PAPER F2
Purpose : For Decision
REPORT TO THE EXECUTIVE
Date : 12
MARCH 2003
Title : WEST
WIGHT SPORTS CENTRE TRUST
REPORT OF THE PORTFOLIO HOLDER FOR
RESOURCES
IMPLEMENTATION
DATE :24
MARCH 2003
1.
Members
are asked to review the outcome of the Trust’s costed business plan and to
agree the level of grant subsidy for next year 2003/04.
2.
None
BACKGROUND
3.
Members
gave consideration to a request from West Wight Sports Centre Trust for
additional funding to operate its Sports and Leisure facilities. The Trust was awarded a £1.8 million grant
by Sport England in 1997 to expand and develop its facilities, however, it has
found it hard to match the projections set out in its original business plan
and was forced to use its reserves.
This led to severe cash flow problems and the request for help from the
Council.
4.
At
the Executive dated 19 November 2002 Members were circulated a letter from the
Chairman of the Trust and business plan.
It was noted that the West Wight Sports Centre was the only public sport
/leisure facility in the area.
5.
An
independent report commissioned by the Council in May 2002 highlighted a number
of opportunities to improve the financial performance of the Centre. A number of these recommendation have been
incorporated into their original
business plan presented to Members last year. This plan was not fully costed.
6.
Member’s
agreed to an advance payment of £30,000 by brought forward from next years
subsidy (2003/04) of £65,070 and that subject
to receipt of a costed business plan that met the approval of the Strategic
Director of Finance and Information, the annual subsidy levels of the Centre be
reviewed by the Council.
7.
In
its period of operation to date the Trust has developed in partnership some key
service functions to be local community, contributing effectively to the
corporate aims of the Council and the themes highlighted in Island Futures
Strategy.
8.
The
Trust actively engage with local partners on the delivery of many of its
operations and actively contribute to improving the quality of life of its
local residents through improved access to its services.
CONSULTATION
9.
The
Treasurer of the Trust has met with the Council’s Finance Staff on a number
of occasions to develop and evaluate a
costed business plan that
reflects the Centres activities, and tries to address the current shortfall of
operational funding currently identified at £30,000 p.a.
10.
The
Trust has worked to improve its financial shortfall through the following
measures:-
a)
The
cafeteria makes a small operating surplus and so contributes to the overheads
of the organisation. The opportunity to
increase income through the franchising of the cafeteria is something that the
Trust will explore, along with other options for increasing income which are
currently being undertaken.
b)
The
Trustees have recently increased charges at the venue, in some areas by up to
11%. The Business Plan has also been
adjusted to accommodate an increase in Cafeteria income from vending machines,
and also for reduced expenditure on certain budget items .
11.
The
above have been fed into the Business Plan, which now demonstrates an annual
deficit of around £10,000, as compared with the £30,000 annual deficit as
presented in December. The Trust now
seeks the additional £10,000 to their annual subsidy, over and above the usual
allowance for inflation.
FINANCIAL/BUDGET IMPLICATIONS
12.
The
sum of £30,000 was paid to the Trust in the current year, in advance of next
year’s subsidy in order to get through the current year deficit position. Your Officer’s view is that there is no
realistic prospect of the Trust being able to recover an equivalent reduction
in the annual subsidy payable to them
in April. The budgeted subsidy for
2003/04 is requested in full plus the additional £10,000 highlighted in the
business plan.
13.
The
Trust in their business plan projections have not made provision for any major
capital investment in the maintenance and replacement of major plant and machinery. The business plan is
currently set to address annual maintenance requirements only.
LEGAL IMPLICATIONS
undertake building works. A sub lease returns part
of the premises to the council for occupation as a youth centre. If the
covenants are breached or if the trust (which is a company limited by
guarantee) goes into liquidation the lease will be forfeit.
OPTIONS
15.
a)
To
convert to a grant the brought forward payment of £30,000 from existing budgets
and to approve an increase in the annual subsidy of £10,000 p.a. to £77,000p.a, subject to an agreed Service Level
Agreement that has a structured monitoring process in place.
b)
To
convert to a grant the brought forward payment of £30,000 from existing budgets, but not to approve an additional
subsidy of £10,000. Annual subsidy therefore remaining at current level of
£67,000.
c)
Not
to approve the additional subsidy request and to clawback brought forward grant
over a period of 5 years (interest or non interest payments to be agreed).
16.
The
budget projections drafted by the Trust strongly indicate that they are not in
a position to repay the Council’s brought forward subsidy without serious
implications to the operations of the facility.
17.
With
no additional resources the centre and the Trust will have to make some
difficult decisions regarding its operations if it is to stay within existing
budgets. Although a range of steps have already been taken, the Trust’s view is
that it would need to review its current service levels in order to approve
changes to keep within current budget levels.
|
RECOMMENDATIONS Option (a) |
PMP Operational Review Report May 02
West Wight Sports Centre Trust Business Plan
D PETTITTStrategic Director Education of Community
Development |
R R BARRYPortfolio Holder for
Resources |