ASSET TRANSFER COMMUNITY ASSET TRANSFER ‘‘The transfer of land or buildings from a statutory body into the ownership or management of a Voluntary and/or Community Sector (VCSE) organisation or social enterprise for less than market value to stimulate, and invest in, the social, economic and environmental well-being of the local community and local people.’ COMMERCIAL ASSET TRANSFER KEY ELEMENTS OF TRANSFER PROCESS and TERMS Lambeth Birmingham Portsmouth Recommendations for Tower Hamlets Objective/Aim ‘The Council seeks to enable an increase in the community ownership and management of assets within neighbourhoods throughout the London Borough of Lambeth - to stimulate the creation of new social markets, underpin robust community enterprises capable of delivering high quality local services, and provide residents with new learning and employment opportunities.’ ‘The Council has a history of transferring land and building to the voluntary and community sector. However currently each Directorate independently approaches the transfer of property to bona fide Third Sector organisations. Each has developed its own methods of working and sets its own requirements for the transfer of assets. One of the purposes of the [CAT Policy] work that has been undertaken has been to develop a corporate way of working which aims to ensure fairness, consistency and transparency across all ‘Plymouth City Council believes community asset transfer is fundamentally about giving local people and community groups greater control in the future of their area and their community in line with promoting the Council’s agenda. If local groups own or manage community buildings and land, such as community centres, rugby pitches, allotments or changing rooms for example, it will help foster a sense of belonging and bring together people from different backgrounds. Community ownership of buildings can also play a part in raising ‘The disposal of assets for less than market value (CAT) is not a grant but an investment, made by the council after due process and consideration, which represents evidenced good value for the public purse through achieving positive, social, economic, and environmental outcomes, and in pursuit of the overall wellbeing of the community. • Local organisations are often best placed to manage facilities in their local communities. Their local knowledge, extensive use of volunteers and hands on management of the Varies but most often to maximise capital receipts and/or stimulate economic growth through redevelopment. co- operative
service areas.’ local people’s aspirations, in enhancing the local economy, environment and have the capacity to strengthen the community, voluntary and social enterprise sector.’ asset is likely to result in a better service to meet the needs of their community, lower overheads and better value-for-money, as well as more intensive use of the asset. • CAT empowers local communities, puts local organisations in control, encourages pride of place and generates wealth in communities. Date of Policy December 2012 February 2011 April 2013 May 2016 N/A Types of organisations eligible to apply ‘Community-led (i.e. its proposed/existing governance arrangements must demonstrate that it has strong links with the local community, and that members of the community are able to influence its operation and decision-making processes); Community or legal entity that exists to perpetuate social, economic or environmental benefit in the London Borough of Lambeth, is ‘Bona fide “not for profit” community organisations (not for commercial profit making purposes but community benefit) e.g. Charity, CIC, Social Enterprise. A not for profit organisation can be defined as one which uses its surplus revenues to realise its social goals rather than distributing them as profit or dividends plus an “asset lock ” and clearly stated social goals/ focus on community benefit.’ ‘Groups must be community led, demonstrating wider community support for the community asset transfer and clearly defined objectives which would be enhanced and delivered through the addition of the asset in question. • Their primary purpose must be or with profits invested back into local communities or the city. • Must have a clear Community-led (i.e. its proposed/existing governance arrangements must demonstrate that it has strong links with the local community, and that members of the community are able to influence its operation and decision-making processes); Community or legal entity that exists to perpetuate social, economic or environmental benefit in the London Borough of Tower Hamlets, is Any prepared to pay the required rent.
distributing (i.e. it must reinvest any surpluses generated to further its intended aims), and can demonstrate community benefit objectives; Appropriately constituted and capable of demonstrating good governance through open, accountable and cooperative processes, with adequate monitoring, evaluation and financial management systems; Capable of managing an asset and delivering services from the point of view of relevant skills, experience and capacity; Able to demonstrate how they will embrace diversity, work to improve community cohesion and reduce inequalities.’ vision of the activities they wish to deliver and resulting positive measurable impacts in the city. • Be able to demonstrate good governance by operating through open and accountable processes, with fully constituted governing boards following clear Terms of Reference. • Meet statutory requirements and demonstrate an inclusive approach in its policies and practices including a commitment to promoting community cohesion and integration. • Have the skills to effectively deliver services and manage the asset to be transferred. • Demonstrate evidence the asset will be run without the need for supplementary Council revenue non-profit distributing (i.e. it must reinvest any surpluses generated to further its intended aims), and can demonstrate community benefit objectives; Appropriately constituted and capable of demonstrating good governance through open and accountable processes, with adequate monitoring, evaluation and financial management systems; Capable of managing an asset and delivering services from the point of view of relevant skills, experience and capacity; Able to demonstrate how they will embrace diversity, work to improve community cohesion and reduce inequalities.
Will also offer Occupation Licences to small groups and TRAs taking on small assets. No Freehold Key Lease Terms Period For Meanwhile CATs of short leases of up to 3 years. Major CATS long lease up to 99 years. ‘Leasehold not freehold – generally on a full repairing lease and up to 25yrs (negotiable)’ Council will discuss longer leases where the business case can demonstrate need/viability. ‘The Council will generally pursue leasehold arrangements with the term being set after carefully considering the needs of the VCOSE, the condition of the asset and the requirements of potential funders or lenders. As a guide: A lease for a minimum of 10 years. A lease of up to 35 years - a lease longer than 35 years may be appropriate if a business case demonstrates special circumstances or requirements from funders / lenders. Freehold. The freehold transfer will only be Occupation Licences (up to 3 years) for small community groups and small assets e.g. TRAs. Short Leases (3 to 5 years) where appropriate e.g. groups taking on asset for first time. In limited circumstances on a case-by-case basis longer leases where this unlocks significant funding opportunities. Recommendation that consideration of Community Matters’ model lease for use in CAT as basis for Tower Hamlets wide model lease (see attached TH supporting documents). Negotiable according to projected use. But for any kind of developments where capital will be invested by lessee in the asset then long leases most common.
considered in exceptional circumstances, any transfer proposal will need to make a strong case that freehold is a necessity for success and provide reassurance that community benefit will be maintained in the long-term.’ Rent Meanwhile CAT: ‘The Council may offer land and buildings for Meanwhile management on the basis of a peppercorn rent.’ Major CATs: ‘The Council will offer land and buildings for transfer on a proportionate basis – ranging from peppercorn rents through to moderate discounts, where the opportunity cost of foregoing market rental or market sale is considered more significant.’ ‘Economic Rent offset by Valuing Worth Process. The Valuing Worth Toolkit will be completed by the organisation and the Council. This will provide a consistent analysis to guide the Council’s decision about what level of rebate to offer the organisation. The level of rebate will ultimately be a negotiation between the Council and the organisation taking account of the valuing worth exercise.’ (Valuing Worth was written by BCC – see attached documents) Transfer ‘at potentially less than best financial consideration to voluntary, community organisations and social enterprises.’ Rent set at a discount to ‘community rent’, potentially up to 100%, and negotiated on a case-by-case basis, where the lessee has met, and to the extent that they have met, the criteria and assessments of the CAT policy and procedure. Market Value.
insurance and utilities. TH Asset Management may a small service to all organisations to ensure CAT is cost-neutral to council. Where a service is made the bill should be clearly itemised with only costs specific to the asset. Maintenance Responsibilities Lessee takes full responsibility for repair and maintenance for major CATS but council retains repairing and maintenance responsibilities for ‘meanwhile’ CATs. Lessee takes full responsibility for repair and maintenance. However some responsibilities maybe retained by council where building has extant heritage costs. Varies. ‘The Council recognises the advantage of flexible lease terms to enable VCOSE’s to adapt and achieve long term sustainability.’ Varies. Council retains repair and maintenance responsibilities for Occupation Licences (annual to 3 years). Internal (lessee)/external (council) split of repair and maintenance responsibilities for short leases (up to 5 years). Lessee takes full responsibility for repair and maintenance for long leases. Full repairing and maintenance Restrictions on Use, and Assignment Provisions ‘If below market value is agreed the Council will apply appropriate legal restrictions to the Lease ‘user clause will be carefully drafted to mirror the organisation’s objects ‘It is standard practice for the Council to place a restriction on use. ‘ Restriction on use in line with the charitable/social objects of the lessee. Restrictions on use may occur on a case by case basis, and council’s will usually a
Skills and Knowledge Test? Yes as part of the Organisational Test at the EOI stage (see attached documents). Further capacity building in specific areas can be required as part of the CAT process before agreement to the transfer. Initial tick box test of appropriate policies as part of EOI. Then requires further evidence to be provided via appropriate Quality Tool with VISIBLE and PreVISIBLE explicitly cited. Lessees must: ‘Be able to demonstrate good governance by operating through open and accountable processes, with fully constituted governing boards following clear Terms of Reference.’ And ‘Have the skills to effectively deliver services and manage the asset to be transferred.’ No precise tool or mechanism specified for how the above requirement is assessed. Initial information collected by EOI form. If CAT is progressed after EOI then provision of a satisfactory, independently assessed, quality tool. Recommendation of use of PreVISIBLE. (See page 11-12 above. Also see attached TH supporting documents for an example PreVISIBLE Report). No Business Plan required? Yes but policy does not set content of business plan. Business Plans assessed by external (PWC) consultants as part of the process. Yes but policy does not set content of business plan. Yes and policy sets out headings for business plan. Yes and policy should set out headings for business plan. (See page 13 above for some suggestions. See also attached TH supporting documents). No
Social Value assessed? Yes Part assessed via EOI form written by LBL (see attached documents) and in part via elements of the Business Plan. Criteria for overall assessment of CAT and any discount to rent is on the basis of: ‘How will the interests of the local community be better served by discounted transfer than open market sale? What social, economic and environmental benefits will be realised by the transfer? How will the transfer result in improvements to safeguarding and community cohesion, provide new local services and activities, or stimulate training and employment opportunities? Who will benefit from Yes ‘Valuing Worth is intended as a means of providing a ‘snap shot’ assessment of a proposal for transferring an asset as well as a way of calculating the social value generated to be offset against the commercial rate of rent. The tool assesses the ‘value added’ by the third sector organisation and the activities arising from the transfer of the asset by measuring them against local and National Indicator objectives.’ (See attached documents for blank Valuing Worth form and an example of a completed form). And ‘The Impact Map will be completed by the Council and the Yes but no precise formal tool or process identified to assess with. Business Plan must cover: Proposed impact/benefits of the project to the local economy, What local needs will the project be responding to (who will be the beneficiaries)? How many will benefit within a year (e.g. community groups, local people)? Evidence the project will meet all the relevant requirements of the Equality Act 2010 and assist Plymouth City Council in promoting community cohesion. Community Benefit statement to be Yes. Use of mutually agreed social value tool appropriate to the scale of the CAT to be completed by all potential lessees as part of the CAT assessment process. (see page above) Key sections in Business Plan (headings for which should be set in the CAT policy) will also require appropriately evidenced predictions on the social, economic, and environmental value/impact of the CAT and the level of community involvement and support for the CAT. Recommendation of use of Your Value for short and long leases as the agreed tool for demonstrating social value (see page 12-13 above. See also attached TH supporting documents for an No