Estates update

Report: 12
Date: 23 September 2010
By: Director of Resources on behalf of the Commissioner

Summary

This paper provides members with an update in regard to the estates responsibilities covered by Property Services and the specific issues that have been addressed since the last report.

Members are asked to note the contents of the paper.

A. Recommendations

That

1. Members note the Property Services’ update provided. 

B. Supporting information

Introduction

1. At the Finance and Resources Committee on 19 December 2009, it was agreed that Property Services should continue to provide a report on real estate and Property Services’ related issues on a quarterly basis. Source documents can be found on previous relevant reports and also in the Members’ Library, the last paper was presented in June 2010.

2. In addition to the delivery of the current estate strategy, including maintaining the existing MPA estate; undertaking modernisation programmes and providing facilities to meet operational needs, and addressing environmental issues, the Property Services Department includes a specialist operational support team who provide advice and support for special events; logistical support at major incidents; physical target hardening of vulnerable buildings; crime scene forensic support; crime scene plan drawing and reconstruction; specialist methods of entry/protestor release; covert property management, and emergency planning in support of major incidents.

3. This Paper provides updates on specific work-streams and key areas of responsibility; where approvals are required for specific programmes or projects, proposals will be presented separately.

Market Overview

Residential

4. Entering into the second half of 2010, several indexes are indicating that UK residential property prices are in decline. In July Nationwide recorded falls of 0.5% in average property prices, the first drop in five months. Commentators are attributing the recent falls to weak buyer demand combined with property supply rising 3.7%. The abolition of Home Information Packs (HIPs) has encouraged more speculative sellers to test the market and even with the increase in Capital Gains Tax many landlords are looking to cash in on the past year’s gains.

5. London prices, whilst previously bucking national trends and recording substantial year-on-year gains, have also recorded falls in July. Prices of prime central London property fell in July by 0.5%, the first monthly decline since March 2009. Of the prime market the lowest declines were in the sub-£1m market where prices fell only 0.2%. As with the UK as a whole economists attributed these falls to a decline in demand and a rise in supply.

6. Evidence from the most recent auctions in which MPA properties were listed indicates that well priced properties in good locations are continuing to sell successfully at auction. Auctions have also seen increasing demand for properties within the M25 generating ground rents or with regulated tenancies as investors look for security.

7. Economists have yet to establish whether the current decline will lead to a flat price trend or whether there will be a continued downward move. Observers at Hometrack have however indicated that “with no immediate prospect of an upturn in demand, price levels are likely to remain under downward pressure in the coming months.”

Commercial Property Market

8. In the second quarter of 2010 the rate of growth in values in the commercial property market has slowed significantly. Commentators attribute the slow down to a combination of uncertainty pre General Election and investor concerns that the recent sharp rise in values was not sustainable.

Outlook for 2010 / 11

9. Commentators have mixed views as to prospects for the next 12 months, with all financial markets showing greater volatility, trends are difficult to ascertain / agree on. The amount of commercial property owned by banks as a result of loan defaults and the value of loans to be re-financed in the near future is a concern in terms of stable market values over the next 12 months.

Estate Strategy

This is due to be presented to the October meeting of this Committee.

Corporate Real Estate and the Delivery of Property Services

10. Property Services are working with business groups to identify opportunities to rationalise the estate through more effective use of facilities. Refreshing those floors vacated by TfL at ESB for example will enable the building to support a further 750 desks and through flexible/agile working practices, over 1,000 people. This will enable the MPS to vacate certain leasehold properties at lease expiry and identify opportunities to vacate certain freehold facilities currently supporting back office functions. Separate papers will be presented to the MPA in this regard.

11. In support of the HR Training Strategy, further accommodation is being made available in ESB to accommodate training functions pending the completion of Sovereign Gate, Richmond. This will facilitate the earlier vacation/release of the current South-West training facility in November. Further opportunities are being taken in South East London; maximising the use/occupancy of Marlowe House, whilst plans are being developed at Hendon. Separate papers will be presented to the MPA in this regard.

12. The delivery of Property Services’ work strand includes a review of process and staffing arrangements; the review renegotiation of certain real estate/property related contracts and a review of asset leverage opportunities, to ensure that the service provided is costs effective and fit for purpose; that the professional services and support provided adds value to the Organisation and that the professional and technical skill sets of the team support the delivery of the Corporate Real Estate approach. Work is progressing in these areas. Feedback has been received in regard to the staff review and analysis of the findings is underway. It is anticipated that this work will be concluded in September and future arrangements agreed in October/November. A further update will be provided to this Committee as part of the next quarterly update paper.

Disposals

13. A summary of the disposal plan approved at the February 2010 Finance and Resources meeting is provided at exempt Appendix 1. The approved capital receipts budget for 2010 / 11 is £20 million.

14. 18 residential properties were offered for sale by Auction in May. All properties were sold. The transactions completed for a total capital receipt of £5.4 million. A further 9 properties were offered for sale by auction in July and six were sold for a total capital receipt of £1.76 million. Three properties did not reach reserve. They and two further properties will be offered for sale by auction in September.

15. In respect of the former operational buildings, approved for disposal, in principle, at the February 2010 MPA Finance Committee, agents, have been appointed to act in respect of six properties and are shortly to be appointed on the remaining four. Active marketing will commence shortly, subject to final clearance by the Estates Panel.

Acquisitions

16. At present there are no defined acquisitions to be reported.

Imber Court Sports Club

17. An update on the progress of the arrangements between the MPA and the Sports Club is included in exempt Appendix 2.

Town Planning Update

London Plan Review Progress

18. MPA/MPS have submitted representations in respect of the following topics to ensure policing is appropriately referred to within the final London Plan: -

• Industry – to promote policing uses in industrial/employment locations or Opportunity Areas where appropriate;
• Climate Change – to ensure viability implications of reducing carbon emissions are considered;
• Parking – to ensure MPA/MPS vehicle parking requirements are reflected in the plan;
• S106 Obligations and CIL – to ensure policing is acknowledged as a key S106 obligation recipient and to protect/manage this status upon any subsequent implementation of CIL (or similar);
• Social Infrastructure – to ensure the impact of large-scale development upon policing provision is mitigated.

19. Through detailed negotiation and discussion, the GLA have either accepted these representations or have proposed minor amendments which will ensure that the representations are taken on board. However the GLA remain adamant that no changes to the identified priorities for S106 obligations can be made (the MPA/MPS had requested 'Policing' be identified as a priority, to reflect a number of Mayoral priorities). Whilst noting that amendments may be suitable for alternative relevant policies (such as those referring to security and Secured by Design) it is not considered that this would provide an appropriate strategic response to meet policing need where development pressure would exacerbate this. At the time of writing, PSD continue to pursue an amendment to the planning obligations policy, mindful of Mayoral objectives and government guidance.

Community Infrastructure Levy

20. Charging authorities, which could include all London Boroughs, will be required to produce a charging schedule setting out Community Infrastructure Levy (CIL) charges in their area. Each charging schedule will be tested to ensure transparency and robustness, allowing the MPA/MPS to make representations to secure their position and obtain contributions.

21. The following highlights the key CIL mechanism in respect of policing:

• The charging schedule must be informed by appropriate available evidence including an infrastructure plan which identifies infrastructure needs and costs, phasing of development, funding sources, and responsibilities for delivery;
• Relevant infrastructure providers (including the MPA) should feed into the charging schedules by providing information to Local Planning Authorities’ (LPAs) as identified above;
• By doing this the MPA will be able to benefit from CIL receipts from a much wider range of developments than at present enabling pooled contributions to fund future policing infrastructure across London;
• Policing contributions may be excluded if not identified as a priority within any local charging schedule. It will be necessary to ensure that the MPA benefit from the pooled funds when distributed by the charging authority by ensuring policing requirements in each borough are identified 'upfront'.

22. CIL was conceived by the previous Labour administration. It is unclear at this stage whether the Conservative/Liberal coalition will implement this. The Conservative Green Paper proposed an alternative system for funding infrastructure – a Single Unified Local Tariff (SULT). Key differences include: -

• A tariff-based approach to infrastructure funding is preferable;
• The tariff rate needs to be variable to reflect differences in development;
• The use of other obligations should be limited to site-specific issues;
• Affordable housing should be exempt from a tariff;
• Service providers and local authorities need to work closer together in preparing infrastructure plans;
  MPSTC Gravesend

23. Significant work has been undertaken to define training requirements for the remainder of the current year and for the next five year period. Separately, meetings have been held with the PFI provider to explore opportunities to maximise the use of facilities on site and to review current expenditure levels. Further updates will be provided in due course.

Proposal for a Secondary Training Facility - NW London

24. Members have asked for an update on the progress made in regard to the approval given in 2007/08, for the MPS to investigate opportunities in regard to the potential acquisition and development of a second firearms and public order training facility in North West London. A number of potential locations were identified and feasibility studies undertaken. Balancing the requirements of the facilities required from such a training facility with local community needs and town planning requirements is challenging, and whilst solutions were identified, costs and timelines that would be required to provide such facilities are significant.

25. The MPS are considering alternative options to address training requirements and are close to resolving this issue. A separate paper will be presented to the MPA later in the year in this regard.

Safer Neighbourhoods

26. Work is currently proceeding and 95 of the total 111 projects under SN” are in various stages of design and development, with 3 being delivered through other works programmes:

• 59 projects have been completed
• 9 projects are under construction
• 7 site starts planned imminently
• 7 sites in procurement
• 1 projects in detailed design
• 3 in feasibility

27. A review of the operational effectiveness of those SN bases which have been provided is being undertaken to consider changing operational requirements and the emerging focus from TP through the development workstrand on larger teams. The next regular report will be represented to the MPA in October 2010 to permit the completion of the review and the inclusion within the report of the initial proposals and financial implications.

PFI Management

South East London PFI

28. The Service Provider continues to provide good levels of service at the SEL PFI Police Station sites of Lewisham, Sutton, Bromley and Deptford with a good clear up rate of actions from the Service Delivery Group and Contract Boards. Customer relationships have improved significantly following the completion of a number of long standing legacy actions.

29. Energy saving measures have been implemented at Lewisham which are beginning to show benefits and yield savings.

30. Work is underway as part of the Property Services PFI & Corporate Real Estate SIP to create more open plan working areas to enhance utilisation levels.

Business Rates

2000 Rating List - New Scotland Yard

31. As requested in June, an appeal has been lodged with the Lands Tribunal against the rateable value of NSY. This appeal is ongoing.

2005 Rating List

32. This rating list closed on 31st March 2010. Since the last reporting period a further 12 appeals have been settled resulting in a further £300k of savings. 7 appeals have subsequently been withdrawn. 164 have now been successfully settled resulting in £8.6m in savings. There are now 89 outstanding appeals including NSY. It is projected that the appeals will be concluded by March 2011.

2010 Rating List

33. The 2010 rating list commenced on 1 April 2010. This increased the MPA’s portfolio rating valuation by 38% and increased rates liabilities for 2010/11 by 10.5%. PSD have now developed an appeals strategy with the MPA’s retained rating consultants LSH.

34. The strategy’s focus is on maximising the potential savings from any successful appeals as early as possible within the 5 year life of the Valuation List.

35. There are currently 482 rateable hereditaments with a total rateable value of £94m. 16 hereditaments have a value in excess of £1m each. Their combined rateable value is £48m representing more than half of the total value in the portfolio. There are 159 properties with a rateable value of less than £15,000, representing approximately 33% of the total number of hereditaments or less than 0.5% of the portfolio’s total rateable value.

36. In 2010/11, PSD will focus on appeals against the 16 high value hereditaments, a further 231 hereditaments each with a value in excess of £35k will be reviewed and appealed where appropriate. Collectively these hereditaments represent more than 95% of the portfolio by value and 50% in number.

37. PSD will report appeals throughout the year.

38. LSH have successfully completed one specialist appeal on Polar Park which has yielded £360K in 2010/2011.

Facilities Management Contracts

Facilities Management Suppliers (FMS) North & South

39. The performance of the Facilities Management Suppliers are now consistent to threshold levels in terms of current planned preventative maintenance and reactive maintenance. The Suppliers have continued to work positively with the MPS client unit and have made some changes to key personnel with more planned to ensure they are aligned in structure and improve lines of communication. The suppliers are working closely with the MPS on identification of cost savings and have made a number of changes in areas such as planned preventative maintenance further changes are proposed in handling reactive maintenance and other planned activity. Responses to significant incidents such as power failures continues to be strong.

40. Third party audits of properties and contracted services continue to demonstrate strong performance.

FMS and MPIC key performance indicators

41. Table One (below) details the high level statistics for the two Facilities Management suppliers (FMS) and the Help desk (MPIC). This gives an overview of progress from the first year of the contract through to the current reporting period.

Particular items to note:

FMS

Generally stable, the trend in the number of complaints being raised against FM continues to improve year on year. PPM shows a slight downturn in this quarter due to the lack of supporting documentation within specified timescales despite works being physically completed on site.

MPIC

Again generally stable. System uptime figures show a decrease; however this is due to one-off works being carried out on a monitoring tool together with a planned shutdown in line with the Business Continuity test (referred to later). This affected the percentage of calls abandoned and it is envisaged that both these figures will be stable throughout the year.

New Furniture Contract

42. Property Services and Procurement have successfully transitioned the furniture and associated services contract to Wagstaff Interiors Group, who commenced their four year contract with the MPA on 1st July. Features of the new contract are an enhanced furniture hire provision for the Olympics and furniture re-use facility. The contract is estimated to save £1.4m per annum through reduced costs. Product lead time for new furniture orders has also been reduced to 4 weeks from the previous 6 weeks.

Construction Projects

Patrol Bases

43. Greenwich Patrol Base (Warspite Road) has been completed and occupied from the beginning of June 2010, with the official opening ceremony held on 28th July 2010 attended by AC McPherson and the BOCU Commander.

Custody Centres

44. Completion of the project at Waltham Forest BBCC (Leyton) is anticipated in October 2010; progress continues in line with project timelines and budgets.

45. Croydon Borough Based Custody Centre was approved by the Finance and Resource Committee in July 2010, with a commencement of construction works anticipated in January 2011 and completion for occupation by May 2012.

Combined Patrol Base / Custody Centres

46. Polar Park, Heathrow, works commenced in January 2010 with completion due in April 2011. Progress continues in line with project timelines and budgets.

47. Fresh Wharf, Barking and Dagenham works commenced in November 2009. Alterations to accommodation have recently been authorised by TPHQ, to provide additional office space for the Borough Commander and senior team. The alterations will delay the opening until February 2011; previously October 2010. Costs are contained within the approved budget.

48. Works commenced in December 2009 on the site of the planned project at Lillie Road, London SW6 and works are progressing in line with expectations towards completion in October 2010.

Office Accommodation

49. Works to Marlowe House were completed in June 2010. Upgrading of the mechanical and electrical services are underway with completion due by March 2011. Refurbished accommodation has been allocated as follows: 8th Floor Central Operations, 12th Floor TP and 14th Floor SCD

50. Construction of the Strategic Coordination Centre within ESB to support London Resilience commenced in May 2010 and is progressing on track for completion of the overall facility in January 2011. Design of accommodation for SO on Floors 25 & 26 is underway and this should be completed by April 2011. Initial design of accommodation for DPS on the Floors 22 & 23 has been completed and awaits user and Management Board approval.

51. Work is underway in New Scotland Yard to upgrade accommodation on the 2nd, 6th, 7th 12th and 17th floors all underway. Completions are due over the next six months with various logistical moves planned and several of the projects involving high degrees of technology installations. This work will be followed by further projects upgrading the facilities on the floors between 14th and 19th in the Tower block as well as the infrastructure and resilience of the building.

Operational Support

52. The ‘Special Events’ Team has supported a range of events since the last update, including:

• The Queen’s Birthday Parade
• Visit of the French President
• The All England Lawn Tennis Championships
• A series of one-day concerts in Hyde Park
• Notting Hill Carnival

Future events include

• His Holiness the Pope’s visit to Britain - September.

Computer Aided Modelling Bureau

53. ‘CAMB’ have concluded their support into a high profile and sensitive investigation, using laser scanning technology to produce detailed 3D scene reconstructions, and presenting this evidence in court via specialist virtual reality software. This proved crucial in assisting the court to understand the layout of the scene and surrounding area. The Judge, in summing up, mentioned that the "virtual presentation was hugely impressive".

Olympics

54. Olympic accommodation requirements with the existing MPA Estate are progressing according to programme via the established procurement and programme delivery procedures.

55. The principle other Estates issue in relation to the Olympics is the development of the plans for the three muster Brief and Deployment Centres. These sites located to the West, North East and South East of London are critical to the policing of the Games but all have planning, Land Ownership and restrictions currently affecting their use. Significant progress has been made on two of the sites with detailed layout plans at or nearing completion. Issues still remain on these sites and are dependent on the resolution of a Legislative amendment to enable use of one of these sites. Full town planning applications will be made on both other sites shortly. Proposals for the third location are underway.

Environmental Management Programme

56. The MPA / MPS Corporate Social Responsibility (CSR) Strategy 2010 - 2013 was presented to the MPA Communities, Equalities and People Committee on 2 September for consideration. The Strategy was supported by the Committee and some amendments to the foreword were agreed with the Service.

57. The CSR Strategy will now be launched and integrated into the full business planning process, for the 2011-14 Policing Plan.

58. Key environment actions over the last three months include:

• Implementation of a food waste recycling trail- July - August at 5 key sites
• Environmental waste audits across the estate - results are being used to raise awareness within the MPS.
• Introduction of a mandatory training programme in regard to waste and recycling.
• Launch of the Environmental Champions Scheme.

59. The Climate Change Action Plan Programme (CCAP) continues, with the following recent highlights:

• Projects will save 9,064 tonnes of CO2 and £1.56m per annum;
• Additional benefits also include CRC Energy Efficiency Scheme revenue savings of £108,768;
• Preferred supplier chosen for the implementation of 13 Voltage Optimization units across 13 sites, due to save 1470 tonnes of CO2 and £300k per annum. The project is due to payback in 1.5 years;
• Initial analysis shows a predicted 9.48% CO2 reduction on 05/06 baseline (building consumption) when full benefits are realized;
• The average household creates 5.5 tonnes of CO2 per annum, which would fill one hot air balloon. The MPS are therefore saving 1,648 hot air balloons of CO2.

60. All preparation work for registering the MPS with the CRC Energy Efficiency Scheme has been completed and registration will be completed imminently.

C. Other organisational & community implications

Equality and Diversity Impact

1. Any equality and diversity implications arising from the matters referred to in this report are being assessed as part of the individual project or item and will be reported separately to the Committee at the appropriate time.

Consideration of MET Forward

2. PSD’s primary contribution to MET Forward is in the value for money objective We have due regard for the Met Support strand which contains the Estates Programme aspirations.

Financial implications

3. The costs associated with the activities set out above are contained within existing budgets as agreed within the 2010-13 Business Plan as approved by the MPA on 01 April 2010.

4. Any financial implications in regard to the items included under the appendices will be reported in full to the relevant committees at the appropriate time.

Legal implications

5. This is an information report, therefore there are no direct legal implications arising.

6. Any legal issues arising from individual property transactions, including any contractual or procurement matter will be dealt with on a case by case basis, and as and when issues arise.

7. Specialist external legal advice is available via Met Law through DLS, if required.

 Environmental implications

8. The report covers a number of themes with the potential for environmental implications however the nature of the report is such that it describes activities for which there are environmental controls specifically put in place to manage issues arising. These include, for example:

• Incorporating a section on the draft CSR strategy section in the draft Estate Strategy
• All construction and refurbishment projects referred to have required the application of the Environmental Design Standards.
• The Environment team is currently engaging with the MPIC project manager to establish the feasibility of including a broader range of environmental reporting capabilities.
• Following engagement with the Supplier Diversity and Environmental Manager, the new furniture contract included the provision of environment and sustainable procurement specifications
• The Environment team has provided input to all Olympics business cases. Particular emphasis is being placed on business cases for Muster, Briefing and Deployment Centres as it is recognised that these have the greatest potential for environmental impacts.
• A significant element of the Environmental Management Programme focuses on issues in relation to the Estate. These programme activities are outlined within this Estates Update Paper. This section also describes progress in relation to the transition from an Environmental to a CSR Strategy fro the period 2010-2013.

9. It should be noted that the MPS Corporate Social Responsibility (CSR) Strategy has now been supported by the MPA. This Strategy takes into account a broader scope of issues than the current MPS Environmental Strategy, extending also to social/ethical and economic issues. Consequently, the "Environmental Implications" section will, in due course, be replaced by a section that addresses these broader issues.

Risk implications

1. This is an update paper and risks will be dealt with at a Programme and/or project level.

D. Background papers

None

E. Contact details

Report author(s): Jane Bond, Director Property Services, MPS.

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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