The Finance and Resources Manager presented the report circulated at agenda item 4.2.  This informed the Board of the composition of the charitable Trust, its history, the current governance arrangements, the specific powers of the Council as a trustee of the charity, and the properties managed by the trustees.

In discussion the Board members raised the following matters:

·        Square footage measurements of the each of the shop premises was missing from the report.  It was agreed that a breakdown of the measurements of each shop unit would be provided.

Action                                     Stephen Adams, Finance and Resources Manager

·        Whether rents were market tested; and whether there was a break clause in the lease. The Board was informed that to ensure that the Council's best negotiating hand lease rates were reviewed after five years.  Commercial agents were appointed to carry out rent reviews and different companies were used for different premises.  The Finance and Resources Manager confirmed that a mezzanine was included as part of the rentable area.  Councillor Shahed Ali noted that where there a building had potential for a mezzanine floor it would affect the rateable value therefore he requested that details of the square footage of each shop unit in shell form be provided and confirmation whether storage and waste facilities were included in the rateable value and lease.

Action                                     Stephen Adams, Finance and Resources Manager

The Board was informed that different rent review processes were used for different types of premises. 

·        Councillor Shahed Ali also made the following enquires:

o         Concerning the company which held the lease at 389 Mile End Road, Councillor Ali asked on what date the company had gone into administration.  The Board was advised that this occurred 18 months ago.  After it had gone into administration, the assets were realised and the lease was assigned to another party.  Councillor Ali asked if this affected the lease for the property that was to have been reviewed and was informed that this would be investigated and a written answer provided to the Board.

Action – Jill Bell, Head of Legal Services – Environment

o         He enquired when the rent review for premises No 389 would be re-instated and was advised that there had been negotiation with a new firm of surveyors and a lease review agreement was now with this new firm.

o         He enquired about the date at which the rent review at 554 Mile End Road had started and was advised that the review could not be started before the rent review date (14th of July 2012) however it could be started after this time and would be backdated to the review date.

o         He requested the rental history of all the leases to investigate consistency of patterns of rentals achieved.  The information was required to enable comparisons of each of the premises.

Action                                     Stephen Adams, Finance and Resources Manager

o         Councillor Ali asked Officers to clarify the arrangements for letting of the vacant premises at 558 Mile End Road, the Head of Legal Services – Environment advised the Board that Strattons Estate Agents had received an approach from Coral Bookmakers.  The Agents advised that Corals were reliable in their payments and asked the Trust Board to give its opinion on the lease application. 

o         Councillor Ali asked Officers to consider applicants who would give benefit and provide services to users of the park.  The Board was advised that in considering the application, it was not possible to raise objections or reject the application based on moral grounds as the Board had an obligation to maximise assets.  The Board was advised that that it would be prudent for the Board to consider the application from Coral but also to look for other prospective tenants.

o         Councillor Ali commented that a low rental was achieved from the three units 383 -- 387 Mile End Road" which were leased to Budgen’s.  The Finance and Resources Manager advised that there had been an unsuccessful appeal relating to the rent the Council had lost because it didn't have a professional negotiator. 

o         In general, he advised that the Trust Board should allow the leases to expire as rent levels in newly negotiated leases would set the expectation for prospective applicants. This had worked to increase rent levels.

• Councillor Shafiqul Haque made the following enquires:

o         He requested information on monies that were held by the Trust.

• Councillor Abdul Asad made the following enquires:

o         He enquired how the income from shop units run by the Trust were used and was informed that, under the terms of the Trust, income can only be received and used by the Trust.

o         He asked for clarification of the areas that were relevant to the Trust and queried that previously Stepney Green area was pertinent but did not include Green Bridge.  To verify the geographical areas pertaining to the Trust, officers referred the Board Members to a map that illustrated the relevant areas.  The Board Members inspected the map.

• Councillor Ohid Ahmed made the following enquires:

o         He asked that information be clearly presented so that the figures can be compared.  He was advised that a range of factors could be used such as the length of the lease, area of the premises, rental value and type of usage; all of these parameters affected the rental that could be achieved.  Leases were reviewed every five years so that they could be brought in line with market rates.

o         He noted the variation in current rents achieved from the premises listed at table 7.1 and asked for the differences to be explained

Action                                     Stephen Adams, Finance and Resources Manager

RESOLVED

That the report be noted