Purpose

The Council has been exploring options for one
of its commercial assets following the expiry of the current
tenant’s lease in line with the Council’s approved
Capital Strategy.

Content

Exempt Paragraph 3
Information relating to
financial and business affairs of any particular person (including the Authority holding
that information)
 
RESOLVED

That the Cabinet:

a)   
Considers the options set out in Section 6 and approve Option 5
which is to let the property on a turnover related rent which will
require the following virements (as identified in paragraph 6.6 of
report FIN/702):-

·      
£855,875 from the Capital Property Reserve – (Capital
Receipts) to fund a contribution to Freedom Works Ltd (payable on
the completion of the lease) to the fit out of the property for the
new tenant (paragraph 6.6 of report FIN/702).

·      
Up to £646,000  for the Council to
spend on structural and plant rectification costs which surveys
have identified (works to be commissioned on the completion of the
lease).

b)   
Approves the expenditure of up to £500k in respect of an
insurance claim resulting from items stolen from and destroyed at
the property. This expenditure will be funded from an insurance
claim resulting in no net cost to the Council.

c)    
Delegates the negotiation, approval and completion of all relevant
documentation, including legal paperwork, to the Commercial Asset
Manager, Head of Corporate Finance and Head of Governance, People
and Performance. (Generic Delegations 2 & 3 will be used to
enact this recommendation).

Reasons for the
Recommendations
 
The dilapidations survey of Ashdown House
carried out prior to the previous tenant’s lease expiry
highlighted that the concrete plant room and possibly the roof of
the building may be constructed of RAAC (Reinforced Autoclaved
Aerated Concrete).  As a result of this
the Council commissioned an expert survey which found that RAAC
concrete was used to form the roof of the building. A second more
intrusive survey was undertaken by specialists to analyse the
current condition of the concrete and advise if any remedial work
is required to strengthen the roof structure. It is proposed to use
the Council’s Capital Property Reserve – (Capital
Receipts) which has been set up for this purpose to fund the
repairs/replacement.

The property is 40 years old and has been let
for the last 30 years on a full repairing and insuring lease and
has generated a significant rental income for the Council during
this time. In 2023/24, the rental income was £677,000. Due to
the previous tenant deciding not to renew their lease, the Council
needs to secure a new tenant for the property.   The proposed new tenant has requested a
contribution for fit out costs which can be met from the
Council’s Capital Property Reserve – (Capital
Receipts).  The use of the reserve
requires a capital budget transfer (virement) which has to be approved by Cabinet (section 6).