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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 08/11/2005
Godalming Leisure Centre - Financial Situation



Summary & Purpose
The purpose of this report is to inform the Executive of the current financial situation regarding the John Stanley Jeffries Trust (JSJ), who run Godalming Leisure Centre and to seek approval for increased financial support from Waverley in the current financial year.

APPENDIX H.2
Waverley Borough Council

executive – 8TH NOVEMBER 2005

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Title:
GODALMING LEISURE CENTRE

[Wards Affected: All Godalming Wards]
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Summary and purpose:

The purpose of this report is to inform the Executive of the current financial situation regarding the John Stanley Jeffries Trust (JSJ), who run Godalming Leisure Centre and to seek approval for increased financial support from Waverley in the current financial year.

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Environmental implications:

There are no direct environmental implications as a result of the recommendation of this report.

Social / community implications:

Godalming Leisure Centre is a significant leisure facility for the local community of Godalming and the surrounding area.

E-Government implications:

There are no direct E-Government implications as a result of the recommendation of this report.

Resource and legal implications:

The report seeks approval for a loan from Waverley in the sum of 60,000, in place of the existing grant of 16,000; requiring approval of a supplementary estimate in the sum of 44,000.

Introduction

1. Godalming Leisure Centre was built and is operated by the JSJ Trust. The initial construction cost was raised from public donations and from a substantial legacy from John Stanley Jeffries to the former Godalming Borough Council. The land is leased from Waverley and the building reverts to Waverley at the end of the lease in 2062.

2. Since 1998 Godalming Leisure Centre had operated without any revenue support from the Council. However, during 2004 the financial position deteriorated and this was projected to continue into 2005/2006. The main causes of this were substantial additional staff costs in response to new health and safety requirements, combined with a gradual decline in income reflecting strong local competition in the Fitness sector.

3. In response to this situation, a revenue deficit grant of 16,000 was included within the Revenue Estimates for 2005/2006. In addition, a provision of 80,000 was included within the draft Capital Programme to enable improvement works to be undertaken in order to maintain the income stream.

4. Additionally, in February 2005 Council approved a one-off grant of 30,000 to be paid to the Trust in response to a cash-flow problem that was detailed in a report presented to the Executive on 7th February.

Update

5. Waverley’s Head of Leisure and Chief Accountant have held regular meetings with the manager of the centre and the accountant to the JSJ Trust during 2005/2006. These meetings have covered monitoring of the revenue budget and proposals for the planned capital expenditure of 80,000. The position at 31st March 2005 and for the first four months of 2005/2006 was in line with expectations. However, the JSJ cash-flow did take account of significantly increased income during the second part of the year following the planned refurbishment works and the opening of the dual-use sports hall at Broadwater School, which will be managed by the leisure centre. 6. Last month the Trust reported that they would be unable to manage the Centre for the remainder of the year without additional revenue support. 7. The 2005/2006 Capital Programme did include 80,000 for capital works at the Centre. It was intended that this figure would provide for some much-needed improvement works, in particular to the reception area. This would have generated additional income through increased use, as well as preventing income loss by installing turn-styles. The estimated payback period was less than three years, which would have represented excellent value. Detailed plans were drawn up by the Trust and presented to Waverley by mid-summer. At this stage Waverley’s Property section were consulted in accordance with best practice. They advised that the proposals represented good value and were feasible, but that it would be prudent to update the structural survey of the building, as this would have been overdue had the building been Waverley’s responsibility. Unfortunately, the survey shows a requirement to spend a very large sum on structural works within the next two years. The proposed capital works are the subject of a separate report to this meeting. However, the result of the survey means that it will not now be possible this year to carry out any improvements to the centre and as a result income is expected to continue to decline rather than to increase. This is the main reason for the supplementary estimate requirement.

8. The other reason for the shortfall in the current year is the delay in opening the dual-use sports hall at Broadwater School. This is to be managed by Godalming Leisure Centre, who expect to make a surplus from additional activities planned for the new centre. Until recently, this facility was expected to generate a surplus of at least 10,000 for the Centre in 2005/2006, but the opening has been delayed until the New Year and, after taking account of start-up costs, it is not prudent to allow for any surplus in this year. Proposed Loan 9. Waverley has engaged consultants to advise the Council (but not the Trust) on the best way forward to secure the future of Leisure provision in Godalming. They have advised that any further support should be in the form of a loan rather than a grant and that this support should be subject to the Trust giving an undertaking to seek their own legal advice on future options for the Trust. 10. The precise terms of the loan would have to be the subject of more detailed negotiation between Council officers and the Trustees, including the use of the loan, the Trust’s agreement to seek their own legal advice on their position generally and the terms of repayment. It would be advisable for the terms to be set out in a document to be signed by the Trustees. The Trust would be recommended to obtain their own legal and financial advice before entering into an agreement for the loan. 2006/2007 draft Estimates

11. The 2006/2007 draft estimates do contain a provisional figure of 150,000 within the variation list to recognise the likely level of revenue support required by the JSJ Trust. This figure takes account of continued decline in income for a full year and increased maintenance requirement if the capital works do not proceed. However, if the improvement works proceed in full, it is expected that this requirement will reduce.

Conclusion

12. It is clear to Waverley’s officers that the level of support as recommended in this report is required in this financial year in order for the Centre to continue operating at its current level for the remainder of the year. The other issues of capital investment and revenue support beyond 31st March 2006 will be the subject of separate reports.

Recommendation

The Executive is asked to:

1. agree to the immediate release, on the basis of a loan, of the sum of 16,000 currently provided within the Council’s 2005/6 Revenue Estimates; and 2. recommend that the Council approves a supplementary estimate in the sum of 44,000 to be paid to the JSJ Trust as a further loan in 2005/6; thereby authorising a total loan in the sum of 60,000.

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Background Papers (DoF)

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 OFFICERS:

Name: Brian Long Telephone: 01483 523253
E-mail: blong@waverley.gov.uk

Julie Maskery Telephone: 01483 523432
E-mail: jmaskery@waverley.gov.uk

Comms/exec/2005-06/173