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  1. 1. STRATEGY AND RESOURCES ITEM 3 13 NOVEMBER 2001 PROACTIVE ASSET MANAGEMENT FOR ALL COUNCIL OWNED PROPERTIES Report of the: Corporate Property Officer and Director of Finance Contact: Alex Williams or John Turnbull Urgent Decision?(yes/no) No If yes, reason urgent decision required: N/A Annexes/Appendices (attached): Appendix A: Backlog Maintenance Schedule for each property category. Letter: despatched to members of committee after main agenda Other available papers (not attached): Asset Management Plan; Management of Property Assets. This report seeks to progress the Council’s asset management plan by identifying funds for carrying out backlog maintenance on Council properties and by employing a surveying firm to carry out condition surveys on the Council’s key assets. Notes RECOMMENDATION That the Committee approves: (1) a provision of £30,000 in 2001/02 for the appointment of firm of building surveyors to carry out condition surveys on key properties, to be funded from a rates rebate on the Town Hall; (2) the provisional allocation of a sum of £350,000 for 2002/03, to be included in the financial plan and funded from strategic reserves. 1 Implications for Committee Policies/Objectives .1 This Committee is responsible for the development of the Council’s Corporate Capital Programme and Asset Management Plan. Both support the achievement of the key corporate objectives. Item 3 - Page 1 of 4
  2. 2. STRATEGY AND RESOURCES ITEM 3 13 NOVEMBER 2001 2 Introduction .1 Following the Government’s request for implementation of the Asset Management Plan and Capital Strategy, both were submitted to GOSE in July 2001. We now await their comments/recommendations. Part of the Asset Management Process was to complete a basic property condition assessment and collect data on maintenance backlogs for each individual property. .2 Due to a largely reactive approach to property asset manufacture over the years, and minimal funding for the property assets owned by the council, both operational and non-operational, this approach has resulted in a backlog of maintenance equating to approximately £350,000. .3 Failure to bring the properties into reasonable repair will result in the continual deterioration of the fabric of the buildings. Effectively, additional costs will fall upon the Council plus loss of income due to inability to re-let the premises or because they will become unfit for their current use. 3 Backlog of Maintenance .1 The maintenance backlog schedule for each property has been prepared by the Property Services Section who have relied on their expert knowledge for each individual building. See Appendix A. .2 Asbestos: The Government has introduced significant measures over the last three years to control the risk of exposure to asbestos. In addition, last year the Health and Safety Commission launched a consultation document which introduced the concept of the duty to manage. Under these proposals, for the first time, building owners will have a specific legal duty to identify asbestos containing materials in their buildings and to assess the condition of those materials. .3 In order to verify the advice shown in Appendix A and ensure that the priority referred to in paragraph 3.5 is correct, full condition surveys on the various properties need to be undertaken by a specialist consultant. In addition to the identification of any asbestos the condition surveys will also identify whether any other “deleterious” materials are evident within the various buildings (e.g. high aluminium cement, etc.). The survey will also include the life expectancy of any plant and when it would be appropriate to consider replacement. This pertinent information will enable the Council to budget appropriately for replacement of costly items. .4 Due to resources and the need for certain specialist skills, it will not be possible to carry out these condition surveys in-house. Officers are therefore in the process of approaching firms who would be willing to carry out this task. Item 3 - Page 2 of 4
  3. 3. STRATEGY AND RESOURCES ITEM 3 13 NOVEMBER 2001 .5 So that the exact costs for the backlog of maintenance can be established the condition surveys need to be carried out prior to the end of the financial year. It is considered that the costs of the conditions surveys will be in the region of £25,000-£30,000. .6 Based on the initial assessment of property assets it is anticipated that a provision of £350,000 may be required for backlog maintenance works. .7 With the increase in the work load to deal with the maintenance back-log during 2002/03 it will be necessary to ‘buy in’ some expertise in respect of specification writing, project management for maintenance and any capital works to the buildings. This could be achieved by way of a temporary contract or consultancy. After 2002/03, this work could form part of the package of the new ‘Building Maintenance’ contract to be tendered shortly. It is envisaged that these costs will be in the range of £30,000 - £50,000. 4 Proposal .1 It is proposed that (a) a provision of £30,000 is included in the 2001/02 budget for condition surveys; (b) that the financial plan includes a provision of £350,000 for backlog property maintenance works to be funded from strategic reserves, and (c) that the release of any monies set aside for pro-active property maintenance be dependant on a further report being made to the committee following completion of the condition surveys. 5 Financial and Manpower Implications .1 The 2001/02 budget includes provisions of some £283,000 for reactive property maintenance in the service budgets and £40,000 for emergency works in the corporate budget for general expenses. There is no provision for additional condition surveys. .2 If supported, the additional £30,000 funding to required to pay for the cost of the conditions surveys in 2001/02 can be met from the rates rebate recently received on the Town Hall following a successful valuation appeal. .3 The budget targets for 2002/03 and future years include an additional provision of £100,000 per annum for property maintenance but no provision has yet been made for backlog works as it was proposed at the time that these be funded from reserves. Item 3 - Page 3 of 4
  4. 4. STRATEGY AND RESOURCES ITEM 3 13 NOVEMBER 2001 .4 The financial planning report to Policy and Resources (10 July 2001 item 12) identified a sum of £370,000 in the insurance reserve as being in excess of the minimum fund provision (110% of reserves on outstanding claims). The fund will be reviewed once new insurance arrangements have been agreed from April 2002, however for planning purposes it is proposed that a Property Maintenance Fund be established by transferring £350,000 from the insurance reserve at the year end. Release of funds should be subject to the approval of a prioritised works programme for 2002/03. .5 The proposed funding arrangement will not adversely impact on the financial plan agreed when the budget targets were set in September. The four year budget profiles do not assume general use of the strategic reserves to support the revenue budget shortfall. 6 Human Rights and Other Legal Implications .1 As identified in this report. 7 Social Well-being .1 As identified in this report 8 Economic Well-being .1 None for the purposes of this report 9 Environmental Well-being .1 As identified in this report 10 Conclusions .1 The asset management plan seeks to ensure that property assets are used effectively and are maintained in good condition. The condition of the Council’s property assets could lead to further increases in reactive maintenance costs in the future and the investment proposed will provide long term cost and service benefits. It is officer’s recommendation that the condition surveys are carried out this year. Following the evidence produced from these surveys and a further report on the outcome of the survey, the backlog maintenance programme to be commenced in the next financial year with a further report to Committee on progress during the course of next year. WARD(S) AFFECTED: ALL Item 3 - Page 4 of 4