Fleet Parish Poll to Save Gurkha Square

Fleet Parish Poll to Save Gurkha Square

Fleet Parish Poll to Save Gurkha Square

Fleet Town Council (FTC) have reluctantly agreed to hold a Fleet Parish Poll to decide whether the new Harlington should be built on Gurkha Square.

We urge eligible voters to vote “No” to the question:

“Do you support the Fleet Town Council proposal to build a new Harlington complex on Gurkha Square?”

Our reasons are:

  • The costs are astronomical. The latest costs are estimated at over £11m, that will be paid back by Fleet residents for 45 years. Longer, if as is usual with projects like this and the costs overrun. We don’t think the finances add up, as described here.
  • Hart residents will lose valuable parking revenue from the existing car park. No alternative car parking arrangements have been agreed.
  • We don’t yet know what assets FTC will have to hand over to recompense Hart for loss of the car park.
  • There are better ways of spending taxpayers money to kick-start the regeneration of Fleet.
  • We also don’t like that fact that Hart residents are not being asked if they would like to give up the Gurkha Square asset, and don’t know what assets they will receive in return.

Fleet residents can vote between the hours of 16:00 to 21:00 on Thursday 13th September at the following polling stations:

  • Ancells Farm Community Center, 1 Falkners Close, Ancells Farm.
  • Church Crookham Baptist Church, 64 Basingbourne Road, Fleet
  • The Harlington Polling Station, Fleet Road
  • St. Philip & St. James Church Hall, Kings Road, Fleet
  • The Lismoyne Hotel, 45 Church Road, Fleet
  • Hart Leisure Centre, Emerald Avenue (off Hitches Lane).

Polling cards are not required.

Fleet Parish Poll resources

A helpful website about the Fleet Parish Poll has been created by concerned residents, and can be found here.

There’s also a leaflet about the  Fleet Parish Poll that can be downloaded below.

Save Gurkha Square in the Fleet Parish Poll

Please help us to save Gurkha Square.

 

 

 

The Harlington project finances don’t add up

The Harlington Project - financial challenges could Save Gurkha Square in Fleet Hampshire

The Harlington Project – Financial challenges

We have uncovered some financial challenges to the Harlington Project to build a new facility on Gurkha Square in Fleet, Hampshire. Sadly, we have found that Fleet Town Council’s numbers don’t add up.

In summary, it is unlikely the project as currently constituted would meet Government lending criteria, without a significant precept increase. Moreover, Fleet taxpayers are on the hook for further increases in the precept if costs were to increase by even a modest amount.

If you want to do something about this, please respond to the petition that can be found here.

Please also object to the planning application here (or search for application 18/00147/OUT on https://publicaccess.hart.gov.uk/ )

Here is detail of the facts as we understand them, that have led us to the conclusions.

First, just to remind you, Fleet Town Council (FTC), is currently proposing to borrow £10,424,200 over 46 years to fund the vast majority of the project cost. The current total cost is estimated at £11,024,200, including a 7.5% estimate of inflation and 5% contingency. They have committed to keeping the annual precept on Fleet residents at £412,000 per year.

The Harlington Project Financial challenges to build on Gurkha Square FTC precept commitment

The Harlington Project – Precept Commitment

Will the Government approve the loan for the Harlington Project?

FTC has stated that it will seek a loan from the Public Works Loan Board (PWLB) to finance the Harlington project to build a replacement building on Gurkha Square.   The PWLB does indeed make such loans, but each loan has to be approved by the Government. Not surprisingly, the Government has set guidelines on how much parish and town councils can borrow.

This leads us to the first challenge. The Government has said:

The amount that an individual council will be allowed to borrow is normally limited to £500,000 in any one financial year.

The Harlington Project Financial challenges to build on Gurkha Square Fleet Government borrowing limit

The Harlington Project – Government borrowing limit

In short, FTC is proposing to borrow more than 20 times the amount that is normally allowed. Therefore, there must be a doubt that the loan will ever be made.

However, there is another challenge. In the current consultation on the prudential framework for capital finance of Local Government, maximum asset lives have been set. Freehold land gets a life of 50 years. Other assets have a maximum asset life of 40 years.

The Harlington Project Financial challenges to build on Gurkha Square Fleet Maximum Asset Life

The Harlington Project – Maximum Asset Life

Eagle eyed readers will have spotted that the maximum term that the Government will allow for buildings is less than the loan term that FTC is proposing. It isn’t even clear that the Government would allow an asset life of 40 years for such a building. This must lead to FTC increasing the precept to finance the reduced loan term (see sensitivity analysis below). Therefore, before any further cost increases, FTC has already broken its commitment to local taxpayers – see below.

Sensitivity of the Harlington Project to Cost Increases

The current proposal from FTC of total project costs of ~£11m, with council needing to borrow £10.4m to fund the build. This project costs figure includes 7.5% provision for inflationary increases and a 5% contingency. Given that stage the project has reached, we think 5% contingency is very low.

Harlington Horror Show: costs escalate to £11m

The Harlington Project costs £11m

This is borne out by FTC’s discussions last year with a Design and Build contractor. This might have been a way of FTC off-loading the risk of cost increases to the private sector. Of course, they would have had to pay a premium to cover this risk. However, the cost estimate put forward by the contractor was ‘unacceptable’, so FTC have decided to go it alone with some support from Rushmoor Borough Council.

The Harlington Project Financial challenges to build on Gurkha Square risk of cost increases

The Harlington Project – risk of cost increases

So, a private company is not willing to risk its own money on there being no further cost increases. We therefore think further cost increases are a virtual certainty. A sensible contingency at this stage of design would be at least 20%. A sensitivity analysis of the costs shows:

The Harlington Project Financial challenges to build on Gurkha Square Sensitivity Analysis

The Harlington Project Financial – Sensitivity Analysis

  • To complete the project at the current cost estimate, with a maximum loan term of 40 years, would require a precept increase of 7.3%
  • If the total project costs increased by 10% (15% over the current baseline), then the precept would need to increase by 18.6%
  • A precept increase of 24.3% would be required if costs increased by 15% (20% over current baseline).

FTC is considering mitigation measures such as seeking a grant from the Arts Council. This would lead to them borrowing £8.5m. They would then have around £1.2m of headroom for cost increases before they would have to consider increasing the precept.

There is of course the risk that the fixed term interest rates that PWLB offer may rise between now and when the loan is offered.

Security of the Loan for the Harlington Project

It is worth pointing out that the loan from the PWLB is different to a mortgage.

With a mortgage, the bank takes security over the property. This means it takes the future value of the property seriously. The bank needs to ensure there will be value in the property if the borrower defaults on the loan.

The Harlington Project Financial challenges to build on Gurkha Square Fleet Security over local tax

The Harlington Project financial challenges – Security over local tax

However, the PWLB takes a charge directly over the taxes raised by the town council, so it has no need to worry about the future value of the building being constructed. This means that if the building were to deteriorate over say, a 30 year period, Fleet taxpayers would still be on the hook to repay the loan, even though the building might be useless by then.

Be careful what you wish for.

See earlier posts:

Save Gurkha Square

The Harlington Horror Show

 

The Harlington Horror Show – public sector value destruction

The Harlington Fleet Horror Show of a Deal to replace it with a new building on Gurkha Square

The Harlington Horror Show in Fleet, Hampshire

We have done more digging into the plans to replace the Harlington in Fleet by building a new facility on Gurkha Square. We have uncovered the Harlington Horror Show. We believe these plans represent a massive destruction of value for taxpayers.

  • Hart taxpayers lose around £140K per year, and lose at least £1.2m of value in Gurkha Square. They might get some of the Views in return, but have to fork out maybe up to £500K to replace the lost parking spaces.
  • Fleet taxpayers gain Gurkha Square and a brand new £9.9m £11m building, that will cost them at least £26.6m £34.3m over a 45 58 year repayment period and they lose part of The Views. They might also gain parking revenue from the remaining car park. ***Stop Press: Costs now escalated to £11m***
  • Everybody gains another decaying building in the form of the old Harlington blighting the town centre for years into the future, with no plan and no money to do anything about it
  • There are no plans for the much needed wider regeneration of Fleet, and there are no plans to raise any private money to back the scheme.

It is difficult to see how these arrangements pass any sensible application of Government Value for Money principles. This is truly the Harlington Horror Show.

If you want to do something about this, please respond to the petition that can be found here.

Please also object to the planning application here (or search for application 18/00147/OUT on https://publicaccess.hart.gov.uk/ )

Here is detail of the facts as we understand them, that have led us to the conclusions:

The Harlington Centre Consultation

In 2017, Fleet Town Council (FTC) consulted on 3 options for the Harlington Fleet. The options were Repair, Refurbish, or Replace. The Replace option mean building a new facility on Gurkha Square car park. Of the 1,481 people who responded to the survey, 86% or 1,274 were Fleet residents. Of those Fleet residents, 53% or 675 people chose the ‘Replace’ option. FTC has taken this as a mandate to spend approximately £10 million to be raised from Fleet Council Tax payers.

The main issue with the consultation is that at the time, FTC did not even have a lease to operate within the existing Harlington and nor does it own the Gurkha Square car park. So, it held a consultation about two options that were not within its gift to deliver. It might as well have had a consultation about how many fairies we would like at the bottom of the garden.

Current position of the Harlington, Fleet

Currently the Harlington generates an operating loss of around £180,000 per year and this is expected to continue with the new facility.

Operating loss of Harlington Centre Fleet £180,000 per year. Harlington Horror Show

It was resolved earlier this year that the Joint Chief Executive in consultation with the Portfolio Holder for Services be authorised to enter into an interim short term ‘two year rolling’ lease for the Harlington with FTC. We don’t know the details of that lease.

HDC FTC short term rolling lease for Harlington Centre. Harlington Horror Show

Current position of Gurkha Square

It is understood that HDC own the freehold for Gurkha Square. Currently it generates between £108,000 and £130,000 of parking revenue. As an average, let’s assume £120,000 per annum.

Parking revenue for Gurkha Square. Harlington Horror Show

Back at the March 2017 Cabinet meeting the car park was worth between £750K and £1.3m.

March 2017 cabinet value of Gurkha Square £750K-£1.3m. Harlington Horror Show

More recently, at Overview and Scrutiny Committee the value was set at £575K. The reason for this mysterious loss of value hasn’t been explained.

New Gurkha Square value £575K. Harlington Horror Show

We think the valuation is on the low side. A continuing stream of parking income, which is likely to be rise in line with inflation each year, might be valued at a multiple of 16 or above. This would value the car park at nearly £2m.

An alternative approach might be to value it as development land with planning permission. The SHMA suggested development land in Hart is worth £4m per hectare. The site is approximately 0.3Ha. This would value the site at £1.2m. This might be considered conservative as it is a prime site in one of the most affluent towns in the UK.

We believe that Hart wants to replace the lost parking revenue. We understand that it has been proposed that there be a ‘land swap’ where HDC give Gurkha Square to FTC and in return, FTC give HDC part of The Views. Hart would then use that land to build new parking spaces. The Views are one of the last remaining green spaces in Fleet town centre. As green space, the land has essentially zero economic value, and probably comes with maintenance costs attached.

The Harlington Proposal

As we understand it, FTC is proposing to build the new facility on Ghurka Square car park at a cost of £9.9m. ***Stop Press: Costs now escalated to £11m***. There are no plans for what happens to the existing Harlington centre, and apparently no money either. It has to be presumed that Hart taxpayers will shoulder the costs of maintenance and security, meanwhile Hart residents gain another decaying building in Fleet.

Harlington Horror Show: costs escalate to £11m

Harlington costs escalate to £11m

It is envisaged they will take loan to cover the cost from the Public Works Loan Board. Under this arrangement, monthly payments would remain fixed, but the term of the loan might vary depending upon changes in interest rates or cost escalations. The current plan is that the repayment period would be 45 years. 58 years based on the new £11m cost. Would the building even last that long?

Harlington costs and repayment £9.9m and 45 years. Harlington Horror Show

FTC has committed not to increase the precept levied to fund this project above £412,000 per annum.

Harlington precept £412000 per year. Harlington Horror Show

It is not clear what will happen if costs or interest rates rise so that the monthly payments don’t cover the interest. A quick sensitivity analysis shows that if the interest rate increases to 4.3% or above, and/or costs escalate to £13.6m or above, then the precept will not be sufficient to repay the interest, let alone repay any of the principal. We know that interest rates are rising, and construction costs only go up between project idea and completion.

Harlington Gurkha Square Sensitivity Analysis. Harlington Horror Show

Taken together, FTC is commiting to spend the continuing operating loss of £180,000 per annum plus the loan repayments of at least £412,000 per annum for the next 45 58 years. This totals at least £26.6m £34.4m over the term, assuming no further cost overruns and no interest rate increases.

The Harlington Horror Show Deal

Putting this all together, we believe this proposal is a lose-lose deal for Hart and Fleet residents. Let’s take a look at the position of Hart and Fleet taxpayers.

Hart Taxpayers

On the revenue side, they lose approximately £120K in parking income each year from Gurkha Square. They also lose the costs of maintaining and securing the decaying Harlington building. This might amount to a total of around £140K per year.

On the capital side of the account they lose Gurkha Square at a value of at least £1.2m. However, they gain part of The Views, at an unknown value. Essentially, this has no economic value as greenspace, and will probably come with maintenance costs attached.

The revenue costs could be mitigated by building more parking spaces on The Views. It is unlikely that the costs, once additional roadworks and machines are included will give much change from £500K. The resulting spaces will then be in an inconvenient position and unlikely to generate much income.

Fleet Taxpayers

On the revenue side Fleet taxpayers commit to paying at least £412K per annum for at least 45 58 years, plus £180K per year subsidy, for a total cost of at least £26.6m £34.3m. They might also gain parking revenue from the remaining car park.

On the capital side, they gain Gurkha Square at a value of £1.2m. However, they lose part of The Views at unknown value. Of course they gain a brand new building at a value of £9.9m £11m.

Taken together, this is the Harlington Horror Show.

 

 

Save Gurkha Square

Save Gurkha Square in Fleet Hampshire

Save Gurkha Square

The purpose of this post is to alert you to the plans to build on the much-loved Gurkha Square car-park and support the petition calling for a referendum of Hart residents before planning permission is granted.

Save Gurkha Square Petition

The petition can be found here.

Gurkha Square proposal

Fleet Town Council has made a controversial planning application to build a new facility on Gurkha Square car-park. This can be found here (or search for application 18/00147/OUT on https://publicaccess.hart.gov.uk/ ). This new facility is currently expected to cost around £9.9m to build.

This is to replace the aging Harlington centre that currently costs £178,300 to support each year. It is envisaged that this support cost will continue for the new centre. Additionally, Fleet residents will be asked to continue paying the £412,000 Harlington precept for 45 years to repay the loan. This assumes there is no escalation in building costs and no increase in interest rates. Hardly sensible assumptions.

At the time of writing, there have been 12 comments on the planning application and all of them are opposed to the proposal. One Hart resident has written:

When I found out about this and how little others living in Fleet knew about it I wanted to ensure that as Fleet residents you were made aware & could have a say in the future

Why is the Gurkha Square proposal a bad idea?

Regular readers will be aware that we are broadly in favour of redeveloping Fleet. So, we had to think long and hard about this proposal. We came down against it because:

  1. This removes much needed parking spaces from the town centre.
  2. Puts at risk the market and other community events.
  3. It is a poorly thought through proposal that isn’t part of a proper master plan for Fleet regeneration
  4. There is no plan to do anything with the vacant, decaying Harlington building or the rest of the underutilised complex.
  5. There is a risk that part of the Views will be concreted over to replace the lost parking spaces.
  6. Disrespects the Gurkha community by reducing the space dedicated to their support and sacrifice for the UK.
  7. This proposal has all the hallmarks of a doomed political vanity project.

Opaque financial arrangements for Gurkha Square transfer

The Gurkha Square car-park is currently owned by Hart District Council. In essence it belongs to all Hart residents. The financial arrangements related to the transfer of the car-park to Fleet Town Council are shrouded in mystery. They were discussed at Overview and Scrutiny Committee, but the key debate about finance was conducted in private.

We don’t think it appropriate that the transfer of assets between two public bodies should be conducted in secret. What we do know is that the Cabinet received advice that the value of the car-park is £575,000. Although it is unclear how this figure was determined. The site is approximately 0.3Ha and development land with planning permission is worth around £4m per hectare. One might expect prime development land in the town centre to be worth more. This would equate to a value of at least £1.2m, far in excess of the stated value.

However, we don’t know the basis on which HDC has agreed to transfer the asset. Some people fear they have agreed a much lower capital value, in exchange for a continuing income. But it seems odd they would rely upon an income from a facility that Fleet Town Council say will continue to lose £180,000 per annum. Moreover, the decaying Harlington Centre will revert to HDC, which looks like it will be a liability rather than an asset.

We think Hart residents should be consulted before ‘their’ asset is transferred to Fleet. Moreover, the financial arrangements should be transparent. Indeed, the deal as proposed may well be in breach of the Value for Money rules governing public bodies.

Conclusion

Please respond to the petition that can be found here.

Please object to the planning application here (or search for application 18/00147/OUT on https://publicaccess.hart.gov.uk/ )

Download the leaflet here:

Save Gurkha Square leaflet