1.    Cabinet endorse the view that the council proceeds with Option Three as set out in section 7.1 of the report, namely progressing with the project, recognising the financial viability challenges and seeking to:

·           Contain costs within the current estimate;

·           Increase capital funding for the scheme; and/or

·           Identify opportunities to reduce costs further where they are not significantly detrimental to the key objectives of the project.

2.    Cabinet recorded that any decision to proceed will be considered as a Key Decision taken by the Executive Leader in accordance with Annex 1.6 of the Constitution, recognising that this will have no impact on the approved capital programme for 2022/23.

Further to minute 11 (31.01.2022), the Cabinet was informed that Knight, Kavanagh & Page (KKP) was commissioned to undertake a feasibility study of the Council owned leisure centres, Cascades Leisure Centre and Cygnet Leisure Centre. The key focus of the study was to refresh the Council’s Indoor Leisure Strategy and to redefine its needs and options for investment in its facility portfolio.

As part of the work, a new design option at Cascades Leisure Centre was developed which offered an attractive, cohesive facility mix giving prominence to the core family focussed activities, and dedicated space for health referral and consultation. A total capital cost of circa £33.8m was identified at the time within the feasibility study, inclusive of approximately £3.5m allocation for enabling works including landscaping, creation of an outdoor ‘active environment’ area and demolition of the existing Regan’s Bar public house. The Cabinet approved the proposals for a new centre and delegated authority was given to the Director (Communities); in consultation with the Leader, the Director (Corporate Services) (in the role of S151 Officer) and the Monitoring Officer, to take all necessary practical, financial and legal actions required; including entering into the relevant formal legal agreements required to engage consultant/contractor support and commence the procurement process. This also included evaluating and appointing the successful contractor(s), approve the design, commence construction and certify the acceptance of completion of works.

It was recommended within the original report that the procurement was approached in a two-stage manner, with the procurement of consultancy services being separate from that of selecting a construction partner. Therefore, the Council made a single appointment of a Lead Consultant, through use of a Pagabo Framework Contract to Faithful & Gould. As Faithful & Gould were already a tier one contractor as part of the Pagabo Framework, one of the main benefits was that it was extremely flexible, in allowing a team to be built for the Council from various other consultancy firms, based on what best met the Council’s needs rather than anything pre-prescribed or restricted. This framework therefore allowed KKP and Space & Place to continue working on the project from the original feasibility phase.

Once the design team was fully in place, a number of design meetings and workshops were organised in order to review the original feasibility study outline and consider the mix of facilities the new centre should provide. These were supplemented with updated operational information from the existing leisure centres within the Borough (particularly relevant following Covid-19 and the changes to patron usage and behaviours) and some early feedback from the public on the proposals within the original report and facility make-up that was publicised at the time. Through this process, the core facility requirements were identified as detailed in section 4.2 of the report.

The environment in which a new leisure centre would be brought forward had significantly changed since the original feasibility study (January 2022). Construction costs had increased nationally by between 20-30% with both material cost and labour costs rising. In addition, there was a market uplift of around 15% for Passivhaus construction techniques that were not incorporated in the original feasibility study, albeit this would be offset by reduced utility expenditure when considering the whole life cost of an asset. The cost of borrowing had also escalated from 0.25% (January 2022) to 2.25%. Further detail on the projected costs had been included within the Part B report.

Options modelling had indicated that from a financial perspective, the Council could seek to take forward the project in a manner that would incorporate the core scheme requirements outlined at 4.2 and target Passivhaus in terms of energy efficiency design. It was noted, however, that achieving viability was currently heavily reliant on achieving a reduction of circa. £2m on the level of borrowing required which would need to be delivered through securing additional external funding or reducing the overall capital cost of the project. The financial viability of the current proposed scheme was also significantly sensitive to any changes in modelling assumptions, particularly those influenced by economic conditions. Should these conditions change and become increasingly challenging moving forwards, it would negatively affect viability of the project. Further modelling on these scenarios had been included within the Part B report.

In formulating the report and developing the preferred scheme, consideration had been given to the following options:-

·         Option One – taking a decision not to proceed with the new leisure facility at the Cascades Leisure site;

·         Option Two – delaying progress of the project until economic conditions become more stable; and

·         Option Three – progressing of the project, recognising the financial viability challenges and seeking to contain costs within the current estimate and increasing capital funding for the scheme, or identifying opportunities to reduce costs further where they are not significantly detrimental to the key objectives of the project.

The inclusion of any proposals that would expand or enhance the core facilities, including the provision of a full Health Suite facility, were not considered to be financially viable within the current economic climate but could be considered in future phasing of provision at the site. Early provision of some health suite facilities poolside will be considered alongside any other potential changes identified through the public consultation.

The Cabinet was asked to endorse the view that the Council proceeds with Option Three and agrees to officers progressing with the scheme, recognising the financial viability challenges and seeking to contain costs within the current estimate and increasing capital funding for the scheme, or identifying opportunities to reduce costs further where they are not significantly detrimental to the key objectives of the project.

The financial provision made for the project in the approved Capital Programme was considered to be sufficient for the current financial year, with any construction activity on site unlikely to commence before Summer 2023. Total project costs, however, had significantly increased and will need to be further considered by Full Council through consideration of future year capital budget provisions. Any decision to proceed would be considered as a Key Decision, given the financial impact of the decision will exceed the £100,000 threshold. In accordance with Annex 1.6 of the Constitution, the Executive Leader may take a Key Decision.

The lead consultants, through a project risk register, had identified a number of risks, the associated risk consequences and the various controls that were in place to mitigate these risks. This will be updated at regular intervals and Appendix 1 provided an indication of the breadth and scope that this will cover as its populated during the project’s development through the various RIBA stages to completion.

The report outlined the following next steps:-

·         Consultation;

·         Planning;

·         Early Contractor Involvement (ECI); and

·         Future Management Operating Model.

Members were informed that options regarding leisure development in Gravesham going forward also need to take account of the Lower Thames Crossing (LTC) programme, which may have a degree of overlap with the leisure centre construction. In this regard, the LTC development included the compulsory purchase of the Southern Valley Golf course. National Highways was negotiating a voluntary purchase of the course but in the interim the owners had closed it. Discussions to date had involved the potential for the acquisition of part of the Southern Valley site by GBC to replace the existing Council owned nine-hole par three course (which had also been earmarked for compulsory purchase by LTC), as part of a land swap arrangement. These discussions and potential agreements will help to create a second phase of leisure development within the area, especially with regards to outdoor team sports. The Council will continue its ongoing discussion with LTC representatives.

As reported previously, proposals for a hub leisure facility at Ebbsfleet Garden City (if delivered) will also provide a potential competition standard facility for swimming and sports hall provision. Therefore, the future plans for the current Cygnet Leisure Centre site will need to be considered and agreed once it is known whether the Ebbsfleet landmark leisure facility will be developed, and if so, when it will be completed, along with its actual location within the Garden City. It should however be noted that there remains a commitment for there to be two municipal leisure centres in the Borough, and interim measures to support the ongoing operation of Cygnets were currently being considered.

The Cabinet welcomed the report and agreed that the Council would need to proceed with caution and progression of the project was subject to achieving viability. It was acknowledged that there would still be a significant cost to the Council for the ongoing operation of Cascades, in its current form, if the Council did not to proceed with the redevelopment.

The Cabinet agreed that it would consider the Part B report prior to making a decision.

Note: Cllr Shane Mochrie-Cox left the Chamber during consideration of this item.