Report of the Corporate Director (Public Protection, Planning and Governance) on the call-in of a decision taken by Cabinet on 9 February 2021. An exempt report relating to this item can be found under item 13.
Members discussed the Call-In of the Cabinet Decision taken on 9 February 2021, which considered the surrender of the lease of Friendship House.
Three reasons was given for the call in and the Committee was asked to:
1) ensure that all avenues had been explored, and that all values, including non-monetary value, should be considered when looking at options for this community facility
2) consider the Options Appraisal framework used
3) consider whether all of the relevant Cabinet report needed to be exempt and covered under Part II
Councillor G.Hayes introduced the item. The Council had the ability to agree for the current lease holder to reassign the lease to another charity but chose not to. Members asked whether this was in order to maximise the income for the Council as the current rent arrangement was below market rates.
In response to questions the Executive Member for Resources confirmed that it was not the Cabinet’s objective to maximise income in this situation, but instead sought to ensure a best value solution for the council (including non-monetary value) as a whole. Whilst there was an option for the tenant to reassign the lease, the Council concluded that this would not be the correct way to proceed for two reasons. Firstly while the rent for the lease was relatively low, the current tenant undertook all of the costs associated with the maintenance, meaning the council did not incur costs and maintained a break even position. The Council would need to assure itself that any new tenant would be in a position to cover the cost of maintaining the premises or else risk significant costs itself. Secondly, allowing the tenant to reassign the lease would lack transparency, may not produce the best value for the borough as a whole for this community asset and may be unfair on other organisations who may wish to have considered taking on the lease but were not invited to do so. The Executive Member for Resources confirmed that such value assessments were more than simply looking to maximise monetary value. The Executive Member confirmed that the Cabinet did want a community centre to remain, but there were a number of models that could achieve this.
Members noted that the rental charge seemed relatively low and below market rate and asked whether there was a particular reason for this.
The Committee noted that the annual rental charge was set at £130 in 1998. It is assumed that this would have been below the market rent. The Executive Member for Resources confirmed that if the tenant had decided to stay, the Council would not have sought to amend the lease arrangements currently in place. However given that the current tenant no longer wanted to continue at the premise, it was right for the Council to consider how best to use the asset for the borough as a whole. This could include replicating similar rental arrangements that were currently in place with new tenants.
Members asked whether the Council had considered developing the site without a community centre.
The Executive Member for Resources confirmed that all options would be considered and were currently being developed. However the preferred position of the Cabinet was to retain a community facility on this site. This could be achieved by agreeing another long term lease, or it could be achieved by the Council taking back control of the asset and hire space to relevant groups. The latter option could also be chosen alongside proposals to develop social housing on part of the site. Whilst there would be opportunities to sell the site to private developers this was not a preferred option of the Cabinet.
The Executive Member for Resources confirmed that there would be opportunities for Members and residents to feedback on different options once they had been developed. The Executive Member confirmed that the only decision taken by the Cabinet was not to accept the automatic reassignment of the lease by the current lease holder to a named third party.
The following points were raised and noted by the Committee:
- the report to Cabinet only mentions monetary value and did not elaborate on other non-monetary values that should be considered by Officers when evaluating options
- charities and community organisations provided valuable services to the community but struggled to afford market rent prices. Therefore the arrangements in place at Friendship House were important
- additional housing at this site may impact residents who live in the immediate area
- a previous example of rent rises at a similar facility at Douglas Tilby led to charities and community organisations unable to afford to remain at that site
- community value needs to be embedded in any options assessment
- the ongoing economic viability of any new arrangements needed to be considered, especially given the community groups Members wanted to support
- the involvement of county funding may provide additional resources for local charities, but Members noted that such funded was often focused on very specific areas which may not meet the need of the local community
- any option analysis would need to consider the different charities involved, and in particular the needs of relatively successful but small charities who are vulnerable to financial shocks
- the cost of maintaining the current building could be a burden to new tenants
- the Council’s preference has been to take control of a property and hire out suitable premises to community groups. This ensures that the Council retains responsibility for the upkeep of the property. However the Council do operate a number of long leases, where often the leaseholder has invested a capital sum at the start of the lease (for example the leaseholder has built a number of shops in a parade)
(7 FOR and 6 AGAINST)
- The Committee agreed to ask the Cabinet to reconsider the decision taken on 9 February 2021, in order to allow the current lease holder to assign the lease to a particular charity identified by the leaseholder and only if that fails to accept surrender of the lease and consider an Options Appraisal
The Committee discussed whether the whole of the Cabinet report should have been taken under Part II. The following points were raised and noted:
- having reviewed the Cabinet report, Members were unclear why it was published and discussed entirely under Part II
- the contributions from the Executive Member for Resources had been very useful and demonstrated the benefit of having this discussion under Part I
- The Committee unanimously agreed to recommend that the Constitution Review Group consider and advise on how reports are prepared and published, especially with regards to what information should be provide under Part I and Part II, and the use of split reports should exempt information be required to be included