To request that, given the significant inflation in construction costs in the last six months, Cabinet approves a transfer of £272,383 from the Business Investment Fund to the Starlings project. 

To also request that demolition of the Milton Road Car Park is postponed and an options paper is brought forward for the site during 2022/23. In the interim that at least £74,000 of the sum to demolish Milton Road Car Park be reassigned to the Starlings project, to enable the scheme to proceed. Further, that up to £12,000 of budgeted demolition costs for Milton Road are used to commission a report to determine the carpark’s current condition and structural stability and the maintenance requirements and costs.

RESOLVED that Cabinet agrees to –

a)     place an additional sum of £272,383 in the Capital Programme from the Business Investment and Growth Fund towards the Starlings Project;

b)     postpone demolition of Milton Road Car Park and bring forward options for the site later in 2022/23; 

c)      approve up to £12,000 from the funding allocated to demolish Milton Road Car Park to commission a report into the current condition of the Car Park and its immediate maintenance requirements and costs to safely operate;

d)     the allocation of the remainder of the Milton Road Car Park demolition costs from the original 2019 September Budget to the Starlings project; and

e)     note that Officers will proceed with procurement of the contractor.

Cabinet had before it a detailed joint report of the Corporate Finance & Governance Portfolio Holder and the Housing Portfolio Holder (A.5) which requested that, given the significant inflation in construction costs in the last six months, Cabinet approve a transfer of £272,383 from the Business Investment Fund to the Starlings project. 

The joint report also requested that demolition of the Milton Road Car Park was postponed and an options paper be brought forward for the site during 2022/23. Furthermore, that in the interim at least £74,000 of the sum to demolish Milton Road Car Park be reassigned to the Starlings Project, in order to enable the scheme to proceed. Further, that up to £12,000 of budgeted demolition costs for Milton Road be used to commission a report to determine the car park’s current condition and structural stability and the maintenance requirements and costs.

Cabinet recalled that, at its meeting in July 2019, it had approved the strategy for the revitalisation of Dovercourt town centre, which set out a positive vision to guide development and identified twenty projects to attract residents and visitors, and to improve the image and quality of the centre (called the ‘Dovercourt Masterplan Revisited’). The Cabinet had also agreed at that meeting to the preparation of a detailed business case for the redevelopment of the Starlings Site and Milton Road Car Park.  That business case had been considered by Cabinet in September 2019 and Cabinet had approved the acquisition and redevelopment of the Starlings site and the demolition of the Milton Road Car Park. Cabinet had also allocated £1.595m funding to the project from existing budgets. £86,000 of that fund had been allocated to the demolition of Milton Road Car Park.

Starlings

Members were aware that the works aimed to bring back into productive use a vacant and derelict site, which currently blighted and had a negative impact on Dovercourt High Street. The new Starlings Car Park would provide 51 parking spaces with four disabled bays and a minimum of four charging points for Electric Vehicles, able to charge up to eight cars.

It was considered that the project had significant benefits. It would create a more accessible public car park and provide the potential for a multi-use ‘event space’ in the town centre. It was felt that this would improve footfall in the town and reduce opportunities for crime and disorder. This investment should create confidence in the market to encourage private sector investment within the town centre and give the town’s existing traders the confidence to invest in their businesses and in their property. It would bring new amenity into the town centre with new toilets, and a high quality design scheme for the public realm.

It was reported that Phase 1 of the Starlings redevelopment had been completed with the initial feasibility, survey and site investigation. A Portfolio Holder decision dated April 2020 had provided authorisation to proceed with the land acquisition and detailed design and the land for the Starlings site had been acquired in August 2020 at a cost of £528,000.

The main scheme had been developed with detailed design by Richard Jackson Ltd in 2020/21 with a total of approximately £670,000 spent on the project to date. Competitive tenders had been sought for the scheme in autumn in 2021. The project consultant’s Richard Jackson Ltd had reviewed the tenders and had made a recommendation.

Members were informed that the tenders had come back in line with the significant inflationary costs in materials and labour in the construction industry in the last six months. Following evaluation and assessment the lowest and recommended tender was for £827,724. There had also been additional costs identified for the scheme, including for the electrical vehicle charging scheme and proposals for a left turn option out of the carpark. As a result, the total cost of the Starlings scheme was estimated to be £1,971,000, an additional £376,383 above the budget of £1,595,000.

Cabinet now had options on how it wished to proceed.

Option One – Stop all Works

This option was to stop all works at this point, accepting the sunk costs into the project. The project would have created a design with planning permission and a tender pack for the works. It could be left to a point in time when the project could seek external funding, for example from the Levelling Up Fund. However, this would mean significant project delay on one of the Council’s top priorities, with external funding uncertain.

Option Two – Value Engineering

An alternative option was value engineering. It was possible to reduce the costs of the scheme by removing the left turn option out of the carpark, which had been brought in later in the design phase, remained a high risk to the programme and to the budget, and had not yet been approved by Essex Highways. This would save £30,000 and it was the Portfolio Holders’ recommendation that this saving be taken.

In addition, the construction of the toilets could be delayed or abandoned, which would save about £70,000, changing the level so that the carpark was sloped rather than flat, thus removing the need for a retaining wall, which would reduce costs in the region of £100,000. However, those two changes would significantly reduce the amenity of the scheme, given the age of the current Milton Road Car Park toilets and that the purpose of creating a level car park was to enable it to be used as an events space which had the opportunity to bring people into the centre of the town.

The scheme could remove all, or a proportion of, the agreed £208,000 contingency, given that this was a fixed price contract. However, there remained risks to the project programme and to the budget including, for example, site contamination. So it was recommended to hold the budget for contingency in order to enable sufficient funds to be set aside for the project to complete.

Project costs could be reduced by seeking additional funding. Central government offered grants for up to 75 percent of electric vehicles charging points, which could save between £15,000 and £26,500, depending on the outcome of the bid. This funding option was being pursued, which if successful would reduce the amount of investment required by the Council.

There was also the opportunity to save costs by postponing the demolition of the Milton Road Carpark.

Milton Road progress and proposal

Members were reminded that Milton Road Car Park was proposed in the Dovercourt Masterplan to be redeveloped as nine three bedroomed town houses above a shared under-croft car park and 15 public car parking spaces on Bagshaw Road. The aim was for the Council to demolish the carpark and then to dispose of the site for housing to a private sector developer, housing association, or for council-led development to deliver the scheme.  £86,000 had been set aside for the demolition of the carpark, with the housing scheme expected to be viable without additional investment, and potentially generate a land receipt for the Council.

The Council had appointed a valuation surveyor in 2017 who had ascribed a value of £120,000 to the Milton Road site. The Council had commissioned a second valuation (in line with protocols for site disposal) with Blackman and Partners Surveyors in April 2020 who had valued the site at £200,000 with outline planning for nine three-storey townhouses. However, the valuation had indicated that for a developer to make an acceptable profit on the development the land value would have to be zero or negative.    

Officers had then engaged with eight private developers and five housing associations in the summer of 2020 to consider whether they were prepared to develop the scheme. An option for development was possible at an estimated cost of £455,000 to the Council, including demolition costs, the £200,000 foregone land value, and contributions to public realm, and planning and project delivery costs.

Consideration had then been given to the partial demolition of the existing Car Park site and toilets and for the lower deck to be retained for additional parking. However, Potter Raper had estimated the costs would be £140,000 for this work, significantly over the budget set aside by Cabinet for total demolition of £86,000. Construction cost inflation had increased significantly in the last six months, with the construction elements of the Starlings project nearly 50 percent over budget, and so full demolition was expected now to be over the £86,000 budgeted.

Cabinet could seek to set aside additional funding for the demolition of the upper deck of Milton Road Car Park now, in addition to the investment in the Starling Project. This would increase the amenity of the site and reduce the cost of any future development at Milton Road. However, it would increase the cost of the project now by a further £128,000. Total demolition would be a similar investment, and would reduce the overall number of parking spaces ahead of the completion of the new Starling car park.

Cabinet could alternatively bring forward options for the Milton Road car park once the Starlings project was complete. This would enable the budget set aside for the demolition of Milton Road car park to be invested into the Starlings project to support it to progress now. Once the Starlings project was complete, any spend against the £208,000 Starlings contingency would be known, creating the context for the potential to progress Milton Road. In addition, the potential for external funding from the Levelling Up Fund should also be clearer.  

As a result it was recommended by the Portfolio Holders that the Milton Road Car Park be retained in its current form and that at least £74,000 of the funding set aside for demolition be used to reduce the additional cost of the Starlings scheme. Up to £12,000 of the £86,000 budgeted for Milton Road demolition should be used to commission a report to determine the car park’s current condition and structural stability and the short/medium term maintenance requirements and costs.  A future report would be brought forward to Cabinet regarding the options for the Milton Road car park in 2022/23

Summary of current position

In summary the Cabinet was requested to approve that at least £74,000 of the £86,000 allocated to the Milton Road Car Park demolition be transferred to the Starlings project, and that the left turn option be abandoned with a further additional sum of £272,383 to enable the current Starlings redevelopment scheme to proceed at a total cost of £1,867,383. This would enable the current tender from the lowest priced contractor to be accepted and appointed to proceed with the works. The Council should also allocate up to £12,000 of the £86,000 currently budget to Milton Road Car Park to obtain an up to date report to determine the condition and future costs and maintenance requirements of the Car Park to enable safe use in an interim period. A report on the future of the Milton Road Project would be brought to Cabinet during 2022/23.

Having considered all of the information and advice contained in the Portfolio Holders’ joint report and to enable this matter to continue to progress to a satisfactory conclusion:-

It was moved by Councillor Newton, seconded by Councillor Stock OBE and:-

RESOLVED that Cabinet agrees to –

a)     place an additional sum of £272,383 in the Capital Programme from the Business Investment and Growth Fund towards the Starlings Project;

b)     postpone demolition of Milton Road Car Park and bring forward options for the site later in 2022/23; 

c)      approve up to £12,000 from the funding allocated to demolish Milton Road Car Park to commission a report into the current condition of the Car Park and its immediate maintenance requirements and costs to safely operate;

d)     the allocation of the remainder of the Milton Road Car Park demolition costs from the original 2019 September Budget to the Starlings project; and

e)     note that Officers will proceed with procurement of the contractor.