Agenda item

Crosby Lakeside Adventure Centre - Business Case update

Report of the Executive Director - Place

Minutes:

The Cabinet considered the report of the Executive Director – Place in relation to the proposals to provide a sustainable future for, and to optimise the benefits of the Crosby Lakeside Adventure Centre including an updated Business Case following a review of operating models in the context of the COVID-19 pandemic.

 

The Cabinet Member for Regeneration and Skills, Councillor Atkinson thanked the Executive Director – Place for the report and referred to the 3.1m as a welcome investment which would create local jobs and reduce unemployment. 

 

Decision Made:      That:

 

(1)              the Full Business Case be agreed and option 2 within the Full Business Case, be approved;

 

(2)              the Executive Director (Place) be authorised to implement the delivery plan outlined within the Full Business Case in consultation with the Cabinet Member – Regeneration and Skills; the Cabinet Member – Regulatory, Compliance and Corporate Services; and the Cabinet Member – Health and Wellbeing, be approved;

 

(3)              in alignment with approval of option 2 (recommendation (1) above), the new operating company be incorporated, with board members nominated and appointed in accordance with the Council’s Constitution; and

 

(4)              £500,000 working capital be loaned from Sefton Council to the new hospitality company to cover the launch and the first 18 months of operation; after which the loan will be paid back to the Council over the 10 years of the business plan and as the first financial commitment from profits generated; be approved.

 

Reasons for the Decisions:

 

To ensure readiness for the completion of the construction project and prompt reopening of the asset, and to ensure that the facility and the operating model deliver economic, social and environmental outcomes to the benefit of the local community and the borough of Sefton.

 

Alternative Options Considered and Rejected:

 

This review reassessed options for operation of the facility in the context of the COVID-19 pandemic, which are summarised in the table below.

 

The assessment of these options identified the Preferred Option to be Option 2: a Sefton Council wholly owned hospitality company to deliver operational transformation within a fully refurbished hospitality facility.

 

The summary of the outcome of the assessment is shown in the table below:

 

OPTION

VALUE AND RISK ASSESSMENT

Option 1

 

Changes to management, in-house council delivery

 

New JV and operating model

Partner with hospitality operator to run facility using a new operating model and new team.  Also invest in the refurbishment and reconfiguration of the facility. 

Financial outcome: current c.£217k pa subsidy fully removed and a surplus generated for the Council of c. £70k pa average over 10 years (total c. £320k pa average) after fully funding on-going maintenance (c. £100k pa average over 10 years) and paying profit share to operator partner.

Backlog maintenance requirements covered in full refurbishment.

£3.4m benefit to the Council (improvement on current position) over 10 years.

Overall assessment: could be financially sustainable, but concerns about ability to attract and retain appropriate partner.

Option 2

 

New wholly-owned operating company

Recruit new team, including MD, with hospitality experience to run facility.  Work to new operating model. Also invest in the refurbishment and reconfiguration of the facility.

Financial outcome: current c.£217 pa subsidy fully removed and a surplus generated for the Council of c. £81k pa average per annum (beginning after year 5 of operations) after fully funding on-going maintenance (c. £100k pa average over 10 years).

£3.4m benefit to the Council (improvement on current position) over 10 years.

Overall assessment: financially sustainable, also delivering positive social outcomes; recommended option.

Option 3

 

Changes to management, in-house council delivery

 

Retain the existing operating model and team and hire new management with hospitality experience.  Also invest in the refurbishment and reconfiguration of the facility.

Financial outcome: current c.£217k subsidy not removed with insufficient new income to fully fund on-going maintenance requirements.

(Backlog maintenance requirements will be covered in full refurbishment).

Overall assessment: not a financially sustainable option.

 

As detailed at Appendix A – Full Business Case to the report.

 

 

 

Supporting documents: