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MAIDSTONE BOROUGH COUNCIL
COBTREE MANOR ESTATE COMMITTEE
14 NOVEMBER 2012
REPORT OF THE ASSISTANT DIRECTOR OF ENVIRONMENT AND REGULATORY SERVICES
Report prepared by Steve Goulette
1. KENT LIFE
1.1 Issue for Decision
1.1.1 To consider the possible management of the Kent Life Museum attraction and entering into an agreement for a company to operate this facility on behalf of the Cobtree Manor Estate , a charitable trust (CMET).
1.2 Reason for Urgency
1.2.1 The Heads of Terms need to be agreed as soon as possible to allow time to negotiate the operating arrangements before Continuum cease to manage the Kent Life Museum facility in February next year.
1.3 Recommendation of the Assistant Director of Environment and Regulatory Services
1.3.1 That the Heads of Terms detailed in exempt appendix 1 be approved.
1.3.2 That subject to the procurement arrangements being satisfied, the Assistant Director of Environment and Regulatory Services be given delegated authority, in consultation with the chairman of the Committee to authorise the Head of Legal Services to enter into an agreement with Continuum Kent Life Ltd. based on the Heads of Terms referred to in paragraph 1.3.1, to operate the Kent Life Museum facility on behalf of CMET.
1.4
Reasons
for Recommendation
1.4.1 The CMET
owns large areas of land to the South of Forstal Road as shown on the attached
Plan 1. The land is sub-let to Kent County Council (KCC) which has sub-let it
to The Museum of Kent Life Trust (MKLT). MKLT has entered into an agreement
with Continuum Kent Life Ltd to operate the Kent Life Museum attraction on its
behalf, on much of this land and as shown on the attached Plan 2 (the site). Although
the site includes land north of the motorway, it is understood these fields
have been little used by either MKLT or Continuum when operating the museum.
1.4.2 The
agreement between MKLT and Continuum Kent Life ltd contains a break clause
allowing Continuum at a certain specified time to give notice to close the Kent
Life Museum if it is making a loss. Continuum gave that notice to MKLT and the
facility will close in February 2013 with over 30 job losses unless other arrangements
are made. The MKLT agreement allows Continuum to remove the play equipment with
a book value of around £180K at the end of the notice period.
1.4.3 Based
on the Borough Councils experiences with trusts it has been possible to
develop a new way of operating which would allow more income to be retained
which should allow Continuum Kent Life Ltd to continue to operate the site
without making a loss. The proposal is for CMET to become the facility manager
and all income would be paid to CMET. CMET would then enter into an operating
agreement with Continuum Kent Life Ltd for the company to operate the site on
its behalf.
1.4.4 In order for this
to become possible, the sub leases granted to MKLT and KCC need to be surrendered.
MKLT has already agreed to surrender its sublease to KCC and KCC is currently
considering surrendering its sub lease to CMET. This has a positive advantage
to CMET in that it regains control of a significant part of its estate
including the remaining land not actively used as part of the museum. MBC is
now preparing the surrender documents.
1.4.5 In
addition CMET will have to agree terms with Continuum to operate the
attraction. It would be possible to seek a new operator and the staff would
transfer under the TUPE regulations but this would be difficult to achieve in
the timescales and Continuum would remove the play equipment which is a very good
attraction at the facility (or CMET could manage the museum direct).
1.4.6 The
accounts of Continuum have been scrutinised in detail by the Borough Council's
and the charitys accountants and they are satisfied that the company has been
operating at a loss and no costs have been attributed to central over heads. Therefore
they are operating the facility in a sensible way, although it is felt that
there could be ways to reduce their costs.
1.4.7 By CMET operating
the site through Continuum the facility could be exempt from Non Domestic
Business Rates due to the charitable and museum status and certain elements of
VAT could also be exempt for the same reasons. The Councils tax advisors have
confirmed that in its view admission charges and some other charges would be
VAT exempt and the Councils Revenues team has confirmed that NNDR exemptions
would be able to be applied. This would provide more
income and allow Continuum to continue to operate the site without incurring a
loss.
1.4.8 Draft
Heads of Terms have been agreed with Continuum Kent Life ltd and these are
attached in exempt Appendix 1. The Councils and charitys technical, legal and
financial officers are satisfied that this represents the best deal given the complicated
circumstances and if agreed will allow the museum attraction to remain
operating with improved likelihood of future success. In addition CMET will
regain control of the site and additional land south of Forstal Road.
1.4.9 A
surplus share prediction is provided as part of exempt Appendix 1 which shows
that based on current income a surplus could be shared by CMET and Continuum.
1.4.10
However, the proposed arrangements with Continuum whilst of
benefit to all parties, do not comply with the Councils contract rules as the
normal procurement process has not occurred. Given the unusual set
of circumstances in this matter, it is considered that a waiver, as allowed
for in the contract rules, is given to allow the arrangement with Continuum to
proceed due to the exceptional circumstances outlined above. This has now been
agreed by the Director of Regeneration and Communities and it is possible to
proceed to agree a way forward.The procurement options are being finalised and an
update will be provided at the meeting.
1.5
Alternative
Action and why not Recommended
1.5.1 The heads of terms
could be rejected but this would result in the Museum of Kent Life attraction
closing with the loss of over 30 jobs, unless CMET managed it directly until a
procurement exercise was undertaken. However CMET has no experience of running
such a facility and if it was to consider doing so the risks would increase
significantly, not least to the CMET of which MBC is the corporate trustee..
The proposal provides a benefit for both parties and is considered the best way
forward given the complex set of circumstances.
1.6
Impact
on Corporate Objectives
1.6.1 The
proposal will result in two sub-leases being surrendered and CMET again being
in control of its land.
1.6.2 The
proposal to manage the Kent Life museum attraction is in accordance with the objects
of the charity, Cobtree Manor Estate.
1.7
Risk
Management
1.7.1 There is
a risk that the sub leases are not surrendered and the Museum facility closes.
It is likely that the sub leases would then be surrendered (as both KCC and
MKLT have the right to give notice terminating these sub leases early) leaving
the charity with a defunct facility missing the play equipment. Every effort is
being made to keep the facility open and MBC is preparing the surrender
documents.
1.7.2 There is
a risk that agreement cannot be reached with Continuum Kent Life Ltd and the
facility closes. However the Heads of Terms have been agreed in draft and are
to be considered for approval in this report. It is in the interests of both
parties to reach agreement.
1.8
Other
Implications
1. Financial
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X
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2. Staffing
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X
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3. Legal
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X
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4. Equality Impact Needs Assessment
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5. Environmental/Sustainable Development
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6. Community Safety
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7. Human Rights Act
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8. Procurement
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X |
9. Asset Management
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1.8.1 Financial
The financial details associated with the Heads of Terms are detailed in the exempt appendix.
1.8.2 Staffing
The
staff will remain with Continuum Kent Life Ltd.
1.8.3 Legal
Legal
agreements will be necessary for the operation of the site by Continuum Kent
Life Ltd. and the surrendering of the sub-leases.
1.9
Relevant
Documents
1.9.1 Appendices
Exempt Appendix 1
1.10 Background Documents
None
IS THIS A KEY DECISION REPORT?
Yes No
If yes, when did it first appear in the Forward Plan?
urgent item ..
This is a Key Decision because: it involves expenditure above £250K ..
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Wards/Parishes affected: Boxley ..
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