CORPORATE PROPERTY STRATEGY

1. INTRODUCTION

1.1 This document provides an overview of South Lakeland District Council’s (SLDC) property assets

and the importance of ensuring the Council Plan 2013 - 2017 objectives are met, along with the

current demands on resources. Assets need to help drive efficiency savings and also contribute to

the four priorities – housing, economy, environment and culture and wellbeing.

1.2 SLDC owns a varied property asset portfolio which is valued at £41.2m as at 1st April 2012. This

portfolio review has identified 198 property assets (Appendix 1), however this does not include

items which are often viewed as liabilities such open spaces or other miscellaneous land parcels

which can often contain culverts, drains, coastal defences, stones walls, paths etc. For the purpose

of this strategy these will be referred to either as Open spaces or as Orphan Assets.

1.3 Over the past years, service reviews have been undertaken on a number of the property assets,

which has helped identify the future requirements. Some property assets are delivering SLDC’s

Council Plan objectives and are fit for purpose. However, some are redundant and do not meet

SLDC’s aspirations and therefore a strategy for their use or disposal needs to be developed and

implemented. This will consider the following factors:

• Is the asset required for service deliver

• Does the asset contribute to the objectives on the Council Plan

• Does the asset have a strategic purpose

• Does the asset provide a financial contribution

This will provide an outline as to whether the asset is retained, transferred or disposed of.

1.4 With the implementation of the Localism Act 2011 the vision for SLDC’s property assets should

be flexible in terms of ownership (freehold/leasehold/partnership) and resources. There should be a

requirement to secure a portfolio which meets the Council Plan aspirations and ensure that it is

responsive to service needs.

1.5 Key areas of work for reviewing and developing the property asset portfolio includes:

1) Reviewing the property portfolio to ensure it is delivering service review and Council Plan

objectives and any surplus to be identified

2) Ensuring the portfolio is managed efficiently through usage and maintenance and repair

costs to help achieve the resources savings required as part of the Medium Term Financial

Plan

3) Optimising the property portfolio to help achieve SLDC’s carbon reduction targets and

energy efficiency aspirations

4) Ensuring the property portfolio can assist where possible to enable SLDC to meet the

Localism agenda as the community requires.

2. SLDC’s PROPERTY PORTFOLIO

2.1 SLDC owns a varied property portfolio that supports a wide range of service delivery throughout

the District. The portfolio has been broken down into a number of key categories. The below table

provides an overview of the number of properties divided into geographic area;

Central Lakes LAP Grange & Cartmel LAP High Furness LAP

Categories Ambleside & Grasmere

Bowness & Windermere Cark Flookburgh Grange Broughton Consiton

Historic 3 1 1

Public Hall

Offices 2

Housing 1

Depots 2 2

Industrial Estates 1

Market 1

Store

TIC 1

Misc Commercial 1 4 2

Cemetery 2 3 1

Public Convenience 1 1 1

Leisure & Sports 4 9 1 8

Car Parks 7 8 5

Affordable Housing 1

Lake 1 5

Kendal LAP

Low Furness

& Ulverston

LAP

Sedbergh & Kirkby

Lonsdale LAP

South Westmorland

LAP

Upper Kent

LAP

Categories Kendal Ulverston Sedbergh Kirkby Lonsdale Arnside Milnthorpe Staveley

Historic 7 1 3

Public Hall 1 1

Offices 2 1

Housing 2

Depots 2 2

Industrial Estates 1 1

Market 2 1 1

Store 2 1 1

TIC

Misc Commercial 15 6 2

Cemetery 4 2 1 1

Public Convenience 2 1 1

Leisure & Sports 8 6 1

Car Parks 12 7 1 3 2 1

Affordable Housing 2 2

Lake

2.2 Each asset class has a different strategic direction, summarised below;

Historic – The aim is to use or to maintain these assets for community benefit, for instance the

monument in Market Square Kirkby Lonsdale or the War Memorial, Ambleside. Due to their age

they are often viewed as a liability, as there may be planning restrictions on them in order to ensure

they are maintained correctly and preserved for future generations. Where appropriate

opportunities for community use will be sought for these assets through asset transfers.

Alternatively rationalisation will be pursued to a local community level following the localism

agenda.

Public Halls – The long term aim is to improve the quality of building stock and to ensure that the

halls are working efficiently providing the right service for the community and maximising income

producing opportunities. Again options can be reviewed on alternatives such as rationalisation.

Offices – The vision is to ensure that these buildings are in the right place and location to deliver

service requirements. There should also be a view of minimisation as per the workforce plan and

mobile working. There is a need to ensure that unnecessary overheads of not taken forward. A

review will be undertaken of each building to explore rationalisation or if shared working can be

accommodated with partners or external bodies. This is already being undertaken in partnership

with Cumbria County Council where Trading Standards have moved into South Lakeland House and

further shared opportunities are being explored.

Housing – Following the Housing Stock Transfer in March 2012 SLDC retained 3 houses due to

restrictions on these preventing them being transferred or they had development opportunities.

These houses are managed by South Lakes Housing. SLDC also owns Town View Hostel. The vision is

to transfer houses to Registered Social Landlords as and when it is possible to do so as SLDC no

longer exercises a housing management function.

Depots – A number of these are considered to be part of the waste and street cleaning service

delivery. The service department will need to undertake a review to establish if rationalisation or if

shared working can be accommodated at these sites. There are potentially some sites which might

be surplus to requirements and can be disposed of.

Industrial Estates – Through the service review it was decided that where SLDC is the owner of these

estates, they should continue in SLDC ownership to ensure they remain as incubation sites for

smaller industrial occupiers as there is a shortage of this type of facility in the area. The estates will

be continued to be reviewed to ensure that they are achieving market rents. All sites where SLDC

was the head lease holder have now been successfully handed back to the landlord as per the terms

of the lease.

Market – The vision is for markets to be delivered at a community level. This is currently being

achieved for the street market in Kirkby Lonsdale as the Town Council now deliver this service.

However the indoor markets require investment before a transfer to the community can be

considered.

Stores – These are storage units. These need to be reviewed and if there is no service delivery use

for them, then they need to be disposed of.

Tourist Information Centre (TIC) – Following the Council’s changes to the provision of TIC services,

one property is owned by the Council and operated by a tenant as a TIC in Windermere.

Miscellaneous Commercial – These are in the main investment property assets which are held for

either their income producing value, development potential or to aid with a community service. The

aim is to review all of these and have a strategy for each site.

Cemeteries – Under section 214(1) of the LGA 1972 the following Authorities are permitted to be

burial authorities: district councils, parish councils and parish meetings. To date the service review

identified that there have been no direct approaches regarding the transfer of the management of

cemeteries from any parish council. The sites will be reviewed and maintained on a priority system.

Public Convenience – Following from the recent public convenience review there is a strategy in

place which is to enable the local community to deliver this service. The remaining assets are either

being sold, demolished or are part of future development.

Leisure & Sports – These property assets can help achieve two elements of the Council Plan of the

environment and cultural and wellbeing. A service review is currently being undertaken to establish

a strategy on the future management of these property assets.

Car Parks – The service review confirmed that SLDC is to continue to provide this service, however

further discussions may occur through the participatory budget.

Lake – The vision is to have a clear strategy in place for the future operation and management of

these assets, so that they contribute to local economic, environmental and social well being, whilst

recognising the significant income generation which supports Council service delivery.

Open Spaces – The existing holdings need reviewing to determine which should be disposed of

(including transfer to local community organisations) and which should be retained. In respect of

new housing development and the management of public open spaces created within the, a review

of the ‘Commuted sum’ policy is required to determine if the SLDC should continue to take on more

of these liabilities. An Open Space strategy is to be developed further.

Orphan Assets – A survey has been undertaken of general fund and housing stock retained land to

identify items which are not currently covered under the planned maintenance, such as boundary

walls, fences, surface paths, drains etc. A budget has now been identified to deal with these items,

but it is not sufficient to deal with the backlog of items and is considerably below what is required. It

order to assist addressing this a review of all the land holdings should be undertaken and surplus

parcels of land should be disposed of so that liabilities can be reduced.

Affordable Housing Sites – these are held for partnership development with Registered Providers.

This category also includes land held on mowing and grazing licences and farm business tenancies

which require a review to determine why they continue to be retained.

3. RESOURCES

3.1 In the late 1990s there was an injection of funds to deal with an accelerating backlog of

maintenance and repairs for SLDC’s property assets. In recent years funding has reduced and the

backlog is rising once again. For example, this year’s planned maintenance bid was £1.8m and the

budget for 2012/13 was set at £650,000. Appendix 2 provides a table detailing the trend over the

last 15 years.

3.2 A condition survey on a 5 year cyclical basis is undertaken which balances immediate needs

against long-term work. This is reviewed annually and budgets are prioritised accordingly.

3.3 Additionally, within the Medium Term Financial Plan there is a General Fund Major Repairs

Reserve with annual contributions of £50,000, with a target of at least £100,000 and a maximum of

£500,000 in the fund. The purpose is to fund major repairs and maintenance to properties that are

not capitalised and would be difficult to accommodate in the annual planned maintenance

programme, on the basis that the Reserve;

o acts as a backstop for emergency major repairs

o accumulates funds as necessary to meet an abnormal year in maintenance terms

o is able to assist in meeting regular maintenance costs

3.4 However with the ever increasing demands on maintenance funds there is a need to continue to

effectively prioritise planned maintenance work and also to ensure that the property portfolio is still

fit for purpose and meets the Council Plan objectives.

4. THE DECISION MAKING PROCESS

4.1 The decision making process of property asset transactions is based on legislation and SLDCs

constitution. Below provides an outline where formal approval will be requested;

1) Any letting/lease for a term exceeding nine years

2) Any disposal or purchase of an asset, no matter what the value is

3) Any lease for a sub-station or other utility operation for a period in excess of 20 years

4) Any letting/lease for a rent greater than £60,000pa for the term of the tenancy

5) Any transaction where it is considered that a formal decision is required

6) Any letting or disposal at less than best consideration

4.2 The Local Government Act 1972 section 123 and 127 governs SLDCs in the way in which it can

dispose of its assets. Except with the consent of the Secretary of State, assets cannot not be

disposed of at below market value other than a short tenancy not exceeding of seven years.

However, under the General Disposal Consent (England) 2003 it is permissible to make disposals at

less than best consideration if those disposals contribute to the social, economic and environmental

well being of the area. Such discounts on the disposal price must not exceed £2 million in each

individual case.

4.3 Similarly S25 of the Local Government Act 1988 allows disposal of land for affordable housing

development to a Registered Provider at less than best consideration under appropriate

circumstances. Such discounts on the disposal price must not exceed £10 million in each individual

case.

4.4 SLDC has approved a policy for Asset Transfer on a non-commercial basis which can be found in

Appendix 3. This policy provides a set of guidelines to be considered in the transfer of assets from

SLDC to other bodies where the transfer is on a non-commercial basis and has regards to the above

legislation.

5. ACTIONS

1) A property asset testing form is currently used and a diagram has been produced which will

help to establish if there are any property assets which are now surplus to requirements

following the service reviews and updates in policy. Please see Appendix 4. This will

produce a list of any surplus property assets which could be disposed of to help with the

deficit in the medium term financial plan. Obviously individual circumstances (e.g. planning

restrictions, restrictive covenants, title status, etc.) and market conditions would need to be

considered as to the best method of disposal and timing, but this can be worked into the

financial plan. This can also be applied to land holdings.

2) The planned maintenance bid deficit will need to be reviewed carefully and any shortfalls

may have implications for the medium term financial plan. A major risk for the planned

maintenance is the Leisure Portfolio. An additional £250,000 has been allocated to 2013/14

financial year to start to address the backlog.

3) The Asset Strategy needs to link into the capital programme over the long term period of 5

to 10 years in order to forecast capital demands and potential capital receipts.

4) The Policy Officer working with the Carbon Management Board will be kept informed of any

alterations to the property asset portfolio. The aim will be to continually manage property

assets to help achieve SLDC’s carbon reduction targets and energy efficiency aspirations.

5) After this review there will then be a list of property assets and land holdings which could

also assist with the Localism agenda. As we have seen recently packages of assets can be

successfully transferred to the local community to run and manage for the benefit of the

local community. However, The Local Government Act 1972 section 123 and 127 still are

enforceable so SLDC needs to ensure that if any transfers are not at best consideration

(market value) that their value reflects the economic, social or environmental wellbeing of

the area and, in any event, are valued at less than £2 million.

6) Within the Localism Act 2011 there is a duty on SLDC to maintain a list of assets which have

been nominated by a community body as an asset of community value. This legislation

applies to all assets no matter whether it is public or private ownership, but excludes

residential and operation land. It has been decided that the Research and Intelligence Unit

will manage the nomination list.

6. SUMMARY

In order to deliver this strategy the Economic Development and Corporate Asset Manager

and NPS Group will need to spend time working closely with all services to understand the

requirement of each property asset to the service delivery. The Economic Development and

Corporate Asset Manager and NPS will also continue discussions with Town and Parish

Councils. Updates will be provided to Management Team on property asset class reviews so

any implications of the Medium Term Financial plan can be successfully reported.

Appendix 1 – Property Asset List

Appendix 2 - Maintenance Backlog

Quinquennial Year Financial Year

Quinquennial

Projection Bid Allocation Shortfall Trend

1 1998/99 £2,142,340 £2,142,340 £1,081,276 £1,061,064

2 1999/00 { £1,432,677 £862,932 £569,745

3 2000/01 { £612,215 £1,220,943 £786,283 £434,660

4 2001/02 { £1,018,617 £584,094 £434,523

5 2002/03 * { £859,805 £943,662 £926,500 £17,162

Period End Totals £3,614,360 £6,758,239 £4,241,085 £2,082,494

1 2003/04 £1,892,710 £1,085,319 £540,419 £544,900

2 2004/05 { £722,327 £599,542 £122,785

3 2005/06 { £1,082,908 £718,018 £639,350 £78,668

4 2006/07 { £731,834 £606,715 £125,119

5 2007/08 { £914,619 £824,674 £579,060 £245,614

Period End Totals £3,890,237 £4,082,172 £2,965,086 £1,117,086

1 2008/09 £855,835 £987,993 £776,550 £211,443

2 2009/10 £812,070 £1,220,688 £783,982 £436,706

3 2010/11 £851,347 £1,838,626 £658,385 £1,180,241

4 2011/12 £988,184 £1,301,595 £646,030 £655,565

5 2012/13 £1,485,749 £1,826,205 £600,000 £1,226205

Period End Totals £4,993,185 £4,966,426 £3,464,947 £3,710,160

Appendix 3 - Asset Transfer Policy

SLDC policy for the transfer of assets on a non-commercial basis

1. Aim

The aim of this Asset Transfer Policy is to provide a set of guidelines to be considered in the transfer

of assets from SLDC to other bodies where the transfer is on a non-commercial basis. In

implementing this policy the Council will have regard to its powers to transfer assets without the

need to achieve best consideration as provided for under Circular 06/03: Local Government Act 1972

general disposal consent (England) 2003 disposal of land for less than the best consideration that

can reasonably be obtained.

The policy also outlines the mechanism to be used in such transfers.

2. Types of Asset

Examples of the types of assets that have been transferred by other Authorities to the community

include:

• Village Halls

• Theatres

• Land (playing fields, allotments, parks).

• Office Space

• Museum Buildings

In the case of SLDC the assets could include toilets, tennis courts, fishing rights or indeed any Council

asset that it is deemed appropriate.

3. Guidelines

The Big Society philosophy provides the background to this policy. The Government’s Big Society is

about achieving goals in ways which are more diverse, more local and more personal. The Council

fully embraces ‘localism’. This is not just because of the Localism Act. However the Act provides

tools to help the progress of localism; new rights such as the Right to Bid and the Right to Challenge

Services for example.

Localism is already working in South Lakeland in many ways with active contributions from people in

voluntary work and emerging examples of various service providers. The Council wants to build on

this enhancing localism through greater decentralisation to reduce bureaucracy, empowerment of

communities, diversification of how services are provided and enabling greater public scrutiny and

accountability.

In response to the new national, regional and local agendas the Council has produced a five year

strategic plan to ensure that the Council is in a long term sustainable position to deliver its vision and

priorities. The strategy encompasses work to be delivered across three key themes:

• One South Lakeland – a partnership approach to achieving priorities

• Localism – working together with our communities

• A Sustainable Council – delivering value for money services

Delivery of the activity detailed in the strategy is creating a new approach to the role of the Council

and its involvement with communities. As we deliver the strategy, the Council is taking significant

steps towards being an enabling organisation.

The criteria listed below provide a framework for the consideration of an asset transfer.

1. Asset that are of strategic importance to the Council will not be considered for transfer. The

strategic importance will vary from case to case but the contribution of the Asset to the

Council finances and the impact on the Council’s ability to deliver strategic objectives are key

considerations.

2. Using a strict definition an asset is something that provides, or is capable of providing an

income. This can be broadened for the purposes of this policy to include assets that may

provide a benefit even if this is not in monetary form.

3. In many cases Council properties do not provide an income but attract costs in upkeep and

maintenance. By a strict definition these are in fact liabilities. As a principle therefore the

Council will also look for opportunities to transfer liabilities to other parties as part of an

overall approach to transfers involving a package of assets and liabilities. In this case the

proportion of assets and liabilities and the balance of the financial impact are important

considerations.

4. Although the transfers being considered in this context are on a non-commercial basis it is

prudent to consider the impact on the Council of the transfer. The preparation of a business

case in the same way as for commercial transfers is a useful way of assessing this impact.

Consideration should be given to the benefits of the transfer to the Council. These benefits

could be in the form of enhanced partnership working, improved community relations,

reputation enhancement or be a means to unlock asset potential for the benefit of the

community. The potential negative impacts should also be considered. The community may

see the transfer as an abdication of responsibility. Even though the transfer is on a non-

commercial basis the financial implication should also be considered, in particular hidden

costs or opportunity costs arising as a result of the transfer.

5. The capability of the community or body to which it is proposed to transfer the asset should

also be considered. Is there a good understanding of the implications of asset responsibility

and appetite to manage the asset. The track record is also important. The legal basis of the

entity taking responsibility for the asset is also a consideration.

6. The level of support the community or body taking on the asset will need is an important

consideration. This may be short term during the transfer or longer term and is part of the

potential hidden costs mentioned in 4 above. The Council should be mindful of identifying a

clear exit strategy at an early stage in the process so that all parties are aware of the end

result and appreciate fully the implications. Consideration should also be given to how a

worst case scenario is to be handled. For example the Council may wish to take back the

asset if the project fails. The long term liabilities in this situation need to be considered.

7. The benefit to the community should be assessed and quantified if possible. The transfer

may be part of a package of measures to assist in community development. The guiding

principle here should be that the community can identify and buy into the benefit, for

example if the possession of an asset allows them to attract funding. In some instances there

may not be a benefit as in when the transfer is of a liability.

8. This policy covers a broad range of potential transfers of both assets and liabilities. There are

therefore likely to be many technical issues involved ranging from physical maintenance, to

planning implications as well as legal HR and equality issues. All of these should be

considered in the same way as for any Council decision.

9. A full risk analysis should be carried out and controls identified for the significant risks where

possible.

10. Whilst this policy deals with the transfer of assets at less than open market value it does not

automatically assume that the transfer is at zero value. In practice a range of discounted

values may be applied ranging from a nominal amount to a significant percentage of Open

Market Value. As a minimum the Council should seek to recover its transaction costs, for

example legal and surveyor fees.

Mechanism

A key aspect of the transfer is whether it is to be a one off permanent disposal or transfer by way of

a long lease. The former offers a clean break with complete transfer of responsibility but it also

means the Council loses all practical control of the eventual use of the asset.

A long lease arrangement provides all of the benefits of a complete disposal in practical terms but it

allows for the Council to retain some control of the asset in the longer term by way of restrictive

covenants.

In practice there may be situations where either approach may be the most appropriate. The Council

should decide on its preferred model as a starting point while allowing for consideration of

alternative approaches in particular circumstances.

Each case will need to be considered on its own merits and the decision process should follow the

normal process for Council decisions in accordance with the Council’s constitution.

Appendix 4 - Asset Testing Diagram