Can a council give away assets?

Question

A complicated situation. A charity has been in existence for 10 years to promote and maintain an area of land but has not had a lease on that land as the council has the lease and done the work. The council  has voted to give the charity which has £45 in the bank a sublease and a working group was set up to discuss a head lease. The council has 4 members that are associated with the sports clubs and they want control over the pitches but have not paid for them. There is a fifth councillor who was a member of the cricket club when a planning application was put forward and has been very closely involved with all works to create the pitches and entrance. A councillor came to a meeting of the WG with a draft sublease that proposed that the council paid £20 k a year to the charity to maintain the land and also transferred ownership of the tractor and other bits to the charity. The draft lease is also for more than 80 years at £1 a year. The charity would be able to ask the council for all monies in their reserves that had been allocated to remedial work and the council would have to pay for the tree maintenance this year. Comments please. Are any of you in a situation where you sublease to a sports and community club?

Answer 1

The Council should take professional advice on this matter. There appear to be conflicts of interest involved here, but regardless of that, the Council should engage a land agent and a solicitor to devise an appropriate way forward.

Comments

I whole-heartedly agree with DavetheClerk.

Get it right from the outset and avoid endless grief and wrangling for evermore in the future.

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Another vote for professional advice one this one.  I've never experienced it but believe you need to get the asset professionally valued and may need to advertise the disposal in a local newspaper too where disposals of land are concerned, despite there being an overall authority to dispose of assets in the Local Government Act.  There are additional regulations on disposals and a bit of a minefield to identify what applies when.

Answer 2

The appears to be an element missing from your summary if I might be so bold...

What are the current annual operating costs for the council in maintaining the area / facility?

It is possible that it could be a sound proposition if it can be shown that a mid to long term saving is achievable to the tax payer by transferring the asset and the operating cost to the end user.

For example, if the annual cost to the council is greater than the £20k pa you mention as being suggested as an annual payment the net result could be a saving especially if 'tapered' so that the user group have a phased decrease in annual council subsidy as they build their own operating system.

But as DtC says - it's not something to be undertaken without either some suitably experienced and impartial Cllrs capable of producing a credible business case or outsourcing the concept to an impartial professional conveyancer to make an assessment before then seeking sound legal advice.

Fields in Trust could be a good source of advice and guidance and in any case consideration should be given to entering into a FiT arrangement in order to safeguard the permanent status of the land as a community accessible green space.   

Comments

Also, worth a look at NALC LTN 45 'Disposal and Appropriation of Land by Local Councils.  It sets out may of the relevant considerations...

Answer 3

As noted by others.  Get legal advice, get those associated with the sports clubs to stand to one side, ask the village and do not do anything in the meantime!   It would be interesting to know what the council lease says (no subletting maybe), the status of the sports charity (Unincorporated or CIO?) and why they only have £45 in the bank?  In our situation, it is the other way round.  The council occupies part of the land, without a lease and without paying rent.  Ditto sports clubs.  Some clubs (Tennis, Bowls) will have leases and football and cricket rent the spaces they use.  Leases for the sports clubs are £1 year with all maintenance, insurance etc etc to the clubs.   There is further unwinding of past ignorance and or the ignoring of past legal advice, so better to get it right now than make it worse!  Good Luck.

Comments

I agree entirely with need for advice .  Also be crystal clear as to PC responsibilities to the charity re maintenance as if there is any doubt the Charity will screw you for as much as they can . IMHO the charity should always aspire to financial independence .    We now have a situation whereby the Chairman of the trustees and the Chairman of the Finance Committee are the same person . Of course he declares an interest  !!

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I am not so sure about charities always trying to get as much as they can.  They can only ask for what is their legal due.  If they need council grants to survive, then then those grants need to be clearly identified in the council accounts as well as the charity accounts.  Grants are income and are not likely to be agreed each year.  The charity needs to take a long hard look at its sustainability if it needs to go cap in hand to the council each year.    Regarding the chair of finance being the chair of a charity, his position as chair of the charity is immaterial.  Charity chairs do not have the powers council chairs have.  However, as a trustee (ie nothing to do with being the chair) then there could be a conflict of interest if there is a difficult financial issue to solve between the two.  The individual should then either resign as a councillor, or as a trustee until the issue is resolved.   Both the council and charity should not have allowed the issue to develop in the first place but its not a perfect world!