Agenda item

Report of the Executive Director of Corporate Resources and Customer Services

The Cabinet considered the report of the Executive Director of Corporate Resources and Customer Services requesting approval to complete the freehold disposal of three property assets comprising St Anne’s House, St Peter’s House and Balliol Road Car Park, Bootle on the terms detailed within this report. The disposal formed part of Phase 3 of the Council’s Asset Disposal Programme and was conditional upon the purchaser securing planning consent to convert St Anne’s House and St Peter’s House to residential use.

Decision(s) Made:

That

(1)      the Heads of Terms for the proposed sale of St Anne’s House, St Peter’s House and Balliol Road Car Park, as detailed within Appendix 1 of the report, be approved;

(2)      the Valuation and gross figures provided within Appendix 2 of the report, which ensured the Council was obtaining best consideration for the sale of St Anne’s House and St Peter’s House, be noted;

(3)      authority to approve the valuation of Balliol Road Car Park be delegated to the Cabinet Member - Regulatory, Compliance and Corporate Services, which shall inform the future price to be paid for this asset;

(4)      the deduction of up to 4% of the eventual capital receipt to cover the professional fees and incidental costs of disposal, as set out in Capital Accounting Regulations, be approved;

(5)      the Chief Legal and Democratic Officer be authorised to complete the necessary legal formalities;

(6)      it be noted that the relocation of the Council IT Data Centre from St Peter’s House will be fully funded by the capital receipt from the sale of St Anne’s House, St Peter’s House and Balliol Road Car Park. The options and costs associated with relocating the IT Data Centre are currently being finalised and will be the subject of a further report to the Cabinet.

Reasons for the Decision(s):

(i)             The three assets were identified as being surplus to operational requirements and disposal would generate a capital receipt that could support the delivery of economic development and regeneration projects, which formed part of the Growth and Strategic Investment Programme.

(ii)           Incidental costs of disposal, such as Consultant’s fees and valuation reports, could be deducted from a capital receipt in accordance with Local Authority Capital accounting Regulations.

(iii)          The assets had been identified for disposal because they adhered to two criteria: that each capital receipt forecasted represented financial “best consideration” and where the loss of other opportunities was quantifiable and did not undermine wider service delivery and economic development/ regeneration priorities.

Alternative Options Considered and Rejected:

(i)             Option 1 – “Do nothing”: do not dispose of St Peter’s House and Balliol Road car park. The Council was obliged to agree to the Long Leaseholder’s request to convert St Anne’s House to residential use. Clause 2(13) of the existing lease did not permit the conversion of St Anne’s House from office to residential, with such consent not to be unreasonably withheld by the Council (the Landlord).

Risk: Officers undertook a review of the Council’s office accommodation in Bootle during 2021/22. A cost benefit assessment was completed, which led to the Council agreeing terms for a new lease of Magdalen House in 2022. Retention of St Peter’s House was not required as the Council was in the process of relocating all remaining services into Magdalen House and other operational Council buildings within Bootle. If the Council were to retain St Peter’s House it would be left with a vacant office building and would incur holding costs including business rates of over £100k per annum.

(ii)            Option 2 – “Seek a joint disposal of St Anne’s House and St Peter’s House”: the Council and the Long Leaseholder would jointly appoint agents to market both assets for sale, with interest from purchasers likely to be for converting the buildings to residential use.

Risk: this option was not preferred by officers as a joint disposal would be complex for both parties. Prospective purchasers would see this as an added complication, given that the Council and the Long Leaseholder may have conflicting objectives for a disposal. The agent acting for the Long Leaseholder had confirmed that a joint disposal was not the favoured option for his client.

(iii)          Option 3 – “Council to buy out the Long Leaseholder of St Anne’s House”: the Council would acquire the Long Leasehold interest in St Anne’s House for the sum presented within Appendices 1 and 2. This would provide the Council with unencumbered freehold ownership of the asset and the ability to bring forward a wider redevelopment scheme with other public sector partners.

Risk: The short-to-medium term (1-3 year) risk was that the Council was going to incur upfront capital outlay to buy-out the long leaseholder of St Anne’s House without any clearly defined financially viable plan for the assets. The Council would have ongoing revenue costs associated with holding two multi-storey vacant office blocks.