Issue details

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.