TREASURY AND RESOURCES DEPARTMENT
PROPERTY HOLDINGS
Property Transaction for Ministerial Decision - Minister for Treasury and Resources
Proposed Letting: Land to the South of Aviation Beauport , St Peter
The Public and The Jersey Electricity Company Limited.
NS 1698/1-3+9
Purpose
To request the Minister for Treasury and Resources to approve a lease from the Public to The Jersey Electricity Company Limited (the “JEC”) in respect of land for the purposes of accommodating a new Western Primary Sub-Station for the West of the Island.
Background
The JEC has indicated that its existing sub-station facility, located on Public land , at the Airport Garage site, L’Avenue de la Commune, does not have sufficient capacity to continue to provide an adequate electrical supply to support the needs of the West of the Island. The land concerned is held under a 21 year contract lease by the JEC from the Public that is due to expire on 19/05/2015.
Over the past 12 months, the JEC has conducted a feasibility exercise to identify a suitable site which could accommodate a larger facility of circa 8,000 sq.ft on 1 ½ floors upon a site of approximately 16,275 sq.ft., having regard to the existing infra-structure cabling beneath L’Avenue de la Commune. As many as 12 sites were investigated, including 3 in the ownership of the Public; the above site (as shown on the attached plan), Field 298 St Peter, as well as the possible expansion of the existing sub-station on adjacent land.
Pre-application advice from Planning and Building Services indicated the area between Aviation Beauport and the adjacent road, L’Avenue de la Conmmune, being effectively an area of open landscaping with some mature planting, to be the most appropriate for this facility in the context of JEC’s requirements. Following agreement of terms with the Public, a scheme has been prepared and planning permission has since been issued on 20 June 2007 (P/2007/1091).
Lease Proposal
In conjunction with Jersey Airport, terms and conditions have been agreed with the JEC concerning an 85 years lease to commence from the date of passing contract to enable the sub-station facility to be constructed.
Since the circumstances behind this transaction are not regarded as an open market letting, the recommended terms are intended to reflect the possible commercial opportunity foregone by the Public in agreeing to release this area of land for this purpose. An initial rent of £34,000 per annum has been agreed, inclusive of any charges for the laying of cables and associated infra-structure in Airport land, which will be subject to upwards-only rent reviews throughout the term; five yearly in accordance with the Jersey Retail Price Index and market reviews every 20 years.
The prospective Lessee shall receive a rent free period of 12 months, during which the sub-station shall be constructed. Once built, after a 2 year commissioning period, the JEC shall surrender back to the Public, its existing site of 815 sq.m./8,773 sq.ft at the Airport Garage site. This will allow the possibility of generating further revenue, subject to planning, from incorporating the land with the existing retail business or by separate letting. In the longer term, upon expiry of the principal lease, the site offers the prospect of development, subject to usual consents.
In view of the importance of this site from both parties’ perspective, the proposed lease terms have been the subject to an external independent valuation. This confirmed that the proposed rental represented the “best commercial terms available” for the area of land concerned.
Standard long term lease provisions will apply in this instance with the JEC being responsible for all constructions costs, utility costs, Foncier and Occupiers rates as well as the buildings’ insurance and third party Public liability insurance.
The Public will also recover its legal and surveying fees in entering into this contract.
Recommendation
It is recommended that the Minister for Treasury and Resources approves the terms set out above and authorises a suitable contract lease to be passed between the Public of the Island and The Jersey Electricity Company Limited before the Royal Court.
Written By: Neil Sproston
Signature …………………………
Authorised By: Eric le Ruez
Signature ………………………… Date 24 July 2007