To evaluate whether, given the extended negotiations, the Council should continue with negotiating an Option Agreement for the disposal of the redundant Council Office at Weeley. This is in line with Cabinet’s decision on 17 December 2021 to dispose of the Weeley Office site, based on the Heads of Terms finalised by the then Leader, the then Portfolio Holder for Housing, the Corporate Director (Operations and Delivery), the Section 151 Officer, and the Monitoring Officer on 25 April 2023.

RESOLVED that Cabinet -

(a)     in the light of the ongoing delays and costs, as well as the significant risk of failing to conclude the disposal Option Agreement for the former Weeley Council Offices site, agrees to no longer pursue further negotiations with the current bidder, based on the existing Heads of Terms agreed in April 2023; and

(b)     requests Officers explore alternative disposal options and report these back to Cabinet for consideration and further decisions.

Councillor Harris declared an Interest in this matter insofar as he was the Ward Member for Weeley & Tendring.

Cabinet considered a report of the Assets and Community Safety Portfolio Holder (A.2) which would enable Cabinet to evaluate whether, given the extended negotiations, the Council should continue with negotiating an Option Agreement for the disposal of the redundant Council Office at Weeley. This was in line with Cabinet’s decision on 17 December 2021 to dispose of the Weeley Office site, based on the Heads of Terms finalised by the then Leader following consultation, with the then Portfolio Holder for Housing along with the Corporate Director (Operations and Delivery), the Section 151 Officer, and the Monitoring Officer on 25 April 2023.

It was reported that Cabinet had agreed transformation proposals on 16 December 2016 which had included disposing of several Council facilities, the Offices at Weeley being one of them.  On 17 December 2021 following an invitation of bids from two special purchasers, Cabinet had agreed to enter into an option agreement with the successful bidder, delegating authority to agree Heads of Terms on the principles set out in the report.  Heads of Terms had been subsequently agreed on 25 April 2023. 

Members were informed that since the Heads of Terms had been agreed, negotiations in respect of the full text of the Options Agreement, the legally binding document that needed to be completed for planning consent to be submitted, had been ongoing.  This had still not been finalised. 

It was felt that negotiations between the successful bidder and the Council in respect of the Options Agreement had reached a stalemate with each party’s legal advice being on opposing sides of the opinion on a key issue, the extent and effect of highway rights adjoining the site.

This Portfolio Holder report therefore examined whether, based on the ongoing costs and liabilities of a currently vacant site, the Council should continue with negotiations to try and finalise the Option Agreement, or choose to withdraw from further negotiations to consider alternative routes to dispose of the site. 

Cabinet was made aware that ongoing costs for the Weeley site were in the region of £65,000.00 p/a.  Given the issues highlighted above, the risks of not being able to satisfactorily move beyond the current stalemate / stalled position were now significant. Planning Consent, which would take a minimum of 12 weeks, possibly longer because of the size and complexity of the development, had not yet been submitted and would not be until the Options Agreement had been resolved.

In making his recommendations to the Cabinet, the Portfolio Holder had taken into account the fact that due to the complex and multilayered considerations of the transaction, it had taken 16 months to agree heads of terms for the Options Agreement and had taken a further two years in negotiations over the legally binding agreement.  Those negotiations had not currently been concluded and despite significant time and effort by the legal and property teams on both sides, were at a stalemate.  Each party’s legal advice sat on opposing sides of the opinion on a key issue: the extent and effect of highway rights adjoining the site.  Due to the time and cost that had already been expended and there being no confidence that matters could be resolved quickly, if at all, withdrawing from the agreement in order to consider alternative disposal routes had been recommended in order to mitigate further expense.

If Cabinet agreed to no longer pursue current negotiations, alternative options could be explored and brought forward in a future report for Cabinet’s decision.  Along with the approach adopted previously, those could also include:

(a)     To go through an open market tender process – robust parameters would need to be put in place around timeframes for completion, but this would provide other interested parties who have made enquiries over the last three years to put their offers forward.  There was however the risk that negotiations with a winning bidder could become lengthy, or the bidder might withdraw prior to the offer becoming legally binding.

(b)     To demolish the buildings on site to mitigate the NNDR costs – this would likely cost the Council a minimum of £200,000 (estimated on previous demolition costs) and negate the potential of any future planning consent including vacant buildings credit, or the option that any future purchaser could choose to convert or repurpose any of the buildings on site.

(c)     To dispose of the property by auction – this would provide a definitive end date for the completion of the sale of the property, but the guide and reserve prices were likely to be lower than would be achieved in the open market.  Whilst it was possible that bidding on the day would achieve the value aspired to, there was a risk it might only achieve the reserve price.

(d)     To redevelop the site – this would provide additional social housing to the Council, however, it would be resource heavy and with design, planning and build likely to be a five-year project.

Although the Portfolio Holder’s report responded to the immediacy of the issues arising to date, the further report planned to be presented to Cabinet as mentioned above, would enable a timely opportunity to address or supersede the specific recommendations made by Cabinet on 17 December 2021 as deemed necessary.

It was moved by Councillor Kotz, seconded by Councillor Bakerand:-

RESOLVED that Cabinet -

(a)     in the light of the ongoing delays and costs, as well as the significant risk of failing to conclude the disposal Option Agreement for the former Weeley Council Offices site, agrees to no longer pursue further negotiations with the current bidder, based on the existing Heads of Terms agreed in April 2023; and

(b)     requests Officers explore alternative disposal options and report these back to Cabinet for consideration and further decisions.