1. Community Asset Transfers – key aspects Sarah Patrice & Dominic Curran 14 th January 2016

2. Community Asset Transfer – key principles Preparation – key principles, negotiation, stages, advice available The recipient organisation – legal structure & governance considerations Property arrangements including: lease options, agreements and subletting.

3. Community Asset Transfer – preparation  Local Authority policy  Knowing your assets  The recipient organisation  Plans for the asset & impact of the same  Negotiating key terms

4. Knowing the assets  What do you need to transfer?  What do the Local Authority own?  Planning status / issues on the land?  Issues with classes of asset?  Libraries  Schools  Open space

5. Community Asset Transfer – process Stage of processNo.Guidance Tool Overview1.Legal process “map”: Table setting out the stages of the process and the legal tools needed Getting started2.Note on requirements in relation to disposal at an undervalue 3.Joint Working Protocol in relation to a transfer and explanatory note 4.Note on asset transfer and procurement of services from TSOs 5.Heads of terms guidance Investment readiness6.Note on asset transfer and state aid Property Development7.Note on development and procurement 8.Note on construction contracts Taking a stake9.Model lease and explanatory note 10.Note identifying key issues of difference between TSOs and local authorities 11.Note on TUPE transfers Long term relationship12.Model management agreement and explanatory note Factsheets13Good practice in negotiations: factsheet 14.Equality and Diversity obligations: factsheet

6. Plans for the asset  What is needed to make the asset work?  Development?  Refurbishment?  Enterprise?

7. Practical issues  Business plan & funding  Building the capacity of community organisations  Public sector processes  Staff  Approvals  Officer / legal relationship  Patience …  ?

8. Some genuine tensions Public body perspective:  Retaining influence  Responsibility to the wider community  Reassurance on governance of recipient organisation Community perspective  Minimal restrictions  Protection of investment  Ability to sub-let/ maximise use

9. Community Asset Transfer – helpful resources  Work of Locality (previously ATU) http://locality.org.uk/our- work/assets/http://locality.org.uk/our- work/assets/  Legal process “map” http://locality.org.uk/resources/asset- transfer-legal-toolkit/http://locality.org.uk/resources/asset- transfer-legal-toolkit/  Tools for understanding the process e.g. http://locality.org.uk/wp-content/uploads/TUPE-guidance.pdf http://locality.org.uk/wp-content/uploads/TUPE-guidance.pdf  Model documents for mapping the process

10. The recipient organisation  Governance issues  Unincorporated organisation?  Legal entity?  Asset locked?  Council involvement? What if there isn’t one?

11. Legal Structure Does it matter? Yes!:  Separate legal entity  Affects what can be done  Protection of limited liability for those involved  Determines how money or assets held  Who will fund and how  Can provide protection of asset lock

12. Non-profit distributing structures: 1. Company limited by guarantee (CLG) (non- charitable) 2. Community Benefit Societies 3. Community Interest Company (CIC) limited by guarantee 4. Charitable Company limited by guarantee (charitable CLG) 5. Charitable Incorporated Organisation (CIO)

13. Charitable? exclusively charitable objects (Charities Act 2011); exclusively charitable activities; public benefit; and non-distribution of assets. Advantages: tax reliefs & breaks; funding possibilities; and public perception. Disadvantages: dual regulation & administration; and “restrictions” on activities

14. Asset lock? Legal or regulatory protections attached to a structure that ensure that once assets are within an asset locked organisation, they remain there for use by the organisation to meet its objectives and cannot be distributed amongst the members (NB: Structure options 2-5 above = asset locked organisations)

15. Key features CLG Charitable CLG CIOGuarantee CIC Separate legal entity – ability to enter into contracts etc. √√√√ Limited liability – protection for those involved √√√√ Asset lock – statutory/regulatory protection of assets X√√√ Regulated by Companies House√√X√ Regulated by Charity CommissionX√√X Regulated by CIC RegulatorXXX√ Mandatory (business) Rate reliefX√√X Discretionary rate reliefX√√√ Charitable tax breaksX√√X Ability to have wide ranging powers e.g. staff, volunteers, land, receive grants etc. √√√√

16. Most appropriate structure for recipient vehicle?  Asset locked?  Charitable?  Secure funding?  Fit for purpose?  Tax efficient?

17. Governance considerations  Objects & Powers  Community involvement?  Stakeholder involvement?  Open – v – closed membership  Board appointments  Regulatory requirements

18. Property issues –what’s on offer?  Land issues?  What kind of interest?  What are you giving / getting?  Condition of property, plans for development  On what terms?  Who repairs?  Is there any rent?  Linked to service provision? Why? How?  Restrictions on usage?  What documents are needed?

19. Lease options and Lease agreements  COMA – Community Asset Transfer Programme or  COML – Community Liability Transfer Programme?  Pessimistic Lawyering? Never  “Hope for the best. Plan for the worst.”

20. Building blocks of taking a lease  Survey  Due Diligence  Title  Searches  Enquiries  Heads of Terms  Negotiate documents

21. Negotiations  What do you want?  Why do you want it?  How hard are you prepared to push for what you want?  What are your chances of success?

22. Lease negotiating tactics  Work out your major issues in the lease  Work out your minor issues in the lease  Work out your leverage  Dance! Have major and minor points you will concede.

23. Heads of Terms  Non binding so pointless?  No. Clear place to have agreement set out.  Surveyor?  Solicitor / Adviser?

24. Big points in Heads of Terms  Term  funding  Repair  full / schedule of condition  Break  short term – yes  long term - no  Assigning and subletting  wide as possible

25. Big points in Heads of Terms contd./  Use  broad as possible  Overage  % of profit in future  % of operating profit  Legal costs  Underlettings  Works  Business rates  Personal liabilities  Reinstatement

26. Due Diligence  Title  RC’s etc.  Searches  Planning etc.  Enquiries  Statutory compliance – potential big cost.

27. If you have any queries or comments in regards to this document please contact Sarah Patrice or Dominic Curran of Anthony Collins Solicitors LLP at sarah.patrice@anthonycollins.com or dominic.curran@anthonycollins.com sarah.patrice@anthonycollins.comdominic.curran@anthonycollins.com Anthony Collins Solicitors LLP 134 Edmund Street Birmingham B3 2ES MDX 13055 Birmingham 1 Tel: 0121 200 3242 www.anthonycollins.com Disclaimer: Whilst every effort has been made to ensure the accuracy of these materials, advice should be taken before action is implemented or refrained from in specific cases. No responsibility can be accepted for action taken or refrained from solely by reference to the contents of these materials. © Anthony Collins Solicitors LLP 2016 Introducing Newsroom, a hub for all the latest news, legal briefings, events and training in sectors that matter to you. Take a look for yourself - see http://newsroom.anthonycollins.com or http://newsroom.anthonycollins.com/subscribe to sign up for regular updates.http://newsroom.anthonycollins.com http://newsroom.anthonycollins.com/subscribe Follow us on Twitter Follow us on Twitter - @ACSLLP Find us on Linkedin Find us on Linkedin – search ‘Anthony Collins Solicitors LLP’