Purpose

The alternative considered was to maintain the
existing arrangements (i.e., take no action). This was rejected
because it would have undermined the intended restructuring of
agreements with Your Leisure (YL), resulting in the continuation of
the current management fee and incurring a greater financial burden
on Thanet District Council (TDC), as identified in the 2021 report
to Cabinet.

Decision

The
Director of Corporate Services and Section 151 Officer agrees,
under delegated authority, to the novation and refinancing of the
facilities agreements attached to Hartsdown and Ramsgate Leisure
Centres.
 

Reasons for the decision

Following a Cabinet
report on Your Leisure's position in January 2021, which addressed
the impact of COVID-19 and the need to rationalise existing
obligations (including loans/facilities and pension commitments), a
review of these arrangements was initiated.
 
This report
specifically discussed the issues with existing obligations placed
on YL pertaining to ongoing loans/facilities agreements and pension
obligations and a need to review these arrangements in order to
rationalise the agreements moving forward.
 
Working with Your
Leisure (YL), Lloyds Bank (the lender), and external advisors, the
most appropriate route identified was novation followed by
refinancing. This treasury management action secures a more
favourable rate of interest over a more realistic term. Crucially,
it allows Thanet District Council (TDC) to remove the management
fee from YL and replace it with a lower-value cost of borrowing,
resulting in ongoing savings for the Council.
 
The Director of
Corporate Services and Section 151 Officer is authorised to approve
these transactions under the Scheme of Delegations.
 
This decision is
linked to the September 2022 Cabinet approval, which granted the
required delegations to facilitate the overall restructuring of the
agreements, specifically including:
 
1.To agree to the
surrender of the current lease in its totality, and regrant two
new  independent leases for Hartsdown Leisure Centre and
Ramsgate Leisure Centre;
 
2. To give delegated authority to the Interim
Director of Property, to enter into the relevant Agreement(s) for
new leases with Your Leisure on terms to be
agreed; 
 
3. To give delegated authority to the Acting Director
of Finance and Operations to negotiate the sharing agreement with
Your Leisure for the wider provision of services provided through
Your Leisure; 
 
4. To give delegated authority to the Acting Director
of Finance and Operations to negotiate the service concession
agreement with Your Leisure for the wider provision of Foreshore
related activities; 
 
5. To give delegated authority to the Interim Head of
Legal and Monitoring Officer to sign all documents necessary to
give effect to the surrender and subsequent leases.
 
To ensure the
revised Leases were fit for purpose and reasonable in the context
of Local Government Reorganisation, an external firm reviewed the
agreements and made several accepted recommendations, including a
revision to the lease terms. 
 
All of the above
actions are effectively completed and new Leases are due to be in
place for 01 April 2026.
 

Alternative options considered

The
alternative considered was to maintain the existing arrangements
(i.e., take no action). This was rejected because it would have
undermined the intended restructuring of agreements with Your
Leisure (YL), resulting in the continuation of the current
management fee and incurring a greater financial burden on Thanet
District Council (TDC), as identified in the 2021 report to
Cabinet.