Agenda item

[Report of the interim Assistant Director for Economic Development and Growth. To be introduced by the Cabinet Member for Corporate Resources and Insourcing.]

Proposal  to lease the ground floor of 54 Muswell Hill for use as a health Centre.

The Cabinet Member for Corporate Services and Insourcing introduced this report which concerned the relocation of 3 current GP practices in the Muswell Hill area to a single new site, 54 Muswell Hill for use as a Health Centre.

This site was owned by the Council and the details of this ownership were contained in the report. Essentially, the 3 GPs wanted to relocate and to set up at this site and the Council were supporting this objective as it met the overall Council view of providing better integrated care in the borough.

Cabinet noted that there existed some access issues with the proposed location, due to it being on a hill. However, these access issues also existed with the current location of the 3 GP practices and the Council were seeking to identify and address these issues.

Instead of sub-contracting the site to an international property company who would likely further sublet this site for a profit, the report proposed the Council retaining the site in ownership and leasing this to the GPs whilst also fitting out the site. This was considered value for money and met the objective of considering direct delivery of services where possible and feasible and prudent. The Council would use capital funding to complete the fit out of the Centre and would be able to obtain a rental stream when leasing the site to the GP’s

In response to Councillor Hearn’s question the following information was provided.

• It was confirmed that the location was felt suitable by the GP’s as it was better than their existing locations. Noted that this centre would be accessible and step free. The issue was with its location on a hill and the Council would take a view on this from the access officer report. Noted that there would be three parking spaces at the site and one would be allocated to patients with a blue badge. Assurance was provided that officers would review the assessment and make sure that the steepness of the hill was not the barrier to the GP’s locating there.

RESOLVED

a)    To agree to the grant of a lease of the whole of the ground floor (outlined red in the plan in Appendix A) of the 54 Muswell Hill to the GPs (The Muswell Hill Practice with and on behalf of Rutland House Surgery, The Queens Avenue Surgery) or such other entity as shall be agreed between GPs and the Council subject to draft terms set out in Appendix B (in draft) and subject to confirmation by the District Valuer of rent to be paid by the GPs.

b)    That the Council should allocate a sum as set out in Part B of this report the approved Capital Programme contingency for the fit out of the ground floor of 54 Muswell Hill as a GP hub to a specification set out in Appendix C, with authority to procure contractors and a facilities management operator to be procured or drawn from available framework panels.

c)    To give delegated authority to the Director of Housing Regeneration & Planning after consultation with the Cabinet Member for Corporate Resources and Insourcing and the Cabinet Member for Adults and Health to agree the final terms for the lease to the GPs and to agree the final costs for the fit-out works, subject to agreement with the NHS/CCG on both the NHS funding and process for securing the fit-out works.

d)    That if agreement with the NHS for funding and the lease with the GPs cannot to be agreed within this financial year, the Council should proceed to market the ground floor space to secure another permitted user in the health and care sector under the planning use-class for the property.

Reasons for decision

There are three main GP practices in Muswell Hill N10: The Muswell Hill Practice, Rutland House and Queens Avenue. The premises for all three are undersized for the current patient lists and fail to fully comply with the Disability Discrimination and Equality Act. The allocation of the Council’s interest in the ground floor of 54 Muswell Hill for a new health facility will provide a modern facility capable of serving 25,000 patients from one site. The integration of the three practices into one would be gradual and not achieved on the initial opening of the new Muswell Hill building. The Muswell Hill and Rutland House practices intend to merge and would enter into the lease with the Council. Queens Avenue Practice has a lease which runs beyond the likely opening of 54 Muswell Hill and so would not relocate to the new GP hub at the same time as the other two practices. Queens Avenue Practice would also need to make use of another property (yet to be identified) for its storage and back-office support, using separate funding from the NHS outside of this project with the Council.

The Council acquired the property at 54 Muswell Hill in mid-2017 as part of the land swap approved by Cabinet in October 2015. The property was acquired for general fund purposes. The two upper floors are currently part of an affordable housing project previously agreed by the Cabinet. This upper space is to be fitted out for six shared ownership flats and the cost of this is already included in the Council’s Capital Programme and recent housing funding bid to the Mayor for London. The fit-out of these residential units is currently in the procurement stage for completion early in 2019. A decision is needed now on allocating the ground floor of 54 Muswell Hill for the GP hub project so that the entire property, including the residential units on the upper floors, may be completed and occupied by the end of 2019, given that by that stage it will have been vacant for two years.

The ground floor space will provide a long-term location for the delivery of high quality, accessible primary care in Muswell Hill. This joint working with the CCG is a pioneering approach to integrated primary health and part of a wider approach to collaborating with the CCG and NHS on co-location and property requirements. The development will complement the existing, larger health centre in Hornsey (Hornsey Central Neighbourhood Health Centre), which hosts a number of Whittington Health community services, as well as a large GP practice and the Haynes Dementia Hub. These two locations together will support the Council’s ambitions to deliver high quality integrated health and care services in the West of Haringey. The GPs have assessed the property and believe it to be suited to their needs in terms of location and accessibility. Given the location on a hill, we will supplement this with our own access report from the Council’s accessibility team before finalising lease terms with the GPs.

Alternative Options considered

Option A:

The Council could choose to lease the premises to the third party private health company identified by the GPs on a long lease of 125 years, which would then fit out the building for the Health Centre and lease directly to the GPs. This would, in effect, be a property disposal by the Council and only provide the Council with a capital receipt. The GPs selected MedicX/Octopus, a major US healthcare company. MedicX/Octopus also offer a range of other medical services in the private health market and are rapidly expanding into the NHS sector providing space for GPs and private hospitals. Were this route to be considered, the Council would need to negotiate a lease with this private company which would then become the landlord to the GPs and sub-let the space to them for 25 years. The company would then have the benefit of the long lease for the remaining 100 years.

Officers considered this option and concluded that it would not provide value for money, would entail virtual disposal of the asset on a long lease to the private property and medical company and make it more difficult for the Council to manage the delivery of the GP hub with the housing project in the upstairs space. It would also mean that the benefit of a long-term revenue stream from the rental of the space would not be available to the local authority.

Option B (Direct Delivery - Preferred Option):

In this option, the Council will directly lease the space to the GPs for a rent to be set by the DV and then for the Council to complete the fit out directly using directly appointed contractors and a specialist health facilities management company. A draft options analysis is provided at Annex D attached (exempt item) comparing this direct delivery option with the original private intermediary option. There are two variations of this option. B(i) would be for the NHS to provide a bullet payment to the Council to cover and procure the fit-out costs, thereby meaning that the GPs would only pay the Council rent at shell-and-core market value for the full term of the lease. The other variation (Bii) is for the CCG/NHS to directly appoint and fund contractors and facilities management directly on behalf of the GPs were it to find a mechanism which does not involve a third party company holding an interest in the property between the Council and the GPs. Until we have final figures from the NHS/CCG and the District Valuer it is not possible to determine which of these variations on direct delivery is both best value and would maximise the best primary health care solution at this location.

Option C:

Another option would be for the Council to lease the space to an alternative health or care operator under the terms of the restrictions in the planning determination. Whilst an annual commercial market rent could be achieved that is greater than the rent to be paid by the GPs, no market occupier could be secured for a 25 year term and taking into account void periods between lettings the revenue potential may be less than that achieved through a long term arrangement with the GPs. Putting the property onto the market would risk leaving Muswell Hill without adequate GP premises given that the CCG and GPs spent over two years looking and failing to find other locations.