A report of the Executive Member for Finance and Governance and the Strategic Director for Finance, Governance and Support was presented, the purpose of which was to consider two proposals: to invest and enhance tennis facilities for the benefit of the area through an investment of £200,000 in Tennis World; and to renegotiate the present lease and dispose of the Council's freehold interest in an area of surplus land adjacent to Tennis World.
Tennis World currently occupied the existing site under the terms of a 125 year lease from 2002 at a peppercorn rent with use restricted to that of a tennis facility only. Discussions had been held with Tennis World to explore possible mechanisms whereby access to facilities and coaching could be offered to a wider cross section of the community. This had resulted in an agreement to invest in tennis facilities at Tennis World through an initial investment (proposal 1) which had been approved in the Investment Strategy, and the potential to sell an under-used area of the main site being identified as suitable for disposal and residential development in order to support enhanced tennis provision at the facility (proposal 2).
Situated on the junction of Marton Road and Ladgate Lane, the subject parcel of land identified for disposal formed part of the Tennis World complex and a location plan was attached to the submitted report. The site was currently used by the leaseholder (Tennis World) for the provision of outdoor clay tennis courts, unkempt buffer landscaping and overflow parking. Due to the existing lease terms, any proposed disposal would require the leaseholder to release the surplus land from their existing lease, with that agreement subsequently being amended and renewed accordingly.
Proposal 1 - Investment in tennis facilities at Tennis World
With the development of the Middlesbrough Sports Village a commitment was made to enhance and develop the tennis facilities for Middlesbrough and ensure that they were integrated with the overall provision at the site. The proposed investment would upgrade facilities to bring them up to a more modern specification in line with the Sports Village. The Council's investment of £200,000 in the facility at Tennis World would be for improvements carried out as Landlord's Works under the terms of the lease; the quality and timing of the works therefore being under the Council's control. The lease would also be subject to a deed of variation, registerable at the Land Registry, the tenant having agreed to reduce the lease team in consideration of this investment from the original 125 year term, to a 25 year term plus an option for a 25 year extension.
The budget of £200,000, approved as part of the Council's Investment Strategy on 30 November 2016, would contribute to a scheme of work to include: refurbishment of internal and external playing surface, replacement of existing internal and external lighting with LED lighting, car park and essential roof works and provision of enhanced access facilities. The full detail of the works would be determined by detailed designs, specifications and costings to be agreed with Tennis World.
The Council's interests would be protected by way of a funding agreement under the terms of which the Council would be able to claw back investment funds in the event that the tenant failed to deliver the agreed Tennis Development Plan.
Proposal 2 - Disposal of surplus land and sharing Capital Receipt
The disposal of surplus land on the Tennis World site for housing could further enhance tennis provision and provide an area for housing development in support of the Council's housing strategy. If the proposal was agreed, the sale and development of this land would generate a capital tax receipt for the Council along with an ongoing return to the Council through council tax. As the holder of a long term lease on the site Tennis World would have to agree to the disposal of the land and it was normal commercial practice in such situations for the freehold and leasehold owners to share the proceeds of the disposal of land.
Having been deemed by the Council to be surplus to operational requirements, the subject property was marketed in local, regional, national and digital media during the period December 2015 to February 2016. A total of three tenders were submitted by three different bidders in response to the formal marketing exercise carried out by the Council.
The following options were available:
1. To open discussions around reuse of the property for another purpose - no Council operational requirement has been identified. This would require leaseholder engagement and consent.
2. With the leaseholder's consent, to proceed with the sale of the property in order to meet the Council's requirement to generate capital receipts, and bring the land into a far more beneficial use in the future and proceed with the investment in tennis facilities in accordance with the recommendations set out in the report.
3. Do nothing - the property would remain in its present state. Whilst it would be retained for potential future Council use, the liability and responsibility for maintaining and holding the property would remain with the leaseholder.
Members requested that in future such reports were drawn to the attention of the relevant Ward Councillor(s) in advance of the meeting.
1. The detail of the investment in tennis facilities in Middlesbrough through improving Tennis World facilities at a budget of £200,000 in return for them renegotiating lease terms was noted.
2. The tender proposals forwarded to the Council for consideration in Part B of the report, identification of a preferred bidder and the sharing of the capital receipt were approved.
The decision was supported by the following reason:
This would result in the improvement of tennis facilities in the borough and the disposal of a surplus parcel of land in return for a capital receipt to the Council together with an ongoing benefit to the Council in terms of a council tax receipt and New Homes Bonus.