Agenda item
IMPLEMENTATION OF AN ALTERNATIVE DELIVERY MODEL (ADM) FOR VARIOUS LEISURE RELATED ACTIVITIES/FUNCTIONS: LEASE OF PROPERTY
- Meeting of Cabinet, Tuesday, 17 December 2019 10.00 am (Item 8.)
- View the declarations of interest for item 8.
To consider a report by Councillor Julian Thompson-Hill, Lead Member for Finance, Performance and Strategic Assets (copy enclosed) seeking Cabinet approval to grant 16 leases, each for a term of 10 years at a peppercorn rent, to Denbighshire Leisure Limited on terms as set out within the report.
Decision:
RESOLVED that Cabinet –
(a) approve the grant of 10 year leases to
Denbighshire Leisure Limited for each of the sites at a peppercorn. The leases will be on the basis of the
standard lease (Appendix 3 to the report).
Site specific adjustments will be included within each of the leases to
incorporate: annual shared user agreements, grant funder obligations, Charity
Commission requirements, advice from DCC tax advisors, third party occupation
as well as any other localised site arrangements; delegated authority to be
given to the Head of Finance and Property Services to agree, in consultation
with the Lead Member for Finance and Efficiency and the Head of Legal, HR and
Democratic Services, and
(b) confirms that it has read, understood and
taken account of the Well-being Impact Assessment (Appendix 4 to the report) as
part of its consideration.
Minutes:
Councillor
Julian Thompson-Hill presented the report seeking Cabinet approval to grant
sixteen leases, each for a term of ten years at a peppercorn rent, to
Denbighshire Leisure Limited (DLL) on terms as set out within the report.
In May
2019 Cabinet agreed the establishment of DLL, a wholly Council owned Local
Authority Trading Company Limited by Guarantee.
The report represented another stage within that process relating to the
lease of sixteen properties to DLL as identified within the report together
with the notable terms. Given the
various site specific issues and matters of further clarification and detail
that DLL may want to raise it was recommended that the leases be granted on the
basis of the draft standard lease with powers delegated to the Head of Finance
and Property in conjunction with the Lead Member for Finance and the Head of
Legal, HR and Democratic Services to agree minor variations in respect of those
issues. Any material departure from the
standard lease would be brought back to Cabinet. Reference was also made to the Land
Transaction Tax element and Denbighshire’s position in that regard which had
been set out within the report.
Councillor
Bobby Feeley advised that she had a number of points to raise regarding the
leases and was pleased a mechanism was in place to agree any subsequent
variations. She also questioned the
level of consultation and highlighted that the Head of Leisure had not been
included as part of that process. In
terms of the risks identified within the report she felt that, given the unique
situation in this case, there would be merit in including the risks around the
Council’s involvement and their obligations.
To supplement that point for clarity the Managing Director Denbighshire
Leisure Limited advised that there were obligations on both parties in the
lease arrangements but the report had only referenced the risks around DLL and
not around the Council fulfilling its own obligations in that regard. In responding to the issues raised the Lead
Member and officers advised that –
·
the decision was being made by the Council
and therefore the report included the potential risks to the Council that
needed to be considered when making the decision whether or not to grant the
leases on the basis as set out in the report.
The Council needed to consider its own interests and ensure it fulfilled
its obligations in respect of the lease arrangements. There may be risk to DLL depending on the
behaviour of the Council but that risk would not be included within the report
given that the Council was not a risk to itself. The appropriate place to record the risks to
DLL would be in their own Risk Register
·
consultations had been carried out regarding
the ADM with those as listed within the report and in terms of specific sites
included consultation with Rhyl Town Council in respect of their interest
within SC2, Arts Council for Wales in respect of grant funding together with
Llangollen International Music Eisteddfod in respect of Llangollen Pavilion
which had not been listed.
Cabinet
raised further questions regarding the risks to the Council together with the
split of responsibilities between the Council and DLL, particularly in terms of
maintenance and repair, together with the financial implications of fulfilling
the lease obligations in that regard and subsequent impact on the financial
success of DLL.
The
Lead Member and officers responded to questions as follows –
·
the risk relating to the ADM not being as
financially successful as hoped had been included in all reports relating to
the ADM highlighting that in such an event any resultant additional costs would
fall back to the Council to fund
·
elaborated upon the Council’s position
regarding the Land Transaction Tax payable explaining that recent advice had
determined the Council would be liable for that tax based on the value of the
lease. Given that the Council provided
significant financial support to DLL with the rents on a peppercorn basis there
was essentially no value to the lease and a robust case would be made in that
regard. Consequently it was not
considered a significant risk but in the event that the position was
successfully challenged by the Welsh Revenue Authority the matter would be
reported back to Cabinet
·
explained that DLL and the Council were
separate legal entities but DLL was controlled and owned by the Council so the
leases would have responsibilities for both parties. The Council was in control and responsible
for fulfilling its obligations within the lease and retained responsibility for
the structure and external parts of the buildings and DLL would be responsible
for the internal maintenance of the sites; condition surveys would be carried
out and there would be an agreed baseline beforehand in terms of the condition
of assets
·
the condition reports set the benchmark of
how both parties would maintain the assets which remained within the Council’s
ownership and it was in the Council’s interest to ensure they were maintained
and continued operating
·
the governance arrangements outside of the
leases involved both an operational board and strategic board to monitor all
those risks. In the event of unforeseen
circumstances impacting on the successful operation of facilities the issue
would likely come before both boards and the Council could ultimately decide to
pay for the rectifications with resources in year. The benefit of the lease and governance
arrangements would mitigate against such risks.
RESOLVED that Cabinet –
(a) approve the grant of 10 year leases to
Denbighshire Leisure Limited for each of the sites at a peppercorn. The leases will be on the basis of the
standard lease (Appendix 3 to the report).
Site specific adjustments will be included within each of the leases to
incorporate: annual shared user agreements, grant funder obligations, Charity
Commission requirements, advice from DCC tax advisors, third party occupation
as well as any other localised site arrangements; delegated authority to be
given to the Head of Finance and Property Services to agree, in consultation
with the Lead Member for Finance and Efficiency and the Head of Legal, HR and
Democratic Services, and
(b) confirms that it has read, understood and
taken account of the Well-being Impact Assessment (Appendix 4 to the report) as
part of its consideration.
At this juncture (11.35 a.m.) the meeting adjourned for a refreshment break.
Supporting documents:
- ADM REPORT, item 8. PDF 216 KB
- ADM - APP 1, item 8. PDF 175 KB
- ADM - APP 2A Ruthin Leisure Centre black and white plan v2, item 8. PDF 343 KB
- ADM APP 2B Rhyl Town Hall v1, item 8. PDF 930 KB
- ADM - APP 2C Rhyl Pavilion, including adjoining Meadow, item 8. PDF 1 MB
- ADM - APP 2D Rhyl Leisure Centre black and white plan v1, item 8. PDF 435 KB
- ADM - APP 2E Rhyl Events Arena b w v1, item 8. PDF 466 KB
- ADM - APP 2F Prestatyn The Nova Centre v1, item 8. PDF 419 KB
- ADM APP 2G Prestatyn North Wales Bowling Club v1, item 8. PDF 435 KB
- ADM - APP 2H Prestatyn Leisure Centre black and white plan v1, item 8. PDF 559 KB
- ADM - APP 2I Llangollen Pavilion - ADM plan in B and W, item 8. PDF 1000 KB
- ADM - APP 2J Llangollen Leisure Centre ADM PLAN B and W, item 8. PDF 381 KB
- ADM - APP 2K Denbigh Leisure Centre b w plan v1, item 8. PDF 450 KB
- ADM - APP 2L CORWEN LEISURE CENTRE, item 8. PDF 434 KB
- ADM - APP 2M Rhyl SC2, item 8. PDF 628 KB
- ADM - APP 2N Ruthin, Craft Centre, item 8. PDF 565 KB
- ADM - APP 20 St Asaph, Leisure Centre - ADM Lease v3, item 8. PDF 351 KB
- ADM - APP 2P Trem_y_Dyffryn_DENBIGH, item 8. PDF 257 KB
- ADM - APP 3, item 8. PDF 382 KB
- ADM - APP 4 WBIA, item 8. PDF 106 KB