Agenda item

[Report of the Assistant Director for Economic Growth . To be introduced by the Cabinet Member for Corporate Resources.]

Report seeking approval for a Community Asset Transfer Policy as was previously part of the recommendations of the Community Building Review cabinet decision in December 2012 and July 2015.

The Cabinet Member for Corporate Resources introduced the report which set out the Community Asset Transfer Policy (CAT) for the Council’s community building portfolio. The Policy sets out the circumstances in which, where organisations wish it, the transfer of long leases to incumbent community organisations that are part of the Council’s community building portfolio can take place. The aims of such a transfer are to enable organisations to self-manage their property assets, to make longer term decisions on their accommodation and to raise funds against the collateral of a long lease.

Cabinet would need to agree separately to the transfer of any individual asset within the policy

In response to a question from Cllr Engert, the Assistant Director would explore if a note, on allowing refreshment provision, could be added to the policy.

RESOLVED

1. To approve of the Community Asset, transfer 2017 policy document attached at Appendix A of this report.

2. To note the key terms of the policy as are set out at paragraph 6.5.

Reasons for decision

The Cabinet report of 14th July 2015 sought to set out the overarching principles and recommendations of the Community Buildings Review and it was resolved to agree to establish criteria around asset transfer and lease monitoring and evaluation. The creation of a Community Asset Transfer is therefore delivering on these previously agreed recommendations.

The policy is required to establish a significant change in emphasis in the way that community organisations manage their assets.  Community Asset Transfer is recommended as good practice by the Localities Team as part of DCLG and has been tested as compliant with legislation arising from the Localism Act 2011 (the Act).

Devolution of powers to manage assets is anticipated to enable more efficient and effective management and utilisation of built assets as well as securing savings in officer time in the maintenance of multiple forms of lease.

The process is about giving local people and community groups greater control in the future of their area and their community.  If local organisations own long term interests or manage community buildings, such as community centres, it can help promote a sense of belonging in the community and bring people from different backgrounds together to work towards a shared goal, creating lasting change in local neighbourhoods.

Alternative options considered

An analysis has been undertaken of 4 of the 14 pathfinder authorities, all city Councils that agreed to introduce community asset transfer and right to bid policies as arising from the Localism Act 2011 to determine the appropriate set of principles to include in a Community Asset Transfer policy.  Policies of Lambeth and Calderdale Councils have also been examined as they were recommended by the Localities Team as being good practice.

Freehold vs Leasehold Transfer

Consideration has been given to the terms upon which an asset would be transferred and key to this is whether a long lease or the freehold would be transferred. The following points have guided the decision that a 125-year FRI lease would be offered.

The Council intends to ensure that the community asset it transfers is safeguarded for community use and does not provide any opportunity for development of the asset for alternative use.

This full safeguarding of community use can only be achieved through terms and conditions set out in a lease.  Under the terms of the lease both the freeholder and leaseholder will remain committed to delivering community space and benefit for that particular location but with significant levels of autonomy over how this is delivered.

The alternative model of a freehold sale with covenants around planning use class was considered in depth and offers much weaker protection. Precedent shows that covenants can be overturned, allowing development for commercial gain or reduction/loss of community space and transfer to an alternative use.

For most groups and 125-year lease allows ample security and is considered as effectively equivalent to a freehold transfer. This length of term would allow any community organisation to borrow in order to invest in the property.  Organisations will also benefit financially from taking the building on a leasehold basis, as there would be a big difference in the value of the transfer (consideration payment) with the cost becoming more affordable in reflection of the D1 only use.

The policy will provide the opportunity for freehold transfer to be considered only in exceptional circumstances where a business case can demonstrate a justified need. For example, where other opportunities for investment in the building can only be secured with benefit to the community realised through this route. However, organisations should be aware that covenants would still be imposed to protect its use and they would expect to pay a significantly higher consideration payment than a leasehold value.