Agenda item - Cabinet Members' Items - Joint Report of the Business & Economic Growth Portfolio Holder and the Housing Portfolio Holder - A.4 - Jaywick Sands Covered Market and Managed Workspace

To seek authority to make a direct award to COLBEA as Operating Partner for Jaywick Sands Covered Market and Managed Workspace, based on a licence and service contract, and to increase TDC’s contribution for enabling for works and for year one operating costs of the facility. In addition, the report sets out the current status of the project delivery.

RESOLVED that Cabinet –

(a) notes the feedback from the Ministry for Housing, Communities and Local Government (now the Department for Levelling Up, Housing & Communities) regarding the Council retaining ownership of the Jaywick Sands Covered Market and Commercial Space once constructed;

(b) grants an exemption to the Council’s Procurement Procedure Rules, having considered the recommendation from the Council’s Section 151 Officer and the Monitoring Officer, in order to allow a direct award to the Council’s Operating Partner, COLBEA, to enter into a Service Contract for the Management of the Facility and to provide a Business Support Service;

(c) authorises the Interim Corporate Director (Project Delivery), to agree the terms and conditions of the Service Contract, within the context of the principles set out in the Portfolio Holders’ joint report, and in consultation with the Portfolio Holder for Housing and the Portfolio Holder for Business and Economic Growth;

(d) endorses the granting of a Licence to COLBEA to occupy the property on terms to be agreed by the Interim Corporate Director (Project Delivery), in consultation with the Portfolio Holder for Housing and the Portfolio Holder for Business and Economic Growth;

(e) endorses the allocation of up to an additional £70,000 from the budget set aside to support housing in Jaywick to the Jaywick Sands Covered Market and Managed Workspace project, with the final amount being agreed by the Interim Corporate Director (Project Delivery), in consultation with the Portfolio Holder for Housing and the Portfolio Holder for Business and Economic Growth; and

(f) authorises the Council’s Section 151 Officer, in consultation with the Portfolio Holder for Corporate Finance and Governance, to make the necessary changes to the Council’s General Fund and Housing Revenue Account budgets to reflect the decisions made.

Cabinet had before it a joint report of the Business & Economic Growth Portfolio Holder and the Housing Portfolio Holder (A.4) which sought its authority to make a direct award to COLBEA as the Operating Partner for the Jaywick Sands Covered Market and Managed Workspace to be based on a Licence to Occupy and Service Contract. The joint report also sought Cabinet’s approval to increase the Council’s financial contribution for the enabling works and operating costs of the facility for year one. The joint report also provided an update on the project’s current delivery status.

Cabinet recalled that, at its meeting held on 21 May 2021, it had approved the development of a Covered Market and Managed Workspace facility at Jaywick Sands, and had made associated decisions to enable the development to proceed.

Cabinet had further agreed to seek approval from the Secretary of State under Section 12 of the Housing Act 1985 to use the land (which was held in the Housing Revenue Account – HRA) for non-housing purposes and to seek approval under Section 32 of the Housing Act to dispose of the land by way of a lease to the Council’s Operating Partner. COLBEA had already been identified as the Council’s preferred Operating Partner through a procurement exercise undertaken earlier in the year, for which the specification had set out the Council’s contribution to the operating costs and referred to a lease arrangement in Modules 3 and 4.

It was reported that, following feedback from the Ministry for Housing, Communities and Local Government (now the Department for Levelling Up, Housing & Communities), Officers had reviewed the options of a lease, a licence, and a service contract, carefully considering the financial implications for the Council and the sharing of risk with COLBEA, our Operating Partner, in order to enable a successful project delivery. The details of that review were included in the finance section of the Portfolio Holders’ joint report. COLBEA had also requested certain changes to the provisions in the Heads of Terms of the lease.

Cabinet was informed that that review had led Officers to recommend that a Service Contract for Management of the Facility and Business Support Service and a Licence to Occupy would enable the most effective project delivery for the benefit of the community, better share risk between the Council and COLBEA, and avoid an accounting anomaly that would lock up the land value of the project (£300,000) in an unusable reserve, and would also keep the land for the project within the HRA.

Members were advised that a Service Contract and Licence to Occupy, in addition to the new provisions proposed by COLBEA, the Operating Partner, differed from the original procurement sufficiently that it was no longer viable to continue with the previous procurement exercise in its entirety. One of the options open to the Council would be to commence a fresh procurement tender to select an Operating Partner against the new terms, however, at this stage, such a process would impact on the project’s tight delivery timetable. Given that the Council had only received two bids during the original procurement exercise, and that the successful Operating Partner was the only applicant with deep experience of managed workspace delivery, it was proposed by the Portfolio Holders that a direct award be made to COLBEA for this part of project.

It was reported that, at the Council’s request, COLBEA had reviewed, in detail, the running costs for the centre based on the original tender documentation and as a result had requested a further £45,000, in addition to the previously agreed £45,000 for the year one operating costs. Changing from a full repairing lease to a Service Contract and Licence to Occupy would reduce COLBEA’s financial risk. Subject to Cabinet’s decision, the Interim Corporate Director (Project Delivery), in consultation with the Business and Economic Growth Portfolio Holder, would negotiate with COLBEA on the terms and conditions of the Service Contract, Licence to Occupy and any changes to the agreed operating subsidy within the parameters set out in the Portfolio Holders’ joint report.

Cabinet was further reminded that, at its meeting held on 21 May 2021, it had been presented with two development scenarios (Scenario A – a development proposal based on the original concept design and structured within the funding allocation of £2,127,535 and Scenario B – a development based on an updated design and requiring additional funding in the value of £300,000 resulting in a total scheme value of £2,427,535).

Members were aware that construction material costs had been seen to increase as the country ‘unlocked’ from the Covid-19 pandemic and that once tender prices came in for the construction, there was a potential risk that the current budget would be insufficient to deliver the project as planned. In that eventuality, Cabinet would be updated with the available options and any necessary approvals would be sought.

Cabinet had also decided on 21 May 2021 to endorse the submission of a Planning Application for the Scenario B scheme given that Essex County Council had indicated that it was minded to fund a further £300,000 in support of the enhanced scheme. Subsequent to Cabinet’s meeting in May 2021, Essex County Council had confirmed that such funding would be made available (as funding of last resort) and Officers had received a draft funding agreement for approval.

Members were advised that the ‘Workspace’ was accessed via Lotus Way and abutted an un-adopted road (named ‘Brooklands’). Essex County Council had carried out a visual inspection of that road and had requested £25,000 in project costs to enable them to complete the works on that road plus associated drainage in support of the delivery of the Workspace project.

It was reported that, subsequent to the Cabinet’s meeting in May 2021, the Council’s Planning Committee had assessed, reviewed and approved the Council’s Planning Application and in so doing the Scenario B scheme had been approved for development at the beginning of July 2021.

Cabinet was informed that securing planning consent by the end of July 2021 had been one of two conditions placed on the award of GBF funding by the South East Local Enterprise Partnership (SELEP) and had been an impediment to the Council being issued with a Funding Agreement. The SELEP (via its Accountable Body – Essex County Council) had now issued the Council with a formal Funding Agreement for signature (which would be completed and signed in accordance with the delegation authorised by Cabinet on 21 May 2021). This would allow the Council to draw down funds from the SELEP’s GBF pot in support of project costs already incurred and against future project expenditure.

Having considered the Portfolio Holders’ joint report and the information, advice and proposals contained therein and to allow this project to continue to progress towards a satisfactory conclusion:-

It was moved by Councillor Newton, seconded by Councillor P B Honeywood and:-