Agenda item

Report of Director of Tourism and Enterprise.

Cabinet lead member:  Councillor Margaret Bannister.

(1) Construction of new leisure centre adjacent to Sovereign Centre approved.

(2) Full council recommended to include £24.48m in capital programme to fund construction of new centre and replacement of adjacent skatepark.

(3) Proposed procurement of a new operator for new centre approved.

(4) Commencement of public procurement processes referred to in report to deliver the new centre and a new operator approved.

(5) Director of tourism and enterprise in consultation with lead cabinet members for tourism and enterprise and finance, chief finance officer and lawyer to the council given delegated authority to work on detailed development, management and approval of public procurement processes to be followed and of all the procurement documentation required to deliver project: Such delegation to include approval to allowing exceptions to council’s contract procedure rules should that be necessary.

(6) That officers instructed to investigate options for the joint management of Motcombe Pool and dry side centres together with centres owned and/or operated by Lewes District Council.

51.1 The chairman reported upon representations that he had received from users of the Sovereign Centre.  He gave an assurance that officers would organise further consultation with user groups and other interested parties on the design detail and in particular that of water based activities in the new centre.

51.2 Councillor Freebody addressed the cabinet and commended the proposal, acknowledging the viability of the business case and welcoming the promised further consultation.  He questioned why cabinet had not been aske to consider other options for the renewal of the existing centre and spoke of the need to ensure that the new centre would have minimal impact on the neighbouring locality.  The chairman replied saying it would not have been appropriate to bring this matter before cabinet at an earlier stage given the need to fully explore the viability of the different options and choice of location.  Councillor Mattock referred to the prior involvement of the council’s strategic property board (having cross-party membership) in receiving reports on the progress of this project and consideration of the different options.

51.3 Cabinet considered the report of the director of tourism and enterprise considering the business case for the construction of a new leisure centre to replace the Sovereign Centre and the future management of the new centre.  The existing centre (opened in the 1970s with a large extension added in the 1980s) was let to the Eastbourne Leisure Trust (ELT) which had appointed Serco to operate the Centre.  The lease and contracts would expire in April 2019. 

51.4 In late 2015 the council commissioned FMG Consultants/GT Architects, to carry out a high-level review and business case development to test the options for the future of the centre.  The review showed that both a refurbishment of the centre or, the construction of a new centre on the adjacent car park were viable.  However, refurbishment was necessarily a compromise, would not completely address the operational issues caused by the layout of the building, was a higher risk than new build and would cause considerable disruption to the service during construction.  Both ELT and Serco had expressed a preference for re-development.  A new build option was therefore taken forward for detailed investigation.  In order to test that a contract with a new operator could fund the revenue costs of constructing a new centre, it would be essential to run an operator procurement in parallel with taking forward the design and procurement of any new building.

51.5 A project team of officers drawn from tourism, planning, property, legal and finance had worked with external consultants, architects and quantity surveyors to develop a cost effective scheme which met the requirements of the revenue business case.  The brief to the design team was as follows:

·         To create a high profile centre adjacent to the existing site which both served the needs of the town’s growing population and provided a new destination, to build on our already ambitious plans for the town’s economic regeneration.

·         The centre to be of a robust design, with a minimum 40 year life, which recognised the marine environment it was located within and the heavy footfall it would attract.

·         The design of the centre should optimise the use of internal space to drive the highest possible commercial returns per m2.

·         To integrate into the design where possible links with the seafront promenade to reinforce the council’s strategy for improving the visitor offer east of the Pier.

51.6 The report outlined the range of facilities the new centre would be expected to offer and key factors influencing design and location.  The report was accompanied by plans showing an initial draft design and layout of the proposed new centre.  The project team would be undertaking further work to refine aspects of the design and layout in the light of market testing of certain optional items and the outcome of further stakeholder and statutory consultations.  The timetable for the construction of the new centre had the following key milestones:

·         Completion of stage 3 design for planning application – April 2017.

·         Planning approval – October 2017.

·         Procurement of construction contractor – May 2017 – December 2017.

·         Construction – December 2017 –September 2019.

·         Demolition of existing centre - Oct 2019 – March 2020.

These dates were dependent on an immediate start on the next phase of work immediately following the cabinet decision, prompt input and decision making by all statutory bodies and a successful contractor procurement process.

51.7 The replacement of the existing skate park adjacent to the Sovereign Centre was an outstanding issue.  It was estimated that this would cost £200,000.  Construction would take place in 2017/18.

51.8 The project team had considered a range of options for the future management of the council’s leisure centres.  They had also worked with an officer of Lewes DC to consider whether there were any opportunities for a shared approach.  All the leisure centres in Lewes were currently managed by a not for profit trust (Wave Leisure).  The contract for this was due to end in April 2021.  The project team recommend that a tendering exercise for the Sovereign Centre be started immediately after the council’s decision on whether to replace the Sovereign Centre.  Further investigation of the options to manage Motcombe Pool, the council’s dry side centres and the centres owned/operated by Lewes DC could then take place in the period January to March 2017.

51.9 At present external consultation had been limited to the board of ELT, 5 major national/regional leisure operators and certain user groups (Eastbourne Swimming Club, Sama Organisation, Eastbourne Voluntary Lifeguards, Eastbourne College, Jurgen Matthes and the

Young at Heart Club).  All would be sent a newsletter setting out the aspirations and timetable for the new development and commitment to keep the existing pool open until 2019.  ELT had made a positive and strongly argued response to the council’s consultation and the points made by ELT were set out in full in the report together with the project team’s response.

51.10 The objective for the initial business case was for the service to break-even under any new contracting arrangements.  The estimated capital cost of the scheme was £24.48 million inclusive of professional fees, surveys, equipment and other costs and the provision of a replacement skate-park.  The initial business case projected that the long term annual revenue cost of the new centre would be £12,000 per annum.  This was based on a payment by an operator being sufficient to cover an estimated debt cost of £1.2 million per annum.  This assumed interest at a rate of 4% (the current PWLB rates were between 2.5% and 3% depending on the term).  By comparison, the annual net cost to the council of the existing centre was some £340,000.  Whilst no proposals had been made nor allowance made for the potential redevelopment of the current Sovereign Centre site, there was clearly a value attached to a site of some 1.8 hectares which would become free in early 2020.

51.11 In conclusion, the report indicated that the development of a new leisure centre adjacent to the Sovereign site would address the weaknesses in design of the current centre; spend capital on a new building with a 40 year life rather than addressing maintenance issue on a building dating from the 1970/80s; provide additional facilities which would extend the leisure offer to both residents and visitors; and provide a building which was attractive to commercial operators and so able to fund the revenue costs of the capital investment.  Procurement of a new operator by late 2017 would ensure that the business case had been market tested and that the operator could contribute to the final design of the new centre.

51.12 Resolved (key decision): (1) That the construction of a new leisure centre adjacent to the Sovereign Centre be approved.

(2) That full council be recommended to include £24.48m in the capital programme to fund the construction of the new centre and replacement of the adjacent skatepark.

(3) That the proposed procurement of a new operator for the new centre be approved.

(4) That the commencement of the public procurement processes referred to in the report to deliver the new centre and a new operator be approved.

(5) That the director of tourism and enterprise in consultation with the lead cabinet members for tourism and enterprise and finance, the chief finance officer and the lawyer to the council be given delegated authority to work on the detailed development, management and approval of the public procurement processes to be followed and of all the procurement documentation required to deliver the project: Such delegation to include approval to allowing exceptions to the council’s contract procedure rules should that be necessary.

(6) That officers be instructed to investigate options for the joint management of Motcombe Pool and the dry side centres together with the centres owned and/or operated by Lewes District Council.

(Note:  Councillor Tester was not present for this item of business)