Bellozanne Scrap Metal Yard, Bellozanne Valley, St. Helier: lease to Picot & Rouille Ltd., (P.170/2004) - amendment (comments)

STATES OF JERSEY

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BELLOZANNE SCRAP METAL YARD, BELLOZANNE VALLEY, ST. HELIER: LEASE TO PICOT AND ROUILLE LIMITED (P.170/2004) – AMENDMENT (P.170/2004 AMD.) – COMMENTS

Presented to the States on 26th October 2004

by the Environment and Public Services Committee

STATES GREFFE

COMMENTS

Deputy R.C. Duhamel of St. Saviour has proposed an amendment to the Lease between the Public and Picot & Rouille Limited in relation to the property known as Bellozanne Scrap Metal Yard, Bellozanne Valley, St Helier, to reduce the term from 9 years to 2 years to coincide with implementation of the waste management strategy following the findings of the current Scrutiny Panel enquiry.

The Committee opposes this amendment for a number of reasons.

1. I t is unnecessary to require the shorteningof this lease because all agreements issued bytheDepartment of Property Servicesonbehalfof the Public contain a "Public interest clause". In the circumstances where an event is prejudicial, thePublic is able to terminate the agreement upon declaring what the Public interest isin relation to the property in question. TheDepartmentof Property Services has advised that, in order to provide the safeguard Deputy Duhamel has requested, the "Public interest clause" can be extended to specifically allow the Public the right to terminate theLeaseongiving an agreed period of notice, if any part ofthewastemanagement strategy affected the Bellozanne ScrapMetal Yard or its operation. This would alsobe preferable to having a fixed termination date asitallowsmore flexibility in providing termination,as and whenthewastemanagementstrategypolicy dictates.
2. T h e re is also a requirement withintheLeasefor the operator to sign a Service LevelAgreement with the Environment and PublicServicesCommitteewhichsetsout the operator's responsibility and liabilities in relation to its activities on the demised property. This can be changed at any time by reasonable negotiation and with reasonable noticebeinggiven.Thereforeshould the operatingprocedures need to change inaccordance with the wastemanagement strategy, this couldbe done without affecting either the term or any other conditions of the proposed Lease. Thereisalso the provision within the agreement that should the Service LevelAgreementbe terminated by either partyfor whatever reason then theLease for the BellozanneScrapMetal Yard wouldterminateconcurrently.
3. T h e reduction in the length of the leasecould also compromise the Island's ability to deal effectively with scrap metal.The current operators need the securityof a 9 year lease tomaintainandprogress their businesswhether that be dealing with theEndof Life Vehicle Directiveor the implementation of the policy onwhitegoods. A financial institution will not lend funds on expensiveplant and equipment normally written off over 5 or 7 years when a lease only covers 2 years.
4. T h e operation of a Scrap Metal Yard is fundamental to the waste strategy. This amendment could seriously affect this operation.
5. T h e amendment states that there will benomanpowerorfinancial implications. This statementisnot correct because the terms and conditions of the leasewouldhavetobe renegotiated, possiblyrequiring future States approval.With a lease of such a shorttermasbeingproposed,itis likely toplace a greater liability onthe Lessor, for instance, a Lesseeis unlikely to accept full maintenance responsibilities for the site duringsuch a short period. If this is the case, the Environment and Public Services Committee may have topayfor any maintenance required during the period.Itshouldalsobenoted that, while further negotiations aretakingplace,the proposed uplifting in rental would be postponed until such timeas agreementandapproval are secured and therefore there is likely to be a loss inrentalincome.

Accordingly, the Environment and Public Services Committee maintains its recommendation of a 9 year lease to Picot and Rouille in relation to Bellozanne Scrap Metal Yard, Bellozanne Valley, St Helier.