Cabinet Sub-Committee (Hitchin Gymnasium and Workmans Hall Trust) Minutes

Date:
Tuesday, 22nd May, 2012
Time:
6:00pm
Place:
Council Chamber, Council Offices, Gernon Road, Letchworth Garden City
 
 

Attendance Details

Present:
Councillor Bernard Lovewell (Chairman), Councillor I.J. Knighton and Councillor Mrs C.P.A. Strong.
In attendance:
Strategic Director of Customer Services, Head of Revenues & Benefits, Legal Advisor and Committee & Member Services Manager.
Item Description/Decision
PART I
1 APPOINTMENT OF CHAIRMAN
RESOLVED: That Councillor Bernard Lovewell be appointed as Chairman of the Sub-Committee for the 2012/13 Civic Year.
2 MINUTES
RESOLVED: That the Minutes of the meeting of the Sub-Committee held on 26 July 2011 be taken as read, approved and signed by the Chairman as a correct record.
3 NOTIFICATION OF OTHER BUSINESS
There was no notification of other business.
4 CHAIRMAN'S ANNOUNCEMENTS
The Chairman reminded Members that, in line with the Code of Conduct, any Declarations of Interest needed to be declared immediately prior to the item in question.
5 PUBLIC PARTICIPATION
There was no public participation.
6 HITCHIN TOWN HALL GYMNASIUM AND WORKMAN'S HALL TRUST CONSIDERATION OF NORTH HERTFORDSHIRE MUSEUM AND COMMUNITY FACILITY
The Trust Legal Advisor and Head of Revenues, Benefits and Information Technology presented a joint report in respect of the implications for the Trust of the information contained in the report to Council on 10 May 2012 regarding the North Hertfordshire Museum and Community Facility project. The following appendix was submitted with the report:

Appendix A - The Report and Appendices 1-10 considered by the Council Meeting held on 10 May 2012 in respect of the North Hertfordshire Museum and Community Facility.

The Trust Legal Advisor advised that the reasons that the report had been presented and the meeting called without the requisite 5 days notice were set out in Paragraph 1.2 of the report. The Chairman of the Overview and Scrutiny Committee had been consulted, and had agreed that the taking of the decision could not reasonably be deferred.

The Trust Legal Advisor reminded the Sub-Committee that, at its meeting held on 10 January 2011, it had agreed to support the principle of establishing the North Hertfordshire Museum and Community Facility, as it met the Trust’s Charitable Objectives and would secure the Trust’s financial position. He explained that the proposal from the Council and Hitchin Town Hall Limited (HTHL) to establish a District Museum and Community Facility at the Town Hall had been worked on and developed over many months. The latest position in terms of the proposals and funding, including the proposed disposal of part of the Trust’s land by way of a 125 year lease to HTHL, were reported to the Council on 10 May 2012. The Council had agreed to these proposals, subject to the satisfactory conclusion of a number of outstanding matters.

The Trust Legal Advisor stated that, at Paragraph 5.3 of the Council report, there was reference to various agreements in respect of 14 Brand Street. He confirmed that the Trust had been involved in the discussions on the content of these documents, given it was intended that 14 Brand Street would ultimately be within the ownership of the Council as Trustee for Hitchin Town Hall Gymnasium and Workman's Hall Trust (ie. it would form part of the Trust Property). Information was currently awaited in respect of any covenants affecting the existing title of 14 Brand Street which may be passed on in the transfer. However, as the requirement to comply with any such covenants would fall on the Council under the terms of the Management Agreement (together with all other liabilities), it was considered that the Sub-Committee would be able make the decision now to accept the transfer of 14 Brand Street upon completion of the construction phase of the project.

The Trust Legal Advisor explained that the Development Agreement set out what was required in the delivery of the project. The relevant points for the Trust to note were the timing of the transfer of 14 Brand Street and the timing of the grant of the lease over its land, both of which were dependent on the prior steps set out in the Development Agreement having been completed. The Sub-Committee was further asked to note that the Trust’s Objectives were referenced within the Development Agreement as a driver for the project and that HTHL’s objectives, as set out in the Agreement, were also consistent with the Trust’s Objectives.

The Trust Legal Advisor advised that the proposed lease to HTHL was for 125 years at a peppercorn rent. The Sub-Committee was asked to note from the plans that the majority of the Trust Property would not be subject to the Lease. In respect of the Trust Property that would be subject to the long lease, the Sub-Committee must satisfy itself that this disposal met the Charity Commission’s requirements for the disposal of charitable property.

The Trust Legal Advisor commented that the Management Agreement between the Council and the Trust was the most important and relevant document for the Trust. In short, it passed management of the Trust property to the Council, with safeguards built in to limit the Council’s activities without further recourse to the Trust. The Agreement set out that the Council took on all the liabilities for the Trust Property and regulated any profit or loss made in respect of the property. The Management Agreement would cover both the Trust’s existing property ownership and 14 Brand Street, if and when that land was acquired by the Trust. The Management Agreement also authorised certain uses of the Trust Property, allowed the Council to enter into management arrangements with HTHL, and contained termination provisions on notice (including if the Council was in breach of its obligations).

In respect of charity considerations, the Trust Legal Advisor advised that the meeting of the Sub-Committee held on 10 January 2011 had received a report entitled “Matters for the Sub-Committee to consider in respect of the Hitchin Town Hall and North Hertfordshire Museum Proposal”. This report had included consideration of the proposed use of the Trust Property in respect of the Trust Objectives and the Charity Commission’s Public Benefit requirement. Consideration of this matter was not repeated within the report, but the Sub-Committee was reminded that:

• It had been considered that the proposed use of the majority of the Trust Property as a museum was compatible with the Trust Objectives; and
• The Sub-Committee had been supplied with information that had been submitted to the Charity Commission which set out the Council’s response to the Public Benefit Test questions set out in sections E and F of the Guidance. At the time of the 10 January 2011 meeting, a substantive response had not been received from the Charity Commission.

Based on the information before it, the Sub-Committee on 10 January 2011 had made the following resolution:

“That the scheme prepared by Hitchin Initiative for use of the Hitchin Town Hall as the North Hertfordshire District Museum and as a community venue be approved in principle, subject to consideration of the Public Benefit Test and guidance received from the Charity Commission.”

The Sub-Committee was advised that, following the above in principle decision, the Charity Commission was asked to confirm that it had no objection in principle to the proposed use of the property, subject to the disposal requirements being fulfilled. By e-mail dated 4 March 2011. the Charity Commission had confirmed “We are happy to give our consent in principle to the proposals subject to the charity's interests and beneficiaries being protected in any agreements.” The protection of the charity’s interests and beneficiaries had been considered by Lambert, Smith and Hampton (LSH), the Trust’s independent surveyors.

The Trust Legal Advisor stated that LSH had now produced an updated report taking into consideration slight changes to the land to be disposed of and the additional acquisition of 14 Brand Street, which would be purchased by HTHL and then gifted to the Trust for nil consideration at the end of the construction phase of the project. This updated report was appended to the Part 2 report on the agenda, as it contained commercially sensitive valuation advice. The following extract was taken from the “Summary and Recommendations” section of the LSH report:

“To conclude, we can confirm our opinion that it is in the interest of the Trust to proceed with both the proposed disposal (to a named party) of part on a long leasehold basis, as discussed above and in our earlier full report and also to acquired [sic] 14 Brand Street, as an integral part of a major capital project to greatly improve the property as outlined above and taking all matters into account do not believe that, in respect of the disposal, a more beneficial overall outcome would be secured by offering the subject area of the property on the open market. We therefore recommend, from a property value viewpoint, that the Trustees approve the disposal of part only of the property on a long leasehold basis as proposed and also the associated acquisition of 14 Brand Street.”

The Trust Legal Advisor explained that the above advice meant that the Sub-Committee could consider and decide on these matters without the need to refer them to the Charity Commission, and the conclusions of LSH were reflected in Recommendations 10.1 to 10.5 of the report.

In respect of the next steps, the Trust Legal Advisor advised that it was likely that there would need to be a further Full Council meeting to consider the outstanding matters which required resolution prior to the execution of the Development Agreement. As these matters did not directly affect the Trust (they did not change the terms of how the Council would operate the Trust property, on behalf of the Trust, under the Management Agreement and nor did they affect the terms of the lease), it was considered that the Trust was able to make a final decision on the proposals prior to the resolution of these final matters. In the unlikely event that these final matters affected the Trust (beyond minor consequential amendments to the draft legal agreements), the Trust would be reported to further.

It was noted that the Trust Sub-Committee would still be required to meet annually to prepare the annual returns to the Charity Commission.

The Head of Revenues, Benefits and Information Technology drew the Sub-Committee’s attention to Section 6 of the report, and stated that, should the proposals be supported, the Trust’s financial risks would be transferred to the Council through a binding agreement, as opposed to the existing arrangements, which relied on the goodwill of the Council and which were not binding.

The Chairman asked the Sub-Committee to consider each of the recommendations in the report in turn. The Sub-Committee was supportive of all of the recommendations. However, Members requested the Trust Legal Advisor be requested to investigate whether or not a change could be made to relevant elements of the Council’s Constitution to explicitly require the Council to formally report back to the Trust on an annual basis all necessary information required by the Trust for reporting to the Charity Commission.

RESOLVED:

(1) That, subject to the consideration and determination of matters referred to in the Part 2 report, the Trust

(i) Agree that the proposed scheme for the Trust Property meets the Trust’s Charitable Objectives;

(ii) Agree that the proposed scheme meets the requirements of the Charity Commission in respect of:

• Public Benefit;
• Disposal of part of the Trust Property to Hitchin Town Hall Limited by way of 125 year lease; and
• Acquisition of 14 Brand Street for nil consideration;

(iii) Authorise the Council to execute on behalf of the Trust the:

• Development Agreement;
• Lease; and
• Transfer of 14 Brand Street;

(iv) Enter into the Management Agreement with the Council;

(v) Delegate to the Head of Revenues, Benefits and IT authority to sign the Management Agreement on behalf of the Trust;

(vi) Delegate to the Head of Revenues, Benefits and IT, in consultation with the Chairman of the Trust Sub-Committee, authority to agree minor variations to Legal Agreements;

(vii) Note that, if further specific decisions are required beyond minor variations a further report will be presented to the Trust Sub-Committee;

(viii)Delegate to the Head of Revenues, Benefits and IT, in consultation with the Chairman of the Trust Sub-Committee, authority to exercise the functions set out in Clauses 2.3 (Trust consent to the Council wishing to transfer management of the property), 2.4 (Trust consent to the Council wishing to grant any right or licence over the property) and 10.4 (Review of the Management Agreement) of the Management Agreement with the Council; and

(ix) Note that progress with the project may also require further formal agreement from Full Council on the outstanding matters referred to in the Full Council papers appended to Trust report;

(2) That the Trust Legal Advisor be requested to investigate whether or not a change could be made to relevant elements of the Council’s Constitution to explicitly require the Council to formally report back to the Trust on an annual basis all necessary information required by the Trust for reporting to the Charity Commission.

REASON FOR DECISION: To ensure that the Charitable requirements of the Trust are met in respect of the principle of the project and to enable the project to progress to delivery of a scheme which safeguards the future interests of the Trust and the Trust Property.
7 EXCLUSION OF PRESS AND PUBLIC
RESOLVED: That under Section 100A(4) of the Local Government Act 1972, the public and press be excluded from the meeting for the following item of business on the grounds that it involves the likely disclosure of exempt information as defined in Paragraphs 1, 3, 4 and 5 of Part 1 of Schedule 12A of the said Act (as amended).
PART II
8 HITCHIN TOWN HALL GYMNASIUM AND WORKMAN'S HALL TRUST CONSIDERATION OF NORTH HERTFORDSHIRE MUSEUM AND COMMUNITY FACILITY
  • Report
  • |
    Appendix A
  • |
    Appendix B
The Trust Legal Advisor and the Head of Revenues, Benefits and Information Technology presented a joint Part 2 report in respect of the implications for the Trust of the information contained in the report to Council on 10 May 2012 regarding the North Hertfordshire Museum and Community Facility project. The following appendices were submitted with the report:

Appendix A - Lambert Smith and Hampton Independent Valuer’s Report - 22 May 2012;
Appendix B - Part 2 Report and Appendix 1 considered by the Council Meeting held on 10 May 2012 in respect of the North Hertfordshire Museum and Community Facility.

In respect of the Architectural Specification/Hitchin Town Hall Ltd. Development Requirements, the Trust Legal Advisor stated that some of the works referred to related to the Trust Property. However, the Trust had not been involved in the Architectural Specification, given that it was not contributing to the cost of the project which was being led by the Council. The Sub-Committee was therefore asked to note this section of the Council report.

In relation to Legal Charges, Guarantees and Indemnities, the Trust Legal Advisor commented that, as set out within the report, Futurebuilders required various guarantees to protect their interest. The charges sought potentially included Trust Property, and therefore the Sub-Committee was asked to note the issue. As the Council was indemnifying the Trust against all liabilities, any issue arising in respect of the charges would fall to the Council to resolve. Accordingly, the Sub-Committee was advised that this issue did not prevent it making its decision on the project.

The Trust Legal Advisor referred the Sub-Committee to the independent valuation advice of Lambert Smith and Hampton (LSH), contained in their report dated 27 April 2012, and which was attached at Appendix A to the Trust report. In particular, Members’ attention was drawn to the “Summary and Recommendations” section of the LSH report, the key conclusions of which were set out in the Part 1 Trust report.

The Sub-Committee noted that, at the conclusion of the project, the property would need to be revalued, particularly as the building footprint would increase due to the acquisition of 14 Brand Street.

RESOLVED:

(1) That the content of the report, including the independent valuation advice of Lambert Smith and Hampton, be noted; and

(2) That the Trust Legal Advisor and Head of Revenues, Benefits and Information Technology be thanked for the time and effort they had devoted to preparing the Trust reports at such short notice.

REASON FOR DECISION: To ensure that the Charitable requirements of the Trust are met in respect of the principle of the project and to enable the project to progress to delivery of a scheme which safeguards the future interests of the Trust and the Trust Property.
Published on Friday, 8th June, 2012
6.55pm