Jersey Enterprise Board Limited: proposed establishment

STATES OF JERSEY

Lodged au Greffe on 19th December 2007
by the Council of Ministers

STATES GREFFE

PROPOSITION

THE STATES are asked to decide whether they are of opinion -

to refer to their Act dated 12th December 1995 in which they approved the establishment of the Waterfront Enterprise Board Limited, and –

(a) to agree to the establishment of a new development agency as a company, to be known as the Jersey Enterprise Board Limited, in accordance with the Memorandum and Articles of Association set out in Appendix 2 of the report of the Council of Ministers dated 19th December 2007;

(b) to agree that the Waterfront Enterprise Board Limited should become a subsidiary of the Jersey Enterprise Board Limited, and that appropriate amendments be made to its Memorandum and Articles of Association as set out in paragraph 8.2 of the said report.

COUNCIL OF MINISTERS

REPORT

1. Introduction

1.1 The Council of Ministers wishes to propose the establishment of a new company, to be known as ‘Jersey Enterprise Board Limited’ to act as (among other things) the developer of property assets currently belonging to the Public but which are not otherwise required to meet States needs. The Company would also take on the activities of the Waterfront Enterprise Board Limited in developing the St. Helier Waterfront and purchase and develop non-States property assets that are required to achieve the Regeneration Strategies of the Regeneration Task Force.

1.2 The new company would have 3 major roles –

(1) Acting as the developer of property assets currently belonging to the Public that have been authorised for development;

(2) Implementing and coordinating the development for the whole of the St. Helier Waterfront, including the greater harbour area and La Collette, in accordance with approved development plans and other relevant guidance prepared by the Minister for Planning and Environment;

(3) Playing a key role in the implementation of the St. Helier regeneration strategy.

1.3 It should be noted that the new company would be separate from the States Property Holdings Department and would have a completely different role. Property Holdings is responsible for managing States property in the most effective manner to provide a good base for delivering public services. If there is significant additional value to be generated from development of property managed by Property Holdings, that property would, subject to the authorisation of the Minister for Treasury and Resources, be transferred to JEB as the development company to maximise the financial return to the States.

2. Background

2.1 In June 2005 the States agreed to the formation of a new department, to be known as ‘States of Jersey Property Holdings’ (‘States of Jersey Property Holdings: Establishment’, P.93/2005). As part of this decision, the States agreed that this new department would come under the Finance and Economics Committee and its successor, the Minister for Treasury and Resources. The States also decided that the administration of all States property assets, with the exception of assets under the administration of the trading committees and the social housing administered by the then Housing Committee, should be transferred to States of Jersey Property Holdings (‘Property Holdings’).

2.2 It was agreed that the role of the new department should be ‘to develop a modern, innovative approach to the management of property’, and that its aims should include the following –

- Optimising operational efficiency;

- Minimising under-performing/unproductive property assets; and

- Maximising and implementing opportunities for cost reduction and for extracting capital from portfolio.

2.3 The States Property Plan, which forms part of the States Strategic Plan 2006-2011, sets out how Property Holdings will work towards delivering a number of objectives, including a corporate approach to property management and the extraction of optimum benefit from property assets. The main focus of Property Holdings is on the rational management of publicly-owned property assets, and the question has been raised as to what would be the best arrangement for dealing with those assets that are no longer required.

2.4 One option would be for a division to be created within Property Holdings that would deal purely with the development of those assets identified for development. This division would consist of a group of development officers who would liaise with both the public and private sectors in reviewing the future of these sites and in promoting their development.

2.5 Although such an arrangement might have the virtue of simplicity, it does have 2 major drawbacks –

● Experience both in Jersey and elsewhere has shown that the private sector is reluctant to deal with the public sector in the area of property development. A more commercial type of arrangement, such as a limited liability company, is regarded by the private sector as having much greater credibility and flexibility, with the ability to employ individuals who have the right background and experience to work in partnership with both the public and private sectors.

● A public sector arrangement would not provide the financial flexibility that is needed for successful development projects. A limited liability company, in contrast, would provide the scope to establish financing structures which are commonly used in the private sector for project financing purposes and would provide greater flexibility while maintaining transparency and accountability.

2.6 A second option would be for Property Holdings to employ consultants with development expertise in order to carry out the work associated with the development of States property assets. However, this option is likely to be expensive, given the costs of employing consultants on an hourly or contract basis, and in any event it would not provide the advantages that would be brought with the creation of a limited liability company.

2.7 Another option would be to set up joint ventures with commercial developers on a case-by-case basis, with certain rights and rewards being reserved for the States of Jersey. The use of joint ventures could, however, lead to the piecemeal identification and development of land, without a clear long-term strategy in place. In addition, joint ventures can limit the range of commercial partners and developers, as they often lack clear objectives and structures.

2.8 The Council of Ministers therefore favours a fourth option, which is based on the establishment of a limited liability company for the purposes of property development. Further details of this proposal are set out below.

3. Jersey Enterprise Board Limited: Establishment

3.1 It is proposed that a new development company, to be known as Jersey Enterprise Board Limited (‘JEB’), be established to act as the lead developer of States property assets that are not otherwise required to meet States needs. This company would have just two shares of £1.00 each, one of which would be held by the Chief Minister (as a corporation sole under the States of Jersey Law 2005). The other share would be held by the Minister for Treasury and Resources (as a corporation sole under the States of Jersey Law 2005) as a nominee for the Chief Minister. The company would be registered under the Companies (Jersey) Law 1991 as ‘Jersey Enterprise Board Limited’, but for general purposes would be known simply as the Jersey Enterprise Board or ‘JEB’.

3.2 JEB would develop assets that have been transferred to it by Property Holdings and which have been authorised by the Minister for Treasury and Resources for transfer. It would be the role of Property Holdings, in consultation with the Minister for Treasury and Resources and JEB to identify suitable properties. It would be for JEB to agree with the Minister for Planning and Environment, in accordance with normal planning procedures, uses that might be appropriate for these properties.

3.3 The ownership and administration of those sites within the States portfolio that are identified as having the potential for development would, subject to the authorisation of the Minister for Treasury and Resources, be transferred to JEB. Arrangements for sale of individual properties with limited or no development potential would continue to be dealt with by Property Holdings.

3.4 The new company would take on the activities of Waterfront Enterprise Board (WEB) Limited, which was established by the States in 1995 as a company in order to ‘promote, coordinate and implement a comprehensive strategy for the development of St. Helier Waterfront’. Under these arrangements the Waterfront Enterprise Board Limited would remain in existence and would become a subsidiary of JEB, thereby ensuring that transactions entered into by WEB since 1995 would remain in force. The Chairman and members of the JEB would be the same as those of WEB.

3.5 WEB already has extensive experience in property development, and it would be advantageous if the expertise that exists within the company could be harnessed to support the proposed new development company. It is accordingly proposed that the staff in WEB would be transferred to the new company. The Managing Director of WEB would become JEB’s Managing Director and would have the specific brief of overseeing the progression of all sites identified for sale or development. He or she would head a professional team that would operate as a property developer to the States. Their objective would be to obtain the optimum development value from property assets, whilst having regard to the socio-economic strategies of the States of Jersey and the interests of the Public.

3.6 The new arrangement would have the following advantages –

● the Jersey Enterprise Board Limited can be given a clear, long-term mandate with responsibility and accountability;

● clear direction can be given as to the objectives under which the development of sites will take place; and

● it will signal a clear intent of purpose that the States wishes to develop land on a commercial basis with appropriate safeguards under existing planning rules, whilst having regard to the socio-economic strategies of the States of Jersey and the interests of the Public.

3.7 It is proposed that JEB would work within a policy framework determined by a new body, to be called the Regeneration Task Force, further details of which are given below.

4. Regeneration Task Force

4.1 In approving the Strategic Plan 2006-2011, the States have agreed that a key priority for the Council of Ministers should be the production of a strategy for the development and regeneration of St. Helier (Strategic Plan, paragraph 4.2). To this end, the Council has established a Regeneration Task Force with the remit of taking this initiative forward.

4.2 The Task Force will report directly to the Council and will be comprised of the Connétable of St. Helier and the following Ministers (or their delegated Assistant Ministers) –

President:	Chief Minister
Members:	Minister for Treasury and Resources
	Minister for Planning and Environment
	Minister for Transport and Technical Services
	Minister for Economic Development

4.3 Executive support to the Task Force will be provided by an Executive Director, who will be based at the Planning and Environment Department, together with further officer support from other States departments as and when necessary. This is likely to include secondments from relevant States departments, such as Planning and Environment, Transport and Technical Services, Economic Development, and Property Holdings, as well as the Parish of St. Helier.

4.4 The role of the Task Force will be to develop Regeneration Strategies in consultation with stakeholder groups, including St. Helier residents, the local business community, relevant States departments, JEB, and the general public. The draft Strategies will be submitted to the Council of Ministers and then to the States for their approval.

4.5 Once Regeneration Strategies have been approved by the States, the Task Force will develop an implementation plan and oversee its implementation. It is envisaged that the Strategies will be implemented over an extended 15-year period, and the Task Force will provide political leadership and coordination throughout this period. The Task Force would provide regular progress reports to the Council of Ministers during this period, and would seek guidance and support from the Council as and when necessary.

4.6 Further information about the St. Helier Regeneration Strategies, together with the proposed delivery structure, is given in Appendix 1.

5. Jersey Enterprise Board Limited: Composition and Terms of Reference

5.1 The JEB will play a key role in the implementation of the Regeneration Strategy, and its proposed terms of reference with respect to the Regeneration Strategies are set out below –

(a) To work within the general policy framework determined by the Regeneration Task Force in progressing the implementation of a regeneration strategy for St. Helier, and in this connection –

(i) to give particular attention to undertaking and coordinating the development for the whole of the St. Helier Waterfront area, including the sites known as West of Albert, East of Albert, and St. Helier Harbours, marrying up the various requirements for the area; and

(ii) to manage the development and improvement of major publicly owned sites in accordance with the regeneration strategies;

(b) To consider sites referred to it by Property Holdings and authorised by the Minister for Treasury and Resources for possible development, whether in St. Helier or in other parts of the Island, having regard to the socio-economic strategies of the States of Jersey and the interests of the Public;

5.2 The company’s work programme would be based on an annual business plan that would be prepared by JEB in accordance with the Regeneration Strategies of the Regeneration Task Force and following consultation with Property Holdings. The annual business plan would be approved by JEB’s board of directors.

5.3 The JEB board of directors (the “Board”) would be made up as follows –

(a) one individual who is a Minister or an Assistant Minister;

(b) one individual, other than the individual nominated pursuant to paragraph (a) above, who is a States member;

(d) a full-time employee who will act as the Managing Director; and

(e) 3 other individuals who are independent members not being members of the States.

The States will determine the appointment of the chairman and independent members on the recommendation of the Chief Minister and appointments would be for a period of 3 years. The Chief Minister as shareholder would have the authority to give directions to the Board, and the Minister for Treasury and Resources, as one of the company’s shareholders, would be kept informed of the Board’s work.

5.4 It is proposed that the composition of the board for the Waterfront Enterprise Board Limited would be the same as that of JEB, with the appointments of the chairperson and the independent members being made by the Chief Minister rather than by the States. This change to the composition of the board and the appointments process will require an amendment to the WEB Memorandum and Articles of Association, as explained in paragraph 8.2 below.

5.5 The chairman, independent members, and Managing Director would all receive appropriate levels of remuneration for their services as members of the Board. The Director of Property Holdings would not receive any remuneration for his work as a Board member, but would be a member by virtue of his employment with Property Holdings. All Board members would be reimbursed for expenses incurred during their work for the Board.

5.6 JEB would have all the normal powers of a company including the power to buy and sell land and the power to borrow money.

5.7 JEB would be exempt from paying tax in the same way that Waterfront Enterprise Board Limited is.

5.8 The JEB would operate within the policy direction of and in consultation with the Regeneration Task Force. The Regeneration Task Force would provide clear terms of reference for any areas of land to be transferred to JEB, including land outside St. Helier, including the planning remit, transport requirements, and any other relevant parameters. Once these parameters have been identified, the Board would have the responsibility for taking forward the development of individual sites, including, if appropriate, working in cooperation with commercial partners, and having regard to the socio-economic strategies of the States of Jersey and the interests of the Public.

5.9 The Task Force would provide general oversight of the work of the Jersey Enterprise Board, and would ensure that the necessary monitoring arrangements are in place. The Task Force will not, however, interfere with the day-to-day running of the Board, as this would compromise the degree of independence and flexibility that the Board will need to carry out its work effectively.

5.10 Land under the administration of Jersey Harbours and of the Airport will continue to remain under the responsibility of the Minister for Economic Development. Any significant proposals for the future development of the harbours at St. Helier and/or the Airport would need to be referred by the Minister to JEB and to the Regeneration Task Force so that they may be considered in the wider context of plans as a whole. The Minister would be expected to have regard to the views of the Regeneration Task Force before taking any decisions in this connection.

6. Special Purpose Companies

6.1 As noted above, it is proposed that JEB would deal only with the larger and/or more complex sites identified for development.

6.2 Examples of possible sites include –

● The greater harbour area, including East of Albert, West of Albert, St. Helier Harbours, and land at La Collette;

● St. Saviour’s Hospital (residual land);

● Airport (non-operational land).

6.3 It is proposed that JEB establish individual subsidiaries to act as special purpose companies (SPCs) to facilitate the development of each of the sites categorised for development. These SPCs will principally be established for project financing purposes or for ring-fencing of assets and liabilities, and each project will be treated as a separate entity. Each project would have clearly identified goals, and all costs and potential income would be identified, thereby providing for clear accountability, segregation and discipline.

6.4 JEB may work in partnership with the private sector, and in such cases it might seek to involve a developer(s) at an early stage in a project. This will enable JEB and the developer to consider the potential for the site as a whole, taking into account existing uses and how these should be accounted for.

6.5 In relation to the greater harbour area, it is clear that this is a major public asset with the potential for mixed public/private sector development. The land in the greater harbour area which is currently administered by the Minister for Economic Development and the Harbour Master, together with the land under public administration at La Collette, is currently the subject of a development feasibility study, and it is proposed that this should be transferred to a Special Purpose Company once a master plan has been agreed. This will enable this key asset to be considered and progressed in the context of the development of the greater harbour area as a whole, as well as in the general framework of the St. Helier regeneration strategy. The development role of Jersey Harbours would therefore be taken over by the SPC, whilst Jersey Harbours would continue to focus on its core activities of operations and financial/commercial management.

7. Leasehold/Freehold Options

7.1 It will be necessary to transfer the ownership of all or part of a site belonging to the public to JEB in order for JEB to secure development finance and/or a joint venture partner to undertake the redevelopment of those sites. The main options could include –

● Freehold transfer: Primarily used for residential development sites;

● Leases: A long-term lease can be appropriate for non-residential uses (e.g. 99 years), with the freehold reversion remaining with the public.

8. Memorandum and Articles of Association

8.1 A draft Memorandum and Articles of Association has been prepared for the proposed JEB, and these are attached as Appendix 2.

8.2 Changes will be required to the Memorandum and Articles of Association of the Waterfront Enterprise Board Limited consequent on it becoming a subsidiary of JEB and to update them. In particular, it is proposed that the Chairman and members of the board of directors of WEB should be the same as those of JEB, thereby ensuring a sharing of aims and objectives. In addition, the references to the Greffier of the States will need to be changed to ‘the Chief Executive of the Chief Minister’s Department’, as the Greffier does not have any active involvement in the operation of WEB and changes will need to be made to the names of the shareholders. The references to ‘committee’ in the Memorandum and Articles should be changed to either ‘Chief Minister’ or ‘Minister’ to reflect the change from the committee to the ministerial system of government that has taken place since 1995.

9. Financial and manpower implications

9.1 The Waterfront Enterprise Board Limited is financially self-supporting, and it is proposed that JEB should also operate on this basis. There will not therefore be any financial and manpower implications for the States arising directly from these proposals.

9.2 Changes to the West of Albert Plan are currently being reviewed by the Minister for Planning and Environment and the Waterfront Enterprise Board Limited, and any resource implications arising from these changes would need to be reviewed separately.

9.3 In the first instance, it is proposed that the executive responsibilities of the new company will be carried out by the staff currently employed by the Waterfront Enterprise Board. It is possible that additional staff may be needed in due course, but this will be a matter for the company’s Managing Director to consider, in consultation with the JEB Board. Any increased costs resulting from a decision to employ additional staff would in any event need to be borne by JEB, not by the States.

9.4 It has been noted in paragraph 4.3 that executive support to the Regeneration Task Force will be provided by an Executive Director, based at the Planning and Environment Department, and this post will need to be funded from within the States agreed cash limits.

10. Implementation

10.1 Subject to approval by the States, it is proposed that the Jersey Enterprise Board Limited should be incorporated as a company as soon as practicable. As a target date, it is proposed that the company should commence operations on 1st May 2008.

11. Conclusion

11.1 The Council of Ministers strongly supports the view that appropriate mechanisms should be in place to support the management and development of States property assets. A major step was taken by the States in 2005 when they agreed to establish Property Holdings, but the Council believes that a further mechanism is needed if the States is going to maximise the potential of those sites.

11.2 The Council believes that this mechanism will be provided by the establishment of the Jersey Enterprise Board Limited. The company will provide the necessary flexibility, expertise and accountability to enable this to happen, and will play a key part in the implementation of a strategy for the regeneration of St. Helier.

COUNCIL OF MINISTERS

19th December 2007

APPENDIX 1

ST. HELIER REGENERATION STRATEGY

Proposed Delivery Structure

Introduction

This paper sets out an initial outline of a delivery structure which will require significant expansion once the basic principles have been agreed.

Successful implementation of the Strategy over a 15 year timescale will require –

● An agreed and coherent implementation plan.

● Effective project management of the total programme and individual development projects.

● Strong and consistent application of planning powers.

● Ongoing public engagement and support.

● Commitment and support from the local business community.

● Effective development partnerships for specific sites and projects.

● Use of publicly-owned assets as a means to kick-start or deliver specific improvements.

● Commitment and support from the Parish of St. Helier and Transport and Technical Services.

● A vehicle to facilitate land assembly, access to private finance and commercial development expertise.

In the U.K. vehicles such as Urban Regeneration Companies or Partnerships have been used to create and manage such programmes. One of their key functions was to bring together central and local government functions with regional and other agencies. In Jersey there is not the same proliferation of agencies so it is proposed to create a simpler structure which is led by a high-level political executive. The elements of such a structure could be as follows –

Long Term Masterplan –

Determined by the States advised by Task Force

Planning Permission

Determined by the Minister for Planning and Environment in accordance with Island Plan policies, and having regard to the Masterplan, as a means of regulating development to accord with the overall Masterplan.

Regeneration Task Force

Develop detailed implementation plan.

Oversees implementation of plan, in partnership with business and developers.

Strong political leadership, combined executive arm.

Urban Partnership

(reports to Task Force)

Consultative/partnership vehicle to ensure that stakeholders are fully engaged, participating and implementing the plan.

Working with and advises Regeneration Task Force.

Jersey Enterprise Board (JEB)

Company to develop public assets in line with the plan and engage commercial parties in direct development activities.

In Diagram Form the new structure will be as follows –