Agenda item

Container Park Completion and Costs

Report of the Executive Director, Operational Services

Decision:

13.1

To provide options for decision on the future use of the Fargate Container Park once it has been relocated from its temporary location, in line with the decision made at Strategy and Resources Committee on 12 December 2022, detailed in section 1.15 of that report.

 

 

13.2

RESOLVED UNANIMOUSLY: That Strategy and Resources Policy Committee:-

 

1. that the Executive Director for Operational Services be authorised to implement removal of the containers (option 1) from Fargate to a storage location, and utilise the containers for a different purpose, such as, but not limited to, usage by community groups, or to improve facilities in Sheffield’s parks or other outdoor activity centres;

 

2 that the future use of the containers be reported back to this Committee for approval, following the consideration of community submissions and having assessed opportunities for outdoor facility improvements;

 

3. that the large screen is retained for future use by the Council; and

 

4. that the Director of Legal Services in consultation with the Executive Director for Operational Services be authorised, if necessary, to negotiate and agree all legal documentation to implement recommendation 1 and 3.

 

 

RESOLVED: that a review of the container park on Fargate project be carried out by Internal Audit, involving the auditing of the end-to-end process from decision through to delivery and highlight lessons for future learning and the governance implications be considered by the Governance Committee. The need for any further review be considered after internal audit and Governance Committee consideration.

 

13.3

Reasons for Decision

 

 

13.3.1

Storing the containers for a short period while a process is finalised to offer to a community group, or improve outdoor facilities, ensures we can remove the containers in line with the required Future High Street Fund redevelopment timeline.

 

 

13.3.2

Interest from several community groups has been indicated. Interest from several council services to reutilise the containers in a different way has also been received. By moving the containers into storage while these expressions of interest are firmed up, it ensures the assets have a long-term use that is beneficial to Sheffield’s communities.

 

 

13.3.3

Option one is the least costly of the four options, yet still provides opportunities for improved community facilities from reutilising the containers, rather than the loss of assets through re-sale.

 

 

13.3.4

The decision on 12 December 2022 committed to learning from the project to ensure improved delivery in the future. The proposal sets out an option that is appropriate in terms of openness and governance arrangements, while ensuring the containers can be an asset to Sheffield and its residents.

 

 

13.4

Alternatives Considered and Rejected

 

 

13.4.1

Option 2: Move to Homes England development site on Sheaf Street next to Sheffield Station but configure as a single storey building.

 

In order to mitigate some of the outstanding building costs to complete access to the first floor, namely the fire engineering works and access to the first floor for people who would need to use a lift, the land at the station would allow for a single ground floor design.

 

Discussions have taken place with Homes England who have indicated they would consider leasing the land to the council for a period of approximately 24 months. Any final commitments have been paused until the outcome of this decision report.

 

An indicative timeline to ensure adequate feasibility work is completed on the site, prior to any build commencing, and the relevant approvals process that would be required, means that it could be May 2024 before the site was fully operational, impacting on the commercial trading period available. Although this option has been in discussion for several months it has not yet been possible to complete the terms of agreement that would enable the relevant approvals to have taken place to give a longer period of trading.

 

Although significant costs can be mitigated by providing a single storey building, costs to dismount and reinstall, plus resolve other outstanding remedial issues from the current build, put indicative costs in the region of £315-£375,000. These costs don’t include any operating costs for utilities, waste, security etc.

 

As the indicative timeline is 12 months to develop the new site and with a maximum of 24 months being available, the short period of confirmed operating time would make it highly unlikely that these additional costs could be recouped from a commercial model in the remaining 12 month period following the build.

 

As any shortfall from the financial model would need to be underwritten by the council, this carries the most significant cost and risk of the options investigated and therefore isn’t recommended.

 

 

13.4.2

Option 3: Move to a second development site owned by a third party near Sheffield Station.

 

In early discussions with the third party, they have expressed an interest in developing a container park on a development site.

 

The site is currently being utilised as storage depot for building works. The site is unavailable while this work is taking place and isn’t envisaged to be available until autumn 2023. This means there would be a need to store the containers until the site was available. The site would provide a longer term location of 5 years or more to develop and operate the container park.

 

However, the containers would need to be stacked in a two story configuration, as they currently are on Fargate. This increases costs to complete outstanding works that haven’t been resolved in terms of fire engineering reports, and access to the first floor for customers who need to use a lift.

 

A commercial arrangement between the Council and the third party would need to be agreed to understand the true cost and benefit to the council of progressing this site, but initial assumptions indicate that the cost to the council would be less than operating the Homes England site. The expectation is there would be at least £180,000 of new costs to the council. The longer usage period of 5 years or more would improve the opportunities to recover some or all of that cost.

 

This option provides an opportunity to increase vibrancy, as well as provide a facility to be used by visitors and residents in a high profile and high footfall area of the city, increasing the chances of success. However, the discussions are still at an early stage, and the true cost and benefits can't be known at this point. For that reason this isn’t the recommended option.

 

 

13.4.3

Option 4: Sell the assets. The option to sell the containers would be subject to agreement with the South Yorkshire Mayoral Combined Authority and if this was to be considered further, consultation would take place with SYMCA and relevant approvals sought.

 

The resale market for the containers is unknown, and highly unlikely to recoup the costs of developing the whole project, particularly as the project hasn’t reached completion on the first floor.

 

Indicative costs to store the containers while negotiations for sale take place are in the region of £55,993. The income for sale is unknown and it is difficult to compare this in the current market as incomplete/single units.

 

Public grants have been utilised to purchase the containers and utilising the assets for the good of Sheffield’s community is a more appropriate way of re-use, rather than sale. For that reason, this option isn’t recommended.

 

Minutes:

12.1

The Executive Director Operational Services presented a report providing options for decision on the future use of the Fargate Container Park once it has been relocated from its temporary location, in line with the decision made at Strategy and Resources Committee on 12 December 2022, detailed in section 1.15 of that report.

 

 

12.2

RESOLVED UNANIMOUSLY: That Strategy and Resources Policy Committee:-

 

1. that the Executive Director for Operational Services be authorised to implement removal of the containers (option 1) from Fargate to a storage location, and utilise the containers for a different purpose, such as, but not limited to, usage by community groups, or to improve facilities in Sheffield’s parks or other outdoor activity centres;

 

2 that the future use of the containers be reported back to this Committee for approval, following the consideration of community submissions and having assessed opportunities for outdoor facility improvements;

 

3. that the large screen is retained for future use by the Council; and

 

4. that the Director of Legal Services in consultation with the Executive Director for Operational Services be authorised, if necessary, to negotiate and agree all legal documentation to implement recommendation 1 and 3.

 

 

RESOLVED: that a review of the container park on Fargate project be carried out by Internal Audit, involving the auditing of the end-to-end process from decision through to delivery and highlight lessons for future learning and the governance implications be considered by the Governance Committee. The need for any further review be considered after internal audit and Governance Committee consideration.

 

(NOTE: (a) The result of the vote on the above resolution in respect of the review of the container park was FOR - 7 Members; AGAINST - 4 Members; ABSTENTIONS – 0 Members; (b) an amendment was proposed, seconded and discussed by the Committee “That the final review report be subject to independent external oversite”.  This proposed amendment was not passed.  The result of the vote on the proposed amendment was FOR - 4 Members; AGAINST - 7 Members; ABSTENTIONS – 0 Members). 

 

12.3

Reasons for Decision

 

 

12.3.1

Storing the containers for a short period while a process is finalised to offer to a community group, or improve outdoor facilities, ensures we can remove the containers in line with the required Future High Street Fund redevelopment timeline.

 

 

12.3.2

Interest from several community groups has been indicated. Interest from several council services to reutilise the containers in a different way has also been received. By moving the containers into storage while these expressions of interest are firmed up, it ensures the assets have a long-term use that is beneficial to Sheffield’s communities.

 

 

12.3.3

Option one is the least costly of the four options, yet still provides opportunities for improved community facilities from reutilising the containers, rather than the loss of assets through re-sale.

 

 

12.3.4

The decision on 12 December 2022 committed to learning from the project to ensure improved delivery in the future. The proposal sets out an option that is appropriate in terms of openness and governance arrangements, while ensuring the containers can be an asset to Sheffield and its residents.

 

 

12.4

Alternatives Considered and Rejected

 

 

12.4.1

Option 2: Move to Homes England development site on Sheaf Street next to Sheffield Station but configure as a single storey building.

 

In order to mitigate some of the outstanding building costs to complete access to the first floor, namely the fire engineering works and access to the first floor for people who would need to use a lift, the land at the station would allow for a single ground floor design.

 

Discussions have taken place with Homes England who have indicated they would consider leasing the land to the council for a period of approximately 24 months. Any final commitments have been paused until the outcome of this decision report.

 

An indicative timeline to ensure adequate feasibility work is completed on the site, prior to any build commencing, and the relevant approvals process that would be required, means that it could be May 2024 before the site was fully operational, impacting on the commercial trading period available. Although this option has been in discussion for several months it has not yet been possible to complete the terms of agreement that would enable the relevant approvals to have taken place to give a longer period of trading.

 

Although significant costs can be mitigated by providing a single storey building, costs to dismount and reinstall, plus resolve other outstanding remedial issues from the current build, put indicative costs in the region of £315-£375,000. These costs don’t include any operating costs for utilities, waste, security etc.

 

As the indicative timeline is 12 months to develop the new site and with a maximum of 24 months being available, the short period of confirmed operating time would make it highly unlikely that these additional costs could be recouped from a commercial model in the remaining 12 month period following the build.

 

As any shortfall from the financial model would need to be underwritten by the council, this carries the most significant cost and risk of the options investigated and therefore isn’t recommended.

 

 

12.4.2

Option 3: Move to a second development site owned by a third party near Sheffield Station.

 

In early discussions with the third party, they have expressed an interest in developing a container park on a development site.

 

The site is currently being utilised as storage depot for building works. The site is unavailable while this work is taking place and isn’t envisaged to be available until autumn 2023. This means there would be a need to store the containers until the site was available. The site would provide a longer term location of 5 years or more to develop and operate the container park.

 

However, the containers would need to be stacked in a two story configuration, as they currently are on Fargate. This increases costs to complete outstanding works that haven’t been resolved in terms of fire engineering reports, and access to the first floor for customers who need to use a lift.

 

A commercial arrangement between the Council and the third party would need to be agreed to understand the true cost and benefit to the council of progressing this site, but initial assumptions indicate that the cost to the council would be less than operating the Homes England site. The expectation is there would be at least £180,000 of new costs to the council. The longer usage period of 5 years or more would improve the opportunities to recover some or all of that cost.

 

This option provides an opportunity to increase vibrancy, as well as provide a facility to be used by visitors and residents in a high profile and high footfall area of the city, increasing the chances of success. However, the discussions are still at an early stage, and the true cost and benefits can't be known at this point. For that reason this isn’t the recommended option.

 

 

12.4.3

Option 4: Sell the assets. The option to sell the containers would be subject to agreement with the South Yorkshire Mayoral Combined Authority and if this was to be considered further, consultation would take place with SYMCA and relevant approvals sought.

 

The resale market for the containers is unknown, and highly unlikely to recoup the costs of developing the whole project, particularly as the project hasn’t reached completion on the first floor.

 

Indicative costs to store the containers while negotiations for sale take place are in the region of £55,993. The income for sale is unknown and it is difficult to compare this in the current market as incomplete/single units.

 

Public grants have been utilised to purchase the containers and utilising the assets for the good of Sheffield’s community is a more appropriate way of re-use, rather than sale. For that reason, this option isn’t recommended.

 

Supporting documents: