Purpose

This report sets out proposals to offer longer leases (10 years) at zero rent to two voluntary organisations operating adventure playgrounds. The zero rent would be delivered through an extension of the Community Benefit Rent Reduction (CBRR) scheme. This approach recognises the organisations’ long-standing community service and the strategic benefits they provide.

The proposals involve a departure from the Council’s VCS Premises Policy, which currently offers a maximum of 5-year leases and up to 80% CBRR, and aim to secure the financial sustainability of these services through lease stability and rent reduction.

Decision

DECISION;

1. Agreed to the offer of a 10-year lease to Shadwell Community Projects for Glamis Adventure Playground and a community benefit rent reduction grant of 10 years, resulting in no rent being payable.
2. Agreed to the offer of a 10-year lease to Weavers Adventure Playground Association for Weavers Adventure Playground and a community benefit rent reduction grant of 10 years resulting in no rent being payable.
3. Noted that the decisions above involve departures from VCS Premises Policy agreed at Cabinet in 2021 as set out in (paragraphs 3.30 to 3.330).
4. Noted the specific equalities considerations, as set out in Section 4.0 of the report.

Reasons for the decision

The decisions require Cabinet approval as they involve departures from VCS Premises Policy previously agreed at Cabinet in relation to the eligibility criteria for Community Benefit Rent Reduction. In particular these are the criteria for lengths of leases, the maximum rent reduction permitted, and the inclusion of leases protected by the Landlord and Tenant Act 1954.

A 10-year lease will provide the stability needed for adventure playgrounds to secure long-term revenue and capital funding from external grant providers who require extended lease terms. Both leases have already expired and are now holding over. Discussions to renew the leases have been ongoing for over 12 months. Both organisations are struggling to secure required grant funding because they do not have a lease with sufficient length.

Continuing with nominal rent payments will support the financial sustainability of these small, grant-funded organisations. While standard rental charges under the Council’s VCS Premises Policy may appear modest, applying them risks undermining the Council’s own investment, given its role as a funding provider. These assets do not have income generating potential, such as a community hall might have in terms of hiring out space, so a tailored approach is required.

The organisations support the Council’s aims and objectives to tackle the cost-of-living crisis, to empower communities and fight crime, and supports public health objectives through increased physical activity among children, particularly in the context of Tower Hamlets’ challenges such as high child poverty and overcrowding.

Both organisations have operated their respective adventure playgrounds and supported local communities for decades. The financial pressures facing VCS organisations-locally and nationally-are well documented and are expected to persist given the current economic climate. Continued Council support at minimal cost offers the best prospect for their sustainability and affirms the Council’s ongoing commitment to the voluntary and community sector.

Bringing operation of the sites in-house or re-marketing them due to organisational financial failure would incur higher costs for the Council, disrupt service provision and offer little to no additional benefit. Repurposing these sites away from adventure play is likely to face significant community opposition, as evidenced by previous VCS lease-related cases.

Alternative Options

Offer both organisations 5-year leases at Community Rent of £14psft and on other standard lease terms with Community Benefit Rent Reduction of 80% (subject to satisfactory application) in line with the Council’s VCS Premises Policy and Procedures agreed by Cabinet in 2021. See appendix A for rental income for this option.

Leases put in place with terms set in accordance with the Landlord  and Tenant 1954 Act. The main lease terms would be based on existing leases, with rents set at market value. The lease lengths would generally follow the existing except that a court is restricted to granting a maximum 15-year lease where an existing lease is for a longer term.

Take possession of both sites and operate in-house This could happen with agreement from the operators or the council could end existing agreements on six months’ notice. This is likely to cost at least £60k per site per year to operate on the same basis as Whitehorse. Further cost information is provided in Appendix A. This could not be covered by existing park budgets.

Take possession and repurpose sites Alternative options would be constrained by the planning position.

Do nothing- the leases would continue to hold over on the current arrangements. This provides no security for the tenants which severely affects their ability to attract grant income.

Action by:

CORPORATE DIRECTOR FOR RESOURCES (A. KASSIM)