Request for approval to dispose of Farrow House, Colindeep Lane, Hendon NW9 6HE

Report: 9
Date: 15 December 2011
By: Director of Resources on behalf of the Commissioner

Linked to exempt item 20

Summary

This report requests Members approval to dispose of the freehold interest in Farrow House, Colindeep Lane, Hendon, NW9 6HE following an open market tender.

A. Recommendations

That Members:

1. Approve the disposal of the freehold interest in Farrow House at the value and to the bidder identified in Exempt Appendix 2 following an open market tender;
2. Note the disposal is consistent with the approval in principle decision made by the Committee on 23 June 2011,
3. Note that the capital receipts from the disposal will support the 2011/12 Capital Programme and subject to approvals elsewhere at this Committee, proposals in regard to the Hendon programme.

B. Supporting information

1. The Corporate Real Estate (CRE) Change Programme aims to i) ensure the MPS estate is fit for purpose and to enable high quality policing in London, ii) optimise the efficiency of the MPS estate, making best use of accommodation and disposing of assets where appropriate and iii) achieve cashable savings to ensure officer/staff roles are protected.

2. The property is an office building adjacent to, but not part of, the Peel Centre, Hendon. It is located on Colindeep Lane, Hendon within the London Borough of Barnet. The North Circular (A406) is c. 1.5 miles to the south east of the property and Colindale underground station is located c.0.6 miles to the north west. The site is bounded by the Northern Line to the north, which separates the property from the Peel Centre, and Colindeep Lane to the South. The property comprises two linked rectangular buildings arranged over six floors on a site of 1.738 acres. The accommodation is a mixture of lecture rooms, offices, computer/training rooms, lounge areas and WCs. The adjoining ground floor block is linked via a corridor and comprises a canteen. The property has never had public access and has been used for IT training and training administration. For the purposes of town planning the property’s lawful use is non-residential training institution. All training functions have been relocated to buildings on the Peel Centre and other properties within the MPS estate. The property is vacant save for a component part of a specialist IT system. The system this equipment serves is being updated and the equipment will be removed by the end of December 2011 after which the property will be fully decommissioned and surplus to requirements.

3. The property was marketed in a campaign between September and November 2011. Knight Frank as agents acting on behalf of the MPA placed advertisements in the national property press and relevant local press. Knight Frank also hosted details of the property on their website, placed a marketing board on site and distributed particulars of the property to interested parties. Bids for the property were invited to be received by the agents no later than midday on 3 November 2011.

4. All bids were invited on an unconditional basis and subject to a standard five year forward-sale clawback clause, to enable the MPA to take benefit in the event that the purchaser subsequently sells the property on at a price in excess of that originally paid to the MPA. Bidders were also advised to consider including provision for additional sales overage or planning clawback in their bids.

5. Seven bids were received by the deadline. The results of the seven bids are shown in Appendix 1 (Exempt). The bids were then evaluated to determine which bids offered the highest value (taking into account any additional sales overage or planning clawback) from a credible purchaser (taking into account the availability of funding). All bidders were invited to submit their best and final offers by midday on 11 November 2011. Because of the identified disadvantages to the MPA in accepting bids conditional upon planning, bidders were requested to ensure that second stage bids were on an unconditional basis only. The results of the second stage bids are attached in Appendix 2 (Exempt).

6. With external advice from Knight Frank, Property Services recommend Members approve the sale of the property to the party identified in Appendix 2 (Exempt). Should approval be granted Property Services will proceed with the completion of this matter and report the transaction in the next quarterly Estate Update Paper.

7. Property Services consider the disposal of the freehold to the bidder identified in Exempt Appendix 2 achieves best consideration that can reasonably be obtained in all of the circumstances, having followed an open and transparent marketing and tendering exercise, and having sought professional advice from independent Property Agents.

C. Other organisational and community implications

Equality and Diversity Impact

1. In line with corporate real estate principles; maximising the use of space and minimising costs, it is essential that those buildings provided for longer-term use (enabling the release of surplus assets) are fit for use, compliant and provide suitable accessibility. Following an Equality Impact Assessment (EIA) completed at a strategic level and screenings undertaken on each property selected for disposal, looking at Equality and Diversity issues from both a community and MPS staff perspective for this site, there are considered to be limited equality or diversity issues arising as a result of this proposed disposal. Any issues that do arise will be dealt with at a local level with the learning reflected within the EIA.

2. Private treaty disposals are open market sales making the property available to all members of the public.

3. In the event of residential redevelopment of the site the provision of key worker or social housing accommodation at a site will need to meet the requirements of the Local Planning Authority, as and when granting planning consent for development.

Consideration of MET Forward

4. This paper aligns with the strategic intent of Met Forward section 7, Met Support - in particular the Estates Programme. The recommendation is to dispose of surplus properties to meet the Capital Programme budget and also deliver revenue savings.

Financial Implications

5. The 2011/2012 Capital Receipts budget is set at £40m. This budget is to be achieved through the disposal of operational and residential properties that are surplus to requirements.

Separately, the MPA will be asked to consider proposals in regard to the Hendon estate at this Committee meeting. If Members support the proposals for the Hendon estate, it is proposed to split the receipts in regard to Farrow House between the 2011/12 Capital Receipts budget and the Hendon programme. If approval is not forthcoming in regard to the Hendon proposals, the receipt will be allocated against the 2011/12 programme in full.

The revenue costs related to the maintenance of this property based on 2010/11 costs are detailed below. Maintenance/repair works have been kept to a minimum.

Cost in £/per year – based on 2010/11 costs

• Planned Maintenance Costs (security/repairs/insurance): 229,290
• Reactive maintenance (security call out/damage repair): 147,454
• Rates 0*
• Utilities 18,982
• Total 395,726

*For the purposes of rating the Property is assessed as part of the Peel Centre

Costs to hold the property in the longer term have not been included within Property Services future budgets as approved within the 2011/14 Business Plan; a longer term hold will require funding to be provided through future business planning processes.

Legal Implications

7. The MPA powers to dispose of the freehold by way of sale are contained in s123 of the Local Government Act 1972. Any contract awarded in respect of works and service associated with this programme will be required to be carried out in accordance with the Public Contract Regulations 2006, and the MPA’s standing orders under Part F

8. Section 19 of the Police Reform and Social Responsibility Act may prohibit MoPC from delegating its functions in relation to acquisition and disposal of land to the Commissioner. Advice is currently being obtained from leading counsel in this regard. It is anticipated that counsel’s advice will be available before Governance Board and, if so, a verbal update will be provided.

9. Property Services confirm within this report that the disposal of the freehold to the bidder identified within Appendix 2 achieves best consideration that can be reasonably obtained in all of the circumstances, having followed an open and transparent marketing and tendering exercise and having sought professional advice from an independent Property Agent.

10. On the basis of the information contained within this report and discussions with Property Services, DLS are supportive of the proposed recommendations.

11. The MPA, in exercising its discretion to dispose of the property, must have regard to its obligation to do so fairly having regard to established policy and procedure. On the basis of this report, the recommended disposal by way of sale of the freehold by open market tender is considered by DLS to be compliant with the MPA’s Standing Orders relating to Property disposals, set out in section 10 of Part E.

12. The disposal is subject to contract and external lawyers will be instructed through MetLaw (DLS) to complete the conveyance.

13. The appendices are considered to contain exempt information in accordance with paragraph 3 of the Local Government (Access to Information) (Variation) Order 2006, as it relates to information relating to the financial or business affairs of any particular person (including the authority holding that information).

14. Members have delegated authority to approve the recommendations contained within this report under the terms of reference of this committee.

Environmental Implications

Risk Implications

13. With continued general financial uncertainty and on-going difficulties in obtaining funding for both commercial re-developments and residential mortgages there is a risk that the sale will fail to complete and / or the purchaser will look to renegotiate the purchase price.

Abbreviations and acronyms

• DLS - Directorate of Legal Services
• MPA - Metropolitan Police Authority

MPS - Metropolitan Police Service

D. Background papers

• Request for Authority to Dispose of Additional Surplus Properties in 2011/2012 - MPA Finance and Resources - 23 June 2011

E. Contact details

Report authors:  Jane Bond, Director Property Services

For more information contact:

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

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