Agenda item

This report sets out the call-in received by 9 Councillors of the decision to surrender the existing occupational lease at 23 Grosvenor Place, subject to payment of a revenue premium by the Council to the tenant. The role of the Panel is to consider the issues raised by both call-in notices and to determine its response.

Councillor Colin Blackburn, Lead Call-in Member addressed the Panel, a summary of his submission is set out below.

I would like to share with you my concerns as I haven't been privy to the comprehensive report that Richard Samuel MUST have received to push ahead with his decision.

23 Grosvenor Place was built for people to sleep in.  As a hotel, opened in 1790 I'm sure it saw many persons through its doors.

Whenever it came into the Authorities ownership, and I haven't been able to ascertain when that was or why, a decision was taken to turn it into Social Housing and provide 20 homes.  180 years after it opened as a hotel, Bath City Council refurbished and made it a home for 20 separate people.  23 years later (1993) a lease was agreed with The Guinness Housing Association Ltd (now known as The Guinness Partnership).  A social housing provider, please note this was 6 years before the mass transfer of housing stock to what has become Curo.

The lease agreed was 65 years long with an annual rent of circa £20k (that’s worth approximately £40k in today’s money allowing for inflation).

25 years after the lease, they ASKED US if they could surrender it.  This can’t have been for the lack of tenants.  Our own Home Search website states that ‘most people wait months or years for Social Housing in Bath & North East Somerset.  At today’s Social Housing rent values, they should be receiving circa £100k per annum against their £20k annual rent.  That’s not a bad return and that value will only grow in the coming years as rents go up and our lease stays static.  Surely that’s plenty of projected margin to invest in the upkeep and modernisation of the building.

Who are The Guinness Partnership and why do they want out of our lease?

They are one of the UKs largest and longest standing housing associations, with 66,000 homes and circa 140,000 tenants, they operate with income above 30% margin (clearly 23 Grosvenor Place was well above even that figure). 

So by giving up the lease, which appears just to no longer fit their plans, where are they building 20 replacement dwellings in our authority area……oh, they aren’t, they are busy elsewhere.  So we will be taking back a building, seemingly not fit for purpose, but losing 20 dwellings for our most vulnerable residents.  That is a business decision by them, and it’s at their request, This is not a housing provider led decision by our tenant considering their tenants.

So what's the state of the building …...we shouldn’t worry about that, it’s a full repairing lease.  Oh, but there appears to have been no formal dilapidations report, why not and why haven't The Guinness Partnership agreed to either do the work or pay for them. His answer may be in the comprehensive report that Cllr Samuel should have received, but I doubt it.

So, what's normal in a situation when a tenant asks to leave a lease agreement early.  You agree a breach clause fee don’t you? Well, first thing is maybe to get a report done as to the current value of the building ….. I have been told varying figures but some conclude £1.5million in its current state ...but we have never been shown that valuation, why not?

Getting professional advice, seems a sensible course of action.  GVA appear to have been asked but no provision has been made for a second opinion  We have never seen that professional advice but the result is we are being told we must pay OUR tenant £450,000 to give us back OUR building that they have asked to leave.

If we were helping this Housing Association to provide modern, fit for purpose dwellings elsewhere in the city then maybe a contribution towards that might make this more palatable but that is not happening……..they are taking our money and leaving town. In real terms, we are giving them back 22 year’s worth of the rent they have paid over the last 26 years and giving us back a building in a far worse state than when it was first given to them.

This isn’t the first time I have seen dubious decisions coming from this crucial part of our Council and I feel it is high time an independent review of the effectiveness of the management and processes within this massive asset holding part of the Council is done, before any more damage is done to the financial backbone of our Councils wellbeing.  I am asking this Scrutiny panel, in light of the non-transparent way this transaction has been handled, to request our new Chief Executive to commission an independent review of the department and its leadership.  As Councillors we should not be being kept in the dark.

I have asked 3 members from the last administration what they knew about this ‘deal’ and none were aware.  This has been sat on for 2 years whilst high value negotiations have taken place.  This deal sets an terrible precedent as a Landlord with any long term leases, but there might be a legitimate reason why ........... Well if this were a decision for a Scrutiny Panel (like planning) unless we had detail, it should be rejected and the officers advice overruled.

This is OUR asset, that The Guinness Partnership are responsible for maintaining.  It appears we will look for a quick disposal to re-coup our £450,000 (a fire sale at £1.5m) and it will get redeveloped by a profit driven developer into 20 apartments worth £250k each..............that’s £5m by the way!

I respectfully ask that this panel recommend OPTION B, that this decision is sent back for reconsideration and request that the comprehensive Single Member decision report that Cllr Samuel must have received, be published for us all to be able to understand the reasons and justifications for this use of TAXPAYERS money.

Prior to Councillor Samuel addressing the Panel the Chairman stated that he would only be speaking with regard to information that was in the public domain and that if the Panel decide that it needs to move into an exempt session they would move to another room.

Councillor Paul May asked if that would exclude all other Councillors.

The Legal Services Manager replied that as stated in the constitution only members of the Panel would be present to discuss any exempt information.

Councillor Richard Samuel, Cabinet Member for Resources addressed the Panel, a summary of his submission is set out below.

He said that he welcomed this opportunity to address the concerns raised.

He stated that the property concerned is within his ward of Walcot and that despite previous years as a Ward Councillor he had not received any communications about the property prior to this decision making process.

He said that in 1993 Bath City Council agreed a 65 year lease with Guinness Housing Association as they had decided the property was no longer manageable by the Council.

He explained that in September 2014 an options appraisal of the property was carried out and that discussions with the Council began in May 2015, therefore the previous administration would have had an oversight.

He said that the original sum sought as a reverse premium by Guinness was much in advance of the sum agreed and that the Council has achieved good value through this process.

He stated that the decision to lose housing stock had not been taken lightly.

He said that the property was a warren of rooms and corridors and not truly appropriate for its purpose.

He explained that he understood the claims for transparency, but although there is a public interest, commercial sensitivity exists.

He stated that he would be open to receiving any possible recommendations by the Panel.

Councillor Shaun Hughes asked how the Panel can be assured that this decision really is good value for the Council.

Councillor Samuel replied that details of the decision would be shared with them if they decide to move to an exempt session. He added that the future of the property had not been decided and that a number of options were being considered. He acknowledged the housing concerns that have been raised and said that it would be a Cabinet decision in relation to the future of the property.

The Chairman said that he felt there was a lack of transparency to the decision and that there was almost a culture of Property Services know best and that the public don’t need to know why it is being done.

Councillor Samuel replied that this was the nature of Council work and that it generally operates on the open market and then there are occasions where we have to work in a commercial environment.

He said that he had no criticism of the department as the Council is often approached to buy or sell properties or land and that the experience of officers is essential with regard to decision making.

Councillor Andrew Furse questioned whether other people on the housing waiting list had been overlooked in order to accommodate some of the former residents of 23 Grosvenor Place. He added whether the reverse premium figure could be earmarked by Guinness for future local use.

Councillor Karen Warrington asked if a decision on future use has not been made why does the written response to the Call-in say it will dispose of the vacant property on the open market.

Councillor Samuel replied that it has been earmarked within the Capital Programme as an expected receipt for the past six years and so should this not be achieved it will have to be found from somewhere else. He added that this matter should have been discussed under the previous administration five years ago.

Councillor Shaun Hughes said that it was difficult to have confidence with no context to the £450k figure.

On a motion from Councillor Winston Duguid, seconded by Councillor Alastair Singleton the Panel, in accordance with the provisions of Section 100(A)(4) of the Local Government Act 1972, RESOLVED that the public should be excluded from the next part of the meeting, because of the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Act.

Before continuing with the debate, the Chairman announced that agenda items 9 and 11 would be deferred until the Panel’s March meeting.

Councillor Samuel said that he did not have a closing statement to make.

Councillor Colin Blackburn made a closing statement to the Panel. He said that he accepted that the property might be no longer suitable for social housing, but that documents relating to the decision should be publicly available even if in a redacted format.

The Chairman said that it was quite clear that there some themes to the comments made so far – decision transparency, social housing loss and the financial case behind the decision.

He said that he felt the decision process should be reviewed as it was not good enough to solely publish a decision with no additional public information.

Councillor Winston Duguid commented in regard to whether the process was compliant with the Royal Institution of Chartered Surveyors (RICS) Red Book and he said that he had been assured that it was. He also said that it had been explained to the Panel why the reverse premium exists.

The Chairman said that the Council must look after the needs of the most vulnerable and suggested that money from the process be ringfenced for future social housing.

Councillor Andrew Furse commented that as negotiations were still ongoing with Guinness could they be asked to spend the reverse premium (£450k) in B&NES and a percentage of the sum received by the Council to be earmarked for future housing.

Councillor Shaun Hughes said that further thought must be given to the transparency of this process as the public need to have confidence in the Council.

Councillor Hal MacFie said it was clear that despite the property now being deemed not fit for its current purpose it was clear of the need for housing units of this type within B&NES. He added that he believed that all Councillors should have access to the information that the Cabinet Member has seen.

Councillors Lucy Hodge and Mark Elliott both stated that a review of the process must be undertaken to assure future transparency.

Councillor Karen Warrington stated that she wanted the Call-in to be upheld and referred back to the Cabinet Member for Resources for further consideration and proposed the following recommendations to the Panel.

i)  Whilst understanding the needs of commercial sensitivity a process should be sought to increase transparency, including allowing a member from each political group access to exempt information so that the decision making process is more transparent.

ii)  Ring fence a percentage of the incoming capital receipt from this decision for future social housing in Bath & North East Somerset. A percentage of 50% or thereabouts is recommended.

iii)  Encourage the Guinness Housing Association through negotiations to spend the reverse premium on social housing in Bath & North East Somerset.

Councillor Winston Duguid seconded the recommendations and proposed a further recommendation to the Panel.

iv)  In view of comments made to the Panel about the Property Services department in relation to other parts of the Council, a review of the Property Services department be undertaken to allow for a refinement to its decision making processes to ensure better democratic accountability and transparency in the future.

The Panel agreed unanimously with the recommendations proposed and therefore the Call-in was upheld.