Lease to CTP (Jersey) Ltd regarding land which the Waterfront Leisure Complex has been constructed

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WRITTEN QUESTION TO THE CHIEF MINISTER BY DEPUTY P.V.F. LE CLAIRE OF ST. HELIER

ANSWER TO BE TABLED ON TUESDAY 4th JULY 2006

Question

On 3rd February 2004, I put, in part, the following question to the then President of the Policy and Resources Committee –

( a ) In agreeing the lease to CTP (Jersey) Ltd for the land on which the Waterfront Leisure Complex has

been constructed the States agreed a formula for financial returns. Would the President inform members of 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?

( b ) W o u ld the President advise members –

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

In order for members to understand the contribution and the amounts paid to date, would the Chief Minister supply members with updated information, including payments?

Answer

Yes, I am happy to supply members with updated information, including payments, and this is set out below –

1. Asnoted in myresponseon3rd February 2004,the sum of £620,000wasreceived from CTP(Jersey) Limited in September2001,as a cashsum,in accordance with the termsof the proposition St. Helier Waterfront Leisure Complex: Terms ofLease' (P.92/1999), adoptedby the States in 1999.

I n addition, the States received an overage payment of £450,000 in October 2004. Overage is the residual

balance  from sale proceeds after deducting  the cost  of development and the developer's profit, and  it represents the value of the land in addition to the payment of £620,000 already received.

A  s well as these two payments, CTP Limited has been making monthly payments to the States since 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 (£93,000 per annum in 2004). 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.

T h e initial monthly payments were calculated at £7,750 per month, plus £3,000 for the part month of July

2003. This monthly figure has been increased annually by reference to the increase in the Jersey Retail Price Index, and it will continue for a period of 20 years from the commencement date of July 2003.

T h e amounts received to date from these monthly payments are as follows: - Ju l y 2 0 03: £3,000 (initial payment for part of the month)

 A  ugust 2003–June 2004:  £85,250 (11 monthly payments of £7,750)

Ju l y 2 0 04–June 2005: £95,796 (12 monthly payments of £7,983)

Ju l y 2 0 05–June 2006: £98,664 (12 monthly payments of £8,222)

T o ta l m  onthly payments July 2003–June 2006: £282,710

T he  total  sum  therefore  received  from  CTP  Limited  since  July  2003,  including  monthly  payments,  is

£1,352,710.

2. The actual revenue from the public in 2005was £1,050,000 and this figure is projected tobe maintained or increased in future years.The financial projectionsfor the operation ofthe leisure pool, in termsof how losses or surpluses would bedealtwith,were spelt out very clearlyin P.92/1999. At the endofeachyear the amount to be paid orreceivedbythe States is determinedaccording to anagreed formula. On current projections, it is envisaged that a subsidy will be paid toSERCOLimited that will be in the regionof £190,000for2006,and for theforeseeablefutureit is likely that a subsidy will continue to bepaid.The subsidy reflects the fact that the leisure pool is a public facility, andit is considered important to keep entrance charges at an affordable rate. Education, Sport and Culture are working with SERCOtoallowfor further reductions in future years.