Community bids already stacked against commercial bidders.
Council valuations show huge uncertainty.
Community benefit undervalued.
Lip-service and nothing else?
We were shown confidential documents earlier this week relating to, amongst other things, the future of the Town Hall. They have rejected the community bid to keep the building in the hands of Beeston, whose predecessors built the hall.
As we have shown in previous stories, severe mismanagement of the council from the current administration has led to reserves being plundered, staff morale crashing, massive legal and temp staffing fees and, ultimately, the flogging off of assets.
The most visible -not to say symbolic -asset to be flogged was Beeston Town Hall, mooted for giving to developers to plug the holes in budgets, or simply demolished. After a public outcry, councillors lied and claimed they’d never had demolition as a possible outcome: despite having it as an option on their public consultancy form!
Under pressure, they then opened up a process where community groups could put in bids to run it and keep it as it was always intended: a public building.
The documents we have been leaked reveal this process looks like a sham designed to doom all bids to fail.
Could we also be cheeky scamps and ask that if you appreciate the work we do, it would be very helpful to drop us a few quid to help us continue? Thomas and I both spend many hours and drink much coffee digging through the stuff certain people don’t want digging through, and it would be hugely appreciated if you help pay for the time we’re not earning money elsewhere. You can easily and swiftly put a few bob our way here: https://www.paypal.me/BEESTONIA
Tom Roberts reports why.
The council obtained two independent valuations on the Town Hall which valued it at £425,000 and £1,000,000. For those with eyes it is clear that these values differ wildly and this itself should be cause for alarm. It is frankly irresponsible of the council to not obtain a third valuation when one is nearly two and a half times larger than the other.
It is unclear what would explain the £575,000 difference in value. It is the opinion of the architect that was commissioned by the Co-operative bidder than this may represent the difference between the value of the building “as is” and the value post renovation. Under the Co-operative’s unsubmitted plans, which included planned additions of shower blocks and a kitchen that total renovation and repair would cost approximately £800,000.
Amusingly, if you are living in a council property and commission your own repairs you are expected to provide the council a minimum of three quotations to assess best value.
As part of the request for community bids the price requested was for offers “in excess of £500,000.” This number is significant for several reasons, not least that it fails to match either the valuations or the average of the valuations.
The council reports provide a clear reasoning, during expression of interest two commercial bidders made offers of “around £0.5mn.” This is the figure that community bids were expected to make offers above and beyond. They were already being expected to match and indeed exceed offers made from the commercial sector. This is hardly in keeping with first preference being given to community bidders.
Beestonia understands that neither of the bids has matched this £500,000 figure and the Co-operative expressly pulled out because they regarded it as too high and it is, in fact, higher than one of the valuations obtained for the building.
The following is the weighting approved by the council and used to evaluate the bidders. As you can see the purchase price offered by bidders. The community benefit, the actual point of allowing community bidders to engage, accounted for a measly 5% of the Bid’s total score. This is seven times less important than the purchase price offered.
If we accept the value of the proposed use this, itself about the contribution the building can make to the local community, then the total value of the community portion of the community bid is approximately 20% of the total value of their bid.
It is further understood that there was an alternative measure proposed that would have assigned the community benefit a far greater importance, approximately 27%. Combine with proposed us this would have meant community use and benefit would account for approximately 40% of the total bid value. This was rejected by councillors at a previous meeting.
Councillors were reminded that both bids offered less financially than the commercial offers and that due to their nature they would be unable to apply national non-domestic rates (NNDR). In layman’s terms this is the building’s business rates obligation and the councillors are informed this will cost the council £10,000 a year. There was also a heavy implication that they would need to justify their decision.
The Council also did not possess several documents that bidders had expected. Part of the council’s justification in selling off the building is the running costs are unsustainable due to repairs needed but no quantity surveyor’s report has been performed.
The Co-operative informed me that they had tried to commission a report, due to the nature of their renovations, but found the cost prohibitive for what was at the time a speculative process. The estimates they secured average approximately £4000, due to the size of the building and the complications of its current state.
Based on a conversation with the council the Co-operative found the building may need in medium term renovation work:
- • The drains are entirely located at the back of the building, necessitating a system of pumps to properly parse effluence from kitchens and bathrooms near the front.
- • The plumbing itself is in reasonable condition but apparently obsolete and as parts become scarcer will require replacement.
- The boiler is in good condition but obsolete and has approximately 2-3 years of replacement parts available before it also needs replacing.
- The basement regularly floods and requires pumping in wet weather to prevent this flooding.
- The lift is obsolete (meaning parts are no longer available) and no longer compliant with modern disability law and as a council worker told me “you take it at your peril.”
Again, the Co-operative’s architect on estimated the work required at approximately £800,000. This is likely more than the current value of the building and is close to the highest estimated value.
The reports and surveys provided did vary dramatically in how up to date they were. Whilst many were from 2017, the most recent Insurance Risk Management report provided was from 2012. The Asbestos report came from 2008. There was no structural survey provided at all.
There is also the question of running costs. These were estimated at a whopping £107,748, an eye-watering sum by anyone’s standards. Whilst this estimate reflects the council’s current usage it includes the £25,600 in NNDR that none of the submitted community bids would be expected to pay.
It also includes the electricity cost as £26,188, this seems high but is explained by the council running their servers from the Town Hall. A standard- sized server, approximately 850watts, costs around £900 a year to run and the council has an entire server room within the Town Hall. The cost in 2017/18 as reported in the council documents was £22,260. Around £4000 less than the figure bidders were supplied.
Finally, groups were expected to provide significant detail whilst the council themselves remained vague. One of the biggest issues raised to me by the Co-operative and the Community Interest Bid was that there was no timescale for the Council vacating the building.
In the Co-operative’s case this provided a significant uncertainty that contributed to their decision to withdraw. They would either be required to postpone their purchase for an undefined period, making it difficult to reassure investors, or would rely on a rental income from the council that would be lower than the cost of repaying the investment.
The Community Interest Bid expressed similar anxiety around this withdrawal period. They would presumably be expected to arrange contracts with community interest groups, secure volunteers and organise their calendar without a clear idea when they would be allowed to enter the building.
In both cases this uncertainty, beyond that the council would have no presence in the “medium to long-term,” affected the bids.
It seems clear that the Community groups faced significant hurdles in attempting to secure the future of the Town Hall. Bids were expected to be “in excess of” the £500,000 offered by commercial bidders, a significant hurdle for non-profits. This is despite the building’s actual value being unclear and the council’s independent valuations varying wildly. A lack of a structural survey, despite assertions of the building’s need for repairs, represented a significant financial obstacle for many bidders and required them to over-estimate renovation costs. In this context, Beestonia asks how serious the council was about this community bidding process, and how fairly those bids were treated?
This is an on-going story and we will keep you updated as we receive responses from the community bids. As the council looks in deep trouble on the Redwood Crescent scandal, with possible criminal proceedings a very real prospect, we can imagine they aren’t too willing to give us a response: nevertheless, we will print when they do.