REPORT TO: Council
MEETING DATE: Thursday 30
November 2017
FROM: Chief Financial Officer
Bruce
Allan
SUBJECT: Hawke's
Bay Community Fitness Centre Trust Lease
1.0 SUMMARY
1.1 The
purpose of this report is to obtain a decision from the Council on the lease to
the Hawkes Bay Community Fitness Centre Trust (HBCFCT) on the Regional Sports
Park land.
1.2 This
issue arises from a need to formalise the arrangements for the HBCFCT.
The Council is
required to give effect to the purpose of local government as prescribed by
Section 10 of the Local Government Act 2002. That purpose is to meet the
current and future needs of communities for good quality local infrastructure,
local public services, and performance of regulatory functions in a way that is
most cost–effective for households and businesses. Good quality means
infrastructure, services and performance that are efficient and effective and
appropriate to present and anticipated future circumstances.
1.3 This
report concludes by recommending that the lease with the HBCFCT be entered
into.
2.0 BACKGROUND
2.1 Council
has agreed to provide $4m of capital funding to the Hawkes Bay Community
Fitness Centre Trust for the development of a new world class regional sports
hub and community health centre at the Hawkes Bay Regional Sports Park and to
be known as the Hawke’s Bay Centre for Excellence in Human Performance.
2.2 A
Feasibility Study prepared by the Trust for this project and updated in July
2017 states the following in reference to this project:
The Hawke’s
Bay Community Fitness Centre Trust is planning a new $17 million world-class
sports hub and community health centre at the Hawke’s Bay Regional Sports
Park. With $10 million of capital funding already secured, including $4
million from Hastings District Council, the target opening date is early
2019. In addition to its sports and recreation focus, the facility will
underpin a comprehensive regional obesity prevention and reduction initiative.
The planned
facility and programmes have a high degree of strategic fit with the Hastings
District Long Term Plan, Hawke’s Bay community outcomes, existing school
and community health and fitness programmes, and regional health stakeholder
initiatives seeking to reduce obesity rates and promote physical activity and
healthy eating. The facility will provide a broad base of services to the
Hawke’s Bay for sporting, wellness and physical education purposes.
The development
will cater for regional needs around community health and fitness, sporting
excellence, health-related education and research. It will model off the
successful example of AUT Millennium in Auckland. The aim is to integrate
community sport, school sport development, community health and fitness and
high-performance sport into a leading Centre of Excellence in Human
Performance.
The Centre will
service three main markets regionally:
· public (community health and fitness programmes and gym);
· school groups; and
· sports users
The planned
development will provide programmes for the whole community, from health and
wellbeing for all ages through to sports performance development of youth
talent in schools and clubs, catering for users from Napier, Hastings Centre
Hawke’s Bay and Wairoa. The Trust anticipates approximately 240,000
annual user-visits, comprising 85 per cent community members and school groups
and the remainder being local sports groups and other sports performance
development stakeholders.
Apart from AUT
Millennium in Auckland, no other facility in New Zealand caters for both sports
performance training and community health and fitness with on-site sports
medicine and sports science support. This will be achieved by providing a
wide range of services at the main facility at the Regional Sports Park and via
satellite services managed from the facility.
The community
health and fitness gym will adhere to AUT Millennium programme
requirements. A Fitness Trail at the main facility will also be a
drawcard. Proposed group and individualised community health and fitness
programmes will be professionally developed and managed:
· based on best evidence from research-led programmes;
· supervised by certified instructors/coaches; and
· with baseline health, nutrition and active exercise status
assessment on programme entry.
As part of its
consideration of options and overall planning, the Trust has undertaken
extensive reviews of research literature to identify what works for obesity
prevention and reduction. The initiative itself will contribute to future
knowledge through the development and implementation of health-related research
programmes including a longitudinal study.
The Trust also
researched existing sport, health and fitness facilities in the Hawke’s
Bay region, and identified no existing specific facilities managed by health
professionals suitable for community-wide healthy living, wellbeing or active
recreation programmes. Following consideration of many available location
and facility options, a staged build at the Hawke’s Bay Regional Sports
Park was identified as the preferred option allowing scope for future
expansion.
2.3 The
Council funding has been provided for through the 2016/17 ($2m) and the 2017/18
($2m) budgets. To-date the Trust has drawn down $550,000 of the budgeted
capital contributions.
2.4 Council
currently leases the Regional Sports Park land to the Hawkes Bay Regional
Sports Park Trust (HBRSPT) n a peppercorn rental for an initial term of 35
years with two renewal terms of 35 year and a final expiry date of November
2113.
2.5 The
deed of lease with the HBRSPT notes the following permitted use:
“Operation as a
Regional Sports Park facility in accordance with the Sports Park Concept, for
charitable purposes in accordance with the charitable purposes of the Trust as
set out in the Deed of Trust dated 28th August 2008 (and as amended
from time to time with the prior consent of HDC)”
3.0 CURRENT
SITUATION
3.1 The
HBCFCT is about to enter into construction contracts for the first stage of
construction and requires a lease arrangement to be in place prior to building
on Council owned land.
3.2 The
preference of HBCFCT was to have a direct lease with Council that had longevity
to support the level of investment they were making on this land. In order to
achieve this the land area that the HBCFCT is to now occupy had to be excluded
from the HBRSPT lease. To achieve this outcome the current lease to HBRSPT will
need to be surrendered with new leases put in place for HBCFCT and HBRSPT which
largely mirror each other but for the different areas and purposes and
permitted uses. The only significant difference will be the information
detailed in clause 12 of the HBRSPT lease has been removed from the HBCFCT
lease and will be reflected in an Operations Agreement between Council and the
HBCFCT rather than included in the lease at the request of the HBCFCT.
3.3 In
support of this there is a proposed Heads of Agreement between Council and the
two Trusts and an Operations Agreement will be put in place between Council and
HBCFCT which records the basis upon which HBCFCT will operate at the Sports
Park.
3.4 The
HBCFCT, HBRSPT and Council Officers have worked together to create a lease
agreement that meets all parties needs and requirements.
Lease
3.5 The
new leases for the HBRSPT (Attachment 1) and HBCFCT (Attachment 2)
have been developed principally off the current lease with the HBRSPT. They
incorporate a level of protection for Council as landowner ensuring that the
land can only be used for certain purposes and ensuring the assets are
maintained to required standards.
3.6 Heads
of Agreement
3.7 The
proposed Heads of Agreement (HoA) (Attachment 3) between the three
parties acknowledges the intention of the Trusts to merge their assets into a
single trust, acknowledging also that Council will need to consent to the terms
on any merger.
3.8 The
HoA also acknowledges that each Trust has a separate lease arrangement with
Council and if the Trusts assets were to be merged, then a new lease would be
created or if the merger was unable to proceed by 2040 then a subdivision would
be undertaken to provide HBCFCT with a separate title to lease from Council.
3.9 While
the HoA states that the Trusts will work together in good faith to agree on the
form and terms of the merger as soon as they are reasonably able to do so, it
does set out a rather long period to achieve the merger of the two Trusts of 31
December 2040. There is still a lot of work to be done by the two Trusts to
establish a shared vision and understand what the future structure will be and
how it will operate.
3.10 The
HoA also sets out the operational framework for the two Trusts which includes
points such as sponsorship, common areas and outgoings, competition and joint
use of facilities.
Operations
agreement
3.11 The
Operations Agreement between Council and HBCFCT (Attachment 4) sets out
to outline that throughout the term of the lease the HBCFCT must operate the
area in accordance with the Trusts purpose and the permitted use defined in the
lease.
3.12 Jodi
Lett of Bannister and von Dadelszen has been providing advice to Council and
protecting the interests of Council during the development of these agreements.
4.0 OPTIONS
4.1 Option
1:
i. Surrender
the current HBRSP lease and enter into the new leases with the HBCFCT and
HBRSPT under the terms of the lease attached to this agenda.
ii. Enter
into a Heads of Agreement with HBCFCT and HBRSPT.
iii. Enter
into an Operations Agreement with HBCFCT.
4.2 Option
2 – instruct Council Officers to enter into a different arrangement as
determined by Council
5.0 SIGNIFICANCE
AND ENGAGEMENT
5.1 While
entering into this lease arrangement does not meet the thresholds outlined in
the Significance and Engagement Policy for this to be deemed a significant
decision, entering into a long term lease arrangement is an important decision
and one that Council must be satisfied that the risks are being mitigated.
6.0 ASSESSMENT
OF OPTIONS (INCLUDING FINANCIAL IMPLICATIONS)
6.1 The
deed of lease has been written to be consistent and cognisant of the deed of
lease with the HBRSPT, it provides all the necessary protections for Council
along with a Heads of Agreement which sets out how the Trusts will operate
together on the Regional Sports Park land. To complete the documentation an
Operations Agreement between Council and the HBCFCT outlines that throughout
the term of the lease the HBCFCT must operate the area in accordance with the
Trusts purpose and the permitted use defined in the lease.
6.2 The
HBCFCT is now in a position to award the build contract, the building consent
is nearing approval, sufficient funding has been secured and the Trust requires
this lease arrangement to be put in place before they can commence
construction.
6.3 While
the HoA states that Trusts will be working together in good faith on the terms
of the merger, there is still a lot of work to be done by the Trusts to
facilitate this. Council as the landowner is well placed to assist with these
discussions and it would be recommended that Council facilitate a meeting of
the two Trusts and associated entities to establish a shared vision or future
structure.
7.0 PREFERRED
OPTION/S AND REASONS
7.1 The
preferred option is Option 1. All parties have been involved in this process
and the necessary protections for Council have been incorporated in the
arrangements recommended.
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8.0 RECOMMENDATIONS AND
REASONS
A) That
the report of the Chief Financial Officer titled “Hawke's
Bay Community Fitness Centre Trust Lease” dated 30/11/2017
be received.
B) That
the Council surrender the lease to the Hawkes Bay Regional Sports Park Trust
C) That
Council enter into the Deed of Lease for the Hawke’s Bay Centre for
Excellence in Human Performance with the Hawkes Bay Community Fitness Centre
Trust.
D) That
Council enter into the Deed of Lease and for the Hawke’s Bay Regional
Sports Park with the Hawkes Bay Regional Sports Park Trust.
E) That
Council enter into the Heads of Agreement with the Hawkes Bay Regional Sports
Park Trust and the Hawkes Bay Community Fitness Centre Trust.
F) That
Council enter into the Operations Agreement with the Hawkes Bay Community
Fitness Centre Trust.
G) That
The Chief Executive of Council be delegated authority to finalise these
agreement and make necessary amendments if required.
H) That
Council as the landowner of the Hawkes Bay Regional Sports Park, facilitate a
meeting of the Hawkes Bay Regional Sports Park Trust, the Hawkes Bay
Community Fitness Centre Trust and associated entities to establish a shared
vision or future structure for a merged Trust.
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Attachments:
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1
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HB Regional Sports Park Trust Lease
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CG-14-1-00517
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2
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HB Community Fitness Centre Trust Lease
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CG-14-1-00513
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3
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Heads of Agreement - HDC, HB Regional Sports Park
Trust and HB Community Fitness Centre Trust
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CG-14-1-00511
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4
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Hastings District Council and HB Community Fitness
Centre Trust Operational Agreement
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CG-14-1-00512
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Hastings District
Council
