SUMMARY/PURPOSE
1
To dispose of the
existing public toilets in Seaview in a manner which secures alternative,
higher quality provision of public toilets for the long-term future. Reduces or removes the revenue cost of
provision of those public toilets.
Secures the maximum capital receipt consistent with delivering the
policy objectives.
BACKGROUND
2
Earlier this year the
Executive agreed the sale of the Seaview Ropewalk Toilets to the owner of the
Seaview Hotel, by way of a leasehold arrangement that decision was called in by
the Resources Select Committee under the scrutiny procedure.
3
The Resources Select Committee met on the 7 June and
recommended to the Portfolio Holders that the proposed arrangements be delayed
pending determination of a planning application for this site and consideration
of financial benefits of other alternatives.
FURTHER CONSIDERATIONS
4
Seaview and Nettlestone
Parish Council has confirmed the local community does have an expectation that
the toilet facilities will be replaced if the site of the existing toilets is
used differently. As such the local
community will expect a permanent replacement with assurance that the provision
of the service is to be provided for the foreseeable future.
5
The possibility of the Council providing toilets elsewhere
on land yet to be identified and for which planning permission would need to be
obtained must be considered. Given such
an opportunity were to be available, and it is not expected to be, (after which
the existing toilet blocks could be sold for redevelopment) then the present
value analysis of costs is as follows:
Capital Receipt for sale of two building plots (optimistic
value) |
|
£200,000 |
|
New build costs of toilets (priced by independent surveyors) |
£170,000 |
|
|
Whole life running costs (excluding inflation and period
upgrades) |
£92,400 |
|
|
Land acquisition value (estimated) |
£20,000 |
£282,400 |
Total negative value
|
|
-£82,400 |
6
Thirdly, the Council’s independent Consulting Surveyors have
also been asked to reconsider their advice to the Council. This has been done in the knowledge that the
proposed development by the Seaview Hotel would now need a lift to comply with
Building Control requirements, but may obtain an additional letting room, all
subject to planning permission. The
consultants have reported their views and conclude that “after consideration of
the additional significant costs of installing the lift and other associated
works we believe that the terms of the transaction as currently agreed remain
favourable to the Council, despite the design now showing one more room than
originally planned”. This advice to the Council is dated 12 July.
7
To be absolutely certain
that there is no alternative route open to the Council that will provide the
Council with a better result than previously proposed, invitations to treat
were sought by way of public notice for any other proposition to come
forward.
8
Following this advertisement three public enquiries were
received for information pack.
9
Three new proposals were received on 12 August seeking to
purchase either a leasehold or freehold interest in the Council’s property;
this made four proposals as follows :
·
F leasehold interest £30,000
Plus new toilets, plus deed of covenant
over hotel. (This original proposal
whilst not resubmitted has been reaffirmed.)
·
G leasehold interest £32,000
Plus new toilet but no undertaking,
bond or covenant offered.
·
H freehold interest £45,000
Plus bond later changed to freehold
covenant for new toilets.
·
K freehold interest £55,000
Plus new toilet but no undertaking,
bond or covenant offered.
10
All three proposals were made conditional on planning
permission being granted.
11
Evaluation of the proposals was against the criteria of
securing long-term service provision, long-term revenue cost and capital
receipt.
12
All three of the above tenderers were approached on this
subject and the two bids, G and K, declined to give any assurance about
long-term provision and were therefore withdrawn from the process.
FINANCIAL/BUDGET IMPLICATIONS
13
The current running costs of the Ropewalk Toilets at Seaview
includes rates, cleaning, insurance, water, electricity, minor repairs and time
spent on inspections expressed as a present value lump sum is £92,400. This excludes periodic upgrades to this
service and the back log of building repairs. Any capital receipt will be added
to the capitalised saving.
OPTIONS
(a)
To declare the site of the existing WC’s as surplus to
requirements.
(b)
To accept offer F.
(c)
To accept the offer by bidder “H”.
(d)
To close these toilets and market the freehold disposal.
(e)
To keep the existing toilet provision.
EVALUATION/RISK
MANAGEMENT
14
Proposal F is the best offer in terms of securing long term
provision of quality public toilets at nil cost to the Council whilst also
obtaining a capital receipt.
15
The Select Committee recommended that planning permission
should first be granted before any transfer of property shall take place. All offers have been made on the basis that
contracts shall be conditional on planning permission being granted; this meets
with the Select Committee’s recommendation in that there will need to be an
acceptable outcome to a planning application before any binding commitment to
dispose of the current site arises. This is the traditional and accepted
property procedure for new development proposals. Developers require the
strength of a contractual undertaking before they will run the risk of
investment in professional design fees and other costs. The assessment of value is on the assumption
that planning consent has been granted.
16
The two proposals left, F and H, must be evaluated against
the three criteria set out above.
Proposal H initially offered a bond but later confirmed that a bond in
perpetuity would be prohibitively expensive and offered instead to enter into a
positive covenant against the freehold, in addition to entering into a positive
covenant.
17
The most important and valuable consideration to be secured
in any transfer of this property is the on-going provision of toilets. It is therefore, extremely important that
Members are clear about the weakness of the offer by bid H and the strength of
the undertakings provided through the original offer.
18
Tender H is weak because the imposition of a covenant on a
freehold sale of the site of the existing toilets would leave no land left in
the ownership of the Council that could be benefited by such covenant. Therefore the means of enforcement of such
covenant would be in the law of contract only which would provide no longevity
for the covenant and the result of subsequent sale of the site would cause the
contractual relationship between the Council and its buyer to be lost making
such an arrangement unsafe.
19
The benefit and strength of the undertaking from Proposal F
is in two parts. Firstly because the
arrangement is by way of a lease for an extension to the hotel there would be a
direct relationship between the Council and all successors in title. Under such a lease the Council can enforce
the provision of new toilets because a failure to do otherwise would put the
leaseholder in breach of that lease. Such a breach would give the Council right
to seek forfeiture subject to the mechanics of the Landlord and Tenant
legislation being observed. Secondly, the Hotel owner has agreed that a Deed of
Covenant can be registered over the existing Hotel site to bind the maintenance
and upkeep of the new conveniences to a standard set by the Council otherwise
the owner will incur severe penalties.
20
By only granting a leasehold interest of the site for the
hotel extension the Council is retaining its freehold ownership. As such the
Council will have a reversionary interest over the area of the new hotel
extension. Therefore the Council would own the benefit of an appreciating
reversionary asset. This is a minor
consideration and may not, of it self, be determinative.
21
The scale and scope for redevelopment on the existing site
is severely limited whilst a marriage
of estate interests between the Council and the Hotel offers the best
opportunity for improvement provided the Council can satisfy best
consideration. On its own the Council’s existing property is hampered and
extremely restricted because of size, boundary lines, rights to light and
accessibility.
22
Given the high level of demand for public conveniences
closing the facility and disposing of the freehold is not offered as an
option. Equally maintaining the status
quo would miss the opportunity to develop new better quality facilities at a
lowed cost to the public purse and is not offered as an option.
23
The direct management of public conveniences facilities
reduces the likelihood of vandalism to such facilities and other incidents of
Crime and Disorder.
LEGAL IMPLICATIONS
24
There will need to be a Building Agreement with draft lease
annexed granted over the site of the WCs.
To ensure the future operation of the new toilets and as the Council will
continue to be the freehold owner of the WCs there will also have to be
accompanying documentation in the form of a Deed of Covenant between the
Council and the freeholder owner of the Hotel.
This will deal with standards, opening hours, signage, repair,
maintenance, inspection, entry, default works at Hotel owner’s expense with
arrangements for control over alternative WC arrangements plus appropriate
indemnity and penalties. The
consideration will be £30k, the covenants in the lease and Deed of Covenant,
the provision and maintenance and availability of the new toilet facilities
throughout the leasehold term and grant of Lease and the Deed of Covenant. The new toilet accommodation will be
operational before the WCs are demolished and development commenced. The Council is empowered to sell its
property and to secure the provision of public conveniences by the Local
Government Acts 1972 and 2000 Part 1 and will be actively pursuing objectives
of the Community Strategy. Independent
Consultants have issued a report recommending this transaction as best
consideration for the Council.
STRATEGIC CONTEXT
25
By enabling the redeployment of this asset in Seaview, the
Council will be progressing the Community Strategy by fulfilling several
strategic objectives. The Council will
be helping the development of a more sustainable environment in terms of access
to facilities and leisure attractions; the promotion of a quality built
environment through the development of a new well designed toilet facility; the
consequent promotion of the local economy and economic development enabling a
local business to make a longer term investment decision; and, by transferring
the management of the new conveniences this should also enable a safer
environment through direct on site management.
26
The Council’s Corporate Plan and Island Futures Local
Strategic Plan both include aims that the Council will promote employment and
support tourism. These are key themes
in both strategies and will be enabled by extending the accommodation and
facilities available to a quality Hotel.
CONCLUSION
27
On balance, the best offer remains that made by the owner of
Seaview Hotel, this is because the cumulative consideration of the new toilet
provision and maintenance and availability, the whole life running cost saving,
the freehold Deed of Covenant plus the benefit of the leasehold and freehold
covenants, the £30k monetary consideration and the retained freehold reversion
is best consideration for the Council and not bettered by any other service provision
and financial offer.
|
RECOMMENDATIONS To declare the Seaview toilets site surplus to requirements and
to dispose of a leasehold interest in the existing Seaview toilets site,
subject to planning permission being granted, in consideration of : (I)
£30,000 (II)
A covenant to provide quality public toilets in perpetuity (III)
A tenants obligation to provide public toilets in
perpetuity |
BACKGROUND PAPERS
Proposals (and evaluation of proposals) received from F, G, H, K
(exempt under paragraph 9 Schedule 12A Local Government Act 1972).
Contact Point : Tony Flower, Head of Property Services ' 823263 e-mail [email protected]
|
TONY FLOWER Head of Property Services |
REG BARRY Portfolio Holder for Resources |
|
TERRY
BUTCHERS Portfolio Holder for Sustainable Development, Environment and Planning Policy |
|