BOROUGH OF POOLE

REPORT TO PORTFOLIO HOLDER FOR RESOURCES

12 DECEMBER 2007

PROPOSED NEW LEASE OF CAFÉ AND KIOSKS AT SANDBANKS

PART OF PUBLISHED FORWARD PLAN:Yes

STATUS – SERVICE DECISION

1.PURPOSE & POLICY CONTEXT

1.1.To seek Portfolio Holder approval to the Borough granting an Agreement for Lease and Surrender and Re-grant of Lease on the Café and Kiosks at Sandbanks subject to agreement on the terms and conditions.
2.DECISION REQUIRED

2.1 To consider and approve the proposal to grant of an Agreement for Lease and Surrender and Re-grant of lease on the Sandbanks Café and Kiosks to Banquets Catering (South Coast) Ltd for a term of 25 years subject to the proposed Heads of Terms (detailed in the Confidential Appendix).

3. BACKGROUND

3.1The Café and Kiosks at Sandbanks are currently subject to a lease dated 27 November 1987 granted to Banquets Catering (South Coast) Ltd. This lease has full Landlord and Tenant Act 1954 protection and as such the lessee is entitled to a new lease on the same basic terms (excluding the rent).

3.2The existing lease demise of the café premises and kiosks A, B and C are shown edged red on plans 1 and 2 attached respectively.

3.3The existing lease grants exclusivity to the lessee in respect of catering rights and beach goods at Sandbanks and this exclusivity extends to the beach, promenade and adjoining Council car park. These exclusivity provisions have been looked at very closely to ascertain whether they have to be included in any new lease. It has been concluded that these provisions are a contractual term of the lease and as such the lessee is entitled to have these provisions retained in any new lease. Therefore, these provisions could only be removed if the lessee was in agreement.

3.4The lease has now come to an end and the lessee is holding over pending completion of a new lease to which it is entitled. The lessee has indicated that rather than simply renew the lease it would like to carry out some alterations and improvements to the Café premises. The exact details of the alterations will be subject to prior approval by the Borough but it is intended that the main entrance to the Café will be relocated and the current rear aspect opened up to provide views in both directions over the sea. The proposal is to modernise and upgrade the existing facilities a consequence of which will be to further enhance the Borough’s own facilities on the beach. The Landlord consideration of the proposals will of course be without prejudice to any statutory approvals required such as planning permission.

3.5The Head of Leisure Services has been consulted in relation to these proposals and supports what the lessee wants to do in terms of service provision at Sandbanks.

3.6In order to facilitate the proposed alterations to the main café premises it is necessary for the lessee to enter in to an Agreement for Lease and for the existing lease to be surrendered and a new lease completed. This has provided the opportunity to renegotiate some of the lease terms.

3.7The existing lease was granted on the basis of an internal repairing obligation on the lessee. This means that the Borough is liable for all external repairs to the buildings and for providing adequate building insurance. It is proposed that the new lease will be granted on a full repairing and insuring basis so the lessee will then be responsible for all maintenance and insuring costs relating to the demised premises. As a result it will reduce the Borough’s liability in respect of both elements. Based on the condition survey of the buildings it has been estimated that this is likely save the Borough in the region of £70 -100k over the next 10 years in terms of maintenance.

3.8In order for the proposed improvements to the accommodation to be financially viable the lessee has looked for a lease term to reflect that investment. However, the Borough needs to retain some control in this area and so the proposed term has been kept to the absolute minimum taking in to account what is proposed.

3.9The proposed new lease will specifically prohibit the use of the premises as a public house or a club but it will permit the sale of alcoholic beverages with or without food providing it is served and consumed at tables on the premises. Off sales or consumption of purchased alcohol off the premises will not be permitted. This will be bring these premises in line with similar Borough owned restaurants which are subject to lease including the Branksome Beach Restaurant which is also operated by Banquets Catering (South Coast) Ltd.

3.10To assist with the enhanced facilities it is proposed that the Borough will grant the lessee a yearly licence for an additional seating area close to the existing Kiosk A as shown hatched black on plan No.2. Banquets Catering (South Coast) Ltd will not have any exclusive possession of this additional seating area so will not gain any additional Landlord and Tenant Act rights to this location.

3.11The matter has been subject to extensive negotiations and therefore, the proposed terms are considered to be the best achievable by the Borough based on the proposals submitted. Members should note that the proposed deal does not materially affect the overall rent currently received by the Borough based on the average receipts over the last 4 years.

4. LEGAL ISSUES

4.1As indicated above the lessee has a Landlord and Tenant Act protected lease and as such the lessee is entitled to a new lease on expiry. The lease can only be brought to an end by the Borough on very specific grounds. This would either have to be for the Borough’s own occupation and use or as part of an imminent comprehensive redevelopment of the area and one which required the space occupied by the demised premises to facilitate that redevelopment. In either scenario the lessee would be entitled to statutory compensation.

4.2If the Borough decided not to renew the lease on the terms currently negotiated the lessees would be entitled to apply to the Court for a new lease and this would be granted by the Court unless the above grounds could be fully satisfied. With the exception of the rent the terms of the new lease would have to remain as drafted in the existing lease. The planned improvements to the facility would then obviously not take place.

John Paton

Acting Head of Property Services

NAME AND TEL NO OF OFFICER CONTACT

Kevin Judd – Tel 261295

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