Issue details

Proposed decision –

The Deputy Leader and Cabinet Member for Finance, Corporate and Traded Services to agree to:

1. APPROVE the Henwood Project and NOTE the contribution towards Corporate Landlord Medium-Term Financial Plan savings targets;
   
   
2. APPROVE the allocation of£1.5m from the Capital Programme Budget 2024-34 as approved by County Council on 19 February 2024 for the delivery of the proposed capital works at the Henwood Depot site;
   
   
3. APPROVE  the disposalof the existing Henwood office building following delivery of the Henwood Depot Project; and
   
   
4. DELEGATE authority to the Director of Infrastructure, in consultation with the Deputy Leader and Cabinet Member for Finance, Corporate and Traded Services, to enter into the necessary contracts and legal agreements to facilitate the implementation of the decisions.

Reason for the decision

The proposed decision involves capital expenditure and capital receipts in excess of £1m.

Decision will involve allocation of capital budgets towards the delivery of new office and welfare accommodation within the Henwood Depot site to ensure the operational requirements of the highways service and provide authority to dispose of the Henwood Office building.

Background

The Henwood Depot is currently operated by Amey Highways under KCC’s Highways Term Maintenance Contract, however the contract is currently subject to procurement and was considered under key decision 24/00086. KCC owns several freehold depots across the County which are provided on a leasehold basis to contracted service providers.

The contracted-out service cannot be delivered in the absence of suitable a suitable depot network across the county.

Several units within the Henwood Depot site are coming to the end of their operational lifespan and require replacement. Other facilities, including welfare accommodation are currently provided within the main Henwood Office building.

Due to KCC’s financial challenges the Henwood Office in Ashford was partially closed on the 1 of February 2023, to save money on utility and FM costs. KCC Staff operating from the Henwood Office were able to work from the nearby Kroner House as part of KCC’s Hybrid Office estate, whilst to support the winter service a small number of KCC Highways staff continued to operate from the building where their roles required close collaboration with the external highways contractor. Welfare facilities on the ground floor of the office building were also used by the external contractor as facilities were not available within the depot site.

The relocation of Highways staff to Kronor house has now been made permanent. However there remains a need to:

• Provide collaboration office space for KCC Highway staff and external contractors to work together in close proximity to the depot site
• Provide office and welfare facilities for use by the external contractor, as per the contract specification
• Maximise potential revenue savings and generate a capital receipt for the council which cannot be achieved while circa 75% of the Henwood Office building remains vacant.
• Replace the accommodation on the depot site as appropriate where it has come to the end of life.

The proposed decision allocates capital budget towards the delivery of a new modular building within the Henwood Depot site. This building would provide the required welfare and collaboration space, whilst also addressing outstanding condition issues at the Depot.

Following the construction of the new modular building the Henwood Office building will become surplus to the Council’s operational requirements, and therefore consent is sought to dispose of the property to generate a capital receipt and deliver a substantial revenue saving against Medium-Term Financial Plan (MTFP) target and a capital receipt.

Options (other options considered but discarded)

• Do nothing – Rejected
• Retention of the Henwood Office building as an investment asset – Rejected
• Full reoccupation of the Henwood Office building by Highways or other KCC services – Rejected
• Part occupation and let of Henwood Office building – Rejected

How the proposed decision supports Securing Kent’s Future 2022 -2026: Securing Kents Future - Budget Recovery Strategy.pdf

• Proposed decision will approve capital spend in order to deliver a capital and revenue savings to the Council as required by its Medium Tern Financial Plan. The construction of dedicated welfare and office accommodation on the Depot site will generate an ongoing revenue saving to KCC.
• Proposed decision will authorise the disposal of a surplus building releasing a capital receipt.
• Proposed decision promotes the efficient use of the KCC corporate estate by reduction of surplus space in its office accommodation. 
• Proposed decision reduces size of KCC estate in line with commitments to Carbon reduction and in compliance with adopted asset management strategy. Improves the condition by replacing life expired assets.

Financial Implications

• Approval to spend £1.5m inclusive of contingency allowance from the Capital Programme Budget 2024-34 as approved by County Council on 19 February 2024.
• Projected to deliver ongoing revenue saving of circa £150,000 per annum excluding rental income.
• Capital receipt exceeding £1m.
• Whether recognised through saving as part of new Highways contract or open market rent pass through, the enhancement of facilities on the Depot will be offset by an ongoing saving/rental income.
• Reduction in ongoing maintenance liability

Legal Implications  

Specialist advice will be sought via the Office of General Counsel for the implementation of asset management and construction matters including:

• Leasehold arrangements with external highways contractor
• Procurement and award of construction contract for new build
• Disposal of surplus Office accommodation.
  
  

Equalities implications

An Equalities impact assessment (EQIA) has been completed and will be kept under review as project progresses. There are no equalities implications arising from the sale of a surplus property.

The new modular accommodation will be built to comply with current building regulation standards.

Data Protection implications

A Data Protection Implication Assessment (DPIA) screening has been undertaken and no requirement for a full DPIA was identified. This will be kept under review as the project progresses.