Purpose

Proposed
decision
 
That the Cabinet
Member for Environment:
 
(a)   
approve the use of capital budget and waste reserve
funds to enable the construction of a new Waste Transfer Station at
Junction 11 of the M20.
 
(b)   
Approve that the developer contribution collection
period be extended to 2040 to support the continued development of
the site at Junction 11 of the M20.
 
Reason for the decision
 

-     
Kent County Council has a legal duty under section
45 of the Environmental Protection Act (1990), as the waste
disposal authority, to dispose of the waste collected at kerbside
by the waste collection authorities (the districts) within its
administrative boundaries. KCC does this by accepting the waste at
a site known as a waste transfer station facility.  At the waste transfer station, waste collection
vehicles deposit the separate waste streams into individual large
bays.  To ensure haulage efficiency, it
is then loaded on to artic lorries for onward transport to its
final disposal location. 
 

-     
The waste infrastructure in Folkestone and Hythe
(F&H) is currently insufficient to handle the amount of waste
produced by existing housing levels. The development of
Otterpool garden town will exacerbate
this issue.KCC therefore needs to provide a
new waste transfer station in the Folkestone and Hythe district to
secure capacity for kerbside collected waste.KCC has been working with Folkestone and Hythe District Council
for a number of years to secure a site and funding via the KCC
capital budget and developer contributions to build the new
facility.

 

-     
A decision is sought for KCC to spend capital budget
to proceed with building a new waste transfer station at junction
11 of the M20.  As well as capital
budget, the project will utilise waste reserve funds to close the
current budget gap and extend the developer contribution collection
period to 2040, thus allowing continuation of development of the
site at junction 11
 
Background
 

-     
KCC currently has a temporary arrangement with a
contractor (Veolia) at Ross Way, Folkestone, to provide an interim
waste transfer facility until 2028. This facility is very small and
cannot accommodate all the waste streams collected at the kerbside
and therefore cannot meet the needs of Folkestone and Hythe
District Council as the waste collection authority or KCC as the
waste disposal authority.  As a result,
food and residual (black bag) waste is currently tipped at the KCC
waste transfer station in Ashford. This out of district tipping
means that legally KCC must pay compensation to Folkestone and
Hythe District Council.  This resulted
in payment of tipping away fees to Folkestone and Hythe District
Council (c.£87,000 in 2024/25) and is operationally
challenging for all parties due to long queuing times and limits to
the permitted tonnes of waste as set out in the Environmental
Permit for the site.  It is not viable
long term.
 

-     
In 2019 a bid for capital monies for the development
and delivery of a new waste transfer station for the Folkestone
& Hythe district was submitted to KCC’s capital officer
group (COG).  The
bid was based upon costs to develop the recently opened Ashford
waste transfer station and a site owned by Folkestone and Hythe
District Council at junction 13 of the M20, which was to be sold to
KCC at cost.  Funding for the project would comprise KCC capital monies as
well as developer contributions collected by Folkestone & Hythe
district. Developer contributions is a collective term used to
refer to the Community Infrastructure Levy (CIL) and Planning
Obligations (commonly referred to as ‘Section 106’
obligations). These are used to secure financial and non-financial
contributions to provide infrastructure to support development and
mitigate the impact of development on the local area.

 

-     
Approval to plan status was given by capital
officers group and feasibility work on the site at Junction 13 was
undertaken.  However, this determined it
to be unviable due to recently granted residential planning
permission on half of the site.  Several
rounds of site searches were subsequently undertaken between 2019
and 2022.  35 sites including Ross Way
in Folkestone were investigated and discounted. The preferred site
for the development was therefore concluded by KCC to be the site
near Junction 11 of the M20.

 

-     
In February 2024, KCC entered into a four-year
option agreement to purchase this junction 11 site.  The Council has engaged with consultants to
progress the project, which has reached outline design and planning
submission. 

 

-     
A recent review of the budget has identified that
the levels of developer contributions are below the levels that
were originally profiled, leaving the project with a significant
budget gap, compelling the Council to review and evaluate risk to
determine the option that delivers value for money and to the
requirements of the service.
 
Options

 

-     
Option 1 Do nothing – pause
project (not viable). The need for this
project remains, however, with slower housing growth in Folkestone
and Hythe, as evidenced by reduced developer contributions, this
option considers the potential to pause the project.  This is not viable as it would not meet the
delivery timescales required to enable KCC to continue delivering
its statutory obligations.  Delay would
also see increased costs through additional inflationary pressures
and put existing infrastructure under more pressure, increasing the
risk of whole service failure.
 

-     
Option 2 Extend developer contribution
collection period to 2045 to close gap (not
recommended). Developer contributions
forecasting is currently to 2030.  KCC
has the ability to direct all Folkestone and Hythe District Council
Community Infrastructure Levy (CIL) monies it receives to this
project for as long as necessary,plus
ensuring that S106 requests are made for waste
infrastructure.  This option requires an
extension of the developer contribution collection period to
2044/45, to bring in an additional £4.4M to close the budget
gap. It is considered financially high risk and ringfencing CIL
funding to waste for longer means other essential Council services
will not be able to access this funding.

 

 

-     
Option 3 Extend developer contribution
collection period to 2040 and utilise waste reserve funds to close
gap (preferred option).Extension of developer contribution
collection period to 2040 to bring in an additional £3.5M is
required.  This date is in line with the
KCC housing led forecast published in 2021, providing more
certainty over delivery.  KCC to forward
fund these developer contributions plus fund remaining budget gap
of £0.9M from waste reserve. 
Capital borrowing remains at agreed £6.165M.  This option is considered to be financially,
legally and politically low risk. It would enable delivery to meet
operational requirements.

 

-     
Option 4 Change to a design, build,
finance, operate model (not viable).
Following procurement advice, this option is discounted as the
route to market is very limited due to the significant progress
that has been made on the project already. The project is already
at a detailed design phase, with planning submitted. Any operator
that would take on the project under this option is highly likely
to want to be involved in the design at an earlier stage, or at the
very least review the design and potentially make changes to suit
their operations, which would result in delay to delivery. The
Council would also need to be very prescriptive over the tender as
we only require £0.9m to be invested which does not make this
an attractive proposition to the market. For these reasons, this
option is discounted.

 

-     
Option 5 Procure a mercantile facility
to deliver the service (not viable).Consideration of a different delivery model has been made due to
the development of a commercial waste transfer station at
Otterpool quarry (2 miles west of the
KCC junction 11 site).  A fundamental
issue for KCC is that the quarry site does not have the correct
permissions to accept KCC’s waste, as it can only accept
certain types of commercial waste, thus excluding this as a viable
option for the Council. 

 

Proposed option:

Based upon a thorough risk analysis as well as
consideration of whole life and net present value costs, option 3
is the recommended option.  Option 3
represents the lowest overall risk to KCC and has no very high risk
impacts identified.  In terms of service
delivery and legal/commissioning risks, this option presents a very
low risk to KCC.
 
 
How the proposed decision supports the

Framing Kent's Future
- Our Council Strategy 2022-2026
 

-     
This project supports priority 2: Infrastructure for
Communities.  This facility is required
to support both the existing housing in Folkestone and Hythe as
well as the planned garden town at Otterpool Park.  It will
deliver a sustainable waste management solution for the area,
allowing waste to be managed further up the hierarchy, contributing
to increased recycling rates. 
 

-     
It will also support priority 3: Environmental Step
Change as it will reduce carbon emissions by providing a more local
facility than that currently used in neighbouring Ashford
District.
 
How the
proposed decision supports Securing Kent’s Future 2022
-2026:
Securing Kent’s
Future - Budget Recovery Strategy.pdf
 

-     
Delivery of a waste transfer station in Folkestone
and Hythe will allow a sustainable waste service to be
provided.  It will allow KCC to move
away from the current inadequate facilities, negating the need to
pay high gate fees and tipping away charges.  KCC has secured developer contributions towards
this project and utilised frameworks to ensure best value is
achieved.
 

Financial Implications

 

-    
The total project cost is £15.38M (of which
c.£3M is land purchase). This is financed through the
following funding streams:

£6.165M KCC capital borrowing

£0.9M from KCC waste reserves

£8.315M developer contributions (£6.81M
of which is forward funded by KCC waste reserves).

-     
A robust cost plan has been developed for the
project by an independent quantity surveyor based upon the detailed
feasibility and outline design works undertaken to
date.  Work has been commissioned
through existing frameworks to ensure value for money is achieved
and financial risks are low.

-     
In addition to capital costs for building the
facility, revenue costs for operating the new facility of
£1.59m pa will be incurred.  To
meet this requirement, £661k of these costs will be utilised
from within the existing budget for current
facilities/arrangements, with the remaining £929k included in
the medium term financial plan (MTFP) in future years as a growth
pressure. Financing costs for the element of the capital funding
that relates to borrowing are included within corporate
budgets.

-     
Spend to date on the project is
£492,032.  Should the proposed
decision not be progressed, these costs would become
abortive.
 

Decision

As Cabinet Member for the (Kent) Environment,
I agree to:
 
 

PROCEED with option 3, which is to
utilise waste reserve funds to close the budget gap and extend the
developer contribution collection period to 2040, thus allowing the
continuation of development of the site near junction 11 of the
M20.

 

DELEGATE authority to the Cabinet
Member for (the Kent) Environment to approve the capital funding
for this project and to the Director of Infrastructure to approve
the purchase of the land

 

DELEGATE authority to the Director
of Environment and Circular Economy in consultation with the Deputy
Leader of the Council and Cabinet Member for (the Kent)
Environment, to take relevant actions, including but not limited
to, awarding, finalising the terms of and entering into the
relevant contracts or other legal agreements, as necessary, to
implement the decision