Meeting documents

1 THE ISSUE

1.1 This report sets out the latest position with regard to the discussions with the Charity Commission regarding the future of the Recreation Ground following the submission of the Strategic Review Report to the Commission in June 2007

2 RECOMMENDATION

2.1 The Trust Board to note the contents of this report.

3 FINANCIAL IMPLICATIONS

3.1 Consultancy fees will be payable to Drivers Jonas. All other financial implications have been outlined within this report.

4 THE REPORT

4.1 Following the receipt of the letter from the Charity Commission dated 6 March the Trust Board has given consideration to the issues raised. On instruction from the Board, the Trust's Independent Adviser has written to the Chief Executive of Bath and North East Somerset Council regarding the future of the Leisure Centre and to the Chief Executive of Bath Rugby regarding the future use of the Rugby ground. Detailed negotiations will now proceed with both parties with a view to meeting the requirements of the Commission regarding these outstanding issues and facilitating the Commission's stated preference to address these issues holistically and thereby clarify the future use of the Recreation Ground by way of a single Scheme which will deal comprehensively with the matter. This approach is very much welcomed by the Trust Board.

4.2 With regard to the Leisure Centre the Commission has emphasised that as things stand, the objects of the Recreation Ground are concerned with the use of the land as open space for recreational purposes, whereas the Leisure Centre provides for indoor recreational activities. The Trust Board had therefore asked that the Commission consider whether a cy-pres occasion has taken place over the land forming the site of the Leisure Centre. In this context the Commission needed to form a view as to whether Section 13 (1) (e) (iii) of the Charities Act 1993 as amended by the Charities Act 2006 applied on the basis that the original purposes have ceased to "provide a suitable and effective method of using the property available by virtue of the gift". It was key to assess whether the use of the site of the Leisure Centre as an open space has ceased to be a suitable method of using it, now that it has been built on by the construction of the Leisure Centre. Taking into consideration that this would require the demolition of a useful facility and its replacement elsewhere, the Commission considers that the case and circumstances for a cy-pres occasion have been met to allow for indoor recreational use.

4.3 In reaching that conclusion, the Commission also took into account the purposes for which the Leisure Centre is used, as these are closely allied to those for which the site would be used if it were not built on. In short, the Commission has taken the view that though those uses are not themselves within the terms and may not even be within `the spirit of the gift'; they at least share with the spirit of the gift, being `for the purposes of enabling the public to take recreation.' The Commission also had to take into consideration that it was clear when it was built that the Leisure Centre would not be financially self supporting and would require a subsidy from public funds. The Trust could not provide such a subsidy from its own income. If it is to continue, Bath & North East Somerset, in its capacity as Local Authority, would have to subsidise it. Moreover, if it is to promote a scheme which allows the continued operation of the Leisure Centre, the Commission must be satisfied in advance that certain conditions are met and that the meeting of these conditions is evidenced to the Commission by the Trust Board. In this context the Board will firstly have to seek agreement with Bath & North East Somerset, as the Local Authority, to ensure that proper arrangements are made for the future funding of the Leisure Centre and for the cost of its demolition when its lifespan as a sports centre and availability to the public is over. The Commission suggests that the best way of doing so would be for the charity to grant Bath & North East Somerset, as local authority, a long lease of the building on a full repairing and insuring basis which would contain an obligation on part of the lessee to demolish the building and reinstate the site as an open space if the building ceases to be used as a sports centre available to the public.

4.4 The Commission reminds the Board that the land is currently vested in the Official Custodian of Charities and so, although it is the responsibility of the Trust Board to secure and negotiate any such lease arrangement, the legal transaction would be in the name of the Official Custodian. Given the dual role that Bath & North East Somerset has, the Commission is happy that this resolves the technical problems that have been identified over the grant by Bath & North East Somerset as trustee of a lease to itself as Local Authority. The Commission's view is that any alteration to the purposes for which the site of the Leisure Centre can be used, to include indoor recreation, does not need to be limited to the existing life of the current building. If the circumstances now exist which make the original purposes no longer a suitable and effective method of using the property available by virtue of the gift, those purposes can be altered to permit an additional purpose, even if it is foreseeable that the additional purpose may not be possible or appropriate for ever. In other words, the Commission is acknowledging that at the end of its useful life the existing Leisure Centre could be replaced by a similar facility if it is considered appropriate at that time to do so, provided that suitable financial arrangements for its constructions and maintenance are made.

4.5 Having made its position clear, the Commission now looks to the Board of Trustees to take the matter forward. Accordingly the Board will be engaging the services of property consultants, Drivers Jonas, who have considerable expertise in these matters, as advisers; and will be looking to make significant progress with these issues as quickly as possible. It is already clear to the Board of Trustees that apart from agreeing on the principle that the Trust should grant a fully insuring and repairing lease of the leisure centre to the Council they will also be seeking agreement on a number of other key issues.

4.6 In considering the Trust Board's request to be able to grant a lease of additional land to Bath Rugby (i.e. provide a larger `footprint' to facilitate the redevelopment of the ground) the Commission has stressed that it needs to be fully satisfied that any detriment arising to the charity from the proposal is significantly outweighed by the benefits that the Recreation Ground will receive. In short, if the proposal is not, on balance, clearly and demonstrably beneficial to the charity, the Commission will not feel able proceed further due to the requirements of charity law.

• The benefit of additional income from the further letting which could be used to further the objects of the Recreation Ground by enabling the Trustees to enhance the sports facilities for the use of the public on other parts of the Recreation Ground.
  
• The grant of the further letting which could enable the Recreation Ground to procure from the Club other benefits to further the objects of the charity:
  
• The increased use of all the land leased to the Club for the charitable purposes of the Recreation Ground.

5 RISK MANAGEMENT

5.1 This report is for information. There are therefore no new or additional risks arising from it.

6 RATIONALE

6.1 This report is for information

7 OTHER OPTIONS CONSIDERED

7.1 None

8 ADVICE SOUGHT

8.1 The Trust's Independent Adviser and Senior Counsel (legal adviser)