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Decision details
Hazlitt Arts Centre Works
Decision Maker: Cabinet.
Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: Yes
Purpose:
To consider expenditure on essential work to the boilers and the electrical installations with the resultant building regulation works at the Hazlitt Arts Centre (HAC).
Decision:
1. That the boilers and associated pipework and controls, electrical switchgear and mains distribution panels are replaced and enabling health and safety works are carried out, all as identified in the report by Mervyn Hayes Consultants set out in Appendix A to the joint report of the Assistant Director of Regeneration and Cultural Services and the Theatre and Events Manager and at the approximate costs set out in that Appendix, plus a contingency of 10%.
2.
That the necessary urgent works to the HAC are
funded from balances, and the monies
recouped through either reduced subsidy and/or increased
income.
Reasons for the decision:
The boilers, associated pipework, controls, air handling systems and electrical installations at the Hazlitt Arts Centre are known to be coming towards the end of their useful life and one boiler has already failed. Maintenance costs and the risk of failure are also increasing. Consultants were appointed to advise on the most efficient way of ensuring the business of the Hazlitt Arts Centre continues and to examine ways of improving energy efficiency and comfort levels.
In the course of the investigation into the operating systems at the HAC the contractor identified potential failure and capacity issues with the main electrical intake board which could necessitate shutting the building down for electrical work to take place which could affect business continuity. There are health and safety concerns about the risk to contractors instructed to work on this equipment. It is therefore thought appropriate that the main board is replaced as part of this work.
The consultant’s report confirmed that after over fifteen years of service, in addition to the boiler that has already failed, the remaining three are also at risk of failing and that there is a strong possibility that one or more could fail during the winter of 2011/12. The existing boilers are no longer in production and, as a result, it has not been possible to find any replacement parts for the boiler that has failed. Therefore, an efficient heating solution needs to be in place before the heating is turned on for the busy winter season, which includes the pantomime.
The consultant also identified potential problems with the existing pipework and radiators which are over thirty years old. The system was flushed out in the summer of 2010 in the hope of improving heating efficiency, however, this has resulted in exposing weaknesses in the pipework causing leaking in some areas. It is therefore considered expedient to replace the elderly pipework and radiators at the same time as the boiler plant to ensure maximum efficiency of the new system. Additionally modern boilers are recognised to be extremely sensitive and debris from the old pipework could seriously compromise the new equipment.
The
programme of work detailed in the joint report of the Assistant
Director of Regeneration and Cultural Services and the Theatre and
Events Manager will necessitate some essential building works to be
undertaken to ensure the health and safety of the contractors and
those carrying out any further works or maintenance. The schedule of work that is necessary is attached
at Appendix ‘A’ to the joint report of the Assistant
Director of Regeneration and Cultural Services and the Theatre and
Events Manager.
Potential Options
The
Hazlitt Art Centre houses the only purpose built performance spaces
in the Borough and it contributes significantly to the economic
(over £2m) and social life of the Town and as such it
contributes to the Council’s key objectives of boosting the
local economy and making the Town an attractive place for residents and
visitors.
In
recognition of the value that the HAC provides to the Town, but
also the cost of running it, the Council is in the process of
looking at alternative ways of operating it but at a reduced
cost. That work is in its early stages
and no conclusions on future governance models can be drawn from
it. The question of the repairs is also
delaying that work, because of the need for detailed advice on
future governance.
The cost of the urgent works is set out in the report and is significant and unbudgeted. The options that face the Council are:
i.
Not to carry out the works; this risks failure of
the heating system and the threats to safety that will rise from
not carrying out the works. The failure
of the heating system, particularly in winter, is likely to lead to
the closure of the Theatre.
ii.
To close the Theatre – this approach would
lose the facility to the Borough and undermine the Council’s
strategic objectives. It would also
result in the loss of staff at the HAC and elsewhere in the Council
at a maximum redundancy cost of £195,000, and a recurring
minimum residual cost of £206,350 per annum.
iii.
Delay the repairs until the governance model is
resolved. The need to repair the HAC
heating and power systems and the consequential cost is unlikely to
make the HAC an attractive proposition to any future operator as
clearly there is a need to reduce the cost of the
operation. Any potential operator would
have to achieve a significant income to cover the cost of the
repairs either directly or through a loan. However, an operator other than the Council might
be able to obtain some grant funding towards the
repair. The risk of system failure
would also remain.
iv.
Fund the works from revenue balances. The approved capital programme agreed by Council
in March 2011 does not allocate resources to the
theatre. The provisional revenue
outturn reported elsewhere on this agenda shows a significant
favourable variance that will be added to balances for
2011/12. The Medium Term Financial
Strategy already predicts revenue balances in excess of the minimum
working balance of £2.3m. With
the addition of the revenue underspend
from 2010/11 to balances the predicted unallocated resources will
be in excess of £1.3m and Cabinet could provide funding from
balances to carry out this urgent work.
Options
(i) and (iii) outlined above risk the failure of the systems and
risks to safety and potential closure of the Theatre whilst urgent
repairs are carried out which at peak times will create
considerable disruption to audiences and loss of income and could
cause damage to the Council’s reputation.
Options
(ii) – the closure of the Theatre – will have financial
consequences immediately and into the future, and also erode the
Town’s economic and social base.
Option
(iv) of funding the repairs from
balances enables:-
·
The HAC to be retained for the future to the benefit
of the Borough;
·
For the work to be undertaken during the summer of
2011, causing the least disruption to audiences;
·
For any impediment because of the cost of repairs to
future governance to be removed.
In
relation to recouping the costs of these repairs this should be
explored as part of the arrangements for the future governance of
the HAC and could take the form of a reduced subsidy and/or a share
in the profit over a period o0f time to be agreed.
It is
therefore recommended that Option (iv) is pursued and the repairs
set out in Appendix ‘A’ of the joint report of the
Assistant Director of Regeneration and the Cultural Services and
the Theatre and Events Manager are carried out, over the summer of
2011, and those repairs are funded from balances.
Alternative options considered:
The
potential options have been set out above and the effects
examined. The reasons for not opting
for options (i) to (iii) have been
outlined, and it is considered that they are unsuitable
alternative courses of action.
It may be possible to shut down the Exchange Studio for the duration of the winter of 2011/12 and just heat the Hazlitt Theatre with the remaining three boilers. However, the consultant and the property services section consider that that there is a high risk of these boilers failing resulting in a total shut down of the business.
Details of the Committee: None
Publication date: 18/05/2011
Date of decision: 18/05/2011
Decided: 18/05/2011 - Cabinet.
Effective from: 26/05/2011
Accompanying Documents: