Lewisham

MAYOR AND CABINET Report Title

Community-based asset transfers

Key Decision

Yes

Ward

All

Contributors

Executive Director Community Services, Head of Strategy, Director of Programme Management and Property, Head of Property and Development, Sustainable Resources Group Manager.

Class

Part 1

1.

Item No. 7

Date: 9 July 2008

Purpose and summary This report describes the Council’s approach to community-based asset transfers, including specific proposals in relation to Parker House.

2.

Policy context

2.1.

‘Making assets work - the Quirk Review of community management and ownership of public assets’ was published in 2007. The Review found that the benefits of community management and ownership of public assets can outweigh the risks and opportunity costs in appropriate circumstances, and if supported by a robust assessment of risks there are no substantive impediments to the transfer of public assets to communities.

2.2.

The Government’s response ‘Opening the transfer window’ accepted the Quirk Review recommendations in full and initiated a programme of activity to identify and disseminate good practice.

2.3.

The Department of Communities and Local Government published ‘An action plan for Community Empowerment: building on success’ and is planning a White Paper on empowerment later this summer. Community-based asset transfers are identified in this context as one of the ways in which local authorities enable citizens and communities to influence what happens in their local area.

3.

Recommendations That the Mayor:

3.1

Endorses the overarching approach on community-based asset transfer described in this report and in Annex A;

3.2

Confirms the Council’s existing policy in relation to leasehold agreements with community groups;

3.3

Agrees to accept funding of £1 million from the Big Lottery Community Assets Fund as part of the proposal to refurbish Parker House and to proceed with the proposed

refurbishment of Parker House funded through the Big Lottery Community Assets Fund; 3.4

Agrees that following completion of the refurbishment the Council will grant a 50 year lease at a peppercorn rent of Parker House in accordance with the funding conditions required by the Big Lottery Community Assets Fund;

3.5

Delegates authority to the Executive Director for Community Services in consultation with the Executive Director for Resources, the Head of Asset Strategy and Development and the Head of Law, to negotiate and agree the terms of the lease referred to in recommendation 3.4 above together with all associated legal documentation.

4.

Background

4.1.

‘Asset transfer’ refers to local communities’ ability to acquire buildings, either at market value or at a discount, in order to deliver services that meet local needs. It is seen as one way in which local authorities (in particular) can support the development of social capital and thereby meet wider strategies for renewal and delivery of local services.

4.2.

Barry Quirk led a national review on community management and ownership of public assets which published its findings in 2007. The Review found that while there are risks and practical challenges, there are no insurmountable obstacles to successfully transferring assets to community ownership.

4.3.

Publication of the report stimulated significant interest locally, and through the Council’s Asset Management Board and the Stronger Communities Partnership Board officers have developed a framework for identifying and developing community-based assets transfers. This report describes this framework and seeks the Mayor’s agreement to the overarching approach.

4.4.

Community-based asset transfers can potentially encompass a range of different scenarios, including freehold and leasehold and can extend from offering first refusal at a commercial rate to a transfer at reduced or nil value. It is important that our approach is consistent with the Council’s wider policies on assets, and in this context the Mayor is asked to confirm the existing policy of only entering into leasehold agreements at market rates.

4.5.

This report also specifically seeks the Mayor’s agreement to proceed with the proposal to refurbish Parker House following the Big Lottery’s decision to award up to £1 million as part of the Community Assets Fund. A framework for community-based assets in Lewisham

4.6.

Transferring ownership of a building to a community-led organisation will only be suitable in certain circumstances, and in the wrong conditions an ‘asset’ can rapidly become a liability to the recipient. Critical to the success of any transfer is a clear rationale backed by a robust business-case demonstrating the ability of the recipient to manage the asset effectively and the advantages secured by a change in ownership.

4.7.

The framework that has been developed with the Council’s Asset Management Board and the Lewisham Stronger Communities Partnership Board aims to provide a basis for identifying, assessing and supporting decision-making making on assets where

ownership could be transferred in a way that is transparent, consistent and linked to wider strategic objectives. 4.8.

There is no commitment to transfer any assets, and the framework that has been developed is not intended to create a bidding process. Any proposed transfer will need to satisfy criteria in relation to achieving value for money and community empowerment. In addition to these criteria, successful projects will be expected to deliver benefits in one or more of the following four categories: • Promoting area-wide benefits • Supporting a sustainable third-sector • Economic development and social enterprise • Improvements to local services

4.9.

The framework and associated assessment tool are included in Annex A. We are now using the framework to identify potentially suitable projects, and the assessment tool will be used to develop proposals that will be put to the Mayor for agreement. The Stronger Communities Partnership Board will continue to be involved in the development of proposals as part of this process.

4.10. In general terms potential community-based initiatives relating to the ownership of assets fall into the following scenarios: • Where an external organisation has a proposal focussed on a specific Council owned building • Where an external organisation has a proposal based on accommodation requirements that do not specify a particular building • Where a wider policy objective has been identified that could be served through an asset transfer but no individual organisation or asset has been identified. 4.11. The framework and assessment tool will enable us to identify Council assets that may be relevant in each of these scenarios and to assess proposals for transfer in a consistent way based on an agreed set of criteria. We will seek to ensure that the general principles of community-based ‘asset transfer’ are embedded within the context of the Council’s overarching engagement with the community and voluntary sector as one of the tools that can be deployed in achieving wider strategic objectives. This will be achieved through the Stronger Communities Partnership Board, and by reflecting the potential role asset transfer can play within other Council strategies for example in relation to community development and community premises. Current policy on leasehold agreements 4.12. The current policy on letting of Council property to community groups was agreed by the Policy and Resources (Finance) Sub Committee on 11th March 1999. This policy is to charge to let properties to community groups on market terms, including rent levels. For the purpose of this policy a community organisation can be regarded as any potential tenant for a property who would not satisfy the normal commercial criteria for selecting a tenant but does provide a service that is corporately supported. 4.13. The market rent reflects both location and condition of a property and takes into consideration any financial investment the organisation has made in the property under the terms of the lease, for example as a result of grant funding. The advantage of this arrangement is that the true cost to the Council of providing accommodation to community organisations becomes apparent. The Council can still decide whether it wishes to provide financial support to cover all or part of the rent payable.

4.14. While asset transfers can take place under this existing policy there are cases where assets have transferred on terms that are below market value based on the individual merits of each of those cases. The framework and assessment tools discussed in this paper will now be used to assess these cases in a more structured way. Refurbishment and transfer of Parker House 4.15. The Big Lottery has awarded Lewisham Council up to £1 million through its Community Assets Programme to refurbish Parker House, a 5 storey office block in Evelyn. A condition of the grant is that the Council agrees to transfer ownership of the building to a community-based organisation. 4.16. This project is designed to deliver community-owned and managed office space that • Responds directly to local demand for community work space • Embeds capacity and an on-going source of revenue within the local community • Reinvigorates the local economy and promote opportunities for social enterprise • Creates stronger and more dynamic links between local third sector organisations • Generates opportunities to improve a range of existing services benefiting the Pepys estate in Deptford and Lewisham as a whole • Stimulates community involvement and informed community representation. 4.17. Detailed negotiations are in progress on the lease arrangements and agreement needs to be reached by September in order to confirm our acceptance of the offer of funding. The Mayor is therefore invited to agree that, subject to satisfactory agreement on a lease, the Council proceeds with the proposed refurbishment of Parker House funded through the Big Lottery Community Assets Fund and following the refurbishment enters into a leasehold agreement at a peppercorn rent in recognition of the £1 million investment made through the Community Assets Fund. The Mayor is also requested to delegate authority to the Executive Director for Community Services in consultation with the Executive Director for Resources, the Head of Asset Strategy and the Head of Law to agree the terms of the lease for Parker House in accordance with the funding conditions required by the Big Lottery Community Assets Fund. 5.

Financial implications There are no immediate financial implications that follow from the overarching framework that has been developed. Each specific proposal will need to be agreed on its own merits.

6.

Legal implications

6.1.

The Council has power under Section 2 of the Local Government Act 2000 to do anything which it considers is likely to contribute to the social, economic or environmental wellbeing of its area. This includes power for a local authority to incur expenditure, enter into arrangements or agreements with any person, facilitate the activities of any person and to provide accommodation to any person. The power does not permit the Council to do anything which is specifically prohibited or restricted from doing under other legislation. In exercising the wellbeing power the Council is required to have regard to its community strategy. The Council must use its well-being powers rationally and lawfully. This well-being power therefore provides the legal context for asset transfer. However, each proposed asset transfer will need to be judged on its own merits and will need to be dealt with in accordance with the relevant statutory framework and the Council’s own internal approval processes.

6.2.

Under Section 123 of the Local Government Act 1972 the Council may not dispose of non-housing land otherwise than for the best consideration reasonably obtainable except with the consent of the Secretary of State. The definition of “disposal” includes the grant of a lease for 7 years or more. Where it is proposed in particular cases to grant leases at less than market rents or to transfer assets at less than best consideration, the Secretary of State has issued the General Disposal Consent (England) 2003 which applies to disposals under Section 123 and applies where the local authority considers that the purpose for which the land is to be disposed is likely to achieve in respect of any parts of its area the promotion or improvement of economic, social or environmental well being and the undervalue at which the land is being disposed does not exceed £2,000,000. This Consent will therefore almost certainly apply to all community-based asset transfers. Provided the undervalue is within the £2m limit, the Council will be able to rely on this Consent without the need to seek a specific disposal consent from the Secretary of State.

6.3.

In the case of housing land, under Section 32 of the Housing Act 1985 the Council may not dispose of any land held for the purposes of Part II of the Act (i.e. housing purposes) without the consent of the Secretary of State. The Secretary of State has issued a series of General Consents for the disposal of different types of housing properties. General Consent E3.1 permits local authorities to dispose of any land held for housing purposes for the best consideration that can reasonably be obtained, provided that any dwelling-house included in the disposal is vacant and will be demolished without being used again as housing accommodation. Where a community-based asset transfer of housing land is taking place at less than market value, a specific Ministerial Consent will be necessary for the disposal and the appropriate authority will need to be obtained to make the application for consent.

6.4.

In addition to the statutory requirements, members also have a fiduciary duty to local people to act prudently when disposing of Council owned assets. Before agreeing to dispose of land at less than best consideration, the decision maker will need to be satisfied that the non-financial benefits arising out of any community-based asset transfer will outweigh the capital receipt/rent which is being foregone.

6.5.

In accordance with the Mayoral Scheme of Delegation, approval to the acceptance of any external funding exceeding £1 million is reserved to members. In accepting the funding of £1 million from the Big Lottery Community Assets Fund and agreeing to proceed with the proposed refurbishment of Parker House funded through the Big Lottery Community Assets Fund, the Council will be required to comply with Central Government Grant Conditions, many of which mirror the Council's own standard grant conditions.

6.6.

As part of the funding conditions, the Council is required to grant a 50 year lease of Parker House at a peppercorn rental to an agreed community-led organisation. Parker House is a non-housing asset. This report delegates authority to the Executive Director for Community Services in consultation with the Executive Director for Resources, the Head of Asset Strategy and Development and the Head of Law, to negotiate and agree the terms of this lease. Once the terms of the lease have been agreed, the Head of Asset Strategy and Development will need to be satisfied that the terms agreed represent the best consideration reasonably obtainable. If this is not the case, the disposal will either need to fall under the General Disposal Consent (England) 2003 or will require an application for specific disposal consent from the Secretary of State.

6.7.

The Council will be required to deliver specific Project Outcomes to BLF and will be dependent upon the selected community-led organisation to deliver these outcomes on its behalf. Failure to deliver them would constitute a breach of the grant conditions with clawback implications for the Council. The Council will therefore have to closely monitor the community-led organisation’s performance and will need a binding agreement with the community-led organisation so far as their outputs are concerned. BLF's prior approval will be required to any changes to the project or the communityled organisation.

6.8.

The Council will be required to enter into a Deed of Dedication with BLF in respect of Parker House which will restrict the Council’s ability to sell/lease the property in the future without BLF's consent.

6.9.

The grant agreement with BLF will remain in place for 10 years (unless there is any breach at the end of that period, in which case it will continue as long as the breach continues). Any breach of the funding conditions by the Council (or breach by the community-led organisation which puts the Council in breach) could result in the grant being clawed back. The Council will therefore need to be satisfied that the selected community-led organisation is capable of meeting the outputs required by BLF and enabling the Council to meet its obligations.

7.

Crime and disorder implications There are no specific crime and disorder implications arising directly from this report.

8.

Equalities implications There are no specific equalities implications arising directly from this report.

9.

Environmental implications There are no specific environmental implications arising directly from this report.

10.

Background documents and originator Contact: Aileen Buckton (Executive Director Community Services)/ Martin O’Brien (Sustainable Resources) Background documents: • Annex A: Lewisham Community Assets Framework and assessment tool • ‘Making assets work – The Quirk Review of community management and ownership of public assets’ (HMSO 2007) • ‘Opening the transfer window – The Government’s response to the Quirk Review’ (DCLG 2007)