Issue - meetings

To consider the report of the Deputy Chief Executive.

Minute of Executive 11 July 2017 – to follow.

Minutes 71 and 73 (Proposal to commence Leisure Complex and Swimming Pool and Bus Station) of the meeting of Executive held on 11 July 2017 were taken as read.

The Leader of the Council moved and the Portfolio Holder for Health and Wellbeing, Communities and Sport seconded the recommendation from Executive 11 July 2017 in respect of the funding proposals for the Leisure Complex and Bus Station.

The Leader stated that it was a shame that the Council had to be here tonight, and it was a shame that diggers were not already in the ground, building a new leisure centre and bus station and regenerating the site. Everyone knows there was a massive need for these facilities in Exeter, the pyramids swimming pool was built in the war and that if the Council did not do something soon it would have to spend money on it or even have to close it. What the city had at the moment just was not good enough for Exeter.

Exeter was now the fourth highest city in the County for job creation and regeneration had been council policy for 20 years and it had taken this Labour administration to deliver it. It was what the Labour Party were elected to do. The cost was more than the Council had planned to pay and the original budget meant there was no need to borrow anything. It was made up of revenue generated by the success of the city, through its expansion and growth, through Community Infrastructure Levy (CIL) and New Homes Bonus (NHB). So why does the Council need more money now? This is because the costs had gone up and those costs would continue to go up much higher if the Council delayed taking this decision any longer so it was urgent that the Council take this decision tonight.

Brexit had created economic uncertainty and unfortunately the Council were paying the price for that. The Council had spent the last few months carefully scrutinising every single part of this project to get the best deal it could, and set the new budget being asked for tonight.  Incidentally, if Devon County Council had paid for a new bus station instead of letting the City Council pick up the bill, the Council would not have had to borrow anything. As it was, the proposal was to plan to borrow £6.27m at a fixed rate over 50 years and all of it would be paid back through revenue generated by the leisure centre. There would be no impact for council tax payers. 

The Council would secure the construction contract at a fixed price and would appoint a contractor committed to best industry practices, after consultation with the unions. There had been a lot of talk over recent months, rightly so. This must be one of the most carefully scrutinised projects in the council’s history. Now was time for action. The Labour Party were elected to deliver these new facilities and this was exactly what it  ...  view the full minutes text for item 20

To consider the report of the Deputy Chief Executive.

The Deputy Chief Executive presented the report which sought a recommendation for the allocation of an additional £0.62m for the bus station and £7.05m for the leisure centre to develop a new leisure complex and bus station. The proposals also sought that, if the overall budget of £39.92m was agreed by Council, the Deputy Chief Executive be authorised to enter into a written contract with the successful tenderer.

Members were advised that when the tenders were received at the end of last year they were in excess of the current budget of £32.25m. During the last six months the design team had been working to identity areas of value of engineering and where necessary to redesign aspects of the buildings to deliver the project within a more attainable tender sum. Members had three options in the report with the preferred option being, option two. This would result in an increase of the current budget of £7.67m, from £32.25m to £39.92m. The additional funding included £1.4m from Section 106 receipts and £6.27m of borrowing, this would be covered by the anticipated income generated from the Leisure Complex.

The Leader commented that major projects all over the country were now coming in over budget but it was important for the city that this proposal went ahead.

The Portfolio Holder for Health & Wellbeing, Communities and Sport thanked the team that had been working diligently over the past few months to get to this position. He asked that, prior to Extraordinary Council next week, Members study the paperwork and speak to the team should they have any questions to enable a full and informed debate to take place at that meeting.

The minutes of the Leisure Complex and Bus Station Programme Board of 10 July 2017 were circulated and noted.

RECOMMENDATION - see minute 73 below.

To consider the report of the Deputy Chief Executive.

The Client Lead (Build) presented a report which sought a recommendation for additional funding of £7.67m to deliver the Leisure Centre, St Sidwell’s Point and the new Bus Station scheme. The proposal also sought approval for authority for officers to enter into a building contract with the successful tenderer to undertake the construction of the development as one Building Contract.  The development of the Leisure Centre and Bus Station, the closing of upper Paris Street and future development by Crown Estate and TIAA Henderson Real Estate on the adjacent site which would include a leisure extension of Princesshay, a new mix of shops, cinema, restaurants, cafes, public open space and an amphitheatre at the site would all provide for a long term regeneration of a strategic site within the city centre.

A presentation by the Client Lead (Build) was made which provided an overview update of the Leisure Complex and the Bus Station. It also highlighted the reasons for the cost disparity between the Project budget cost and the tender return figures. A substantial increase in construction costs was a consequence of a number of factors, including the impact of Brexit, the shortage of skilled workers and workforce in the south west and general uncertainty within the economy and construction marketplace. At the last meeting of the Programme Board, it was reported that tenders for the project had not met the approved budget and due to the complexity of the tender documentation, they would be subjected to a full tender analysis. Five companies had originally been invited to tender. Two tenders were finally submitted. Both tenders exceeded the project budget allocated for construction. The presentation also set out what measures had been put in place to mitigate the cost increase including a Best and Final Offer (BAFO) process led by an external independent consultant.  The six month BAFO process involved the engagement of the whole design team, with one contractor, to identify areas of value of engineering, and where necessary to redesign aspects of the buildings to deliver them within a more attainable tender sum.  The process included a review of the specification and risk allocations within the contract, and further engagement with the supply chain/market to achieve a more favourable position for the City Council. 

At the end of the BAFO period, a detailed Tender report and Value for Money report was produced, once a preferred option had been ascertained.  The options appraised were as follows:-

Option 1 -   develop the Leisure Centre and Bus Station aligned to the already approved Council total project cost budget. However, the top floor of the Leisure Centre would be removed, (including the Spa and two studios) and 40% of the gym area removed.  The enclosed gazing wall would also be removed from the Bus Station concourse. The buildings as designed would be compromised.  This option did not provide the mix of facilities or quality of building required, with a revenue position significantly lower than the other two options;

Option  ...  view the full minutes text for item 7