Roger Mace, leader of Lancaster City Council’s Conservative group, has joined others voicing concern that the end of March deadline for negotiating the future of Lancaster Market may hamper, not help, find a solution to the problems the expensive building is causing the local authority. He has also suggested the Market could be run by the Traders themselves, not the Council.
“Most councillors recognise the current level of deficit from operating the Market (6% of the District’s Council Tax) is unsustainable and not good value for Council Tax payers,” he told virtual-lancaster, “but I think the ‘negotiation’ period will prove impossibly short for a viable solution to be worked up and documented in detail in the form of a business plan.”
As we reported last week, market traders claim that although several organisations are supposed to be attending discussions on the Market’s future – agreed at Full Council on 3rd March – one national group was not invited until the day of the first meetng, effectively ensuring they would not be able to attend.
Despite their active interest in trying to find a solution to the Market’s problems, Roger reveals that the Conservative Group on the City Council has not been invited to send a representative to the working group discussing the Market in preparation for the 31st March Council meeting. “It is not by our choice that we are not attending,” he notes.
Concerned by the short discussion period, Councillor Mace is now recommending that the Traders Association should ask the City Council for an extension of the negotiation period to give themselves the time they need.
“By operating as a coordinated group instead of as individual traders, they should be capable of resolving the issues of the Landlord and Tenant Act which are forcing the end of negotiation to be on 31 March 2010 – as set out in the Council decision on 3rd March,” he suggests.
In the meantime, he asked the Chief Executive and the Corporate Director of Regeneration at the City Council for answers to several questions about the Lease of the Market and has given us permission to publish the reply from Graham Cox, Head of Property Services, here on virtual-lancaster. “There was no indication with Graham’s replies to suggest they are confidential,” he tells us.
While these may seem a bit dry to some, and, Roger suggests “some of the answers may well raise more questions than the ones they answer”, the responses from shed new light on the complicated issues facing everyone trying to find a way forwards.
Assuming they were given advice and followed the advice received, has there been any review of the competency of the advice given to those councillors who approved the Council entering into the 1995 Market Lease? When was that review carried out, and what was the result of that review?
Graham Cox: There has been no review of the circumstances in 1995. The arrangements entered into at that time were a perfectly reasonable way to proceed for the council. Taking a lease of premises was a common process at the time and remains so now.
Is the City Council able to ask for a review of the rent and service charge the Council is required to pay to the Landlord to ensure that it is in all respects fair and reasonable? Has this been done? When was the last occasion on which it was done? Did the Council go to arbitration in respect of the outcome of the (delayed) 2005 rent review? If not, why not? What is happening about the rent review due in 2010?
Graham Cox: The rent review pattern in the lease is every five years, with the next review due on 24th June, 2010. It is not normal practice for the rent review dates to change from those set down in the lease. The review was undertaken by professional staff using evidence that was clearly available in Lancaster – indeed immediately next door to the market hall.
It was totally inappropriate to take the matter to arbitration at that time – indeed to do so would have resulted in the council paying out substantial costs both to the landlord and the arbitrator.
The previous review was undertaken in 2000 and at that time it was clear that there was no evidence to show any increase in rental value although the landlord was suggesting a substantial increase. At that time it was appropriate to go to arbitration.
In terms of service charge, the annual account from the landlord is challenged where appropriate. The current year’s figures are the subject of review.
Is the Council able to assign the lease of the market to a new tenant? If so, in what circumstance would it be reasonable for the Council’s Landlord to withhold consent for such an assignment of the lease? Is it possible for the Council to assign a lease of one floor of the market building separately from another floor?
The Council can assign or underlet the lease of the market being the whole building with the landlord’s consent. The landlord would only be able to withhold consent where it is reasonable to refuse and would have to give written notice to the tenant of the decision within a reasonable period of time (the court’s current view is within 4 to 6 weeks dependent on the individual scenario) and would have to provide reasons should consent be refused under the Landlord and Tenant Act 1988.
There could not be an assignment of part of the whole building as this is not allowed in the lease although the previous landlord was keen to see this happen. A negotiation on this will be required.
If the council finds a tenant for the whole building, and assigns the lease to that tenant, is it likely that the Council’s Landlord would be able to insist on the Council being guarantor for the rent? In other words, is it effectively impossible for the Council to remove the financial risk it bears in respect of the rent due under the lease ? How (if at all) would it be possible to change the risk borne by the Council by treating one floor of the market separately from the rest of the market?
Graham Cox: If the Landlord wanted a guarantor for the rent this would usually be a guarantor not connected to the council ie the outgoing tenant but a guarantor connected to the assignee ie the incoming tenant
Therefore, if the council
(a) assigns with consent the whole of the building – liability and responsibility regarding the building can be stopped in accordance with the Landlord and Tenant (Covenants) Act 1995
(b) underlets with consent the whole of the building – this means the 1996 lease still remains and liability and responsibility regarding the building will still be retained by the council if the incoming tenant has financial difficulties or gives up the lease.
As to the query regarding treating one floor of the market separately please see answer above where assignment/underletting of part of the market building is not possible under the lease.
What is the advantage to the City Council of administering the Market? Why does the Council not immediately offer the administration of the whole market building to a single company set up by the Tenants Association?
There is no advantage to the council in administering the market. The proposal put forward by traders to operate their own market was referred to in the options report 18 months ago but it was a view of only one trader at the time with no support from other traders. The proposal would only work if supported by all, or a majority of traders.
Commenting on the answers, Roger tells virtual-lancaster his personal preference is that the possibility of the Traders taking over the running of the building should be further investigated and if feasible, given serious consideration as a way forward.
“In my view, it offers the least disruptive way to reduce the current deficit,” he suggests. “It allows the Market Traders themselves to improve the market – and it is probably less of a risk to all concerned than some of the other plans under discussion.”
Other suggestions under discussion include relocating the Market entirely and, as widely reported, the takeover of the ground floor by one single retailer, identified as newcomer supermarket ASCO in the Morecambe Visitor and elsewhere and confirmed by ASCO themselves – despite this being “confidential” information.