Agenda item

Approval is also being sought from the Mayor to the disapplication of the call-in procedure on the grounds of urgency, in accordance with Overview and Scrutiny Procedure Rule C14.

Report attached.

Approval was obtained from the Chief Executive (in the absence firstly of the Mayor and secondly of the Deputy Mayor) to the disapplication of the call-in procedure on the grounds of urgency, in accordance with Overview and Scrutiny Procedure Rule C14.

The Cabinet considered a report of Councillor Noordad Aziz, Deputy Leader and Portfolio Holder for Transformation, Education and Skills, seeking approval to enter a new 15-year lease of Mercer Hall, Great Harwood with Hyndburn Leisure.

Councillor Aziz provided a brief intriductio9n to the report.  The new lease would help to secure funding for the development of modern facilities at Mercer Hall.

Approval of the report was not considered to be a key decision.

Reasons for Decision

Mercer Hall was located in the Great Harwood Conservation Area of Lancashire and did not have charitable status.  In 2002, the Council had leased Mercer Hall to Hyndburn Leisure for a term of 25 years in a lease that had also included Hyndburn Sports Centre in Accrington.  That lease remained in force.

Mercer Hall was a vital community asset that faced increasing challenges.  Built in the early 19^th century with Greek-inspired architecture, it had been an integral part of Great Harwood’s heritage and public life.  However, in recent years, the closure of its swimming pool, structural issues, and declining use had threatened its long-term viability.

To support this effort, a range of studies, including structural surveys and building appraisals, had been conducted.  A repurposing group with local stakeholders had been formed, and public consultation had revealed strong community support for the facility’s revitalisation.  Mercer Hall’s redevelopment was expected to be phased, with initial efforts focused on structural repairs and accessibility improvements.

Hyndburn Leisure had secured grant funding of £250,000 from the Community Ownership Fund (COF) for immediate repairs and improvements, and additional funding was being pursued through organisations such as the Lancashire Environment Fund, and the National Lottery Heritage Fund.  This grant would enable the initial phase of works to be completed and future phases would require larger funding applications to fully realise the building’s potential.

The grant from the Community Ownership Fund (COF) was to repurpose the building and address some of the building’s defects.  COF had indicated that the funding offer would be subject to conditions and that COF were likely to require the registration of a legal charge or a restriction against the title to Mercer Hall to prevent a sale or change of use of the same unless they consented and / or received repayment of all or part of the grant.  It was likely that similar conditions would apply to any grant funding received from other sources, such as the National Lottery.

The success of Mercer Hall’s repurposing would depend on continued community engagement, careful planning, and securing the necessary funding to ensure the building’s preservation and its future role in enhancing the well-being of local residents.

Following a successful bid to COF, Hyndburn Leisure had developed a strategic plan for the initial phase of repurposing and reopening Mercer Hall.  This phase aimed to ensure the facility was operational while future plans and funding applications were pursued.

This phase included the following key initiatives:

• Installing a structural floor over the existing pool to create a versatile, publicly accessible space;
• Implementing effective pigeon deterrent measures; and
• Decommissioning obsolete equipment to improve safety and efficiency.

The COF funding ensured that Mercer Hall could remain open, allowing it to continue offering a diverse range of activities for the community while future phases were planned and developed.  Although this funding was just a stepping stone toward securing Mercer Hall’s long-term future, it played a crucial role in preventing its closure.

In order to draw down this funding, COF required Hyndburn Leisure to have a lease of Mercer Hall which had at least 15 years remaining.  This was not the case with Hyndburn Leisure’s current lease, and it was proposed that Hyndburn Leisure be permitted to surrender their current lease in so far as it related to Mercer Hall (with the existing lease continuing in so far as it related to Hyndburn Sports Centre).

It was proposed that Hyndburn Leisure would be offered a lease on the following terms:

• A full repairing and insuring lease for a term of 15 years;
• At a peppercorn rent, with no premium; and
• A rolling landlord and tenant’s option to terminate the lease, subject to the giving of not less than 6 months’ notice by either.

The Council;s Property Services Team had conducted a valuation, in accordance with guidelines and Practice Statements set out in the RICS Valuation Global Standards, in November 2021 by a corporate member of the Royal Institution of Chartered Surveyors who had the appropriate knowledge, skills, and understanding to carry out the valuation with the competence and due diligence expected of a qualified valuer.

In applying the valuation methodology the following values had been determined:

Market Value

• Scenario 1 – £ 350,000 (Three Hundred and Fifty Thousand Pounds), a sale in the open market.

• Scenario 2 – Market Value subject to a letting to Hyndburn Leisure on the terms outlined above.  £350,000 (Three Hundred and Fifty Thousand Pounds)

• Scenario 3 – Market Value subject to a letting to Hyndburn Leisure on the terms outlined above, but with a COF restriction or charge on title.  £120,000 (One Hundred and twenty Thousand Pounds)

Market Rent

• Scenario 1 – A letting in the Open Market. £nil (No Pounds)

• Scenario 2 – A letting to Hyndburn Leisure, with no COF restrictions.  £nil (No pounds).

• Scenario 3 – A letting to Hyndburn Leisure, with COF restrictions.  £Nil (No Pounds). 

In summary, applying the valuation methodology the following values had been determined:

1. An unrestricted value of £350,000 assuming a sale on the open market without conditions as to usage.
2. A value of nil assuming a lease on the terms proposed and including the proposed limitations as to future use.

It was not considered that the terms of the proposed lease to Hyndburn Leisure constituted subsidy for the purpose of the Subsidy Control Act 2022 (further details of which were set out at Paragraph 6 of the report).

Alternative Options considered and Reasons for Rejection

The Council could decide not to offer a new lease of Mercer Hall to Hyndburn Leisure.  This was not recommended, as it was a key requirement of the COF funding that Hyndburn Leisure had a 15-year lease on this site.  In addition, access to further sources of external funding were likely to require Hyndburn Leisure to have an interest in the building of at least this length.

Resolved                                 (1)   That Cabinet agrees to accept a surrender of that part of the lease between the Council and Hyndburn Leisure dated 1^st April 2002, which relates to Mercer Hall in Great Harwood and notes that the lease will continue in force in respect of Hyndburn Leisure Centre; and

(2)   Subject to the surrender referred to in Paragraph (1) above, Cabinet agrees to grant a lease of Mercer Hall in Great Harwood to Hyndburn Leisure on the terms outlined in Paragraph 3.10 of the report and delegates authority to the Head of Regeneration and Housing, following consultation with the Executive Director (Legal and Democratic Services), to agree the terms of the proposed new lease and to complete the same.