Content

RESOLVED:
 
1. 
That the scheme for Finance and Corporate Resources
Directorate as set out in section 11 was approved as
follows:
 
Automation of
Council Tax Handling Requests: Resource and spend approval of
£116k in 2024/25 is requested to enable
Council Officers to proceed with the automation of the back office
process relating to Council Tax, by utilising a new set of online
forms and integration into our back office system.  The new solution will enable residents to complete
forms online that automatically process their requests into our
back office system, without needing manual processing.
 
Mosaic ICT System
Development Strategy: Resource and spend approval of £543k (£217k in 2024/25, £220k in 2025/26 and
£105k in 2026/27) is requested to enable Council Officers
to proceed with extending the scope of the transformation
development work on the Mosaic ICT System.
 
2. 
That the Quarter 2 Capital Monitoring for the year
ending 30 September 2024 in section 12 was noted.

 
3. 
That the re-profiling of the budgets as set out in
Appendix 1 and summarised below was approved:

 

Current
Directorate

Re-Profiling
24/25

Re-Profiling
25/26

Re-Profiling 26/27

Re-Profiling
27/28

Re-Profiling
28/29

 

£'000

£'000

£'000

£'000

£'000

Non Housing

(6,170)

4,157

1,456

557

0

Housing

(90)

90

0

0

0

Total

(6,260)

4,247

1,456

557

0

 

 
4. 
That the capital adjustments of the budgets as set out
in Appendix 1 and summarised below was approved:
 

Current Directorate

Capital Adjustments

 

£'000

Non Housing

28,572

Housing

0

Total

28,572

 

 
5. 
That the granting of a new ten-year lease to the
current tenant of Unit A, Residence Tower, Goodchild Road, N4 2LY,
on the proposed Heads of Terms as outlined in Exempt Appendix 3
(subject to any reasonable amendments during the legal process) was
approved.

 
6. 
Authority to the Interim Group Director, Finance and
the Director of Strategic Property Services to agree to the lease,
all commercial terms and any associated documentation and ensure
that it represents best consideration was delegated.

 
7. 
Authority to the Acting Director of Legal, Democratic
& Electoral Services to complete the lease and all other
relevant and ancillary legal documents arising thereto on behalf of
the Council was delegated.

 
8. 
The disposal of 17 Sylvester Road E8 1DZ shown for
identification purposes only edged red on the plan at Appendix 2
was authorised.

 
9. 
Authority to the Interim Group Director, Finance to
agree all commercial terms of the transaction was
delegated.
10.Authority to the Acting Director of Legal, Democratic and
Electoral Services to settle, agree and enter into all
documentation necessary for this transaction was delegated.
 
REASONS FOR DECISION
 
The decisions required are necessary in order
that the schemes within the Council’s approved Capital
programme can be delivered and necessary to approve the property
proposals as set out in this report.
 
In most cases, resources have already been
allocated to the capital schemes as part of the budget setting
exercise but spending approval is required in order for the scheme
to proceed. Where, however, resources have not previously been
allocated, resource approval is requested in this report.
 
To facilitate financial management and control
of the Council's finances.
 
Lease of Unit A, Residence Tower,
Goodchild Road, N4 2LY:  Granting a
new 10-year lease to the current tenant, will provide an income
stream for the Council beyond the current termination date,
reducing the risk of future void and re-letting
charges. 
 
It will also reduce the risk of the cafe
closing. Zer Cafe is a well-regarded
business within the community. The loss of the cafe would not only
impact the local residents but could also diminish the
parade’s appeal and result in potential revenue loss.
Although a new tenant is seeking to take occupation of the
property, they will continue to operate as a cafe, which shall
continue to benefit the community.
 
Proposed disposal of 17 Sylvester
Road E8 1DZ:  The Council has widely
marketed this building for a commercial letting and received
interest from a number of managed workspace operators and also a
budget hotel chain. However, in any scenario beyond a temporary
use, the Council would have to take on significant financial risks
in undertaking major works to the building and/ or obtaining
planning consent for change of use, and commit considerable
resources to deliver this. The resulting estimated capital value of
the asset would not justify the risk, expenditure and resources
required compared to the existing value with vacant possession,
which could be achieved with relative speed and low resource
input.
 
Meanwhile, the Council is looking for funding
opportunities for “invest to save” measures and
transformational revenue spend. There is the potential for capital
receipts from property disposals to be used, with the appropriate
permissions, for this purpose. The property at 17 Sylvester Road
presents a rare opportunity for the Council to dispose of an asset
and achieve a substantial capital receipt without complications
around rehousing occupiers or staff, and without any loss of
existing commercial income. In fact, the immediate revenue position
would be improved by removing ongoing void management costs.
 
DETAILS OF ALTERNATIVE OPTIONS CONSIDERED AND
REJECTED
 
Lease of Unit A, Residence Tower,
Goodchild Road, N4 2LY: The alternative option would be to
refuse the grant of a new lease, meaning the tenant would only be
able to assign the lease expiring on 12 May 2028. This option has
been rejected because the proposed assignee requires the certainty
of a 10 year term upon purchasing the
business, and therefore would not proceed with an assignment of the
current lease. In any event, the longer lease term is in the
Council’s best interests, as well as the
assignee’s.
 
Proposed disposal of 17 Sylvester
Road E8 1DZ: No action. This course of action is not tenable
because leaving the building vacant would incur ongoing security
and other costs, involve reputational risks and leave the Council
open to enquiries or challenge from local residents and other
interested parties.
 
Undertake repair and refurbishment
works to facilitate an office / workspace letting The Council
would need to take on a major capital project with outlay in excess
of £2.5m, potentially up to £4m depending on level of
fit out, in order to set this building up for a long term
commercial letting as workspace or studios.  Based on proposals received during marketing, the
rental returns and resulting capital value on this basis would not
justify the capital expenditure and risk attached. The Council
already has a large amount of office space in its ownership in and
around Hackney Central and  is therefore already extensively exposed to
the Hackney Central office and workspace market, and there are
substantial risks associated with further large investments in that
market.
 
Change of use to hotel The
Council has received serious interest from a budget hotel chain
operator. This would diversify the Council’s commercial
property portfolio and lead to higher rental returns than offices
or workspace. However, this is a very high risk approach. For a
traditional letting, the Council would have to meet all, or at
least a substantial proportion, of the conversion costs, which
could be in excess of £7m. There are potentially other models
for a letting to a hotel that would not require the same level of
up front investment, but these come
with other types of financial risks throughout the lease term.
Moreover, planning consent for change of use to a hotel would be
extremely challenging, given the interest from workspace operators.
There is a very strong risk that the Council could go through a
lengthy planning process that is ultimately unsuccessful, and in
the interim continue to incur high void costs.
 
Other corporate objectives
Similarly, the demonstrable interest from workspace providers means
there is a high risk that planning consent would not be achieved in
the short/medium term for conversion to residential use, including
temporary accommodation and specialised supported housing. A
developer might be able to take a longer term view on this, but it
is not viable for the Council to hold very costly and high value
buildings in such a speculative way.
 
Retain the adjacent piece of
land. This piece of land could be split from the building and
retained by the Council for possible future development. However,
the size and shape of the land, with a four storey privately owned
building protruding from the middle of the north boundary, would
make development complicated and it is unlikely to be a project the
Council would take on in the foreseeable future. The Council would
be exposed to a significant construction and development risk at a
time when there is great uncertainty in the market. In any event,
the land is likely to have a higher value when coupled with the
building, as it enhances its viability for development to
residential or hotel use, and could provide useful (and rare)
external space for some commercial operations. The Council can
include an overage provision in the sale so that it can benefit
from any future increases in value as a result of development.
However, such provisions can be detrimental to the initial capital
value and marketability.