursuance of
the Council’s desire to relocate and to be able to take forward the
previously identified Knowle site for development it is necessary that the
Council agree to appropriate the land for a housing purpose and then agree
to dispose of the land. This is the best mechanism by which the Council
can then sell the freehold of the land for development. The matter has
been advertised and responses invited. The Council has received a number
of responses which are summarised, considered and addressed in further
detail in the report in the section titled ‘Appropriation of Land’.”

 

“It can be seen that both the Cashflow Analysis and the Net Present Value
(NPV) Analysis indicate that:

a) all options to leave the Knowle are better than staying and;

b) The Heathpark/ Exmouth twin site solution with BREEAM Very Good option
represents the best financial option for the Council as compared to 
remaining at the Knowle.”

 

“It is worth members further noting that the Grant Thornton Model shows
that the construction costs projected for the refurbishment of Exmouth
Town Hall and a new office building at Honiton including contingency would
both have to increase by a further 42% before the Net Council Cashflow
under the Knowle Do Minimum option becomes comparable. This being
equivalent to a contingency of 60%. This is statement coming from the
Grant Thornton report

under Modelling Conclusion (2.10.3 of their report).”

 

“Inherent in the consideration of relocation it is also vital that the
project and members consider and compare the risk in remaining at Knowle
and incurring unfunded but required repair, general maintenance and
refurbishment costs of buildings that have no commercial value. Some
proposals have been made by third parties that suggest that the Council
could somehow squeeze into the rear buildings leaving the former hotel to
be redeveloped into flats. This is financially and operationally
impractical. Also, no commercial developer has expressed any interest in
retaining any buildings on the site as part of a redevelopment.”

 

“Relocation meets a range of priorities in the Council Plan. It will
provide future resilience and improved working for the council to continue
to design and deliver services that suit our residents, businesses and
visitors’ needs. It will give the Council better control of its future
cost management and avoid future unfunded debt attached to repair and
refurbishment of its current office accommodation. EDDC is also committed
to making the best use of its assets including the longer term certainty
and efficiency that modern offices will provide with operational
flexibility alongside more mobile working across the

district.”

 

The report additionally outlines the benefits of re-location and these are
detailed on pages 49 – 51 of the cabinet agenda document, paras 2.0 – 2.11

 

The report by the South West Audit Partnership at page 65 (Appendix 1)of
the above agenda, also outlines the business case in terms of the purpose
of the project as follows:

“Although the detail of the project has evolved over time, the purpose of
the project remains largely unaltered. The Council identified a strategic
risk in 2011 that the existing office at the Knowle was increasingly
unsuitable, both in terms of maintenance and management costs of the
building itself, and the restrictions it placed on improvements to service
delivery, performance improvement and modern efficient working practices.

The aim of the project has therefore been to relocate the Council to more
suitable premises. This is defined in the Project Programme as; "EDDC
Office Relocation to a new purpose built office for 170 desks at Heathpark
Honiton and refurbishment of Exmouth Town Hall to provide 80 desks". From
the outset it has been clear that the current site at Knowle will be sold
to fund the new offices.”

 

Appendix 2 (page 73) of the report outlines the financial elements of the
project and shows the forecast project costs based on 6 possible
scenarios. At figure 4.2 – page 91 – this appendix sets out the financial
case as follows:

“The key cashflows to the Council are Long Term Loan costs and Betterment
Costs. The Long Term Funding requirement under each option are comparable
to those under the Do Minimum scenario. Therefore the ranking is highly
dependent upon the Betterment under each option.

As can be seen from the sensitivities the Construction Costs would have to
increase by at least 42% before the Net Council Cashflow under the Do
Minimum option becomes comparable.

Both the Cashflow Analysis and the NPV Analysis indicate that the
Heathpark 2,776 m2 VG option represents best value from a financial
perspective compared to the Do Minimum scenario based upon the stated
assumptions. However, it should be noted that there is an opportunity cost
under the Heathpark 3,352 m2 options in the sale of the Exmouth site,
which is not reflected in the results above. Should this be reflected,
Heathpark 3,352 m2 may represent better value than Heathpark 2,776 m2 VG.
However the Council has informed us that there is no intention to sell
this asset

The conclusions above are based solely on the results of the Model and
therefore do not consider any qualitative aspects of the options, and nor
have we considered the extent to which the office relocation project will
meet the Council’s service or efficiency aspirations/objectives”

 

Appendix 3 at page 113 shows the projected annual running costs compared
with the existing Knowle building.

 

Cabinet report February 2014
[2]http://eastdevon.gov.uk/media/1228648/13...

This report outlines options being considered at the time and outlines the
business case for each. Specific areas of relevance to your request are
copied below and have been highlighted in the attached version of the
report:

 

Para 1.1, 2.2, 2.3, 2.4, 2.9, 2.10, 2.11

Para 4.3 outlines the thought processes gone through in selecting
preferred sites and the report then goes on, in some detail, to assess the
merit of each option which was being considered at that time. This process
also includes refurbishing the Knowle or doing nothing – which
demonstrates the business case for taking action.

 

Cabinet report July 2013
[3]http://eastdevon.gov.uk/media/1183866/ca...

This report sets out the reason for the council’s need to move to
alternative accommodation and includes an appraisal of options including
the “do nothing” option. The elements of this report which constitute the
business case are copied below:

Recommendation that members agree:

“The costs of maintaining, refurbishing or building new offices on the
Knowle are not sustainable and EDDC must therefore look at alternative
locations for a new headquarters.

Alternative Options

The report contains detailed analysis of the options leading to the
recommendation above. The ‘do nothing’ option is one alternative that also
needs to be addressed. The specific option to do nothing carries with it
the following costs and implications

which have been identified as part of the viability exercise:

1. Retaining and maintaining HQ office space (7,722 sq m) which is over
twice the Council’s projected future requirement

2. Incurring a £1.566m bill of essential maintenance and minimum
improvement costs (see attached Knowle Energy Use and Maintenance Analysis
Report) solely to keep the buildings and Council operations functioning.
Running cost reductions following

this spend would be small (£26,929 pa).

3. Investment in maintaining the current building does not include any
refurbishment or redesign that would allow a more modern operation.
Furthermore continued maintenance spend to reflect the ageing nature of
the building would be expected. 4. Continuing annual running costs
(2012/13 - £431,486) for the buildings and parklands that are nearly 40%
higher than a new office would require.

5. Energy costs (2012/13 - £75,069) that are double what a new building of
the appropriate size would require. Moving to a purpose built new office
in comparison would cost £29,000 per year in energy bills.

6. The Knowle presently produces an estimated 401 tonnes of CO2 per year.
A new office would produce one third of that amount.

In effect, our Council Tax payers would be subsidising the Council’s known
inefficiency if we take no action. Retaining and maintaining parts but not
all of the current buildings carry with them a similar relationship
between necessary repair costs and limited

savings. Maintaining the operation of EDDC in a reduced proportion of the
Knowle would require investment in restructuring the buildings to try to
make them workable.

This would also be likely to include significant structural costs.

This state of affairs therefore requires the Council to consider either
redevelopment of office accommodation on the Knowle or relocation to an

alternative site. This report considers those options.”

 

“1 Background

EDDC decided to investigate new offices with a commitment to nil cost on
the district’s Council Tax. That decision coincided with central
government funding reductions and the increasing need for Councils to look
to ways of making themselves more cost effective. Accommodation is a key
element of that consideration.

Both the Victorian and later buildings are increasingly dilapidated and
expensive to run. The costs of bringing them back into a reasonable state
of repair is high with the prospect of little saving in running cost to
show for such an investment. Nor will investment in the current buildings
or a proportion of them either address the cellular restrictions that
exist in the layout of the buildings or the continued problems that we
will encounter from old buildings getting older. This is before the
Council looks to the necessity of future proofing its operations and
further driving down costs. The Knowle no longer reflects the changing
operational future of local government and the expectations of our
residents. Furthermore, and within the existing boundary of development,
the Knowle represents a realisable asset that will help fund a new, more
efficient HQ.”

 

Section 2 (agenda pages 46 – 49) presents a detailed options analysis of
the sites which were being considered at that time.

 

The report concludes with the following factors to outline the reasons for
continuing to pursue this project:

“After an extensive and detailed viability analysis it is clear that the
Council cannot stay as it is and needs to move into new, more efficient
and smaller offices. This is a key aspect of planning for the future that
will help to maintain our outstanding services.

Remaining on the Knowle has been considered and found to be not viable in
that the Council would need to borrow so much money that repayment rates
would be in excess of the costs we are trying to avoid. However, there are
financially viable options that allow us to move from the Knowle to
Honiton or Cranbrook.

Relocation carries with it a number of risks. These can be managed through
close project management, clear decision points in the process and strong
officer and member engagement. EDDC will also engage with stakeholders
across the district to make sure that the relocation project is responding
to their needs.

Moving to a new office in a new location is viable. It will significantly
reduce operating costs, give certainty of cost management into the future
and provide a new building that is more attractive, efficient and
effective for our staff, members and visitors.”

 

Appendix A outlines the relocation viability report based upon approximate
costs and Thomas Lister valuations.

 

Cabinet report July 2010
[4]http://eastdevon.gov.uk/media/1669177/co...

This report takes us back to the beginning of this project and outlines
work undertaken on the council’s behalf by Alder King. This is a
relatively short summary report and I will not quote specific sections as
the entire report is relevant to the “business case”. The full report can
be accessed using the above link.

The strategy report prepared by Alder King is also available here
[5]http://eastdevon.gov.uk/media/1128124/1.... and this report outlines
the likely costs of options such as using relocating to existing sites or
to new-build accommodation.

 

I trust this information is helpful and confirm that this constitutes all
information held which we assess as falling within the scope of your
request – ie constituting the business case for the relocation project.

 

Should you feel dissatisfied with our response, please contact our
Monitoring Officer, Mr Henry Gordon Lennox at
[6][email address] In doing so, you may wish to be
guided by the principals outlined by the Information Commissioner who
advises focusing a complaint or request for internal review on one or more
of the three issues below;

Your disagreement with our interpretation of your request;

Your belief that we hold more information than we have disclosed; or

Any delay in providing you with a response.

 

The internal review process is not intended for use where a requestor may
require explanation of information provided nor where that information
leads on to supplementary questions. We are, of course, happy to deal with
such enquiries or questions through informal means where it is possible
and practical for us to do so.

 

You may also approach the Information Commissioner for advice at
[7]www.ico.org.uk

 

 

Mrs Kate Symington

Information and Complaints Officer

East Devon District Council

[8]www.eastdevon.gov.uk

 

01395 517417

 

 

 

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References

Visible links
1. http://eastdevon.gov.uk/moving-and-impro...
2. http://eastdevon.gov.uk/media/1228648/13...
3. http://eastdevon.gov.uk/media/1183866/ca...
4. http://eastdevon.gov.uk/media/1669177/co...
5. http://eastdevon.gov.uk/media/1128124/1....
6. mailto:[email address]
7. http://www.ico.org.uk/
8. http://www.eastdevon.gov.uk/

Dear Ms Symington,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an Internal Review of East Devon District Council's handling of my FOI request “Business case for Knowle relocation project”.

The information you have provided is woefully out of date and does not “include the most current case stated”. It does not reflect the full business case as of 22nd November 2016 (the date of my FOI request).

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/b...

Meanwhile, I am submitting a new FOI request to ask for the provision of the business case as it stands today (1st February 2017) as matters have changed considerably since 22nd November 2016.

Nevertheless, I would still like you to conduct an Internal Review on this current FOI request “Business case for Knowle relocation project”.

Thank you.

Yours sincerely,

Jeremy Woodward

Henry Gordon Lennox, East Devon District Council

1 Attachment

Mr Woodward,

I am sorry that you feel dissatisfied with the way we have responded to
your request for information. You have explained that the reason for
requesting an internal review is because you feel that some of the
information provided to you was out of date.

 

We explained to you that responding to your request was not a simple
matter of extracting a file entitled “the business case”. As you will
appreciate this is a complex project which has been on-going over a period
of many years. We therefore felt that the logical place to begin our
search was to establish the generally accepted meaning of the term
“business case” and, in so doing, we referred back to guidance shared with
us by the Information Commissioner outlining that  a business case
basically captures the reason for initiating a project or task and
comprises information from which the justification for the project is
derived.

Clearly, if we are seeking to provide information to justify the project –
this will incorporate documentation from the inception of the project.
This is why some of the information provided to you was historic. Our
response would not have been complete without providing information from
the very beginning of the project. I feel that all information provided to
you was relevant and within the scope of your request and note that your
request specifically asked for historic documentation.

 

In terms of day to day costings and progress with the project, this is
detailed in the minutes of the office relocation working group, executive
group and project reports. These are published online here
[1]http://eastdevon.gov.uk/access-to-inform...
and are updated on a regular basis. As at the date of this review, the
most recent documents online are dated September 2016. The next batch of
documents will be published in early April, taking us up to the end of
December 2016. In order to provide you with the most up to date costing
information available however, I have attached the cost report to December
2016. You will note that there have been some redactions made to reflect
the fact that these figures are not yet subject to contract and the
disclosure of this detail, at this point in time, would weaken the
council’s negotiating position and our ability to achieve best value. This
information is exempt from disclosure under Reg 12(5)(e) of the
Environmental Information Regulations.

 

I hope this review has been helpful in clarifying our previous response
but, if you remain dissatisfied with the way we have responded to your
request, you are aware of your right to refer matters to the Information
Commissioner [2]www.ico.org.uk.

 

Yours sincerely,

 

HENRY GORDON LENNOX

 

Monitoring Officer

East Devon District Council

Tel: 01395 517401

Ext: 2601

Email: [email address]

 

 

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References

Visible links
1. http://eastdevon.gov.uk/access-to-inform...
2. http://www.ico.org.uk/
3. http://www.facebook.com/eastdevon
4. http://twitter.com/eastdevon
5. http://eepurl.com/oKwgf
6. http://eastdevon.gov.uk/help/email-discl...
7. https://public.govdelivery.com/accounts/...

Dear Mr Gordon Lennox,

Thank you for your reply.

As referred to in my own response, this information is woefully inadequate precisely because it is so out of date: we have moved on considerably from the 'historic' position, with events demanding a reassessment of the business case.

Which is why I have submitted another FOI request: https://www.whatdotheyknow.com/request/b...

As for the cost report to December 2016, you state: "You will note that there have been some redactions made to reflect the fact that these figures are not yet subject to contract and the disclosure of this detail, at this point in time, would weaken the council’s negotiating position and our ability to achieve best value. This information is exempt from disclosure under Reg 12(5)(e) of the Environmental Information Regulations."

I would like to keep this enquiry open for the time being as I might wish to return to the points you raise.

Meanwhile, I look forward to hearing from you with regard to the FOI request I refer to above.

Yours sincerely,

Jeremy Woodward