SUMMARY/PURPOSE
1.
The purpose of this paper is to grant the Riverside
Centre a new longer term lease to include Quay House, Newport.
BACKGROUND
2.
The Riverside Centre in Newport has been leased to the
Riverside Centre Limited since 1989 on the basis of a 21 year lease. The Riverside Centre Limited is responsible
for internal repairs, insuring the property and is to use the property as a
multi-purpose centre for disabled persons in accordance with the Memorandum of
Association. Assignment or sub-letting
of the property is subject to the Council’s consent.
3.
The existing Riverside Centre has been developed over
many years in three phases and the company pays a current rent of
£49,500 per annum.
4.
The accompanying plan indicates the phased development
of the Riverside Centre which was developed partly on former Council workshops,
the old Newport Pumping Station and partly on contaminated land. These existing arrangements will expire in
2010.
5.
The Riverside Centre is a fully registered charity and
the company’s objects are :
(a)
To promote the relief and rehabilitation of disabled
persons in the Isle of Wight and to assist those persons to overcome their
disability by the provision of workshops and vocational training at the
Riverside Multi-Purpose Centre, The Quay, Newport, Isle of Wight.
(b)
To provide or assist in the provision of facilities in
the interest of social welfare, recreation or other leisure time occupation for
persons who have need to such facilities by reason of their youth, age,
infirmity or disability with the object of improving their conditions of life.
6.
Further the company’s objects provide that the income
and property of the company shall be applied solely towards the promotion of
its objects as set out above and no portion thereof shall be paid or
transferred directly or indirectly by way of dividend, bonus or otherwise
howsoever by way of profit to members of the company and no member of its Board
of Directors shall be appointed to any office of the company paid by salary or
fees or receive any remuneration or other benefit or monies worth from the
company.
7.
The Riverside Centre is now underway with planning and
commissioning Phase 4 of the development for the Riverside Centre to
include new workshops and facilities with up-to-date technology. In order to raise the funds necessary to
achieve Phase 4 development funders need assurance that their grant or
loan will have sufficient life in terms of tenure to ensure the resources so
invested are well used and to that end the Riverside Centre Limited wishes to
surrender its existing lease and take back a new longer term lease on similar
terms as prevailing currently and under this scheme the Centre will be able to
take forward the Phase 4 development.
8.
These discussions have been ongoing for some time and
the proposal to renew the Riverside Centre lease is supported by Social
Services which obtains significant service support under an annual contract for
services from the Riverside Centre.
9.
Whilst these discussions have been ongoing, the
Council has moved forward with changes to Quay House that adjoins the Riverside
Centre. In the process of these changes
the Riverside Centre has also promoted the idea of converting Quay House to a
club house managed by the Centre that would support the Council still
further. The Riverside Centre has
therefore applied to incorporate Quay House in the new lease.
10.
Leasing Quay House to the Riverside Centre would
enable the Centre to develop projects consistent with Social Service needs
assessments and secure extra funding.
The Centre would offer further support to other organisations who share
the Centre’s aims and the Local Authority’s social aims, for example Victim
Support and Youth Advocacy. In addition
it would enable the Centre to expand its capacity as the Island’s principal
social firm to provide increased opportunities and physical space for disabled
and non disabled people to participate in new activities and contribute to the
local community. Promises of funding
towards this club house scheme have already come from the Department of Health.
11.
Because this would represent a marriage of two
property interests independent valuation advice has been given that supports
the proposals set out below.
12.
Under the Executive paper dated 13 June 2002 which
deals with accommodation changes and refers to Quay House where the Museums
Workshop Team has now moved to Cothey Bottom in Ryde, the Portfolio Holder for
Resources was delegated authority to make changes to the accommodation review
programme and consider selling Quay House to fund the planned moves.
13.
The use of Quay House as part of the Riverside Centre
also fits in with the development of Newport Harbour and given that the rear
offices to this property are only temporary construction, the Riverside Centre
would plan to build a further extension on the side of Quay House to replace
these temporary offices and that in its turn would help reinforce the sense of
a green space and square at this point in the harbour. A sketch plan to this effect has been
prepared.
14.
Discussions about the Riverside Centre taking over the
management and maintenance of the public toilets fronting the Riverside Centre
have also been ongoing and to date a recommendation has yet to emerge.
15.
In short over the years the Riverside Centre has grown
into a successful and well respected organisation that now wishes to take
forward further proposals to develop its social function in the area. The terms proposed for the new lease is that
it will be for a term of 25 years at a rent of £54,000 per annum subject
to review every five years according to general index of the RPI. The Riverside Centre would be responsible
for all repairs and all outgoings and the Riverside Centre would pay a premium
of £50,000.
STRATEGIC CONTEXT
16.
The
proposals set out clearly support the Council’s strategic objectives for social
inclusion, long life learning and bringing equalities to the Island’s
community.
CONSULTATION
17.
In addition to consulting with Social Services,
Planning and Members of the Council, the Riverside Centre have made
applications to various funding bodies who, in principle, support the proposals
for Phase 4 and the club house scheme at Quay House.
FINANCIAL/BUDGET
IMPLICATIONS
18.
The scheme will represent a capital receipt.
LEGAL
IMPLICATIONS
19.
S123 Local Government Act 1973 requires this disposal
to be at best consideration.
20.
The Leader of the Council, Councillor Shirley Smart,
and Councillor Mike Cunningham are directors of the company. This connection between the Portfolio Holder
and directors of the company may amount to a personal interest which should be
declared but will not prevent the decision being taken under delegated powers.
OPTIONS
21.
(a) The
Council agrees to this request on the terms set out.
(b) The Council proceeds only with the
surrender and renewal of the lease for the Riverside Centre.
(c) That the Council offers the whole
property for sale on the open market.
EVALUATION/RISK MANAGEMENT
22.
The first question is whether or not to grant the
Riverside Centre Limited a new lease.
The existing lease is a fully protected lease under the Landlord and
Tenant Act 1954 and given new terms, such as the rent can be agreed then the
tenant has right of renewal for a further 14 years and again thereafter. The surrender and renewal of a lease is a
common commercial transaction to be arranged between a landlord and tenant,
especially when a tenant is seeking to invest in his landlord property and
wishes to enjoy the belief of that investment over a reasonable period. If the Council decided not to renew the
lease when it expires then the tenant would be entitled to compensation and no
doubt it would be necessary to replicate the service presently provided by the
Riverside Centre elsewhere.
23.
The Council is redeveloping the harbour area and in
doing so has used long lease arrangements to underpin proposals. By maintaining the freehold ownership of the
area, the Council will be able to influence and control long term
development. The proposal to grant a
lease of Quay House fits with that policy.
The question then is whether or not the lease premium and new rent is
best consideration in terms of the open market. Two independent professional valuers have been asked to report on
the point and both are happy to confirm that the proposed terms represent best
consideration for the term of years as requested, and bearing in mind the
Council will continue to own the freehold.
24.
Working with the Riverside Centre Limited represents a
good local private/public partnership.
The demand for space is continually growing.
25.
By passing the responsibility of all repairs and
maintenance of these assets to the Riverside Centre Limited the Council’s
corporate building maintenance budget will have less liability.
26.
If the Riverside Centre should fail in the future then
the Council would have first opportunity to take back the property concerned
and certainly influence its future use.
27.
With either the current or proposed lease in place the
Council could sell its freehold reversion or a long lease interest and attract
a significant capital receipt.
28.
With either the current or proposed lease in place,
the Council could sell the freehold of Quay House which would attract a more
significant capital receipt.
29.
The question arises whether a change of use from
offices to residential use would affect the value of Quay House. Under the emerging planning guidance for the
Newport Harbour Regeneration it generally identifies residential use as above
the ground floor level. Applying this
principle to Quay House results in a mixed use that would be difficult to
achieve, in terms of both building division and viability. As such the best use remains as offices.
30.
The open market value of Quay House as freehold
offices with vacated possession is £100,000.
|
RECOMMENDATIONS 31.
Option (a) be adopted. |
BACKGROUND
PAPERS
32.
Valuers Report.
33.
Current Lease.
ADDITIONAL
INFORMATION
34.
None
Contact
Point : Tony Flower, ( 823263, e-mail: [email protected]
REG
BARRY
Portfolio
Holder for Resources
Signed:
.............................................................................................................................
Portfolio Holder for Resources
Date: ................................................................................................................................
