Agenda item

Report to follow.

The report was introduced by Peter Baulf, City Solicitor.  He apologised to members for the delay in getting the report finalised as this had needed input from a number of officers including the Chief Finance Officer. 

Councillor Pitt advised that Councillor Symes had submitted the following comment which he read out.  He said as the papers came out late he was not clear if she had been cited on this report before it came out so wished to caveat it with that.

'I have reservation re the loan to the Groundlings Theatre as there seems to be a disproportionate support for this type of venue, with the £1.7 million gift to the Guildhall and the £3.5 million loan to the Kings Theatre.  We must also consider the fact that if any of these ventures fail, the taxpayer will be liable for the debt'.

In response to these comments, Councillor Pitt explained that the £1.7 million 'gift' is not a gift but the capitalisation of allocated annual revenue funding to the Guildhall for repairs, maintenance and renewals and was entirely in line with the council's policy of maintaining and improving the building. The £3.5 million to the Kings Theatre referred to by Cllr Symes was not the amount of the actual proposed loan.  This was already set out in the budget to be a maximum of £3 million and was not set at that level yet as the details were to be finalised with the Section 151 Officer.  

Councillor Pitt added that the debt is secured against the building so if the organisation did cease to operate and the building be sold the Council would recover its investment.  The City Solicitor confirmed that this was correct and said the idea is to protect the council's money proportionate to the value of the asset. 

Councillor Morgan said that this was a welcome arrangement and felt was long overdue.  He said a number of cultural institutions were struggling due to the current situation with the pandemic and said he would welcome a paper when appropriate to understand the implications and understand how the authority were supporting the industry.  

Councillor Pitt said he had spoken to the Section 151 Officer and secured an agreement that revenue grants will be released in full to organisations at the start of the financial year and those organisations were being spoken to currently.  Councillor Pitt said he would ensure that members would be made aware of the proposals.

DECISIONS:

(1) That a grant of £15,000 be given to the Groundlings Theatre Trust (CIO) and a Loan Facility Agreement of approximately £36,000 (including £6,230 previously provided) be given to Mr Richard Hurdle (Stride) which will be subject to:

i) entering into a detailed Grant Agreement (incorporating a Service Level Agreement) with associated performance criteria;

ii) a "clawback" arrangement being in force for 36 months which stipulates that should the CIO not meet the performance requirements of the Grant Agreement , then the grant is repayable;

iii) a separate Loan Facility Agreement being entered into with Mr Richard Hurdle (Stride) (subject to interest) for the sum equal to the outstanding sum required to discharge the existing loan secured on the Groundlings Theatre property. The sum advanced is to be used to discharge the existing loan secured on the property. Depending upon the most appropriate basis of advancement of the loan facility it could be either payable to Mr Richard Hurdle (Stride) direct or via Portsmouth City Council direct to the current mortgage holder on behalf of Mr Richard Hurdle (Stride) the proviso being that the current legal owner of the premises Mr Richard Hurdle (Stride) has agreed and provided in escrow an appropriate legal charge securing both the loan facility and grant agreement in advance.

iv) that the emergency financial assistance previously provided in the sum of £6,230 is included within the Loan Facility Agreement described in recommendation iii) above;

v) a first legal charge on the property is obtained in favour of the Council for the sums due under the Grant Agreement and the Loan Facility Agreement set out in recommendation iii) and iv) above for the sum advanced to the CIO and Mr Hurdle (Stride).

(2) Delegated authority was given to the City Solicitor in consultation with the S.151 Officer to conclude the terms of the Loan Facility Agreement and to complete all other necessary legal documentation to put these recommendations into effect.

(3) It was noted that the grant award is subject to the approval of funding and criteria agreed by the S151 Officer as set out in the Council's constitution (Financial Rules).