Issue - meetings

Cabinet discussed proposals for the option to buy the leasehold interest in the Royal Harbour Multi-Storey Car Park in Ramsgate. The current lease runs until 2073 with no break options. Rent was reviewed every five years based on the construction price index (CPI) and was currently just over £227k per annum. However, by July 2025, it was expected to rise to above £300,000 per annum.

The lease allowed the Council to buy the property every five years, with the next opportunity in July 2025. The purchase price would be 12 times the rent amount, currently estimated to be at circa £3.6 million plus VAT, though VAT could be reclaimed if the car park use continued. The Council would also need to conduct legal and survey checks before purchasing. The costs could vary slightly depending on the levels of work required. The main reason for purchasing the car park was the significant long-term financial savings it offered.

For example, if the rent remained at the forecasted 2025 levels of £302k annually, the Council would have to pay £14.5 million pounds in rent over the next 48 years. Whereas if the Council bought the property, the cost of borrowing over the same period would be circa £12.7 million, it would be cheaper by £1.78 million. However, the rents would continue to rise. Therefore if the current rate of increase was assumed, the total rental payments could escalate to £27.6 million pounds. This meant that purchasing would save the Council an even greater amount of up to £14.9 million. These were the financial savings alone before considering the benefits from having full control over the site with flexibility to explore future uses and full control over maintenance and repair plans.

Councillor Wing spoke under Council Procedure Rule 20.1.

Councillor Duckworth proposed, Councillor Keen seconded and Cabinet approved exercising the option to purchase the leasehold interest in Royal Harbour Multi-storey car park, Ramsgate at the next available option trigger date and finances the purchase from borrowing.

Andreea Plant, Head of Property introduced the report and made the following comments:

·  The report presented to the Panel specifically looked at the Council's option to buy the leasehold interest in the Royal Harbour Multi-Storey Car Park in Ramsgate;

·  The current lease ran until 2073 with no break options;

·  Rent was reviewed every five years based on the construction price index (CPI) and was currently just over £227k per annum. However, by July 2025, it was expected to rise to above £300,000 per annum;

·  The lease allowed the Council to buy the property every five years, with the next opportunity in July 2025. The purchase price would be 12 times the rent amount, currently estimated to be at circa £3.6 million plus VAT, though VAT could be reclaimed if the car park use continued;

·  The Council would also need to conduct legal and survey checks before purchasing so costs could vary slightly depending on the levels of work required;

·  The main reason for purchasing the car park was the significant long-term financial savings it offers;

·  For example, if the rent remained at the forecasted 2025 levels of £302k annually (which the Council knew it would not, as the reviews would bring it up every 5 years), the Council would have to pay £14.5 million pounds in rent over the next 48 years;

·  Whereas if the Council bought the property the cost of borrowing over the same period would be circa £12.7 million, it would be cheaper by £1.78 million;

·  But as was known, the rents would continue to rise, so if the current rate of increase was assumed, the total rental payments could escalate to £27.6 million pounds, therefore purchasing would save the council an even greater amount of up to £14.9 million;

·  These were the financial savings alone before considering the benefits from having full control over the site with flexibility to explore future uses, and full control over maintenance and repairs plans.

Members asked questions and made comments as follows:

·  Could officers review the calculations just to be sure that these were correct?

·  On a value for ,money basis purchasing this property would be adding to the Council’s assets;

·  The valuation was very high. Was an industry formula used?

·  It was a great idea to take control of this asset. Had a structural survey been conducted to ensure that the facility could take on electric vehicles, as these were heavier than non-electric vehicles?

·  How would the Council deal with fire incidents if they broke out in this facility?

·  How many other assets were being leased by the Council where a similar purchasing approach could be recommended to Cabinet?

·  In February 2023, the lifts were reported as broken and two summers had passed without any repairs having been made to these lifts. Could officers offer a deadline by when these lifts would be repaired?

Andreea Plant and Chris Blundell responded to Member questions and comments as follows:

·  CPI indexes were used for the calculations;

·  There was scope for variability  ...  view the full minutes text for item 68