DEPARTMENT FOR INFRASTRUCTURE
JERSEY PROPERTY HOLDINGS
Property Transaction for Ministerial Decision - Minister for Infrastructure
Public
LC03 Fuel Storage Site, La Collette, St Helier - Proposed Lease Renewal
RFo 2052-01-001
Purpose
To recommend to the Minister a transaction to renew the ground lease of an area of land known as LC03, La Collette, St Helier to La Collette Terminal Limited with effect from 1 February 2016.
Background
On 22 June 2007 the Public entered into a ten year lease with Shell (U.K.) Limited and Esso Petroleum Company Limited (Esso) for the site known as LC03 Fuel Storage Site and which ended on the 31 January 2016.
On 26 July 2009 the Public agreed to the assignment from Shell UK Limited and Esso (the Assignors) to Esso and La Collette Terminal Limited (LCTL - the Assignees) the latter being a wholly owned subsidiary of Vitogaz SA who is in turn a wholly owned subsidiary of Rubis SCA.
On 2 June 2015 the Public consented to, and agreed to be party to, an assignment of the leasehold interest held by Esso to LCTL
A dialogue has taken place with LCTL to agree terms for a lease renewal to run from the expiry of the existing lease and to run alongside an Operating Agreement of even date.
The parties have concluded negotiations and the terms proposed, together with the content of the Operating Agreement, have been reviewed by officers of the Department for Infrastructure, Economic Development Department, States Fire Service, and Chief Minister’s Department and by the Law Officers and States Economist.
As the decision to renew the lease, with the accompanying Operating Agreement, has cross departmental implications, the proposal was discussed at a series of meetings by the Council of Ministers, concluding with a meeting on 24 February 2016 at which it was agreed that the lease should be renewed.
The Operating Agreement wording has now been agreed with LCTL and reference thereto is incorporated into the final version of the lease.
As the lease also includes reference to land now in the leasehold ownership of the Ports of Jersey (Ports), approval to be party to the lease has been obtained by the Ports Board. The Ports and are not party to the Operating Agreement.
Lease Heads of Terms
The form of lease is attached as Appendix A (Supporting Document 1) to this report. The following terms are recommended for the Lease:-
Lessor | The Public of the Island of Jersey. |
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Lessee Ports | La Collette Terminal Limited or such other name(s) agreed between the parties. Ports of Jersey Limited |
Demised Premises | Approximately 209,350 square feet of land including the buildings situated thereon at La Collette in St Helier as shown on plan attached to the lease |
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Lease term | 10 years from 1 February 2016 |
Commencement | £418,700 |
Rental | |
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Rent reviews | The rent will be subject to review on 1 February 2021, equivalent to the market value of the demised premises at the time of the rent review. The rental shall at no time be reduced below the passing rent at the time of the review. |
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Permitted Use | Means the importation and/or storage and/or handling and/or distribution of petroleum products and activities directly related thereto (but excluding for the avoidance of doubt the retail sale of road fuels to members of the public). |
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Repairs and maintenance | The Lessee shall repair and maintain the demised premise. |
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Alienation | Not at any time during the Term to assign this Lease or to sub-let or grant any licence in respect of the whole or any part of the Demised Premises or part with or share possession or occupation thereof without in any such case having received the consent of the Landlord (such consent not to be unreasonably withheld or delayed) |
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Alterations | To be allowed subject to Lessor’s prior written consent. Such consent shall not unreasonably be withheld or delayed |
Outgoings | The Lessee shall be responsible for all outgoings associated with the demised premise |
Insurance | The Lessee is to insure the demise. The Lessee will be required to obtain and maintain a public liability policy of not less than £30,000,000 (thirty million pounds) or any amount as the Lessor may require from time to time. |
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Clean up | Upon termination of the lease, where the Term ends on the Termination Date and the Landlord has not served a Purchase Notice eighteen (18) months prior to the Termination Date, the Lessee shall under take “Clean up works” to provide the Lessor a cleared and level site (RSK Group Plc final report N10957-R2 (02)). The Lessee will be required to undertake these works during a 12 month period (rent free). Thereafter payment of rent would continue at 50% of the equivalent level as at the end of the lease. |
Fees | Each party to meet its own costs. |
Operating Agreement – Key Terms
The form of Operating Agreement is set out in Appendix B (Supporting Document 2) to this report. The key terms are as follows:
The Minister for Infrastructure | Acting for the Public of the Island of Jersey |
La Collette Terminal Limited | Operator |
Provision of Services | Minister authorises the Operator, and the Operator agrees, to provide the Services |
Statutory Obligations | Minister not constrained by the Agreement from exercising statutory powers |
New Entrants | Terms for allowing new entrant to provide Services |
Service Requirements | Operator to provide the Services in accordance with the Service Requirements, except that, during an Emergency Event, the Minister may suspend all or part of the Service Requirements for the duration of the Emergency Event |
Service Review | Operator to meet with the Fire Service on a quarterly basis to review the Operator’s compliance with statutory requirements |
Capital Replacement and Maintenance Fees Health and Safety Improvement Works | Operator to maintain, upkeep and, where necessary, repair or replace the Plant and Machinery Operator to design and schedule a maintenance programme for the Plant and Machinery; and invest sufficient capital in the Plant and Machinery To undertake improvement works to ensure the Plant and Machinery comply with statutory requirements within the completion dates set out and noting the ability for the Public to impose liquidated damages for non- completion |
Throughput Agreement | Operator to enter into a Throughput Agreement with each Throughputter and charge fees to Throughputters in accordance with Throughput Agreement |
Service Change Procedure | Process for making changes under the Agreement as required |
Change of Control | Agreement to continue in force following a Change of Control of the Operator |
Termination | Definition of Termination Events under which the Agreement may be terminated |
Insurance | Operator to maintain a policy of insurance. |
Assignment and Sub-Contracting | Neither Party to assign, sub-contract or dispose of the Agreement without the prior written approval of the other Party |
Dispute Resolution | Dispute resolution remedies set out that requires a mediated approach prior to any legal action |
Recommendations
It is recommended that:
The Minister approves the granting of a renewal of a lease by the Public of the Island of Jersey to La Collette Terminal Limited with effect from 1 February 2016.
The Minister approves the terms and conditions within the Lease and the Operating Agreement of even date and authorises the Operating Agreement and Lease to be signed in that order on behalf of the Public.
Written By: (Director of Estates) Signature ………………………… | 3 March 2016 |
Appendix A
[Supporting Document 1 – Final Draft Lease]
Appendix B
[Supporting Document 2 – Final Draft Operating Agreement]
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