THE CABINET
10 MARCH 2014
Subject: Options for Alcester Greig Centre
Lead Officer: David Buckland
Contact on 01789 260425
Lead Member/
Portfolio Holder: Councillor C Saint & Cllr L Organ
Summary
The purpose of this report is to present options in relation to the future use and operation of the Greig Centre site in Alcester. The Council has first charge on the Greig Centre site of £800,000 following entering into a funding agreement with the Hannah Susan Greig Memorial Trust (Trust) in 2005 for improvements to the facilities.
The Trust has indicated that its financial problems are terminal and closure is imminent. The Council has been in discussions with the Trust surrounding potential options to preserve leisure and community use on the site.
Recommendation
An Option for the future of the Greig Site is selected.
1. Background/Information
1.1 The Greig Site
1.1.1 The Trustees of the Hannah Susan Greig Memorial Trust (Trust) has operated in Alcester for almost 60 years. It has historically operated the Greig Hall and associated outbuildings, a sports centre and tennis courts.
1.1.2 The site comprises 3.4 acres and incorporates a number of individual buildings including:-
· The Greig Hall - this facility is closed and comprises a main hall/bar including a stage and two further function rooms with bar/kitchen facilities.
· The Lifestyles Building - this is currently open and comprises a sports hall (4 badminton court size), 49 station gym, dance studio, Treatment/Physiotherapy room.
· Squash Courts – 2 courts which whilst open are currently in a state of disrepair, these are thought to be the only pay and play squash courts within the District.
· Army Cadets Hut- the hut is owned by the cadets with the site leased to the cadets. The hut is in the North-West corner of the site and is in good condition.
· Studio – very run down pair of buildings used in the past for nursery/play group and store for the Greig Hall.
· Tennis Courts – these are not currently used and would require investment to bring back into use.
· Parking – there are a total of 47 parking bays on site of which 5 are for disabled use. There is capacity on site for additional parking by the side of the Greig Hall.
1.1.3 The plan below provides an overview of the layout of the site:
1.1.4 It should be noted that there is a restrictive covenant on the whole of the site which restricts the use to “Public Hall and Youth Centre”; this covenant naturally does depress the overall value of the site.
1.1.5 The Council has agreed to provide limited financial support to the Greig for a period until the end of March 2014 in order to progress discussions and keep options available before consideration by The Cabinet. The level of this support is at a maximum of £4,000 pcm for a period from 17 February 2014 until 21 March 2014. Depending upon which option is selected this period of support may need to be extended.
1.2 Funding Agreement
1.2.1 In October 2005 The Council entered into a funding agreement of £800,000 with the Trust. This followed the decision of The Cabinet on 29 November 2004 to provide the funding in order for improvements in the Leisure Provision at the facility. This was part of a strategic review of leisure within Alcester which also provided support of £200,000 to Alcester Grammar School towards a new sports hall. In addition to the funding from SDC, funding of £150,000 was made available from Alcester Town Council for the enhanced leisure provision.
1.2.2 Prior to the funding agreement the Trust was generating annual losses. The Business Plan provided to support the funding agreements expected that, following refurbishment, sufficient income could be generated to sustain the both the leisure provision and the Greig Hall.
1.2.3 The grant agreement was for a 25 year period and the grant was to be repaid to the Council in the event of a default by the Trust, including the event where the “Trust ceases to operate a leisure business from the property” or that “the legal status of the Trust changes”.
1.2.4 The funding was predominately used to refurbish and modernise the Lifestyles building on the site and works were completed by January 2007.
1.3 Period 2007 to 2013
1.3.1 In July 2007 the Executive considered a report to provide further revenue and capital funding to the Greig. The Executive was warned of a cash flow problem which could potentially see the closure of the facility. Within the report it was identified that the Trust was paying £35,000 per annum in leasing charges for fitness equipment. The funding request was refused and, during the summer, options were investigated to introduce SLM to run the facility on behalf of the Trust.
1.3.2 In December 2007 the Executive considered a request to allow an additional charge on the Greig site of £180,000. This charge would enable a loan to be taken out to buy the fitness equipment thereby saving leasing costs of £35,000 per annum. The Executive agreed to this request and a loan was entered into with Unity Trust Bank and made second charge to the asset, behind SDC; however, ahead of Alcester Town Council.
1.3.3 Following the loan with Unity Trust the position in relation to the site was and remains as follows:
Order of charges / Amount£
1. Stratford on Avon DC / 800,000
2. Unity Trust Bank / 180,000
3. Alcester Town Council / 150,000
Total / 1,130,000
1.3.4 The financial position of the Trust did not improve following the new loan. The Trust approached the Council on more than one occasion with the objective of securing on-going revenue support. In 2009 the Council was warned that the facility would close within a year without such grant support.
1.3.5 In late 2009 and during 2010, the Trust engaged the services of Trebor Development to draw up proposals for redevelopment of the site. These proposals would have seen the demolition of the Greig Hall, squash courts, Army Cadets hut and the Studio to make way for housing development. The funds generated from such a redevelopment being used to finance the refurbishment of and the extension to the Sports Hall. There was significant local concern from ward members and the Town Council to the proposals at the loss to the town of The Greig Centre through such a redevelopment.
1.3.6 Consideration was given by The Cabinet on 1 November 2010 to relax the terms of the grant conditions to allow development of the Greig Hall portion of the site for housing purposes. Proceeds from the proposed development would have seen a return to SDC of £200,000, thereby reducing the charge to £600,000 along with the repayment of 50% of the Unity Trust loan. The Council was warned that if the development did not proceed then the leisure facilities would be forced to close. The decision of The Cabinet was as follows:-
That the request from the Greig Trustees, as detailed in the reported presented, be supported in principle on the understanding that:-
a. further legal work would need to be undertaken to ensure that the Council could consent to the release of any covenants;
b. it would also be necessary to carry out an independent valuation of the land retained by the Company to ensure that it provided sufficient security for the remaining charge and;
c. the business plan produced by the Trustees was viable.
1.3.7 Concern within Alcester was growing at this time due to the potential loss of the facilities. The Greig Hall Action Committee was formed from local residents and it prepared for the Town Council and the District Council a proposed business plan for the running of the Greig Centre. These proposals and the principle of on-going community use of the facility are supported by the Town Council.
1.3.8 The planning application was submitted to the Council for the redevelopment and refurbishment in December 2010. The application was considered but refused by the Council in September 2011 on a number of grounds. Therefore the proposal for the development did not proceed.
1.3.9 In August 2011 The Trust announced the closure of the Greig Hall. At this point they were still hopeful of securing planning consent. However, the rationale for the closure was to maintain the Greig Lifestyles Building and squash courts. At this time the Trust also reduced costs and staffing to try and remain solvent. The Greig Hall has deteriorated since closure; however, Alcester Town Council has expressed an interest in returning the Hall to community use and has requested either a long term lease or freehold purchase of the Greig Hall.
1.3.10 Although the closure of the facility was a technical breach of the funding agreement it was not deemed to be sufficient to trigger the repayment of the grant funding. No action has therefore been taken against the Trust. However it was expected that the Trust would commence insolvency proceedings in the near future.
1.3.11 In late 2012 early 2013 the Trust approached the Council. Whilst the Trust was continuing to provide leisure facilities this meant operating at a minimal level of staff and with the Trustees having taken on day-to-day management roles. The Trustees were able to negotiate a ‘standstill arrangement’ with Unity Trust Bank, who had issued letters in late 2011 and in early 2012, seeking immediate repayment of the outstanding loan balance of circa £180,000. The Trust proposed a merger with Wychavon Leisure on the basis “to secure the future of community leisure facilities in Alcester and to improve the facilities and services offered with a health and wellness focus”.
1.3.12 The proposal was underpinned on the basis that the site shown in Red on the above would still be considered for redevelopment and proceeds used from this redevelopment used to support the Sports Hall. This request was considered and rejected by the Leader and the Portfolio Holder for Technical Services for a number of reasons including that “the solutions do not appear to have any future for a community hall”. In August 2013, the Leader wrote to the Trust to that effect.
1.3.13 In September 2013, Council officers met the Trust at the Lifestyles Building. The purpose of the meeting was to discuss the impending closure of the facility and determine whether the Council could help with a managed transition with the view of maintaining leisure provision in Alcester. The response from the Trust was that they are continuing to operate and are not under any imminent threat of closure.
1.3.14 It should be noted that, as well as the Greig Hall and the Lifestyles Building in the top Western corner of the site, there are two extant leases in place. One relates to the Army Cadets, whose hall is located within the grounds of the Greig site, the other relates to a Vodafone communications mast. Both of these leases have been producing income for the site.
1.4 Current Position and Proposal
1.4.1 In December 2013 the Council was approached directly by Wychavon Leisure who stated:
“We are considering making a substantial investment in the Grieg Centre and hold the view that the District Council has a significant stake in the future of the site and the Trust.
1.4.2 Discussions were held with Wychavon Leisure and it was established that the financial position of the Trust had deteriorated further and that without a deal being agreed the facility would need to close in the very near future. Peter Williams from Wychavon Leisure stated that he had discussed with the Trustees the seriousness of knowingly trading whilst insolvent.
1.4.3 It is recognised that if the Trust is placed into insolvency proceedings, whilst SDC as first charge on the land would probably gain the asset in the fullness of time, there is likely to be a considerable period where there would be no leisure activity on the site. The Council has requested a valuation of the site with the restrictive covenant in place that restricts the use of the land to Public Hall and Youth Centre.
1.4.4 In determining the way forward on this issue discussions have been held with the Trust on a range of options. These options are identified and evaluated below.
1.5 Strategic Importance of the Site for Leisure Purposes
1.5.1 The Council recognised in 2005 the importance of leisure provision from the Greig Site and, in addressing this point as part of the overall investment of £1m for leisure facilities within Alcester, the Greig Centre received £800,000, with the remainder being provided to improve the leisure facilities at the Grammar School.
1.5.2 Under the Sport England facilities model the district currently has a ratio of 71.6 m2 of sports hall for every 1,000 of population. This is below the England average of 80.7 m2 and the West Midlands average of 79.5 m2. If the Lifestyles Building was closed then the figure for the District would reduce to 66.2 m2, this would still be in excess to North Warwickshire, Nuneaton and Warwick District Council areas.
1.5.3 Using the same facilities model a similar comparison can be made in relation to gym provision. The current number of stations for Stratford is 5.3 per 1,000 population which, whilst below the national average, is in line with the rest of the county area. Without the 48 stations which are provided at the Greig Centre this measure reduces to 4.8 which, apart from Nuneaton, would be the lowest level within the County.
2. Options available to The Cabinet
2.1. Following discussions it is clear that the Council has three potential options in relation to how to proceed on this matter. These options and the evaluation of these options are detailed in the attached exempt appendix. However, they are summarised as follows:-
2.2. Option 1 – Do not support the Trust’s Options
2.2.1. The Council is not obliged to assist the Greig Trustees with their financial difficulties. The Council could take the view that it will therefore not intervene and, as a result, it is likely that the Trust would be placed into insolvency proceedings immediately.