REPROVISION OF ROOKWOOD NEURO AND SPINAL REHABILITATION

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1 AGENDA ITEM May 2012 REPROVISION OF ROOKWOOD NEURO AND SPINAL REHABILITATION Report of Paper prepared by Director of Finance Director of Finance Executive Summary The update report summarises the current status and implications of the UHB Specialist Neuro and Spinal Rehabilitation Services Strategic Outline Case (SOC) for the Rookwood Hospital Charity. The SOC was considered at the 6 December 2011 Trustees meeting and the Outline Business Case (OBC) was due to be presented to the Trustee meeting in July This July timetable is subject to Welsh Government approval of the SOC and UHB progress with developing and finalising the OBC for the July UHB Board meeting. Action/Decision required NOTE the content of this report; ENDORSE the retention of ALAC facility on the Rookwood site as this is entirely consistent with charity objects; NOTE that the valuation exercise is being progressed by the respective UHB and Trustee valuers; NOTE that feedback from the 9 May meeting with Trustee legal advisor and valuer will be presented. Reprovision of Rookwood Neuro Page 1 of 15 Name of Meeting

2 Link to other Board Committee (s) and subcommittees Link to Standards for Health Services in Wales Link to Public Health Agenda Link to UHB Strategic Direction and Corporate Objectives / Legislative and Regulatory Framework Link to relevant evidence base This report has not been considered by a Committee of the Board. Standard 8 Care Planning and Provision. Through supporting UHB Making a Difference. A key component of the UHB Making a Difference. Strategic Planning and Performance Committee report, Development of Specialist Neuro- and Spinal Rehabilitation Services, and Board report Specialist Neuro- and Spinal Rehabilitation Services Strategic Outline Case for the Rookwood Hospital. Reprovision of Rookwood Neuro Page 2 of 15 Name of Meeting

3 REPROVISION OF ROOKWOOD NEURO AND SPINAL REHABILITATION INTRODUCTION The update report summarises the current status and implications of the UHB Specialist Neuro and Spinal Rehabilitation Services Strategic Outline Case (SOC) for the Rookwood Hospital Charity. The SOC was considered at the 6 December 2011 Trustees meeting and the Outline Business Case (OBC) was due to be presented to the Trustee meeting in July This July timetable is subject to Welsh Government approval of the SOC and UHB progress with developing and finalising the OBC for the July UHB Board meeting. The SOC, OBC and FBC timetable and action plans are regularly reviewed by the Making a Difference Project Board. BACKGROUND At the 6 December 2011 meeting the Trustees: NOTED the contents of the report; CONFIRMED support for the SOC preferred option; and CONFIRMED in principle support for the sale of Rookwood Hospital and land and the purchase of buildings and land at University Hospital Llandough (UHL). Additionally the Trustees noted that Charitable Funds Committee had considered the siting of the Artificial Limb and Appliance Centre (ALAC) at the meeting on 8 November 2011, and agreed that this would need to be considered at the Outline Business Case (OBC) stage. ARTIFICIAL LIMB AND APPLIANCE CENTRE In line with the Committee request the Capital and Estates Department have been working with Artificial Limb and Appliance Centre (ALAC) to consider the viability on moving ALAC off Rookwood site, thereby providing the opportunity for the sale of the whole site. The feasibility study is attached as Appendix 1. It concludes that: From the financial evaluation undertaken there is no benefit to the re-location of ALAC Services to the Treforest site. The land receipt associated with Area B is 2.1m which may benefit the re-location of specialist rehabilitation services to UHL but would require the UHB Reprovision of Rookwood Neuro Page 3 of 15 Name of Meeting

4 to provide circa 2.0m of capital funding for the fit out works of the unit at Treforest and either the 86k additional revenue or a further 2m to purchase the units. The Directorate may wish to consider whether there could be financial savings realised from the co-location of services to meeting the additional revenue costs. However, consideration would need to be given to the costs associated with staff subsistence allowances for a change of base. The ALAC Directorate have reviewed the feasibility study and have acknowledged that any savings from co-location of services would fall short of the additional costs. While the feasibility study has been undertaken from a UHB perspective, the Charity must consider whether it accepts the study conclusion as it may well be in the Charity s interest for the move to take place. In considering this the Charity cannot take into account the UHB views nor be mindful of the consequences of Charity decisions on the UHB. However the Charity, in considering its interest, must take due account of the Charity purpose the objects in decision making. In 1980 the Charity Commission slightly updated and widened the purposes for which Rookwood can be used (known as the objects ) as follows:- The Hospital belonging to the said Charity known as Rookwood Hospital and the property occupied therewith shall be appropriated and used as a hospital or home (in which may be established as a centre for the provision of artificial limbs and appliances, for the provision of invalid vehicles and for the making of grants towards the cost of provision of invalid aids) for sick and disabled persons with a preference for sick and disabled naval and military pensioners and in particular such pensioners who are paraplegic cases. Accordingly as the Charity objects include a centre for the provision of artificial limbs and appliances the retention of the ALAC facility on the Rookwood site is entirely consistent with those objects. Therefore the Charity can continue to support ALAC on the Rookwood Hospital site. Reprovision of Rookwood Neuro Page 4 of 15 Name of Meeting

5 SALE OF ROOKWOOD HOSPITAL AND LAND AND THE PURCHASE OF BUILDINGS AND LAND AT UHL The key decision for the Charity will be the sale of Rookwood Hospital and land and the purchase of buildings and land at UHL. As noted in earlier papers, and discussions, the Charity will be selling a saleable, largely self contained site which has tangible value. It then intends to purchase an equivalent asset that also allows the charity to fulfil its obligations in terms of facilities for care on the UHL site. A number of meetings have been held between UHB representatives, Trustee representatives, UHB valuers and Trustee valuers on this complex and sensitive issue. This has also included site visits to both Rookwood and, more importantly to UHL to identify an equivalent asset. The attached floor plans and elevations layout at Appendix 2, illustrate the accommodation to be occupied by the service at UHL. The main issue relates to the wing where the first floor will continue to be occupied by ITU while the ground floor will be occupied by the service. The key question is can, and should, the Charity own the whole wing and/or is it feasible and appropriate for the Charity to own one floor. A number of key issues will need to be resolved by the OBC: Will the receipts be sufficient to purchase equivalent asset at UHL site? Can an equivalent asset be identified at UHL, including land and buildings? What restrictions will the UHB apply on any sale of asset to the Charity: o would the UHB allow the Charity to have an asset that it can potentially sell independently at some point in the future? o what rights of access will the UHB allow for the Charity as the Charity assets will be land locked? o what covenants will the UHB seek to apply on the asset to be sold to the Charity? These issues between the UHB and the Charity will need to be resolved to enable the finalisation of the valuations for both parties. Reprovision of Rookwood Neuro Page 5 of 15 Name of Meeting

6 If these issues cannot be satisfactorily resolved for the Charity, the Charity may then need to consider the alternatives to discharge the Charity objects. While such alternatives may have a material impact on the UHB OBC, the Charity Trustees must discharge their responsibilities to the Charity. It should always be noted that Charities Commission consent is required for the proposals and approval for the scheme to proceed given that the current and future arrangements relate to a connected party, the UHB. To date correspondence and dialogue with Charity Commission has been around the sale at Rookwood and purchase at UHL. If the purchase at UHL becomes a challenge the consequences of this on the Charity will need to be considered. There could be a number of options available for the Charity, some of which could impact on the UHB, and these will need to be worked through with the Trustee legal advisor and also the Charity Commission before recommendations are made to thetrustees. A UHB meeting was held on 4 May 2012, on Rookwood Disposal. This meeting covered the OBC progress, status of Planning and Disposal Strategy approved by Trustees In Committee on 6 December 2012, and also the progress to date between the UHB valuer and Trustee valuer. Specific issues raised at the meeting that the Charity will need to consider include: Should an Expression of Interest for marketing the site go ahead of OBC approval by Trustees? Should a Screening Opinion be submitted on whether an Environmental Impact Assessment (EIA) is required ahead of OBC approval by Trustees? This would save time, as it would provide clarity, and early start, if an EIA is required. However the submission is a statutory application and will be in the public domain. While both points were covered in the Planning and Disposal Strategy document submitted In Committee on 6 December 2011, they are highlighted given the natural sensitivities as both will be in the public domain. The Finance Trustee is meeting with the Trustee legal advisor and Trustee valuer on 9 May 2012, to consider the options and key issues for the Committee and Trustees to consider. It is essential that this legal advice, on the appropriate issues and decisions for the Trustees, is Reprovision of Rookwood Neuro Page 6 of 15 Name of Meeting

7 followed to ensure that Trustee duties and obligations are appropriately discharged. An update on the key issues from the meeting with the Trustee legal advisor and valuer will be presented at the Committee. CONCLUSION The update report summarises the progress made on resolving the ALAC situation and valuation and ownership issues. It highlights that key decision point will soon arise on the viability of asset purchase and ownership at UHL. RECOMMENDATION The Committee is asked to: NOTE the content of this report; ENDORSE the retention of ALAC facility on the Rookwood site as this is entirely consistent with charity objects; NOTE that the valuation exercise is being progressed by the respective UHB and Trustee valuers; NOTE that feedback from the 9 May 2012 meeting with the Trustee legal advisor and valuer will be presented with recommendations on any actions. Reprovision of Rookwood Neuro Page 7 of 15 Name of Meeting

8 INTRODUCTION OPTIONS FOR THE RE-LOCATION OF ALAC INFORMATION Appendix 1 The OBC for the re-location of Neuroscience and Spinal rehabilitation Services from Rookwood Hospital to the University Hospital Llandough was approved by both the UHB Board and the Board of Trustees in their December 2011 meetings. The OBC identified an anticipated out-turn cost for the project of 16.33M with a significant proportion of the works cost related directly to the re-provision of the Neuroscience and Spinal Rehabilitation Wards, Therapies and Out-patient facilities to be located in the former Women s Unit at UHL. It was originally anticipated that the capital costs to re-locate the service to UHL would be funded in the main by the land receipt generated by the sale of the Rookwood site, with a small percentage met from WG. However, the Rookwood site provides facilities for a number of other services, some of which are associated with the specialist rehabilitation service and some more mainstream services. On review of the scheme and the multi faceted enabling moves that were required to achieve the outcomes it was clear that the original cost was simply related to the works at UHL for the specialist rehabilitation services element. Furthermore, it was envisaged that only a proportion of the land at Rookwood would be offered for disposal, with the area occupied by the ALAC Building, old gymnasium and adjacent car park remaining. In view of the funding gap identified, the Charity enquired as to the potential benefits of relocating the ALAC services to enable the disposal of the whole site. This report provides the findings of a feasibility study undertaken in respect of additional land receipt generated by the sale of the Artificial Limb and Appliance Centre (ALAC) and associated land. Reprovision of Rookwood Neuro Page 8 of 15 Name of Meeting

9 RE-LOCATION OPTIONS The ALAC service currently has a depot on the Treforest Industrial Estate which provides wheelchair services. This Industrial Unit is occupied on a lease basis with a break clause in 5 years and a total of 13 remaining of the overall lease. The Directorate have previously submitted a paper (Appendix 1) identifying the benefits and efficiencies of co-locating the ALAC services currently based in Rookwood on the Treforest site. In order to co-locate all services at Treforest the UHB would require to consider the following options: 1. Continue to lease the existing facility, in addition to entering into an additional lease for a further unit on the current site; 2. Purchase the existing leased unit and an additional unit on the current site; 3. Lease or purchase a single unit of a suitable size to accommodate all services on the Treforest Estate. Option 3 was discounted from the more detailed work as the UHB would be required to buy out the remainder of the existing lease and meet the cost of any reinstatement works. COST OPTIONS 1. The annual cost of the lease for Unit 1 Bridge Road is 105, The landlord has indicated an additional annual rent for the second unit would of 85, The landlord has confirmed that there is an option to purchase both of the required units. Unit 1 is valued at 1.10M with unit 3 being 0.920M. If the UHB were to consider this route then the landlord would sell both units for 2M. The costs identified above exclude the capital costs associated with internal fit out works which are yet to be quantified. However, by applying a cost per square meter the potential additional capital required would be: Total area of Unit 3 is 22,929 sq ft. which equates to 2130 sq mts Reprovision of Rookwood Neuro Page 9 of 15 Name of Meeting

10 Cost per sq metre INFORMATION 2130 sq mts 1,704,000 2,130,000 2,556,000 LAND VALUES A copy the Rookwood site is attached in Appendix 2 which is divided into two principal areas: Area A facilities which are identified to re-locate to UHL Area B - ALAC, Gymnasium and associated car park Both the UHB and Trustees have engaged Land and Property marketing consultants who have independently valued the whole site and those areas identified separately. Whilst there are some slight variances these, result from different presumptions, for example one consultant allowing for affordable housing deduction, whilst the other has reported a gross receipt. The value of area A is in the region of 4.35m The value of area B is in the region of 2.4m These figures are those of Lambert Smith Hampton who are acting on behalf of the Trustees and are gross figures. CONCLUSION The feasibility study concludes that from the financial evaluation undertaken there is no benefit to the re-location of ALAC Services to the Treforest site. The land receipt associated with Area B is 2.1m which may benefit the re-location of specialist rehabilitation services to UHL but would require the UHB to provide circa 2.0m of capital funding for the fit out works of the unit at Treforest and either the 86k additional revenue or a further 2m to purchase the units. Reprovision of Rookwood Neuro Page 10 of 15 Name of Meeting

11 The Directorate may wish to consider whether there could be financial savings realised from the co-location of services to meeting the additional revenue costs. However, consideration would need to be given to the costs associated with staff subsistence allowances for change of base. Reprovision of Rookwood Neuro Page 11 of 15 Name of Meeting

12 Appendix 2 Reprovision of Rookwood Neuro Page 12 of 15 Name of Meeting

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15 IMPACT ASSESSMENT Health Improvement Workforce Education and Training Financial To maximise benefits to patients in delivering high quality healthcare. To support staff in providing high class services. Not Applicable. Effective Stewardship of Charitable Funds. Legal Equality Environmental Compliance with relevant legislation and Charity Commission requirements. Not Applicable. Not Applicable. RISK ASSESSMENT Clinical/Service Not Applicable. Financial Effective Stewardship of Charitable Funds. Reputational Compliance with relevant legislation, governance and independence of charity. Acronyms and abbreviations ALAC Artificial Limb and Appliance Centre EIA - Environmental Impact Assessment FBC Full Business Case OBC Outline Business Case SOC Strategic Outline Case UHB Cardiff and Vale University Health Board UHL University Hospital Llandough WG Welsh Government Reprovision of Rookwood Neuro Page 15 of 15 Name of Meeting