Supplementary memorandum submitted by
the Foreign and Commonwealth Office
SAN FRANCISCO RESIDENCE
Letter to the Chairman of the Committee
from the Permanent Under Secretary of State, Foreign and Commonwealth
Office, 26 September 2003
Thank you for your letter of 9 September about
the Residence of the Consul General in San Francisco[11]
I have provided the answers to your questions
1-5 on the cash-flow analysis in annex A[12]
On question 6, the intangible costs and benefits
of making a move are not easy to quantify. The guidance on "costs
and benefits not easily valued" in the HM Treasury Green
Book of 1997, which was the document prevailing at the decision
was taken in principle to sell, was aimed more at the evaluation
of large public sector infrastructure projects in the UK such
as road construction. For cases such as the change of Residence
in San Francisco, there is no precise mechanism for reaching a
conclusion when subjective views differ.
On 27 October 2000 the FCO Board of Management
took a decision that San Francisco should be included in the list
of sales prospects, in the general context of asset recycling.
Sir David Wright, the then Chief Executive of British Trade International,
was present at the meeting and subsequently commented that he
was skeptical about the debate by saying that any change of Residence
must not hurt British interests but that we could not simply preserve
our estate in aspic.
Thereafter attention focused on what would constitute
a suitable replacement for the Pacific Heights Residence. In reaching
that decision, we decided to look for a property which reflected
more closely a modern image of Britain and accepted that the replacement
might not offer the same provision for in-house entertainment
as Pacific Heights. The brief for an FCO visit in March 2002 specified
that the net internal area should be around 280 square metres.
During the visit, the Post suggested for purchase a property which
was approximately the same size as the newly purchased Presidio
Terrace house, but this was subsequently rejected by our Security
Strategy Unit on security grounds.
Before leading the team in March this year which
identified the present house, the Estate Modernising Manager spoke
to those responsible for North America in both TPUK (as was) and
Invest UK to seek their view on the entertainment requirement
for the San Francisco post. It was clear in those conversations,
and from the subsequent submission recommending purchase of the
Presidio Avenue property, that any replacement would be on a smaller
scale. The only way to have a house the size of Pacific Heights
but at significantly less cost would have been to chose a location
too far from the San Francisco business district. There was consensus
that this should be avoided.
This means there is no further document which
will provide a detailed financial or statistical breakdown to
help the Committee understand the background to official and Ministerial
decisions. As usual in these matters, it was a question of balancing
conflicting factors and taking into account the space guidelines
for Heads of Posts property at that particular grade. Ultimately
the decision is a matter of practical judgement rather than a
set of easily quantifiable figures.
You ask about the position on the two properties.
We completed the purchase of 12 Presidio Terrace on 20 June. It
is being prepared for occupation for Martin Uden, the new Consul
General, in late October. He has told me that he is confident
that he will be able to use Presidio Terrace in a manner which
ensures that the UK maintains a high profile in San Francisco.
Our broker began marketing 2516 Pacific Avenue actively in early
September. There have already been several indications of serious
interest.
I enclose extracts on San Francisco from the
paper put to the board in October 2000[13]including
an annex relating to Boston and San Francisco[14]and
the minutes relating to San Francisco (Annex B).
Sir Michael Jay KCMG,
Permanent Under Secretary of State, Foreign and Commonwealth
Office,
September 2003
Annex B
Extracts from the Board of Management
Meeting Minutes (27 October 2000) relating to San Francisco
11. Mr Fall said the targets for this triennium
were achievable but difficult decisions were required by the Board
now, particularly on the San Francisco and Boston residences and
Buenos Aires garden. He also aimed to sell the Singapore residence
garden this financial year but it was likely to slip to 2001-02.
Mr Collecott had confirmed that resources were likely to become
available for replacement hirings in San Francisco and Boston
this financial year. Mr Fall noted that Sir C Meyer had recently
written effectively acquiescing in the sale of San Francisco.
He recommended that preparations for selling San Francisco should
not await the procurement of alternative accommodation. The Board
would need to decide whether the specific arguments for retention
of Boston outweighed the wider asset recycling objectives.
12. Mr Westmacott said that if Sir C Meyer
was content the San Francisco sale should go ahead now. He thought
Boston was a real proposition and the arguments about its history
should not outweigh the aims of the sales strategy. Selling any
part of Buenos Aires would be much more complicated. Dr Jones
Parry and Sir D Wright said Buenos Aires might well require a
more radical solution than selling part of the garden, considering
the state of disrepair of the house. Sir D Wright thought Boston
might require a more cautious approach. Mr Metcalfe said that
options for Buenos Aires may need to take in the office since
it was so close to the Residence. Mr Hum noted that Directors,
including Mr Wilkinson (Director Americas). were not opposed to
the strategy provided that the balance of advantage on each sale
was got right. Dr Jones Parry said there should be a more general
look at specifications for accommodation given people's increasing
reluctance to entertain at home. The PUS concluded that the Board
wanted to press ahead with Singapore. San Francisco and Boston,
although the latter might require a more cautious approach. They
also wanted preparations for selling part of the Buenos Aires
garden to go ahead, but before a decision was taken to sell the
Board should be able to consider advice in parallel on the rest
of the estate and whether a more radical solution was needed.
The Board also endorsed Mr Fall's wider outline strategy.
Foreign and Commonwealth Office
October 2000
11 Not printed. Back
12
Restricted-not printed. Back
13
Restricted-not printed. Back
14
Restricted-not printed. Back
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