Treasury and Resources Department
Ministerial Decision Report
Transfer of the Transport Centre from the States of Jersey Development Company to the Public of the Island of Jersey (Department for Infrastructure).
- Purpose of Report
To enable the Assistant Minister to consider approving the transfer of the Transport Centre from the States of Jersey Development Company (“SoJDC”) to the Public of the Island of Jersey (Department for Infrastructure (“DfI”)).
- Background
The Liberty Wharf site was put into SoJDC’s ownership to find development partners to regenerate this landmark site. As part of its development agreement with Harcourt Developments (the developer of the site), SoJDC negotiated the delivery of a Transportation Centre (now known as Liberation Station) also allowing the regeneration of the Weighbridge into a public square. Harcourt Developments agreed to construct the Transport Centre for an ascribed cost of £3 million, that was to be deducted from the land payment that Harcourt Developments paid SoJDC for the site.
The Transport Centre is situated on the ground floor of a five-storey building with offices and an aparthotel situated directly above it. The premises are constructed as a purpose-built bus station and comprise a large open plan concourse with 14 individual bus stands. The main stand area comprises 10 covered stands with automated passenger entry system on the southern side with additional parking for 3 buses. The premises also have a staff area comprising ticket office, administration office, drivers lounge, and rest room. At the eastern end of the property is a café concession together with toilets. The gross internal area is 8,571 sq.ft.
The property is held by SoJDC by way of a long lease granted from the Public for a term of 150 years from 7th November 2003.
The premises were initially let by way of a 9 year sub-lease that commenced on the 30th September 2007 between SoJDC and the Public of the Island of Jersey. The lease expired on 29th September 2016. The original lease was granted on a full repairing and insuring basis.
The commencing annual rental was £100,000 per annum with effect from 27th September 2009 following a reduced rental for the first two years, with the reviews at year 3 and 6 being the higher of the market rent or £100,000 per annum. No rent review has ever taken place and neither has the rent been increased as there is a general lack of market evidence (as bus operators in the UK own and occupy their depots).
Since March 2016, SoJDC and DfI have been in discussions to renew the lease. However, the Minister for Infrastructure has requested that the Transport Centre be transferred to the States of Jersey by 31st December 2019.
P.73/2010: “Property and Infrastructure Regeneration: The States of Jersey Development Company Limited”, in its Appendix 7, sets out the “Protocols for the Transfer of assets to and from the States of Jersey Development Company.”
The principles contained in this state, “The States of Jersey (“SoJ”) is establishing SoJDC as a development company. The prime purpose of SoJDC is to deliver regeneration projects to provide the best socio-economic benefit to SoJ. This will be in the form of enhancing the value of existing properties through refurbishment, the development of new properties, infrastructure and public realm. Regeneration assets may be retained by the Public (SoJ) or disposed of to realise capital proceeds. Property held by either Jersey Property Holdings (“JPH”) or SoJDC will be consolidated within the SoJ accounts.”
Principles to guide the policy on holding assets in the future were set out in Section 8 of P.73/2010. This included:-
- “Once developments have been completed, they should be sold in the open market or if there a strategic reason for long-term ownership by the States, transferred to SoJ at market value.
- Where assets are sold into the market, they should be subject to an independent valuation to ensure best value is being achieved.”
Each of the investments held by SoJDC at the time P.73/2010 was approved by the States, were listed in Appendix 5 of P.73/2010 and a strategy for disposal identified. In the case of the Transport Centre, the strategy was that it transfer to JPH (Jersey Property Holdings, now part of DfI).
- Current request
The Assistant Minister received a letter dated 24th August 2017 from the Managing Director of SoJDC asking him to approve:-
1) The future transfer of the Transport Centre to the Public of the Island of Jersey (DfI);
2) That the transfer be made for nil consideration: and
3) That the transfer be reflected at Market Value in SoJDC’s accounts as a dividend ‘in specie’ to occur on 31 December 2019.
The SoJDC Board has agreed that subject to the Shareholder’s consent and Funder’s consent, the property may be transferred out of SoJDC’s books as a dividend in specie. SoJDC’s Funders (HSBC) has agreed that the dividend in specie can be paid at the year end 2019.
“In specie” is a phrase describing the distribution of an asset in its present form, rather than selling it and distributing the cash proceeds.
A valuation of the Transport Centre has been undertaken by BNP Paribas Real Estate on behalf of SoJDC. In their Report dated 6th October 2017 they have identified a fair value of £2.5 million. The current valuation of the asset as shown in SoJDC’s Annual Report & Accounts 2016 is £1.25 million.
This valuation as at the planned transfer date does not need to be agreed as part of this Ministerial Decision. It will be agreed between SoJDC and DfI at that time when the legal transfer takes place. However the current valuation obtained provides a clear indication of the current position.
- Recommendation
The Assistant Minister is recommended to approve:-
1) The future transfer of the Transport Centre to the Public of the Island (DfI);
2) That the transfer be made for nil consideration: and
3) That the transfer be reflected at Market Value in SoJDC’s accounts as a dividend in specie to occur on 31 December 2019.
This is subject to there being no objections after the 15 day “grace” period required under P.73/2010 in order to allow for sufficient transparency and scrutiny.
- Reason for Decision
The Assistant Minister’s approval is in accordance with section 13.1 of SoJDC’s Memorandum of Understanding and the requirements in Section 12 of P.73/2010 - Property and Infrastructure Regeneration: the States of Jersey Development Company Limited.
- Resource Implications
SoJDC and DfI will each be responsible for their own legal costs relating to the formal transfer. DfI currently pay £100,000 per annum to SoJDC. The subsequent rental saving made by DfI, post transfer, will be retained within DfI’s budget. There are no other known financial or manpower implications for the States.
Report author : Head of Shareholder Relations | Document date: 7th February 2018 |
Quality Assurance / Review : Head of Decision Support | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2018-0018 - SoJDC Transfer of Transport Centre to DfI |
MD sponsor : Director of Treasury Operations & Investments |
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