677  31 March 2003  

Private Lives, Public Lives

By Roger Warren Evans, FCIOB, Barrister-at-law

Our town halls and old municipal buildings are integral to our political
heritage, and many are under threat of demolition.  English Heritage, has issued a wake-up call to those concerned, in particular local authorities. 

"One quarter of the 748 at-risk buildings are owned by local authorities,"
reported Delcia Keate, London adviser to English Heritage.   One-third of
London's historic town-halls are no longer in government use, or were
facing sale or redundancy.  So were swimming-pools, and libraries.  The
continuing transformation of local government, the emergence of larger,
modern administrative systems is simply by-passing these great community
centres.

In Bath, they do things differently. And Bath, I suggest, could be pointing
the way.  This summer, one of Bath's greatest Victorian Listed Buildings,
the magnificent Green Park Station, will pass from the corporate sector into the control of a local conservation trust Envolve, already a tenant in one of the Station's vaults. 

The Station is literally being transferred by the long-leaseholder
Sainsburys, to the registered charity, under the terms of a new 50-year
lease, with the approval of the freeholder, Bath & North East Somerset
Council.   Sainsburys will retain responsibiloty for the repair and decoration
of the primary built structure, with all other responsibilities passing to
Envolve, together with the rent-roll.  Envolve will become the new Landlords of Green Park Station in their own right, not merely as “managing agents” on behalf of Sainsburys.  Envolve were chosen by Sainsburys, following a strongly contested interview process, with other Bath trusts vying to take over the Station.

Sainsburys have been responsible for active regeneration of the Station
over the past twenty years, under a Planning Agreement signed when the retailer was granted planning permission for its Bath store, which is still adjacent to the Station.  Sainsburys formed a wholly-owned subsidiary to manage the Station, and all the ground and space is now fully let, with a rent-roll in excess of £120,000 pa.

For the last three years, I have been responsible for the management of the
Station, working for Sainsburys part-time with two other staff and local professional agents.  Two years ago, in mid-2001,  I came to the conclusion that the future of this great heritage building deserved a better assurance than the tumultuous international retail sector could offer it.   Why should such a great building remain in the property portfolio of a national
food-retailer, however committed?

I devised a deal which proved attractive to both Sainsburys and future
charity trustees. It simplified Sainsburys' managerial commitments,
removing day-to-day management concerns from their shoulders, and leaving the company with building-maintenance responsibilities only.  I calculated also that, by offering Trustees the entire rent-roll (subject to their making a rental payment of £25,000 pa  back to Sainsburys, by way of contribution to the Company's maintenance and insurance costs), and by giving the incoming Trustees the opportunity to generate and retain the entire trading-surplus from the property, the deal would prove acceptable to charity trustees conscientiously discharging their conservation trust obligations and generating a surplus for their own charitable deployment.  And there are future development opportunities, within the building and its basements, which the Trust could develop as future sources of income.

And that is how it turned out.  This great building will thus be
returned by Sainsburys to the community of Bath, to be managed and
developed by local charity trustees.  This transaction is unusual in a
number of respects.  "Externalization" is uncommon, between the corporate
sector and the charitable sector.  But more important: the transaction
could point the way to the mobilization of  other "trading charity"
initiatives in this sector, to take over responsibility for old municipal
buildings.  The fiscal and other systemic advantages of a trading charity
can make a huge difference to the search for a viable break-even solution,
at income-, cost- and surplus- levels well below those of the private
sector.  

The charitable sector offers, to those in local government, an alternative
public service rationale, to complement the formal rationale of government
use.  These are exciting options, exciting times.  And the Government’s plan to introduce community interest companies, extending many corporate advantages outside the strict confines of the charitable sector, will expand the "public service market" further.   

This new public service trading sector (consisting of both trading charities and community interest companies) has the potential to unlock massive resources – in terms of financial capital, communal commitment, and personal motivation.  Today we see small beginnings, but these ideas are destined to grow, to play a very large part in the social fabric of our lives.

What do you think?  Do these developments interest you?  Drop me a line