Decision details

SERVICE AREA:

Growth Directorate

SUBJECT MATTER:

ASHTON OLD BATHS PHASE 3 - ANNEXE AND NEW DATA CENTRE (FULL BUSINESS CASE)

DECISION:

That Executive Cabinet:

a)    Recommend to Council to amend the Capital programme to increase the budget by £1,157k to £2,757k subject to the conclusion of procurement.  Any revisions to the budget requirement will be subject to a further report to Executive Cabinet.

b)    Subject to approval of the additional budget, approve the proposals for the Ashton Old Baths Phase 3 project, and give officers approval to proceed with the project and procurement as outlined within the report.

c)    Approve  a waiver of Procurement Standing Orders for the award of the contract for the Supply and Installation of a new Electricity Sub-Station to Electricity North West (ENWL), the Licenced Distribution Network Operator (LDNO) for the North West of England, for the sum of £85,699.88

d)    Approve a waiver of Procurement Standing Orders for the award of the main contract through a two-stage design and construct procurement process.

e)    Note that progress on the delivery of this project will be reported to the Strategic Planning and Capital Monitoring Panel on a quarterly basis.

DECISION TAKER(S):

Executive Cabinet

DESIGNATION OF DECISION TAKER(S):

DATE OF DECISION:

12 December 2018

REASON FOR DECISION:

Delays to the Data Centre would cause financial and operational implications for the Council.  The approval of the project enables further income generation and remove the revenue costs of having data hosted at Rochdale BC.  By bringing the building back into use as a modern centre there will be the creation of a space for the creation of further jobs within the Borough.

ALTERNATIVE OPTIONS REJECTED (if any):

To continue with the arrangements with Rochdale Council hosting the Council’s data centre provides significant financial and operational impacts for the Council with continuing with this arrangement.

CONSULTEES:

Consultation with Historic England and the Council’s Planning Service has taken place to establish how the remaining heritage aspects of the building are to be restored and/or maintained.

FINANCIAL IMPLICATIONS:

(Authorised by Section 151 Officer)

The Capital programme includes an earmarked amount of £1.600m for the redevelopment of Ashton Old Baths Annexe. On 13 December 2017, Executive Cabinet approved £0.840m towards the new Data Centre as part of the Tameside Digital Infrastructure capital scheme. The proposals in this report would require an additional funding of £1.157m.  This total of £2.757m will need to be funded entirely by the Council, from reserves or capital receipts.  Further details on the project cost, including previously approved funding for the Data Centre is set out in section 8.2. 

The majority of capital programme has been placed on pause due to concerns about the achievement of capital receipts from asset sales, and cost overruns on a number of projects.  Executive Cabinet agreed that only schemes that have already started and those of a business critical nature could proceed.  This scheme was considered business critical due to the requirement to relocate the data centre and ensure that a disaster recovery capability was established. 

However, the scheme outlined is greater than the original budget and if it commences will require other identified schemes to be delayed or removed from the capital programme, or additional assets identified for sale.

Delays to the Data Centre would cause financial and operational implications for the Council.  Paragraph 2.23 of the report provides further detail, including the additional costs that would be incurred as a result of extending the current hosting arrangements with Rochdale by another 12 months.  Overall annual costs of £150k per annum will be avoided by developing the data centre in Ashton Old Baths.  This will be a saving that can be used to contribute to the balancing of the Council’s budget.

Paragraph 8.7 of the report provides a summary of the operating arrangements in place for Ashton Old Baths.  The management of the building is undertaken by Oxford Innovation, with the Council being entitled to any profit after the management fee.  The forecast total revenue income stream from this profit share over the first five years is £0.036m.  Completion of the Annexe increases this forecast to £0.154m over five years, or around £0.038m per annum, which again can be offered as a saving to help with the balancing of the Council’s budget.

Section 4 provides a summary of forecast economic benefits, based on the Oxford Economics Greater Manchester Forecasting model (2017), including an additional £0.05m of income from Business rates, although these figures have not been verified by finance.

The total revenue impact of the scheme through reduced costs (para 2.23), additional rental income (para 8.9) and additional business rates income (para 4.1) is around £0.234m per annum, which represents a payback period of 16 years on the gross proposed spend of £3.847m..

LEGAL IMPLICATIONS:

(Authorised by Borough Solicitor)

The Council will need to ensure that it has robust systems in place to ensure that the project is delivered within the budget.

It is advisable for the Council to continue to review the position with the current data centre and plan for a contingency in the event of having to vacate Oldham and the new data centre at Ashton Old Baths not yet being ready

CONFLICT OF INTEREST:

There were no declarations of interest.

DISPENSATION GRANTED BY STANDARDS COMMITTEE ATTACHED:

Not applicable.

REFERENCE DOCUMENTS:

The background papers relating to this report can be inspected by contacting the report author,: Nawaz Khan, Economic Growth Lead

 Telephone: 0161 342 2723

e-mail: nawaz.khan@tameside.gov.uk