Sunday 12 August 2012

'Major Projects' becomes even more major with Charity project

A Windows on Willesden shop on St Patrick's Day
Brent Council will, if Executive approval is given, set up a new national charitable organisation, to help deal with the blight caused by empty properties in areas awaiting redevelopment or closed in the face of the economic down turn. LINK

The Director of  Regeneration and Major Projects, Andy Donald,  responsible for the Executive report, will be authorised to set up the Meanwhile Foundation with Locality and other partners and enter into a Framework agreement on behalf of Brent Council with the national Meanwhile Foundation to set up a Brent Meanwhile Partnership. The reports notes that the Director of Regeneration and Major Projects will most likely be the Council's representative on the Foundation Board.

Regeneration and Major Projects, already involved with the controversial Willesden Green Library Redevelopment and the Civic Centre and responsible for the upcoming massive school expansion programme, is already the most powerful Brent Council department.  The Meanwhile Project represents a further extension of this power.

Donald is keen on projects that, on the surface at least, are at  no or little cost to the Council, and that makes him popular with Labour councillors. Perhaps they should bear in mind the popular expression about free lunches.. The report states:
In partnership with Locality, Brent Council will jointly form the Meanwhile Foundation as a new national charity with Brent contributing the essential £5,000 start-up income and Locality providing development time and expertise in kind. The £5000 will be drawn from the New Initiatives budget.

The Brent Meanwhile Partnership will then contribute to the Meanwhile Foundation a sum of £10,000 per annum for 5 years. In the first two years, this sum will be paid from the council’s New Initiatives budget, but it is intended that from years 3 – 5, the contribution will be paid by surpluses generated from using assets on a temporary basis (it is these assets that the Foundation will carry the tenancies for). The council should keep under review its involvement beyond five years. The contributions will be used to meet the on-going administrative costs of the Foundation.
Clearly these are small sums in terms of initial funding but in the medium term funding is dependent on the generation surpluses from the temporary assets. However, the Foundation as well as being a charity will be a company limited by guarantee, and this will reduce their liabilities to a maximum of £1 if the company became insolvent.

The renting out of these premises would be subsidised by reductions in rates (Non Domestic Discretionary Rates - NNDR) but these are due to be replaced in April 2013 under the Localism Act 2011. The Council will have powers to reduce rates but the report notes that details are not yet available and warns that the impact on Council revenue needs to be taken into account.

Prospective tenants should be warned that a special 'meanwhile lease' will apply:

A particular characteristic of the lease is that it removes provisions in respect of security of tenure under the Landlord and Tenant Act 1954. For tenants this means that they have no legal right to remain in the property at the end of the term and no legal right to apply to the landlord for a new lease. The tenant might request a new lease from the landlord but the landlord is not obliged to agree to this and it will be a matter for negotiation between the parties. In this respect, the lease protects landlords from occupants claiming ‘squatters’  rights’ …
It is anticipated that the tenancy model for this scenario would be that there is a head lease signed between the landlord and the council, and then a meanwhile tenancy between the council and the Foundation. This agreement will be tilted in favour of the council so that it is not exposed to tenancy risks
These are complex arrangements and it is to be hoped that councillors study them in complex detail before the Executive before  rubber stamping them.

Below you can find further explanation from the report going before the Executive. The paragraph in bold is particularly interesting in the light of the Council's arguments over the Willesden Bookshop.

The term “meanwhile” is used to describe the use of vacant premises or land while it is not being used – it is the pause in the development process between the old and the new. This pause can be a few months or a number of years. The use of vacant premises has become an issue high on political agendas as people see the impact of the recession at street level. Vacancy often suggests an area is in decline, and vacancy often leads to further vacancy.

Using vacant premises can have cumulative beneficial impacts on high streets within regeneration areas: the reduction in vacancy can lead to further business investment in an area that appears lively and animated; the spaces can be used for business start ups or community based projects; and they can reduce the incidence of vandalism.

Empty property is now readily available. Landlords are becoming wise to the benefits of letting their premises on a ‘meanwhile tenancy’ as this relieves them of empty premises business rates liabilities and security costs. As demonstrated in Willesden Green and Wembley, these premises can be secured on favourable terms.

In the last two years, the council has embarked on a series of successful meanwhile projects to assist with delivering regeneration within South Kilburn, Wembley and Willesden Green. The South Kilburn Studios project transformed a derelict portacabin site in the estate and, now within its second year, is providing workspace and valuable training opportunities to local people. In the Wembley Triangle section of the High Road and Wembley Hill Road, a long term vacant shop unit is being brought into use
to provide people with an opportunity to explore how they want to interact with Wembley and use the high number of empty spaces to develop ideas for business and community ideas and try them in a low cost and low risk arena.

In Wembley there are also swathes of vacant land that is not due for development for several years. This could be used to help deliver the council’s regenerative objectives in the area. In South Kilburn, the council has already delivered South Kilburn Studios in partnership with the South Kilburn Neighbourhood Trust and it is likely that further opportunities for projects will be presented as the regeneration programme rolls forward. In Willesden Green, the council has delivered an Outer London Fund project
on the high street taking on vacant units, providing design advice to existing traders, using space in the Willesden Green Library Centre and forming a local town team of interested stakeholders.

 Lessons learned from these projects include:
• there is significant inherent value in property that can lever regenerative benefits by extracting social benefits from physical assets;
• business rates liabilities can render meanwhile projects unviable;
• procuring a team that can deliver the quality of outcomes can be difficult when constrained by the existing procurement guidelines and financial regulations required by the council;
• projects that intend to use privately owned commercial premises can benefit from specialist meanwhile property expertise to secure tenancies;
• imported and curated project start ups can miss opportunities to develop and foster grassroots interest to the particular local neighbourhood; and
projects without a sustainable business model can require an on-going subsidy, albeit these can be small sums that may be justified by the quality of outcomes from projects.

In consideration of the lessons learned, it has become apparent that existing and future projects could substantially benefit from a form of governance vehicle that can be “asset controlling”, “asset using” and “enabling” to strengthen the council’s ability to set up and maintain effective meanwhile projects, and in particular:
• help to relieve the council of tenancy risks that can arise from such projects;
• allow projects to benefit from business rates relief to enable projects to be financially viable;
• ensure the quality of outcomes for projects by streamlining procurement process and allowing the forward funding of projects; and
• secure the sustainability and proper governance of successful projects.

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