1. Princes Parade Project Working Group
13th March 2018

2. Purpose and Scope
To provide the Working Group with an overview of the results of the work undertaken in relation to the Princes Parade Project in advance of the forthcoming report to Cabinet setting out the business case for the project.
To seek the views and input of the Working Group prior to the preparation of the Cabinet report.

3. Topics covered
Princes Parade planning application (Y17/1042/SH) update.
Leisure Centre Business Case – presentation by the Sports Consultancy
Programme and procurement advice – presentation by Hadron Consulting including contractor soft market testing.
Princes Parade Viability Report overview
Residential soft market testing update
Next steps and forward programme.

4. Planning Application update
Additional information submitted to LPA covering
Cost and Viability – including a comparison with a scheme for Nickolls Quarry.
Heritage – in response to HE representation
Ecology – responding to KCC EAS, EA (also CPRE and KWT)
Lighting impact of residential properties on canal with updated ecology response.
Transport – clarification of details and Stage 1 Safety Audit

5. Leisure Centre Business Case
used for analysis of the revenue performance of the centre.
Net operational position – £271,770 deficit
Demographics – 6,000 people within a mile.
76,000 within a 12 minute drive (takes in Hythe, Saltwood, Sandgate, Folkestone, Hawkinge, Etchinghill and Palmarsh).
Biggest groups of the population (the 6000) are aspiring homemakers (26-35) and senior security both accounting for 13.5%. Senior security average age of 75.

6. Leisure Centre Business Case
Latent demand for fitness is 2334 memberships
Business plan – management fee of £61,009 over a 10 year average. Payable as income to Shepway District Council by the operator.
10 year average throughput of 351,276 per annum
10 average in terms of membership 2037.
Revenue turn around - £332,779 = £3.4 million over 10 years.
Leisure Centre has potential to be used by visitors/tourists – allowance made for 20% of the total to come from outside the estimated catchment area

7. Leisure Centre Business Case
Management options – In-house, outsource to a specialist operator, new leisure trust, asset transfer.
Soft market testing – 9 existing trusts with 7 responses. 5 said they were interested in the opportunity with the other two potentially dependent on timing.
General preference for a 10 to 15 year contract with an extension option in line with recent examples.

8. Procurement and Programme
Presentation by Stephen Jepson of Hadron Consulting

9. Princes Parade Viability Report
Based on cost plan prepared by Betteridge and Milsom
Princes Parade Phases 1 (as described in Hadron presentation) – total cost £28.7 million SDC contribution £2.1 million
Nickolls Quarry two storey scheme – total cost £26 million SDC contribution - £15.8million

10. Princes Parade Viability Report
Cost and viability assessment assumes
£14.3 million valuation of remediated/serviced residential/commercial land (Savills)
£5 million valuation of existing swimming pool site without affordable housing due to existing commercial floorspace (Savills)
Reinvestment of CIL - £1.1 million
Use of Hythe S106 affordable housing contribution - £1.4 million. Secured by SDC from nearby Imperial Green scheme.
Nickolls Quarry S106 - £4.7 million (with indexation)

11. Residential/Commercial Soft Market Testing
Co-ordinated by BNP Paribas. Discussions with
Kentish Properties
Pentland Homes
Jenner Construction
Sunningdale House
TG Designer Homes
ICC _ PLC
Bellway
Crest Nicholson

12. Residential/Commercial Soft Market Testing
Key outcomes :-
High level of interest from both local and national housebuilders
Preference to acquire a single plot for the full 150 homes
Input on the phasing of the remediation strategy.
Interest in pursuing a joint venture/structured land sale rather a straight land sale.
Interest in commercial land and existing pool site.

13. Next Steps and Forward Programme
Planning and Licencing Committee estimate - April 2018
Business Plan to Cabinet May 2018
Progress procurement of core team, leisure operator and phase 1 contractor following PLC and Cabinet decisions.
Commence disposal process for residential/commercial land – Summer 2018
Ongoing programme of ecological survey work and mitigation.
Construction to commence – 1st Quarter 2019