Purpose

Proposed decision
 
For the Deputy Leader
and Cabinet Member for Finance, Corporate and Traded Services in
consultation with the Cabinet Member for Economic Development
to:
 
(i)      APPROVE and DELEGATE to
the Director of Growth and Communities to extend the current
contract period for a period of nine months to allow time to
undertake the disposal.
 
(ii)     AGREE that the necessary steps
can be taken to dispose of the Old Rectory Business Centre in
Northfleet as a going concern.
 
(iii) DELEGATE authority to The
Director of Infrastructure, in consultation with the Deputy Leader
and Cabinet Member for Finance, Corporate and Traded Services, to
finalise the terms of the disposal and execution of all necessary
or desirable documentation required to implement the
above
 
Background
and reason for the decision:The Old
Rectory Business Centre in Northfleet is a KCC-owned facility that
has been offering high quality office space to local businesses
since 2009. The current contractual arrangements with the company
that manages the day-to-day operation of the centre will expire on
30 November 2024. In the light of ‘Securing Kent’s
Future’ which requires a review of all discretionary
expenditure, KCC is seeking to dispose of the asset as a going
concern. This would provide a one-off capital receipt for KCC while
ensuring the continued availability of in-demand workspace premises
in Gravesham, the lack of which is a recognised constraint on the
expansion of local small and medium sized enterprises.
 
Options:Officers have considered five
options. The preferred option is to dispose of the asset and
transfer its functions (as a business centre) as a going
concern. 

 
As a
going concern, the asset has been valued by Investment and
Disposals, Property Strategy at circa £773,000 although an
actual figure will only be determined by testing the
market. 
This
option will also ensure continued availability of business
workspace in an area of the county where there is a lack of these
facilities compared to neighbouring districts reinforcing
KCC’s commitment to supporting economic regeneration and
growth.

 

Other options considered:

 

Initiate a full procurement exercise to allow KCC to test the market for better value and share
future profits with an operator. The centre would operate on a full
cost recovery basis, with an estimated income of £1.7 million
over five years, and KCC would receive £250,000 for managing
the contract, maintenance, improvements, and surplus income
annually. However, it may not align with the objectives of
reviewing discretionary spend despite potential long-term
income.

 

Dispose of the asset. KCC would forego
future income but receive a one-time capital receipt between
£830,000 to £1.1 million, aiding the Council’s
financial position however this option poses significant risk to
tenant businesses and site management staff and does not support
the County’s priorities in Framing Kent’s Future and
the Kent & Medway Economic Framework.

 

Extend the current contract for a duration of
2-years:By extending the contract for two
years, income generated could be around £680,000, with over
£100,000 supporting maintenance and management, plus
£50,000 in profit. However, this would not allow KCC to test
the market for best value and may not support the objectives of
Securing Kent’s Future.

 

KCC
to take over the management of the facility.  This option minimises disruption to
businesses and allows KCC to retain all income. However, it would
require covering all operational costs, which is not recommended
during a period of discretionary activity review.

 
Alignment to KCC Strategies:
 

·  
The proposed decision supports

Framing Kent’s Future
2022-2026by boosting
economic growth and support Small and Medium-sized
businesses.

 

·    
The proposed decision supports

Securing Kents Future - Budget Recovery
Strategy.pdf by securing a
capital receipt to invest in KCC’s priority projects and
programmes whilst also streamlining KCC’s property portfolio,
achieving financial and efficiency benefits.

 

·    
The proposed decision supports the

Kent & Medway Economic
Framework by supporting the
conditions for growth through ensuring the ongoing availability of
high quality workspace.
 
 

Decision

As Deputy Leader and Cabinet Member for
Finance, Corporate and Traded Services, in consultation with the
Cabinet Member for Economic Development, I:
 
(i)         APPROVE
and DELEGATE to the Director of Growth and Communities to extend
the current contract period for a period of nine months to allow
time to undertake the disposal.
 
(ii)        AGREE that the
necessary steps can be taken to dispose of the Old Rectory Business
Centre in Northfleet as a going concern.
 
(iii)       DELEGATE authority to The
Director of Infrastructure, in consultation with the Deputy Leader
and Cabinet Member for Finance, Corporate and Traded Services, to
finalise the terms of the disposal and execution of all necessary
or desirable documentation required to implement the above.