Meeting documents

1 THE ISSUE

1.1 The Charity Commission have undertaken public consultation on the Scheme it had proposed to make, to authorise the disposal of the Leisure Centre to the Council. As a result of representations received the Charity Commission are now proposing an alternative to the disposal and are seeking the views of the Trust Board before proceeding.

2 RECOMMENDATION

2.1 That the Trust Board considers the proposals from the Charity Commission

2.2 That the Trust instructs the Director of Resources to prepare a response to the Charity Commission based on the Trust's consideration of the proposal.

3 FINANCIAL IMPLICATIONS

3.1 The Trust has built up a deficit of almost £100,000 as a result of the work undertaken by the Receiver and Manager who were appointed by the Charity Commission. In normal operating circumstances the Recreation Ground generates sufficient income to cover its costs, giving rise to a small surplus. The Receiver/Managers reviewed the options for the future of the Leisure centre and proposed its disposal to the Council. This was agreed by the Charity Commission. A sum of £750, 000 has been agreed between the Council and Trust as full and final settlement, which if and when received will ensure the financial solvency of the Trust into the future.

3.2 The financial position of the Trust is under further pressure as it is required by the Charity Commission to undertake a Strategic Review of future uses. This will add at least a further £30,000 to the Trusts existing deficit. This is being financed by a loan from the Council, initially for £30,000.

3.3 Any alternative proposal should bring with it substantial compensation but also further uncertainty as it will require another scheme to be negotiated and publicly consulted, incurring further costs and delay. The existing scheme has certainty and could be implemented immediately if approved by the Charity Commission.

4 SALE OF BATH LEISURE CENTRE TO BATH AND NORTH EAST SOMERSET COUNCIL

4.1 The Charity Commission appointed Receiver/Managers to examine options for the future of the Leisure Centre. Having examined the options the Charities Commission accepted a recommendation to dispose of the Leisure centre to the Council and charged the Receiver Manager with negotiating terms with the Council and advertising the draft scheme. Draft Heads of Terms for the grant of a long lease were agreed early in 2005 (reported to the Trust Board in February 2005) and a Scheme to give the Charity the necessary power was duly advertised for public consultation as required by the Charities Act 1993.

4.2 At the time of advertising the public notice it was envisage that the disposal would be effected in June 2005 or shortly thereafter. However following the passing of this anticipated deadline the then Director of Resources requested a meeting with the Charity Commission to establish the position on the proposed Scheme. The meeting took place in September 2005 and was attended by (Council) officers representing the Trust. During this meeting it was confirmed that the Charity Commission had received representations and in view of the nature of these were proposing an alternative to the scheme advertised.

4.3 The Director of Resources held informal consultations with the Trustees and wrote to the Charity Commissions expressing the Trusts position. The letter is attached as appendix two. A response to this and confirmation of the proposal was received from the Charities Commission in November attached as appendix one.

4.4 The nature of representations received were wide-ranging, however the two critical areas considered were that

4.5 The Charity Commission's view is that the land presently occupied by the Leisure Centre could eventually be returned to open air recreation as the building has a finite lifespan. This would not require the immediate removal of the existing building as a Scheme could be prepared to enable the alternative use of the land limited to the lifetime of the building. This would still leave the question of compensation both retrospectively and for future use of the building by the Council to be resolved. The Trust would have to obtain an independent valuation of the site on which to base a rent for which there is no national precedent.

4.6 The Trust Board have been requested by the Charity Commission to consider its alternative proposals. The letter from the Charity Commission is attached as appendix two.

4.7 In considering the options there are a number of issues that need to be born in mind

a) The Charity Commissions' appointed Receiver Manager, negotiated a position with the Council for the grant of the lease. The money due to the Trust on this basis would result in the long term financial security of the Trust and enable it to pay its existing liabilities. As the Charity Commission have no proposal to resolve the issue of arrears and future rents in the event of a revised Scheme, it is difficult to envisage when any arrears due to the Trust from the Council will be paid. It has taken a significant amount of time to arrive at the present position with the possibility of a similar period elapsing before a settlement could be reached. In the meantime the Trust is operating at a deficit.

b) The building whilst theoretically having a finite life could be maintained for a lengthy period. However it is unclear how or when a return to green space could be affected leaving a practical difficulty for the Trust to resolve. This could leave the Trust with a derelict site left to manage.

c) There is no guarantee that a revised Scheme will not receive further objections from the public and possibly the Council itself, the latter not least of all because of the matter of compensation. A revised scheme will also incur further costs over which the Trust itself has no control as the work on any negotiated proposal would be commissioned by the Charity Commission.

d) The revised proposal would place the Trust in a potentially very difficult position. The certainty offered by the existing proposal will have been removed thus taking away for an indefinite period the ability of the Trust to develop its role and the use of the Recreation Ground as it has a significant temporary financial deficit. Any compensation finally negotiated would need to discharge existing liabilities and may leave little with which to promote the Recreation Ground after the deduction of Receivers fees. In contrast the existing proposal would provide the Trust with a significant capital.

e) It is not unknown for Charities to dispose of part of their asset in order to meet financial liabilities and or pursue the objects of the charity

5 RISK MANAGEMENT

5.1 It is anticipated that the option now proposed by the Charity Commission would still yield a significant sum for the Trust and thus mitigate its temporary deficit. However no sum has been discussed and further uncertainty over the timing of payments could result in the Trust remaining in deficit to the Council for some time. This is opposed to the existing scheme which provides certainty over the amount and could be implemented immediately.

6 RATIONALE

6.1 The Charity Commission require the Trust to consider the alternative scheme proposal and respond with their preferred option before the Charity Commission will make a decision as to which option to pursue.

7 OTHER OPTIONS CONSIDERED

7.1 All options have to be supported by the Charity Commission in principle and then subjected to public consultation. The options for the Leisure Centre were considered by the Receiver/Manager and Charity Commission in 2004. Following public consultation on the original scheme the Charity Commission has proposed an alternative which similarly if supported by the Trustees and subsequently Charity Commission would require public consultation.

8 CONSULTATION

8.1 None.