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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 13/06/2006
Site at Kings Road Industrial Estate, Haslemere



APPENDIX T
Waverley Borough Council

EXECUTIVE – 13TH JUNE 2006

Title:
SITE AT KINGS ROAD INDUSTRIAL ESTATE, HASLEMERE

[Ward Affected: Haslemere Critchmere and Shottermill]

Note pursuant to Section 100B(5) of the Local Government Act 1972

An annexe to this report contains exempt information by virtue of which the public is likely to be excluded during the item to which the report relates, as specified in Paragraph 3 of the revised Part I of Schedule 12A to the Local Government Act 1972, namely:-
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Summary and purpose:

The purpose of this report is to seek members’ approval for the lease of the above property.


Environmental implications:

There are no environmental implications relating to this report.

Social / community implications:

This report seeks to lease the land to a local employer that needs to relocate from its present premises owing to expansion.

E-Government implications:

There are no e-government implications arising from this report.

Resource and legal implications:

The rent paid by the Council for this site is covered by the rent received from Top Yard. Because it remains vacant and derelict, the Council is currently not receiving any income from the site. The proposed terms and conditions set out in the (Exempt) Annexe to this report show the estimated annual income likely to be achieved over the remaining period of the lease, should the lease be authorised.

Any investment of the Council’s insurance money in the site will be subject to further considerations. There will be legal time involved in drafting the necessary documentation.
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Background

1. This report is further to the report to the Executive on 4th April 2006. The site is shown outlined on the plan at Annexe 1.

Introduction

2. A local employer is interested in constructing a new facility for itself, having outgrown its present premises in Haslemere. It employs local staff and would prefer to relocate within Haslemere. This site would provide it with that opportunity.

3. As mentioned in the previous report, the Kings Road site has major constraints which reduce its attractiveness to the market:-

The lease only has 30 years to run;
Most lending institutions require the security of leases of at least 99 years, if not 125 years, before lending sufficient monies for a development of an industrial unit; and
Most occupiers purchasing a ground lease require similar lengths, as short leases lead to a devaluation of their investment.

4. For these reasons, the number of interested parties will therefore be very low, especially given the poor industrial market at present in the area.

5. The proposed lessee is aware of the problems of the Kings Road site, but is prepared to enter into a lease on the terms and conditions as set out in the (Exempt) Annexe. Its use of the land is compatible with Waverley’s lease from the head lessees. It is prepared to invest a significant sum in building new premises to cope with its expansion. This should also help to increase local employment. If the proposed lessee does not take the lease, it will be obliged to relocate out of Haslemere, with the consequential potential loss of local jobs.

6. With regard to any decision to dispose or lease of Waverley’s property, the Council‘s Contract Procedure Rules require a consideration of the risks and any conditions and restrictions relating to the property.

7. The restrictions and conditions are:-

short lease period for the level of investment required to make the site useable; and
limited acceptable uses under planning restrictions and Head-lease terms.

8. The risks are:-

Risk of missing the opportunity of securing a good level of investment in the site, increased local employment and a rent for the Council, particularly given the length of lease and restrictions on the site;
Site continues to be difficult to attract interest and it remains vacant and derelict; and
Current potential lessee moves its existing employment base out of the area or the Borough to meet its expansions needs.

Views of the Asset Management Group

9. The Asset Management Group has considered the proposal for the proposed lessee to be offered the lease on the stated terms. The group has concluded that, given the period of lease, the conditions of the site and the lack of other interest in the property, this represents good value for the Council.

Conclusion

10. The Council has a lease of a site on the Kings Road Industrial Estate that is now vacant and derelict, following a fire some years’ ago. The lease has only 31 years’ remaining, which is too short a period for most investors to consider. At present, while the Council is not losing money on the site, it is also not obtaining any for it.

11. A local employer has expressed strong interest in taking a sublease of the site to construct new and expanded premises for itself. If it is unable to relocate here, it will be necessary to relocate outside of the Haslemere area, with the consequential potential loss of employment.

12. The Council has the opportunity to obtain an income from the site, which would not be guaranteed should a marketing exercise be required. It would also be assisting to retain a local employer, thus aiding the local economy.

Recommendation

It is recommended that the proposed lessee be offered a lease of the site on the Kings Road Industrial Estate, on the terms and conditions set out in the (Exempt) Annexe to the report, other terms and conditions to be negotiated by the Property and Development Manager.
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Background Papers (DoPD)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.
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CONTACT OFFICER:

Name: Ailsa Rhodes Telephone: 01483 523459

E-mail: arhodes@waverley.gov.uk



Comms/exec/2006-07/033