Waterfront Enterprise Board Limited - dissolution (P.33-2003) – comments

STATES OF JERSEY

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WATERFRONT ENTERPRISE BOARD LIMITED: DISSOLUTION (P.33/2003) – COMMENTS

Presented to the States on 22nd July 2003 by the Policy and Resources Committee

STATES GREFFE

COMMENTS

1. T h e Statesestablished the WaterfrontEnterpriseBoard(WEB) Limited in February 1996, as a separate legal entity to act as a developmentagencyofthe States, foran initial 10-year period. In so doing, the States  agreed [inter-alia]  that in  the  exercise  of  their  powers  of  management  of  the  Company,  the Directors would have regard to the objectives for which the Company was established, namely –

• T  o p romote, co-ordinate and implement a comprehensive strategy for the development of the St.  Helier  Waterfront  area  (as  defined  by  figure 1  shown  in  Projet  P.123/92  of  the  Island Development Committee lodged au Greffe on 18th August 1992 (the "Waterfront") – but as since superseded).

• T o   e xercise administrative control over the use of the land and the adjacent shore and water areas

in the Waterfront and to liaise and consult with all relevant committees of the States of Jersey and other governmental and regulatory authorities in relation to investment in infrastructure projects in and development of the Waterfront.

2. S i n ce February 1996 successive Boardshave strived continually to meet these objectives. Setting aside that some individual Directors have not completed their terms of office, there have to date been 2 successive Boardscovering the period from 1996 to 2000 and 2000 to 2003.In all that time theStateshas considered and appointed States membersandnon-Statesmembersas Directors and, intaking its duty seriously  and acting  in  a  most responsible manner, has appointed people of considerable integrity, expertise andexperience.
3. T h e CommitteeseesProjetP.33/2003as an attempt to try to exert totally inappropriate influence over the progress ofWEB – an independentcompanywholly owned bythe States, overseenby 2 of the most senior States Committeesandwhich is, of course, subject to all laws andnormal planning and licensing constraints.
4. T h e alternative arrangementproposedby Senator Syvret is not defined – nor is it even outlined. Nor are any of the potentially largecoststo the Public,oftaking the actions proposed, quantified orcommented upon.
5. F r o m the foregoingit will beclear that the Committee opposes what is proposed in P.33/2003 and the following paragraphs explain why it recommends to the States that itshould reject the proposition.

The Report

6. S e n ator Syvret cites 3 mainaims,but referred to as reasons', in his report in supportof his proposition being broughtforwardnow.

The termination of the Waterfront Enterprise Board

7. I n support of this 'aim' the Senator uses emotive sentences which are unsubstantiated by any clear evidenceanduponwhich the Committee comments as follows –

W  h e n this QUANGO was established a number of fears were expressed that it would not produce

a balanced, cohesive development that met the needs of the community. So it has come to pass.'

8. T  h e Committeeacknowledges that a number of such fears were expressed in 1995. However, it also remains clear that such concernswerevoiced by comparatively few andtheStatesagreedto establish WEBby a largemajorityof42votesto 8.
9. T h e Policy and ResourcesCommitteemaintains that, in reality and despite many challenges andsetbacks over the years,WEBhas done exactly what itwas directed todobythe States. Despite theviewsofthose

who would suggest it has been a failure, it is clearly a success story. If this was not so, why would so many

Islanders young and old enjoy on a daily basis the many indoor and outdoor facilities which now exist?

10. I n  April this  year  it was confirmed  that  the  2  fast-food restaurants  were  serving  approximately 11,000  customersperweek, the Health Club membership stood at 2,100, the Chicago Rock Café which holds550personsand The Bar' were trading to capacityon busy nights – with the Chicago Rock Café enjoying the best food salesofanyof their 70 U.K. outlets and, Cine-U.K.were reporting that their new Cineworld cinema was enjoying  steady growth and the highest spend per  head  among  all  their 30  cinemas. WEB has recently reported that as the tourist season hascommenced,The Waterfront Centre has been successful inaddingto its extensivecustomer base andhas provided facilities for a significant numbersof visitors to the Island with the result that tradein all venues is significantly upon that reported in April. Further increases in popularity and trade in all venues are expected to result from the soon to be opened AquaSplash' leisure pool.
11. T o date, WEB has deliveredaround £10  million ofengineering infrastructure works which has turned the St.  Helier Waterfront(Westof Albert) from anexhaustedwastedisposal site into many hectaresofhighly valuable,  developable  land  which will  re-connect the  town with  its  Waterfront;  a  key,  long-held community and tourism objective for the Island. All ofthese directly controlled works once startedhave been completedon time and to budget.

• M  a ri time House, the new Harbours and Airport Committee headquarters;

• L e  F régate seafront restaurant;

• L e s J ardins de la Mer public gardens;

• L a C ollette boat hoist facility.

F o r a total public investment of around £20  million, land and assets of approximately£25  million have

been created. The net asset gain as a result of WEB's activities so far is therefore around £5.0  million. To this must be added the potential that now exists for the States to save a further £20  million or so in land and other costs, required to deliver States' public buildings and items of social infrastructure on the St.  Helier Waterfront site, such as the Transportation Centre and Police H.Q. etc, for which sites would otherwise have to be purchased on the open market.

12. T h is has been delivered by a WEBexecutiveteamof 2 with one full-time administrative assistant, and by any measurable standards, this indicates an efficient and effective organisation.
13. The WEB experiment has proven to be a failure.  The time has come to replace WEB with a more community-oriented means of determining the future of the rest of the area.'
14. T h e  notion  that  the  setting  up of  WEB has  in  some way  been  an experiment' is  refuted  by the Committee.It is true that its establishmentwas a newdeparture for Jersey and that it was set up initially only for a period of10 years. In 1996itwas indeed aprototype' whichhasnowdeveloped into being a fully-fledged company with statutory responsibilities and powers and itis charged with bringing – and is delivering – a major community project to fruition.
15. T h e useof an arms-length limited company,whollyownedby the public, butwithout planning powers, created to ring-fencerisk,enableborrowing, minimise public sector administrative hurdles and attract professional staff capableof engaging the public in commercial partnerships and co-investment with the private sector, is a well recognisedapproachto the deliveryof urban regeneration and the developmentof public assets in the U.K. and elsewhere. Infact it is the norm'.
16. S e natorSyvret does notdefinewhathemeans by a more community-oriented means of determining the future of the rest of the area'. The Committee maintains that the establishmentofWEBwasagreedby the

States in 1995, following very wide consultation at the time and a with a resounding majority vote in favour.

WEB was established to promote, co-ordinate and implement a comprehensive strategy for the development of the St. Helier Waterfront area and to consult with all relevant committees of the States of Jersey and other governmental and regulatory authorities in relation to investment in infrastructure projects in and development of the Waterfront. The Committee acknowledges that the word community' could have been inserted after the word governmental' but believes that, in reality, such an insertion was not an issue at the time and that it would have made no difference at all to the end result as WEB have consistently and repeatedly consulted with and included many of the wishes of relevant community bodies throughout its existence.

17. S e natorSyvretsuggests that The waterfront developments are in the main, an aesthetic nightmare'. This is a personal view to whichthe Senator is entitled. Until very recently, WEB's work has been largely infrastructure and only in the last 18 monthshaveany substantial buildings been occupied.Atpresent, the main buildings which are completedor are nearing completion are relatively plain functional buildings serving quitespecificpurposes.Theyarebuildingswhich will eventually form part of a much larger whole,where these functional structures will blend in with moreiconic' structures, landmark features and open spaces.
18. T h e leisure building is the only substantial building delivered so far without a design competition. Maritime house and the Albert Pier housing scheme were both the result of a full, public design competitions. Somesay that the cinemaelementof the leisure schemeis too functional inappearanceand this commentisbeing considered byWEBas it determines the next developer selection process.Advice in managing the developer led design process is being taken by WEB from The Commission for Architecture and the Built Environment(CABE) in theU.K.These issues are takenseriouslybyWEB and will continue to be discussed with Planning.
19. T h e Committee therefore holdsto the expectation that the whole will be better than the sum of the individual partsandcommends this longerterm view toothers.

Saving the Island Site

20. T he Island site represents one of the last significant development opportunities in the waterfront zone. This is our last chance to save it from the same fate that has befallen most of the rest of the areas under the control of WEB. Steam clocks, pubs, fast food joints, and buildings that may as well be in Basingstoke.'
21. T h e Committee agrees that the Island Site isindeedoneofthelastsignificantdevelopment opportunities in thewaterfrontzone'.However, the Committee isconfident that Senator Syvret's implication that WEB will just be able to do anything its wants to the Island Site willbeseenas incorrect.

• A l a rge part of the site is already protected from inappropriate development by being registered as a Site of Special Interest.

• T h e States has decided that the new transport centre will be based there.

• W E B is continuing to liaise with relevant authorities and groups and remains fully alive to the need to consider including community facilities where appropriate.

• W E B are only at the stage of selecting a development partner and a scheme has yet to be developed.

• A n y scheme has to comply with the States approved policies contained within the Island Plan.

• A n y proposals for licensed premises will have to be approved by the relevant licensing authorities.

• A  n y scheme proposals will have to be made public for consultation purposes.

• T h e Environment and Public Services Committee has, in planning terms, to approve in detail how the development proceeds and what eventually goes on the site.

• T h e Finance and Economics Committee has to approve whatever financial arrangements are entered into, not only between WEB and any developer but between WEB and any ultimate

lessee or concessionaire.

22. It should, ofcoursebenoted that All developments undertaken byWEBinvolve the combined scrutiny of –

• t h e W  EB Board of 7  people; which consists of 3  State'sDirectors, 3  non-States Directors - all of whom are appointed by the States, plus the Managing Director;

• t h e E nvironment and Public Services Committee;

• t h e P ublic and relevant community and other organisations;

• t h e F inance and Economics Committee;

• t h e P arish of St.  Helier Licensing Authorities.

23. I t is a virtually unmitigated disaster. Do we want the same approach to ruin the Island site? The public certainly do not.'
24. A t this pointthe Committee takes serious issue with the assertion that SenatorSyvrettalks for the public' on this matter. He quite clearlyhas his ownagendaon the Waterfront Developmentsandhas tried to delay and frustrate them both inside this Assembly and outside.

Corporate Governance

25. A s SenatorSyvret lodged theseproposalsbeforehehad been provided with the thoroughly detailed answers to the questions heaskedof the President of the Policy and ResourcesCommittee, his report is not complete andsumsup his own thoughts and understandingsat that time.However,the Committee is confident that,upon reading the answerstothose questions, the correct picture ofeventshasbecomeclear and that members will agree that –

• n o im  propriety has taken place with regard to the selection of a preferred developer for the Island Site, and

• t h e C  ommittee has identified some areas of the process adopted by WEB to appoint its preferred

developer for the Island Site which it considers could have been improved and are working with WEB  to  ensure that  its  partner  selection  processes  are  developed  and  improved  for  future projects.

The need for urgency

26. S e natorSyvret states that he acted swiftly to pre-empt the signing of contracts and commencement of deals before the issue of corporate governance has been resolved to the satisfaction of the States and public' and to prevent the present proposals from becoming a done deal' .'
27. A s to the corporate governance' issues, the Committee has thoroughly investigated WEB's actions in relation to the selection of a development partner for the Island site. However,itisclear that from his statement In  any  event, even  if  completely satisfactory  answers  were forthcoming to the  questions

concerning corporate governance, the days of WEB must be over' that Senator Syvret had already made up his

mind on the evidence he had available in March and whatever answers the Committee had produced he was going to pursue this proposition.

28. T h e proposition demonstrates a lackof understanding ofthe process whichwasbeingandhas been undertaken by WEBin relation tothe Island Site. WEB was identifying a development partner – not a scheme – with whom it couldworktodevelop a schemefor the site. This arrangementis in place for 6 monthsonly,andgives both parties sufficient timeto establish whether they canworktogetherand whether they can evolve a viable and an acceptable scheme.Anylongertermcommitment proposals will only beconsidered, and only ifappropriate entered into, once this work isdone.
29. T h e Committeeis most concerned that this proposition seeks to create an atmosphere in which any potential developer might shy away from investing inthefutureofthe Island.

The Proposition

30. P a rt (b) of the proposition asks the States to agree that all non-States Directors of the Waterfront Enterprise Board Limited should be removed from office within one month of the approval of this proposition, in accordance with the provisions of Article 30(b) of the Company's Articles of Association, and to request the Policy and Resources Committee to bring forward to the States for approval, within one month of the approval of this proposition, nominations for replacement Directors to serve for a term of office not exceeding the period required to wind up the company's affairs;
31. T h e Committee has not discovered any evidenceofimpropriety.The Committee thereforeseesno reason why this proposal shouldbesupported.
32. It i s a difficult enoughtask at times, to identify 3 appropriate individuals who are prepared to volunteer to be WEB Directors for a full 3-yearterm of office. Whatperson – of any stature – would agreetobe appointed toWEB,forwhatcan only be an indefinite period (seebelow)and then only to oversee its winding up?
33. P a rt (c) of the proposition asks the Statesto agree that it is the view of the Assembly that the present proposals chosen by the Waterfront Enterprise Board Limited for the development of the Island Site should be abandoned and to request the Policy and Resources Committee to direct the Directors, in accordance with the provisions of Article 22(a) of the Articles of Association of the Company, to abandon those plans'.
34. It s houldbemadeclear that WEB has not selected a scheme,buthas selected a development partner. No firm proposals have yet beenchosenbyWEBGiven that no such schemeyet exists, it is not possible for States memberstojudgewhethersuch plans' can be abandoned.
35. P a rt (d) of the proposition asks the Statesto agree that the development of the Island Site should be reconsidered by all relevant Committees of the States and that public consultation should take place, to ensure that the project meets the best needs of the community before revised proposals are brought forward to the States for approval by the relevant sponsoring committee.
36. T h e Committee agrees with this proposition in so far as it remains of the view that the normalprocesses of developing, consulting onandgainingapprovals for an Island Site scheme will, ofcourse,befollowed. There has never been any question that any scheme should not be considered by all relevant Committees of the States and that public consultation should take place, to ensure that the project meets the best needs of the community.
37. H o wever the Committee does not agree that proposals should be brought forward to the States for approval by the relevant sponsoring Committee,whichin this case would bethe Policy andResources Committee.WEBwasestablished,as a separate and independent legal entity, to act as a development agency of the States. ThepurposeoftheStatesindoing so wasto create a private sector body capable of

attracting and working with private sector developers and other parties and, most importantly, acting within all

relevant laws and States' policies but acting also outside of the States organisation and its cumbersome and bureaucratic control mechanisms. To reinforce this situation, the States has, since 1996, taken active steps to move WEB even further away from direct States' influence and has agreed that the areas of land on the Waterfront will be sold or leased to WEB and that the Finance and Economics Committee be empowered to consider and approve all of WEB's financial deals with other parties.

38. T h e Policy andResourcesCommittee therefore stronglyrecommends that this part of the proposition be rejected so that, within the very strict controls(planning and financial) already applied bythe States, WEB can continue to operate as an independentdevelopmentagencyofthe States and complete the developmentoftheWaterfrontin line with already agreed plans.
39. T h us this brings the Committeeto consideration of Part (a) ofthe proposition whichasks the States to 'agree, in principle, that the Waterfront Enterprise Board Limited should be wound up as soon as practicable, and that revised arrangements for dealing with the management and development of the areas currently under the administration of the Company, that better meet the needs of the community, be put in place, following a public consultation process and consultation between all relevant Committees of the States.
40. T h e Committee recommends that this proposal should be rejected. Notonly is it not precise, in that it says that WEB should be wound up as soonaspracticable', but it also suggests that certain undefined revised arrangements be put in place, following a public consultation process and consultation between all Committees of the States'.Theseproposalslack clarity andit has beenleftopenas to whatit is intended should happen. Nocase has beenmade for change. The WEB model and its potential alternatives have been extensively tried and tested elsewhere in the U.K.It has been found to bethe best delivery vehicle for regeneration, asit encourages the private sector toco-investbut retains significant public control through the public'sownershipof the company, through political representationon the Board and through the retention by the Public of all planning powers. WEBhasnot failed, it has met the objectives set by the States and it will, of course, continue toconsultwidely.What certainty isthere that replacementproposals would be any better?
41. In addition, the company has manyexisting complex commercial leases and contracts inplace with third party companies,andit would take a considerable periodoftime to changethose arrangements. In some cases, that maynotbepossible as thosethird parties, while content to work with an independent WEB, may not choose to work with government, or whatever other government controlled organisation is established. The cost of resolving these issues might not be insubstantial and should anyof the existing arrangements fail, then the coststothePubliccould escalate considerably.
42. W EB has ongoing contracts of employment with its staff. Those contracts would need either to be honoured,by gaining agreementon transfer of the postsandpost holders toanynew entity imposedor, failing such agreement, the Public would be required tofundanycosts associated with terminating such contracts. Given that the new, very experiencedandhighly regarded, ManagingDirectorhasonly just begun a new5-year contract, thecostsof resolving this issuemightbe considerable.
43. G i ven the critical stage that WEBhas reached in its negotiations in connection with developmentsofthe Hotel, the HarbourReach and other sites, the Committee is of the view that shouldthe States decideto support Senator Syvret's proposal to windWEBup, then not only wouldthose developments beputat very serious risk of not proceeding but the States might also find itself under threat of litigation with third parties who,in all good faith, have expended considerable time and money bringing their development plans near to fruition and now find thoseplans delayed orfrustrated.To introduce such uncertaintynow – for no good reason – would,intheCommittee'sview,beextremelyimprudent and might destroy any future hope of attracting private finance into suchdevelopments.
44. U n der Financial/manpower implications the report states that It is too early to assess whether there would be any financial or manpower implications for the States arising from this proposition. However, it is likely that if there were any such costs arising from it, these could easily be met by the current budget

provision of the Waterfront Enterprise Board Limited. The Committee cannot agree with this view given the

aforementioned potential difficulties in seeking to wind up WEB. The costs of agreeing these proposals are difficult to ascertain in the abstract, but could be very high indeed. Such costs could, the Committee suggests, very easily become a major factor in the next few years as the States, and in particular the Finance and Economics Committee, wrestle with trying to achieve and maintain balanced budgets.

45. F i nally the Committee is concerned that although the States could choose to reject part (b) of the proposition as being unachievable and, even ifitwere,as being ofnoreal purpose, and parts(c)and (d) because they arefoundedon a misunderstandingof the actual position in relation to the existence of a scheme', States memberscouldbe persuaded toconsidersupporting part (a) of the proposition because it is an in principle' decision only.However, the Committee recommends,in the strongest possible terms, that this is not an option which States members should contemplate. The damage to the existing arrangements, thenearlycompletednegotiationsontheHotelandother sites, and on proposed future schemes, including the Island Site, would be incalculable. Everything would be put into limbo, developments would slow down or stop entirely andtheStates' credibility with the private sector would be diminished for a long time,ifnotdestroyedforever.Thereisnoevidencewhatsoever that any other model would have produced more valuable results in the past,or that it would do so inthe future.
46. T h e Committee therefore sees no merit in this set ofproposals and recommends the States to reject them.