Review of the Waterfront Enterprise Board - terms of reference

STATES OF JERSEY

REVIEW OF THE WATERFRONT ENTERPRISE BOARD: TERMS OF REFERENCE

Presented to the States on 22nd December 2009 by the Chief Minister

STATES GREFFE

2009   Price code: B  R.143

REPORT

On the 3rd November 2009, the States Assembly agreed that Proposition P.79/2009, which  sought  to  introduce  revised  arrangements  for  property  and  infrastructure development through the States of Jersey Development Company, should be referred back for further information.

This referral back was largely based on the recommendation of the Corporate Services Scrutiny Sub-Panel that reviews of various aspects of WEB should be undertaken before  the  company  becomes  operational.  I  would  remind  Members  that,  in  my response  to  its  report  (S.R.9/2009),  I  had  accepted  all  recommendations  and committed to complete all reviews before bringing the States of Jersey Development Company into operation.

It was also clear from the debate that there are a number of perceptions amongst members about the performance of WEB since its inception and that, in addition to the issues identified by the Sub-Panel, the review should include an evaluation of current and past performance and staffing levels of the Company.

The Terms of Reference for a review of WEB has now been finalised and is attached at Appendix. This has been used to commission an external company – DTZ – to undertake the work, which I expect to be completed within the timescales set out in section 7, below.

Early in November 2009 I asked the Scrutiny Sub-Panel for its comments on the Terms of Reference and its Chairman responded by stating that he felt it would be inappropriate to comment as the Panel wished to keep a certain distance from the work of the executive in order to maintain independence and objectivity. I have therefore decided to publish this document to ensure members are aware that the matter is in hand and to ensure that the Terms of Reference meets expectations.

I am more than willing to discuss this with individual members should they so wish.

APPENDIX

Review of the Waterfront Enterprise Board

Terms of Reference 18th November, 2009

1. Introduction

1. The following Terms of Reference sets out the background to, purpose, key objectives and outline timescales for a review of the Waterfront Enterprise Board ("WEB") in relation to the proposal to restructure WEB into States of Jersey Development Company ("SoJDC").
   2. Purpose

1. The Chief Minister of the States of Jersey (SoJ) requires an independent external review of WEB in relation to the proposal to restructure WEB into the SoJDC and to implement new arrangements for oversight of regeneration within the Island.
2. The purpose of SoJDC is to act as the retained development company for the delivery of regeneration of property and infrastructure projects for the SoJ.
3. As part of the political scrutiny review and subsequent debate of the proposal, the need to undertake a review of WEB has been identified. The scrutiny report  recommended,  amongst  other  things,  a  review  of  the  activities undertaken by WEB, and the assets it holds.
4. The States Assembly has determined that this review should take place and be presented to the House before it debates the SoJDC proposition again.

3. Background and Context

1. The  SoJ  established  WEB  in  1995  to  promote  the  development  of  the waterfront in St Helier. Over the last 14 years it has delivered a significant number of new buildings and associated infrastructure (see document 9). All of these developments have been subject to the relevant SoJ and/or Ministerial approvals.
2. The SoJ also set up Jersey Property Holdings (JPH) in 2006 to manage more effectively the property assets of SoJ and to identify in particular surplus and underutilised assets that could be disposed of. In certain cases relating to particular regeneration strategies, such assets could instead be redeveloped by SoJDC as the preferred developer.
3. The remit of WEB is currently limited to the redevelopment of the St. Helier Waterfront  whereas  the  need  going  forward  is  the  promotion  of redevelopment  and  regeneration  throughout  the  Island  of  Jersey.  SoJ  has therefore  been  examining  options  for  establishing  a  suitable  structure  to facilitate this work.

4. In  June  2009,  the  Council  of  Ministers  ("CoM")  submitted  to  the  States Assembly the proposition to form SoJDC (P.79/2009). This set out a revised structure  which  clearly  separated  the  functions  of  Master  planning, Development Specification and project delivery.
5. The Corporate Services Scrutiny Panel ("Scrutiny Panel") carried out a review of the proposal and submitted a report and recommendations (S.R.9/2009) to the States on the 2nd October 2009.
6. The  Chief  Minister  responded  to  this  report  on  the  19th  October  2009 accepting all its recommendations.
7. On the 3rd November 2009, the States Assembly debated the proposal to form SoJDC and decided to refer-back' the proposition pending the outcome of those reviews identified by the Scrutiny Panel. This effectively postponed the debate on SoJDC until all the reviews requested by the Scrutiny Panel have been completed and the findings available to States Members.

4. The need for review

1. The Scrutiny Panel made a number of observations where it felt further detail was  required.  The  principle  was  that  a  review  of  the  activities  currently undertaken by WEB, and the assets it holds, would confirm what activities SoJDC would undertake and thereby lead to a clearer understanding of the rôle of the new Company within the revised arrangements for regeneration.
2. WEB presently operates as a development agency, preparing master plans, specifying development projects, holding property from which it derives a rental income to cover the costs of maintaining the retained property and public realm as well as promoting the delivery of development projects. In the new structure SoJDC would have an Island wide geographical remit but would confine its activities to project delivery.
3. WEB holds and manages its estate for a necessary period in order to maximise the development value of its development sites and to assist developers during the  period  of  sale  or  rental  of  the  underlying  residential  or  commercial product. The intention is to hand the assets back to the SoJ when development is completed.
4. The recommendation of the Scrutiny Panel within S.R.9/2009 was that, before the company becomes operational, the Chief Minister should commission an independent review of the activities and the assets of WEB and establish what activities and assets should be held by the new company.
5. Other issues identified by the Scrutiny Panel that need to be addressed by the review include:

• setting out clear protocols for the transfer of assets between JPH and SoJDC;

• developing a detailed risk management regime, including individual project risk management;

• reviewing the capacity of SoJDC to purchase privately owned assets and put in place protocols to ensure that the most effective vehicle is used in such purchases.

6. As a result of the States debate on 3rd November 2009, a review will need to be  completed  discussed  and  facts  checked  with  the  Board  of  WEB  and findings shared with the Corporate Services Scrutiny Panel and published to States Members before the debate on SoJDC proposals can be resumed.

5. Terms of Reference

1. The Terms of Reference for the proposed review are as follows:

1. To  review  and  evaluate  the  past  and  current  performance  of  the Waterfront  Enterprise  Board  in  the  promotion  and  delivery  of regeneration projects in the St Helier Waterfront area, including:

• what WEB has delivered;

• the benefits delivered to the States of Jersey as a result;

• the  current  financial  structure  of  WEB,  and  its  contract commitments.

2. To review the structure and levels of staffing within WEB and advise the  Minister  how  this  compares  with  comparable  development companies.
3. To review the current activities of the Waterfront Enterprise Board in respect  of  regeneration  master  planning,  development  promotion, project specification, project implementation and exploitation; and to advise the Chief Minister on which activities are appropriate to the proposed  operation  of  the  SoJDC  and  where  those  activities  not thought to be appropriate should be undertaken.
4. To review the current assets held by WEB, their tenure and value, income generation and holding costs and to advise the Chief Minister as to which assets should be retained in SoJDC, which should transfer to the Public and the timing of such transfers.
5. To  review  and  establish  clear  protocols  for  the  transfer  of  assets between JPH and the Company.
6. To  develop  a  detailed  risk  management  regime  that  includes individual project Risk Management Plans.
7. To review the capacity of the SoJDC to purchase privately-owned assets and to advise on the protocols required to ensure the most effective vehicle is used to effect such purchases.

2. The outcome of the review should be a report setting out the key findings from the above, which will be discussed and facts checked with the board of WEB and which will be shared with the Scrutiny Panel and published to all

States Members in advance of the debate. It should be noted that the findings will become public domain.

6. Management of the Review

1. The  review  has  been  commissioned  by  the  Chief  Minister.  Based  on  the review he will develop a proposition to be considered by the Council of Ministers before being shared with the Scrutiny Panel and submitted to the States Assembly as part of the debate on SoJDC.
2. The Chief Executive to the Council of Ministers will be responsible for the co- ordination of the review.

7. Timeline

7.1  The following outline timeline is envisaged, though this will be subject to review on agreement of proposals to undertake the work:

* subject to proposal

8. Subsequent Organisational Issues

8.1  The States decisions in relation to the activities and holding of assets will be binding on the Treasury and Resources Minister and the Company. However it is the responsibility of the Board to determine and implement changes to the structure and operation of SoJDC. Clearly as the company will have a new remit and a new Board, one of the first duties of that Board will be to review the structure. Any organisational changes arising from the above will also be the responsibility of the new Board.

9. Documents

9.1  All necessary documents will be made available for the purpose of the review including:

1. Report  and  Proposition  proposing  the  establishment  of  the  Jersey Development  Company  (P.79/2009)  dated  2nd  June  2009  and amendments.
2. The  Corporate  Services  Scrutiny  Panel  report  "The  Jersey Development Company", dated 2nd October, 2009 (S.R.9/2009).
3. The  Chief  Ministers  response  to  S.R.  9/2009,  dated  19th  October 2009.
4. P.195/1995 the establishment of WEB
5. P.45/2002 the transfer of freehold and long (150 year) leasehold land holdings to WEB.
6. WEB audited accounts for 2006, 2007 and 2008.
7. WEB 2009 and 2010 Business Plans (including 10 year cashflow forecast).
8. Full details of WEB assets including red book valuations.
9. History of WEB detailing each project and States of Jersey directions, decisions and approvals.
10. Review of Corporate Governance of WEB, Comptroller and Auditor General, 24th November 2008.