Asset Management Strategy 2007 - 2011
4.0 Strategic Context
4.1 Our Philosophy, Why Do
We Own Property and Why do We Need to Keep It?
Residents and businesses in Thanet expect the Council to provide
them with good services. They also expect the Council to have
a clear vision of the future, and how the best possible outcomes
for our district will be achieved.
We believe that our Corporate Plan correctly addresses the
point. Change is implicit within the Plan. Nothing
remains the same, Local Government finance changes, law changes,
technology advances and therefore the Organisation's workforce must
also change. Yet the land and property owned by Thanet is regarded
sometimes as 'static'.
Most of the property we own has been in public ownership since
before the formation of Thanet District Council in 1974.
Historically, Local Councils were large Organisations with wider
powers and greater funding than is the case today.
Two challenges in particular emerge from this. Do we
actually need all the property we own to deliver our Corporate Plan
and, secondly, can we afford to maintain the extensive Property
(Asset) Register we own. Both these challenges will be met by
a strategic approach to Asset Management. This involves
regular review of the Asset Register and questioning of what
we really need to achieve in terms of Asset Management to make
the Corporate Plan happen. The wrong approach would be to
regard our property portfolio as 'static', and base our services on
that assumption. Residents have told us that they want to see
change; a dynamic approach to Asset Management is therefore
needed.
4.2 Categorisation of
Assets
A key element of our review of the Asset Register is distinction
between the types of property we own. Thanet will use the
categories as defined both by the Chartered
Institute Public Finance Accountancy
(CIPFA), and the Royal Institute of Chartered Surveyors
(RICS). This means that with reference to CIPFA Guidance
Notes and Good Practice our
property assets will be reported in a manner consistent, and
therefore comparable with, other local authorities. The
categorisation is similar to that of the RICS Valuation Standards,
giving the further advantage of making our Asset
Register consistent with the property sector in general.
The categories are:
Operational assets
Property held, occupied, used or contracted to be used on behalf
of the authority in the direct delivery of services for which it
has a responsibility, whether statutory or discretionary or for the
service of strategic objectives of the authority.
This category includes (the list is not exhaustive)
- Land associated with operational property
- Offices
- Sports centres and swimming pools
- Depots and workshops
- Museums and galleries
- Non Housing Revenue Account (HRA) dwellings
- Crematoria and cemeteries (buildings only)
- Off street car parks
NB: Council dwellings are included as operational in the CIPFA
Guidance, but will not be part of the Asset Management
Strategy at Thanet.
Though not examples included in the CIPFA Guidance, the Port and
Marina (at Ramsgate) should be treated as operational.
Infrastructure assets
Infrastructure assets are inalienable assets, expenditure on
which is only recoverable by continued use of the asset created, ie
there is no prospect of sale or alternative use.
Examples of this category include;
- Footpaths
- Bridges
- Water and drainage
- Promenades
- Coastal defences
The Council is responsible for a substantial coastline, most of
which is protected by lower promenade. The Council has always
been responsible for maintaining these structures, and indeed
upper, cliff-top promenades. But this has been from a
discrete Coast Protection Budget, rather than within the framework
of asset management.
Community Assets
Community assets are assets that an authority intends to hold in
perpetuity, that have no determinable useful life and which may, in
addition, have restrictions on their disposal. There is
little prospect of sale and change of use. If the asset is
used for a specific operational purpose it does not qualify as a
community asset.
Examples of community assets include;
- Parks (but not a golf course within a park)
- Historic buildings (but not used for, say, a museum)
- Cemeteries and crematoria (land only)
- Allotments (where there are restrictions on alternative
uses)
Non-operational assets
Non-operational assets are those held by an authority but not
directly occupied, used or consumed in the delivery of services, or
for the services or strategic objectives of the authority.
The classification emphasises that the decision to classify
something as non-operational focuses on the authority's objectives
in holding the asset, and not on whether the authority itself
occupies the asset.
Examples (this list is not exhaustive) include:
- Assets under construction
- Land awaiting development
- Commercial property, leased/rented to other parties and
producing income. But not for the delivery of Council
services by a third party
- Investment property, acquired/held with the express intent of
increasing value for subsequent realisation
- Golf courses and sports pitches
- Surplus
The key question then is, "Should the Council own a particular
property?" Understanding the above classifications helps
satisfactorily address the question. Some rationalisation,
and selling of surplus sites, is already supporting Council
financing of investment programmes, particularly the Capital
Programme and the Corporate Plan. It has also saved revenue
costs on upkeeping land and buildings we did not need.
Decisions should on the basis firstly of operational need, and
subsequently on the basis of cost or value to the Council, justify
themselves. It would be wrong to retain non-operational
assets that place a financial drain upon the community, unless the
community agree that these assets provide a benefit worth paying
for.
Raising funds from assets does, of course, also make it possible
to repair; or, focus investment on other Council owned property our
residents consider to be landmark local amenities. It also
has the potential to enable step changes to be made in priority
services and community facilities through strategic
investment. Part of our philosophy on Asset Management must
be community leadership. For example we must set a good
example to others on maintenance of the scores of Listed Buildings
we own, and the provision of a barrier-free environment into our
public buildings to those with a disability.
4.3 Strategic Approach to Property
The Council realises, to make informed decisions regarding its
Property Portfolio, it must first understand each property, its
value in both monetary terms and with respect to community
benefit. This is because of the amenity it may provide, and
the opportunity cost of alternative usage to increase either
community benefit or financial value. Much information
already exists on various databases concerning the property
portfolio. But it is not possible at the moment to identify
the full utility, level of repair and running costs, including
energy efficiency, of all of the Council's properties.
Consequently, a major plank of the strategic approach to Asset
Management is investment in establishing a wholly updated
database.
In the meantime, a decent start has already been made. The
Council has in place the Asset Management Group, and membership
includes the appropriate Cabinet Member. In recent years this
Group has brought forward several sites considered surplus by the
Council for disposal, and thereby contributed to funding corporate
priorities. In bringing forward this work to Cabinet for
decision, the Group was always mindful of the purposes the Council
has for owning property.
These are, and remain:
- To meet the Council's Statutory Obligations.
- To enable the provision of its Operational Services to local
people.
- To support and achieve Council objectives as set out in the
Corporate Plan and supporting/related plans.
- To generate income.
The Corporate Plan is explained at section 3 of this document
when considering our strategic approach to property, the following
parts of the plan are particularly relevant.
(i) During 2006/2007, the Council embarked on a widespread
programme of public engagement concerning swimming pool
provision. This subject is important to local people.
We are a series of seaside towns and communities, and swimming pool
facilities have traditionally been important, with the public
telling us they still are. Better provision will not just
show the public that the Council listens, but will also strongly
support our objectives to provide better leisure facilities and, in
association, support health promotion.
The cost of improving swimming pool facilities will be
considerable; this is understood by both the Council and
local residents. At the time of drafting this document, a
conclusion has not yet been finally reached, but it seems likely
that the Council's Programme for the next three years will be
sharply focused in this direction. To fund construction and
commissioning of improved public swimming facilities.
(ii) In support of its Regeneration Objectives, the Council has
signed Heads of Terms with Kent County Council on a joint
development approach to this Council's land at Haine Road
(EuroKent) and the County Council's land at Manston Business
Park. Whilst local unemployment remains twice the regional
average, success is vital but, to achieve take-up and development
of land on both sites, infrastructure costs must be borne early in
the development, although there is one major difference between
this key project and that of improving swimming pool
provision. Whilst swimming pools are essentially a service
which incur substantial running costs – any expenditure on
infrastructure will be recovered by later receipts.
The Council already has Preferred Development Partners, and
therefore disposals with planning consent or joint agreements on
both sites will generate cash receipts. A process of
recycling a proportion of receipts back into facilitation of
further development will be established, thereby achieving a
long-term income stream as well as a capital sum for disposal.
(iv) Hitherto the Council, like most Local Authorities, has
disposed by sale at auction of surplus land and property to raise
funds. Advice is currently being taken on alternative
mechanisms such as joint development with partners or with the
Council retaining title to the land in question and sharing future
income with the developer. It is thought this will be
particularly relevant to key seafront locations. On such
sites, income generation may be anticipated at high levels from the
commercial sector. Further, it is likely to be in the
community interest that an element of landowner control of
prominent public buildings remains with the Council, such that care
for especially the historic built environment is assured. The
crucial point to joint ventures is that the development proposed
must be viable commercially.
(v) Strong progress has already been made by the Council in
making more efficient use of its Margate office space.
Rationalisation of floor space used directly by the Council has
produced savings but, at the same time, quality and efficiency of
servicing has risen. In short, money has been saved but
Thanet's customers have not suffered any loss of service.
In January 2008, the new Service Centre opened, providing
excellent new 'Gateway' facilities for our customers within the
main Library in central Margate. The Centre will contribute
to an improved access and aspect onto Cecil Square, and will
reinforce our joint working with the County Council, Voluntary
Sector and others.
Improvements in electronic communication, and moving towards
working from home for some of our staff, will further reduce our
need for office accommodation. This will provide more
opportunities to save money which can be reinvested in priority
actions.
(vi) Market intervention by the Council, because of its
constrained resources, must be by exception only. However,
the former Marks & Spencer site in Central Margate is an
example of partner funding acquiring the building for the Council
so that Thanet will lead redevelopment of the site. This
particular development is the flagship for reinvestment in Central
Margate. Expert input from the Council will make sure that
economically, commercially, architecturally and, in planning terms,
the development is a success. It will be the catalyst for
rejuvenation of the Town Centre but, during the process, some costs
will be borne by the Council in facilitation of this change
process. As is the case with the EuroKent and Manston
Business Park venture, recovery of costs will occur at conclusion
of the project, but Asset Management principles require that
provision of these costs is made at the outset.
The project at Queens Arms Yard offers a smaller case study
example of this proactive approach. Thanet's release of a
small site in Margate Old Town will enable a scheme with three
other property owners to proceed.
(vii) Opportunities will be sought for the use of land and other
assets in support of the corporate priority, Decent Quality
Housing. The council will demonstrate wherever
possible that it is prepared to use its
resources and to take the lead in affordable housing development in
partnership with its preferred Registered Social Landlord
development partners.
Where suitable sites become available the affordable housing
contribution must form part of the Development Planning Brief.
(viii) Where appropriate, opportunities will be sought for
the use of land in support of the development of
a 'café culture' separately formalised through planning and
licensing policies.
(ix) The Quirk Review, "Making Assets
Work" 2007, produced for the Secretary of State for Communities and
Local Government, encourages an innovative approach to working
with community groups. It says that effective
community groups have lower costs than Local Authorities, and
can therefore make better, and more cost efficient, use of public
buildings. In Thanet, we have sometimes grant-funded
groups using our buildings. Quirk tells us that a more
holistic approach would be more successful, and have a better
change of lasting success. The key, he suggests, is
recognising community groups that are
motivated and
focussed. Their purpose is likely to complement the Corporate
Plan.
(x) In suitable locations the installation of telecommunications
equipment will be supported to produce revenue generation.
The principle of site and mast sharing will be supported.
4.4 Summary
Our strategic approach to Asset Management is two-fold. In
the short term, through planned review of the Asset Register,
against current category and usage, disposal of surplus property
will fund the major investment needed by our Capital
Programme. In the medium-term, because the Council does not
have an endless supply of property, the emphasis will change toward
ensuring that greater value is extracted from all properties,
through joint ventures and partnership opportunities.
In parallel, the second major strand of work required is the
establishment of an integrated land and property database. We
have an Asset Register but a much better information database, in
content and updating, needs to be developed. This will be
imperative. At the outset our process will deal with those
sites clearly recognisable as surplus. This will leave more
complex decisions to be taken later, when Thanet will have better
management information.
Finally, it is anticipated that into the medium-term there will
be the opportunity to promote and enter into joint development
projects, leaving the Council titleholder in receipt of enhanced
income. Previously this has simply not been an option for the
Council but, as values begin to rise and our Regeneration Strategy
closes the gap between us and the rest of the South East,
opportunities should be taken.
4.5 Energy Efficiency
Energy efficiency is high on the National agenda, and in Thanet
it is important to have a positive impact on the environment.
- Minimise Thanet's detrimental environmental impact.
- Reduce revenue costs of operational buildings through improved
energy efficiency.
4.6 Investment and Building up of Capital Fund
The relationship between Asset Management, Financial Management
and the ability of the Council to deliver its priorities via the
Capital Programme is crucial.
The table below shows that the current relationship between
disposals and the Programme, subject to Cabinet approval, can
achieve substantial funding, but the figure of £8.285m (as reported
in February 2007) will not be sufficient to fund the scale of
improved swimming pool facility anticipated by residents.
It is self-evident that readjustment of the current programme,
to increase focus on swimming pool provision, is required;
or, alternatively, the programme of disposals and developments may
be accelerated. This would have an initial cost in terms of
staffing, fixed term contracts or consultancies, and
technical/legal costs.
Increasing income from review of the Asset Register to achieve
market rents, and therefore lift annual income from the current
total of £1.2 million, will support the financial position, as will
better managed planned maintenance. Once the repair backlog
diminishes, and with it the call for reactive repairs, more funding
will be available to contribute to other areas, including the
Capital Programme.
4.7 Government
Guidance
At the level of Central Government, a series of targets have
been set to reduce the public estate, produce savings and release
money for front line services. The Department for Transport,
having an estate of £2.3 billion, is tasked with 20% annual
efficiency savings.
Lessons it has learned concentrate on data
collection. If the Asset Register is electronic and
constantly updated, the information needed to take decisions is
easy to extract. It does not have to be 'mined'.
Government expects local authorities to follow its lead,
although it is understood that Councils do have special working
relationships with local communities. Hence the significance
of Quirk being published this year.
The underlying message is that Councils will need to make Asset
Management a central part of any major projects and objectives,
showing the explicit relationship between property transactions and
how finance released achieves goals supported by local
people. In short, not only must Asset Management be close to
forward planning, it must be evident in the Corporate Plan.
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