Thursday, 10 March 2016
FTC met on Monday 7 March to discuss its future in Castle Park. It had two questions to answer.
First did the council want to remain a tenant at the House occupying the ground floor? Second did the town council want to contemplate having a closer relationship with the Park, the House and the Trust?
Now these questions are not as easy to answer as may at first sight appear. These questions have an emotional and community aspect - after all we all see Castle Park and the House as a jewel in Frodsham's Crown. However like each of us as individuals, or how a business would approach such matters, before signing on the dotted line one has to perform a hard headed financial analysis. Ideally you also need to have a wider understanding of the history and context of the assets involved so as to be able to understand the consequences and implications of any chosen course of action.
So here goes with a swift potted history.
In the 1930s Castle Park House and the park land was left on charitable trust for the benefit of the local community - that community being the area covered by the long since defunct old Runcorn Rural District Council. That council was declared the trustee. After two rounds of local government reform CWaC now stands in the shoes of the old Runcorn Rural District Council.
CWaC doesn't own Castle Park as such, rather it holds Castle Park as trustee of the charitable trust for the benefit of the local community. CWaC runs the trust through Castle Park Trust Executive. The main governance document for the Trust is a Charity Commission Scheme of 26 April 2007.
I'm the Chairman of the Trust Executive and Lynn is the Deputy Chairman. The Trust Executive meets like a council committee. Members make the policy decisions - but officers carry out all the detailed work. Members do not get involved in any commercial negotiations. The Trust accounts are separate from CWaC's accounts and show an income of around £100k per year - largely derived from letting out the rooms, offices and buildings at the House. CWaC also acts as lettings agent for the Trust - and charges the trust a 10% fee for doing so. CWaC also maintains the parkland separate from the charitable trust.
In addition to restoring the House at a costs of £2.6m in 2006 the former Vale Royal Borough Council invested more than £3.5m in restoring the park in the following years. Some £1.835m of those funds came from the Heritage Lottery Fund ('HLF'). The HLF grant came with conditions largely designed to ensure the park remains a park. If the conditions are breached then CWaC as Vale Royal's successor could be asked to repay the grant. These conditions bind the council until February 2034.
The Trust Executive meets, typically, once a quarter. FTC has two non-voting positions on the Trust Executive. Anyone can attend the public parts of the Trust Executive meetings. It is rare for there to be private parts to these meetings - but it can happen. Over recent years FTC's attendance at these meetings of the Executive has been sporadic at best. That has improved recently as FTC members have started to attend.
So that's enough history for now - back to FTC's questions. Should they stay in Castle Park House. Should FTC seek to have a larger role within the park and the trust? Lynn and I have always believed that our public assets in Frodsham should have greater local control - not only so that they can be run better and more in tune with the community - but also to ensure that the community derives the most benefit from them - such as through supporting our local economy. But do others have that ambition? Does FTC have the appetite for greater local control of our public assets?
FTC first took up occupation at the ground floor at Castle Park House in May 2015. The council signed a short term readily breakable lease called a tenancy-at-will. They signed that they would also be responsible for paying the rates that were due. The Town Council used to occupy Footman's Cottage at Castle Park - but it had outgrown the office space. The deal it had before combined the rent and rates due into one payment to CWaC. Prior to signing up to the tenancy at will CWaC issued a 'Heads of Terms' document. FTC should have checked that the Heads of Terms covered what it was prepared to sign up to ... and in due course that the tenancy at will matched the Heads of Terms. Events suggest that these fundamental checks were not made.
The deal offered by CWaC greatly subsidised the rent that FTC would otherwise have to pay - on the condition that FTC took over the front of house staffing at Castle Park House. That subsidy amounted to around £22,000. FTC was and is free to give those staff other roles and responsibilities providing that the front of house role is carried out. This front of house role involves providing assistance for other tenants within the House but there should be plenty of time for the staff to do other work for FTC.
FTC's tenancy also includes the main conference room which FTC can let out to earn income. I found out recently that CWaC when it let out the conference room was able to raise £10,000 per year. The latest figures from FTC suggest that the maximum income it will achieve in its first year will be in the £2,000-£2,400 range.
Even though FTC signed up for this agreement as recently as May 2015, FTC asked CWaC for renegotiated terms this autumn. FTC hadn't budgeted that it would have to pay rates... even though it had signed a lease specifically stating that it was liable to pay them. All businesses and councils have to pay rates. The minor exceptions to this rule don't apply to a Town Council.
There were discussions at CWaC as to whether a better deal for FTC could be struck. CWaC suggested that the rent payable by FTC be reduced by £4k - with CWaC taking a £2k hit and the trust the other £2k. As Chairman of the Trust I was very unhappy about this suggestion. Here was the Trust finding itself having to subsidise FTC - and all because FTC hadn't done its homework and CWaC hadn't helped FTC. CWaC didn't and doesn't have a duty to help FTC. However the Trust wants satisfied long-term tenants - and therefore CWaC could be criticised for not ensuring that their FTC customer was satisfied with the deal. I did criticise CWaC for this - and FTC could have seen me do it, and learn from it at the Trust Executive meeting held in September 2015.
Even though those of us on the Trust Executive were unhappy we agreed reluctantly to subsidise FTC - although we asked for the deal to be changed so as to claw back some of this additional subsidy if possible. The deal officers put to FTC was that their rent would be reduced by £4k - however in return CWaC could use the conference room free of charge and the trust would receive 40% of any income from the conference room being let out.
FTC rejected this deal in January 2016 - and so since then they have been paying a higher rent than they otherwise needed to do. It appears that no-one at FTC attempted to work out whether the £4k rent reduction and the other terms made financial sense for them. Ironically the deal offered actually encourages FTC to be lazy. Keep the £4k rent reduction and don't earn a great deal from the conference room. I don't think this was either FTC's or CWaC's finest hour - and I've made sure that both of them know that!
In February FTC asked to meet CWaC for further discussions. This led in turn to last night's meeting. I emailed FTC several times pointing to where FTC could find the various key documents so that they could understand the Trust, its rules, its accounts and the recent history with CWaC. That recent history includes a commitment by CWaC to reform the trust and to enable it to work at arms length from CWaC. That reformation is long over due... however I won't bore you with that detail here.
When Lynn and I got to the meeting on Monday night it was clear that FTC hadn't done its homework even at this late stage. This led to the meeting being more robust that usual - and actually - that probably helped.
FTC has decided to ask CWaC for better terms than it has... and has indicated that it would like to have a greater role in the park and the trust going forward. These decisions are effectively 'in principle' decisions only. I hope that before FTC takes a final decision it really does try to understand the Trust, the park and the respective financial positions. I have advised them repeatedly that they need to do their homework and retain independent advisors to assist them in understanding the risks and potential rewards available to it. Whether they do any of these things time alone will tell.
The video of the meeting is available both through FTC's and CWaC's website.
If you listen to the meeting from the start you'll hear some FTC members complain that they haven't had any papers to read in advance of the meeting. However all of the key documents I referred to in the meeting are public documents and readily available from the CWaC website - just by downloading the recent Castle Park Trust Executive Meeting agenda and minutes - or by FTC simply referring to the Heads of Terms document it received and the tenancy-at-will document it signed. I had even advised FTC where to find these documents (assuming they wanted them) on the Thursday morning before the meeting on the Monday. Lets not forget FTC have two seats at the Trust Executive table and could attend any of those meetings over the years.