Agenda item

Asset Review


The Executive Member for Regeneration submitted a report for Executive’s consideration.


This report set out the details of a review of land and property assets held by the Council, with a view to generating additional income and/or disposals resulting in a pipeline of capital receipts being realised to support the financial recovery and return to financial sustainability over the period of the Medium-Term Financial Plan.


An asset review had been undertaken to identify land and property owned by the Council that could be utilised differently (including disposal) to assist in supporting the Council’s financial recovery and to achieve financial sustainability.


Disposal of capital assets generated capital receipts that could be used to support the Council’s financial position in serval ways including to fund investment in projects that will either deliver ongoing revenue savings or deliver transformation in public service delivery through cost and/or demand reduction in accordance with Government regulations governing the Flexible Use of Capital Receipts.


The Council held significant amounts of land and buildings on its balance sheet which presented opportunity for review and optimisation to support the Council’s delivery of services in the future.


A review had been undertaken for all land and property assets, and recommendations made as to the future strategy for each. These recommendations were summarised in the report and included the investment of £1.5m in existing Council buildings to accommodate additional staff and the development of a public sector hub within the Cleveland Centre


The financial impact of the proposed sales would be an estimated net capital receipt of over £33m, with a reduction in the Council’s longer-term income of £1m pa, with a one off revenue cost of £0.6m in relation to TeesAMP 1.


The Ward Member for Hemlington stated the Viewley Centre was included on the list of Assets that could be disposed of. As the site held value for the local community, the Member raised several queries. They asked if assurance could be provided that there was no intention to close the Viewley Hill Shopping Centre, but that if it was to be sold it would be as a going concern as a shopping centre with leases protected. They also queried if the Viewley Centre would be considered at the end of the three-year period for disposals rather than in the near future and sought confirmation that the Viewley centre had no interested parties to buy it. The Member also asked, were the Viewley Centre were to be earmarked for disposal, that a report be brought to Executive for agreement before that happened.  


The Executive Member for Regeneration stated that any intentions to dispose of assets, including the Viewley Centre, would follow proper processes and that consultation would be carried out with interested parties including Ward Members.


ORDERED the Executive


a)    Close and sell Middlesbrough House, relocating staff to Fountain Court and other Council buildings;

b)    Invest £1.5m from the Council’s Capital Programme in expanding the capacity of Fountain Court and other Council buildings;

c)    Relocate the Live Well Centre from Dundas House to the Cleveland Centre, subject to confirmation of external funding;

d)    Relocate Middlesbrough Community Learning from the Multi Media Exchange to the Cleveland Centre, subject to confirmation of external funding;

e)    Close and sell Multi Media Exchange;

f)     Relocate Children’s Services staff from 6-14 Viewley Centre to other Council buildings

g)    Close and sell 3 Park Road North;

h)    Close and sell Lloyd Street Depot;

i)     Seek specialist external management arrangements for the premium assets within the commercial portfolio;

j)     Sell the following commercial properties:

i. Tees AMP 1 & 2;

ii. Viewley Centre;

iii. Lorne Street Industrial Estate;

iv. Howard Street Industrial Estate;

v. Letitia Industrial Estate;

vi. Gilkes Street Industrial Estate;

vii. Carcut Road Industrial Estate;

viii. Florence/Italy Street Units;

k)    Sell the Middlesbrough Municipal Golf Centre with the appropriate covenants in place to protect members and secure its permanent use as a golf club;

l)     Sell the Zetland Street Car Park with the appropriate covenants in place to secure its permanent use as a car park;

m)  Sell the following sites for housing development:

i. Land East of Middlesbrough Municipal Golf Centre Driving Range;

ii. Acklam [Stainsby Road];

iii. Hemlington Grange [West];

iv. Coulby Farm Way East / West;

v. Muirfield, Nunthorpe;

vi. Land West of Toby Carvery;

n)    Sell the following sites for commercial development:

i. Cannon Park Car Park 1;

ii. Cannon Park Car Park 2;

iii. Corporation Quay;

o)    Delegate the approval of individual Asset Disposal Business Case forms for the assets listed above to the Director of Regeneration, in consultation with the Director of Finance; and,

p)    Delegate the packaging and timing of disposals identified in this report to the Director of Regeneration, in consultation with the Director of Finance.





Several options were submitted as part of the report including:


The disposal of all non-operational assets.


Although the Council’s short term financial situation was challenging and would be supported by the complete disposal of all non-operational assets, there was a need to balance this with the longer-term view as well. If the Council sold all commercial assets and invested the receipts in reducing capital borrowing and funding transformation, there was inevitably going to be less long-term reliance upon the revenue income generated by a commercial portfolio. That reliance was, however, unlikely to be eased to the extent that none of the commercial income was required in future. The optimum balance could be found by taking a more incremental approach that was recommended in the report, and if the financial position improved and the long-term reliance on commercial income reduced over time then there was a case to be made for further asset disposals.


Sale and leaseback of operational assets


Similar to the argument regarding the disposal of all non-operational assets, the Council needed to balance taking short term capital benefits at the expense of the longer-term revenue position. A sale and leaseback arrangement may ultimately be determined to be necessary if the financial position did not improve, but this exchange of long-term revenue for short term capital was viewed as being an unnecessary step at this stage, with such saleable commercial assets to utilise first.


Categorisation of community based properties for disposal or retention


The long list of community based assets identified in the report represented an opportunity to reduce running costs, rather than to raise capital receipts. The future use of community assets was as likely to be driven by Council need and the appetite for community asset transfers than it was by commercial considerations, as the properties had only a limited financial value. Determining the disposal or retention of these individually ahead of the Council determining its preferred model for locality working would potentially weaken the chances of success and create a confused local picture.




Reducing the number of assets held by the Council would enable revenue costs to be reduced, capital receipts to be secured, and the alternative strategies proposed for others should enable the Council to reduce its revenue costs and increase commercial income. The additional income, reduced expenditure and secured capital receipts would all be essential to addressing the budget challenges the Council faced but came at the cost of reducing longer term income potential.


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