Projection of income from land leased to CTP Limited on Waterfront development

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QUESTION TO BE ASKED OF THE PRESIDENT OF THE POLICY AND RESOURCES COMMITTEE ON TUESDAY, 3rd FEBRUARY 2004 BY SENATOR P.V.F. LE CLAIRE

Question

1. In agreeing the lease toCTP(Jersey) Ltd for the land onwhich the WaterfrontLeisureComplex has been constructed the States agreed a formula for financialreturns.Would the President inform membersof the sums of money per annum received to date, and give a breakdown of this sum, to indicate how the Waterfront development has delivered financially to the States of Jersey?
2. Would the President advise members –

( i)  of the projections for income, if any, for the future and would he indicate how these will be delivered?

( ii ) of the total States' contribution to the cost of the leisure complex, including the grant up to a maximum

of £10.9m from the Tourism Investment Fund agreed by the States on 4th July 2000, and would be indicate whether the States will have any future financial involvement with the project?

Answer

1. A sum of £620,000 has been received to date, being exactly as defined in the proposition St. Helier Waterfront Leisure Complex: Terms ofLease' (P.92/1999) that was adopted bytheStatesin 1999. Thereis no breakdownof this sumasitwasreceived in onepaymentat the commencementofthecontract.

I n addition, a total of £57,250 has been received from the developer, CTP Limited, in the seven months since

July 2003, i.e. seven monthly payments of £7,750 plus £3,000 for the part month of July 2003. This payment is being made in accordance with the terms set out in the report accompanying P.92/1999, and is intended to cover the estimated trading deficit for the complex of £93,000 per annum. These funds have been forwarded on to the company responsible for the management of the complex, namely SERCO Leisure, in accordance with the terms of the management agreement.

2. (i)  The financial projections for the operation of the leisure poolin how lossesor surpluses wereto be dealt with wereveryclearly spelt out in P.92/1999.  Noassessmenton the first full yearof trading ofthe leisure pool can be carried outuntilAugust this yearwhen the pool will by then have been operational for one year.

T h e r e is likely to be a substantial overage' payment due to the States on either the sale of the Leisure

Complex by the developer, or an agreed valuation after a period of twelve months from commencement of the operation of the leisure pool. Overage is the residual balance from sale proceeds after deducting the cost of the development and the developer's profit and represents the value of the land in addition to the payment of £620,000 already received.

( ii ) A grant of £10.9 million was made by the Tourism Investment Fund to the Waterfront Enterprise Board

Limited to enable the leisure pool to be constructed. Any further financial involvement by the States will be conditional on the annual operation of the leisure pool as detailed by the formula contained within Projet P.92/1999 for dealing with any surplus or losses which may arise.