Agenda item

RESOLVED that the Monitoring Officer be given delegated authority to finalise the heads of terms, including the schedule of works, and enter into a lease agreement based on the Heads of Terms negotiated which included a 12 month rent free period.

Executive considered a detailed report, presented by Councillor John Ritchie, which sought Member’s approval to enter into a lease agreement in relation to 3 / 4 Vernon Street, Shirebrook, on the terms as detailed in the report.

The interested party was in the neighbouring property, and the vacant unit presented an opportunity for them to expand their business operation without the need for them to relocate, disrupt staff and incur significant relocation costs.

The Developments and Contracts Officer had received a proposal for a 10-year lease term at a rental value of £15,000 per annum, fully repairing and insuring the unit.  The proposal suggested a minimum one-year rent-free period to offset a proportion of the improvements which the interested party was proposing for the building and wider site. An upwards only rent review would be completed in the 5^th year of the term - this would be based on market value.

Moved by Councillor John Ritchie and seconded by Councillor Duncan McGregor

RESOLVED that the Monitoring Officer is given delegated authority to finalise the heads of terms, including the schedule of works, and enter into a lease agreement based on the Heads of Terms negotiated which include a 12 month rent free period.

Reasons for Recommendation

Securing the tenancy would both provide a suitable premises for a SME business to grow within the district and ensure occupation of the premises avoiding it falling into disrepair.

Agreeing the tenancy would secure rental income of at least £15,000 per annum for the 10-year term.  In addition, the business rate liability, currently £7,500 per annum would be passed onto the tenant.

With the Council’s permission, the tenant proposed to complete extensive improvements to the internal of the building and the site compound. Necessitating the Council to complete only mandatory compliance works.  An itemised list of works was attached in Appendix 1 to the report, this list was not exhaustive.  It was proposed that necessary compliance works were funded via the Council’s Transformation Reserve, as the Capital Budget allocated to the Facilities Management Team had been fully utilised on other projects for this financial year.  A delegated decision would be completed to authorise and access the reserve funding when the itemised list was fully costed.  This ensured the premises could be let and generate an immediate revenue stream.  A proportion of the costs incurred for improvements would be offset within the rent-free period.

The timescales for completing the improvement works would be agreed between the interested party and the Council and would be written as a clause within the lease agreement.  This would give the Council assurance that works would be completed within a specified time frame.

All the works would be documented in a schedule of works on completion.  This ensured, at the end of the tenancy, that the Council recovered premises in a better condition than originally let, subject to general wear and tear.

Alternative Options and Reasons for Rejection

Not to proceed with the new tenancy may result in the interested party choosing to relocate their business to alternative premises and this could potentially fall outside the district.  This would result in a loss of revenue income.

Should the Authority not proceed with the letting of the premises, they would need to complete dilapidation works to the premises to bring it up to the desirable standard for letting, this would be at a cost to the Council, as well as delaying any new tenancy.

The Council opt to dispose of the premises, foregoing any repairs.  This would however lead to the loss of a revenue generating asset from within the Council’s portfolio.