What will be learned from the case study?
- How a long standing partnership between the club and the local authority was stepped up a level to enable a freehold transfer to take place
- The importance of the local authority’s strategic approach towards asset transfer as a framework for decision making
- How the freehold purchase means that the club will be able to raise essential additional funding and secure its long term future
- That asset transfer needs to be driven by committed and influential individuals on both sides.
Setting the scene
Bury St Edmunds Rugby Club has been in existence for over 80 years. It is regarded as a major asset for the town in terms of its sporting provision and has a regional role as a community rugby club. There has been a long and positive relationship between the local authority and the club.
The club provides a range of sporting activities for young people, (there are more than 375 young children in the Mini and Youth sections), women, and people with disabilities, as well as mainstream rugby team activities. However, until significant improvements were made to the facilities in the recent years, the club was only able to offer limited compliance with the Disability Discrimination Act, and had no changing facilities for women or children.
When teams from other areas came to visit and train with the club, there were 300 to 400 children on site. However, children were having to get changed outside for their matches and training because there were not enough changing rooms and showers available.
Working with the council was a very positive experience – relationships were very good with both elected members and officers, which really helped to push things on
Philip Torkington, Chairman, Bury St Edmunds Rugby Football Club
Another key aim for the club was to further expand its provision for girls playing rugby and football. As there were no female changing rooms or showers, and only one toilet on the ground floor, participation of girls in these sports was very limited, which was putting off new members and participants.
Access for wheelchairs was very difficult as the clubhouse had no lift access to the spectator areas and the main function room on the first floor had no wheelchair accessible toilets on the ground or first floor.
The club had a clear plan to develop the grounds and to make them more accessible to women, children and disabled people. It worked closely with the local authority, the Rugby Football Union, Suffolk Environmental Trust, and the Football Foundation to secure funding, (grants and loans), to redevelop the ground and make it fit for purpose. In the 5 years prior to seeking an asset transfer, the club raised approximately one million pounds for capital improvements. In addition, the club purchased some more land at the back of the site and as a result were able to offer a greater number of activities.
The members of the club increasingly felt that as they had raised and invested so much money into the facility, they wanted to have the security of tenure that freehold ownership would bring. Additionally, this would allow them to develop the site in the long term as they would be in a better position to raise finance against the asset.
The club was also recognised by the RFU as 'a forward looking organisation', and had achieved accreditation accordingly. Securing the premises was critical to the club's main aim: to achieve financial sustainability and independence, and to increase its community impact.
Although the club had been keen to secure the freehold of the asset for some years, it was not until 2009 that they formally approached the local authority to request a transfer.
The importance of an asset transfer culture within the local authority
The local authority had developed an asset transfer strategy, and had been interested in transferring assets for some time. A key officer in the local authority was involved in stakeholder discussions during the 2007 Quirk Review, so the local authority had taken a very proactive and positive approach to considering asset transfer to date.
The council had been systematically reviewing its property portfolio since 2002, in accordance with its asset management plan, with the aim of creating the ideal portfolio to meet its corporate aims. All assets considered for disposal are scored regarding their ability to deliver corporate objectives for operational staff, or their suitability to meet non-operational service requirements.
Those buildings that achieve a low score are reviewed for their potential for disposal. Decisions regarding disposal are based on the best use of the building, which may or may not be for a capital receipt.
The principal questions the local authority asks itself are: "what is the best use for the building, and are we the best custodians to realise those benefits?" rather than, "what can we get for it on the open market?" Hence, all community centres are able to be transferred at nil value, should there be a suitable recipient group with a viable and sustainable plan that produces community benefit.
The options appraisal
The local authority undertook an options appraisal to review what would be the best possible outcome for all parties and considered:
- No change
- Disposal of the asset as a Community Asset Transfer, (a below market value freehold or long lease, in consideration of community benefit)
- Disposal of the asset at market value.
The asset earned £1,800 in rent per annum for the council, (on a 28 year lease, 24 years remaining at the time). An independent valuation of the asset came in at £275,000, (based on the restricted use of the site). An additional valuation on behalf of the club found that the value to them of a freehold purchase, or 999 year lease, was £600,000.
£1,800 rent earned by the council per annum
Historically, the site itself had also been used as a rubbish dump for many years, at least up until the 1950's. Therefore, a great deal of work was put into exploring the level of contamination on the site, assigning responsibility, and insuring against future contamination.
Establishing this understanding with the local authority was essential for the members of the club to make them feel assured that they could take responsibility for the land.
Following changes in the Environmental Protection Act (1996), the local authority accepted future liability, and with the ability to insure against future problems solved, the club felt they could progress to the next stage.
Outcomes and impact
Following 18 months of negotiation, the club took receipt of the freehold for £27,000, (this was half the estimated rental value of the site to the local authority for the period left on the lease). The decision was agreed at a Cabinet meeting in June 2010.
The local authority placed a restriction on the transfer that the site must be used for sporting activities for the people of Bury St Edmunds, and that should the site be sold in the future, 100% of the proceeds would return to the council. The club welcomed this restriction as they felt it offered long term security to the members and users of the club.
The local authority are currently considering further transfers, as working with the club has been a very successful example of partnership working. The Chairman of the club, Philip Torkington, said: "Working with the council was a very positive experience. Whilst at times the wheels moved slowly, relationships were very good with both elected members and officers, which really helped to push things on."
Critical success factors
- Work with senior elected members: make sure you have the ear of someone who has the authority to make decisions
- Ensure that the asset you want is an asset and not a liability, (in this case, the risk around contamination had to be transferred to the local authority to make it an asset to the club)
- Make sure the receiving organisation has a lead person to drive the process in the long term and can make delegated decisions. Local authority processes can take time to complete, and the club did not want to add to the delays from their side
- If possible engage a supportive solicitor. The club only paid £1,000 for legal fees, which should have amounted to £4,700, as the solicitor had a stated interest in community benefit.