Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: Yes
It was RESOLVED:-
1.1 That Cabinet approved Options 3 and 3a of the report being progressed simultaneously.
1.2 That Cabinet approved the grant of a new lease for 50 years at a peppercorn rent of the Council owned land and continuation of the existing lease with the Church until expiry in 2025.
1.3 That Cabinet approved the grant of a sublease of the Church land from the Council to Stowmarket CIC which is co-terminus with the existing head lease at an annual rent of £4,000.
1.4 That in the event that Option 3a is not achievable due to the lack of agreement with the Stowmarket Church Charities, the Assistant Director for Assets and Investments in consultation with the Cabinet Member for Assets and Investments is authorised to agree an alternative transaction structure in respect of the Stowmarket Church Charities owned land subject to a maximum financial cost of £55,000.
Reason for Decision:
1.1 To enable the CIC to secure occupation and successfully apply for Football Association funding.
1.2 To minimise the Councils expenditure and ensure the most effective outcome is reached securing the future of the CIC and enabling it to thrive.
Alternative Options Considered and Rejected:
1.1 There are two elements to be considered, the approach to the land within the Council’s ownership and the approach to the land currently leased from the Church, which are set out in the options below.
Land within Council’s Ownership
1.2 Option 1 Do Nothing – this option has been discounted as it would result in no further action being taken which would not provide the security required by the CIC to get the Football Association funding needed to improve the ground and facilities.
1.3 Option 2 Transfer the land on a freehold basis to the football club. Whilst this option would support the CIC in the short term, the Council would lose control of the future use of the land which may not be in best interests of the community in the longer term.
1.4 The CIC are seeking a transfer at a peppercorn. An independent surveyor has assessed the market value of the land is in the order of £12,500. The site also provides access to the Church Land and it is estimated that the value of this access is approximately £20,000 (equal to a third of the value of the Church land), giving a total value in the order of £32,500. If a transfer is made at less than market value, the Council should look to restrict the use of the site in the future and secure an overage arrangement in the event that the site is brought forward for redevelopment in the future, whilst also reserving rights in respect of the access road.
1.5 Option 3 Grant a new 50-year lease to the CIC, with repairing obligations for the site and boundaries. The Council would retain control over the use of the land via the lease.
1.6 The CIC are seeking a rent of a peppercorn. An independent surveyor has assessed the market rent for this property (excluding the CIC occupied Church Land) is in the order of £1,250 p.a. This annual subsidy would be recorded as equivalent to a grant.
Land Within Stowmarket Church Charity Ownership
1.7 This land is currently subject to a lease between the Council and the Church expiring in March 2025.
1.8 Option 1a Do Nothing – this option has been discounted as it would result in no further action being taken which would not provide the security required by the CIC to get the Football Association funding needed to improve the ground and facilities.
1.9 Option 2a – Surrender the existing lease to the Church, to enable a new lease to be granted directly between the Church and the Football Club. This lease would be entered into at the same time as the 50-year lease between the Council and the Football Club.
1.10 Mid Suffolk District Council currently pay rent of £15,000 p.a. to Stowmarket Church Charities and receive £4,000 from the CIC who occupy part of the land. The Church would require the shortfall between these amounts to be paid by way of a surrender premium equating to approximately £55,000.
1.11 Option 3a -Continue the existing lease between the Council and the Church and enter into a sublease to the CIC until the current lease expiry in March 2025 formalising the CIC’s current arrangements and continuing the annual cost of £11,000 p.a. to the Council until expiry. This would enable a reversionary (future) lease to be entered into between the Church and the CIC simultaneous to the sublease, which could secure the required land for a further 45 years, providing a total secure term of 50 years.
1.12 Option 4a - The Council renews the lease with Stowmarket Church Charity for a further 45 years from 25 March 2025 and sub-lets the whole site to the CIC at a discounted rate (peppercorn). This option has been discounted as it increases the Councils financial liability significantly.
1.13 It is recommended that subject to FA funding being confirmed option 3 and option 3a are progressed simultaneously. This would provide the CIC with security in respect of both pieces of land enabling them to attract the necessary funding to improve the ground and its facilities. The Council would reduce its annual costs after 2025, would not be required to pay a surrender premium and would protect its interest in the land in the longer term. The CIC will require written confirmation that the new leases will be granted in due course to obtain the funding from the FA.
Any Declarations of Interests Declared: None
Any Dispensation Granted: None
Publication date: 11/02/2020
Date of decision: 10/02/2020
Decided at meeting: 10/02/2020 - Mid Suffolk Cabinet
Effective from: 19/02/2020