Update on the Ice Rink Cllr Bound, Cabinet Member for Communities and Community Safety Cllr Izett, Cabinet Member for Property and Development

Report to Community Environment and Partnerships Committee Ward(s): South Ham Key Decision: No Appendix 1: Ice Rink Usage Figures (Confidential) Responses to questions raised at Full Council on 22 Appendix 2: February 2018

Foreword – Cllr Bound, Cabinet Member for Communities and Community Safety:

The successful Basingstoke Bison ice hockey team and ice rink make a valued contribution to the sporting life of the borough. We benefit from facilities and teams in a range of different sports - this is part of why we have a reputation for high quality leisure. The ice rink has been part of the life of Basingstoke for the last three decades.

This is why the agreement with NewRiver includes the requirement to put together a proposal for the development of a new ice rink, subject to a suitable operator, who is able to make it economically viable to run being found, and there being demand for it. But I can totally appreciate the concerns of the fans that a solution is found that will keep the ice rink functioning as the venue for their team in the interim.

I’m sure that they will also appreciate that both the team and the rink are run on a commercial basis by Planet Ice, a private company, and that it would be hard for the council to justify subsidising this to benefit a private business at public expense.

The council has been working with the existing owner, the long leaseholder Standard Securities, and Planet Ice to focus on practical ways to keep the rink open in the short term. I’m pleased that a solution appears to have been found to do this while the longer-term options are investigated. I look forward to hearing the views of the committee members.

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Views of the committee are sought on:

. The approach adopted to date and options for future actions

2 of 11 Background, corporate objectives and priorities

The Chair of Community, Environment and Partnerships Committee has requested an update on the Basingstoke Ice Rink following public concerns raised about the deteriorating condition of the rink in recent years.

Whilst this facility is run commercially by a private business, it is a key element of the current Leisure Park that contributes to the Council Plan priority to Enhance Leisure and Cultural Facilities.

Glossary of terms

Term Definition Special Purpose Vehicle – a company set up for a sole purpose SPV or to hold a specific asset Any advantage granted by public authorities through state resources on a selective basis to any organisations that could State Aid potentially distort competition and trade in the European Union (EU). Peppercorn rent A lease with no rent payable

Main considerations

1 Executive Summary

1.1 Concern has been raised by the public and Members about both the long term and the immediate future of the Basingstoke ice rink and the Bison ice hockey team. Extensive questions were raised at Full Council on 22 February 2018 by a member of the public.

1.2 Community Environment and Partnerships Committee has requested an update on the current position be bought to the committee at the earliest time.

1.3 An interim solution to keep the ice rink and associated ice hockey team has been agreed while the long-term options are considered.

2 Background

2.1 Public concern has arisen over the past few years about the condition of the Basingstoke ice rink and hence the future of both skating and the Bison ice hockey team. Extensive questions were put to Full Council on 22 February 2018

2.2 The ice rink is one of a number of key leisure attractions at the existing leisure park. The rink was originally built and managed by the council, latterly using external operators. Latest usage figures for the rink and comparison to the refurbished Planet Ice rink at Milton Keynes have been provided by Planet Ice (Basingstoke) Ltd on a commercially confidential basis and are set out in confidential appendix 1

3 of 11 2.2.1 The rink fulfils two primary purposes and that is participative skating including pleasure, lessons, learning hockey, parties etc and as a home for the Basingstoke Bison. The Bison is a semi-professional ice hockey team founded in 1988 and wholly owned by Planet Ice. The team has had a good recent success record and now plays in the National Ice Hockey League South 1 alongside nearby Bracknell Bees and .

2.3 The detailed questions raised at Full Council seek information on the condition of the rink going back to the original construction in 1988. The council’s Leisure Services Committee and Policy Committee considered and authorised the policy approach and the future of both the Lido and Ice Rink at meetings between 1998 and 2000.

2.3.1 The council’s document retention policy means that records from pre-2000 are not routinely retained, albeit there are some limited archived files that provide some history but by no means comprehensively.

2.3.2 Responses to the questions raised are in Appendix 2 to the extent information has been retained. The questions raised also contain a number of statements but in the main, these cannot be validated or commented upon on an informed basis.

2.4 The legal position is set out in S5 and the current position is that Basingstoke and Deane Borough Council is the landlord, Standard Securities Ltd is the head tenant under a 115 year peppercorn lease sold to it by the council in July 2000 and Planet Ice (Basingstoke) Ltd has an occupational lease till 2061, paying their rent to Standard Securities Ltd. The council receives no rental income from the ice rink for the duration of the 115 year lease.

2.5 The history of repair pre-2000 is thought to be of little, if any, legal relevance given the key contractual event, being the grant of the 2000 headlease and the unequivocal covenant to repair within that lease.

2.6 The rink has developed structural problems with the ice pad. Planet Ice has structural surveyors retained, who advise that water is getting beneath the ice pad into the chalk subsoil. As this freezes, creating a “permafrost”, the rink is subject to an upward heave from below. Planet Ice is managing this by keeping the surface flat but the resultant ice pad is a “lens shape”, rather than flat, with significantly more depth at the edges.

2.7 It is unclear when the issue became apparent but no specific reference was made to it in July 2011 when a joint inspection was carried out by the council’s surveyor and representatives of Planet Ice. There was however reference to cracking in various areas such as stands that were the subject on an insurance claim at the time. It is understood that the insurance claim was not successful

2.8 In 2013, Planet Ice (Basingstoke) advised the council at a meeting, that the cause of the structural cracking was the ice pad heave and that the repair costs would be beyond the company’s means.

2.9 Following public concerns raised in 2016, the council’s Environmental Health and Building Control teams visited the ice rink. It was felt that whilst not

4 of 11 correcting the fundamental structural issue, Planet Ice (Basingstoke) Ltd had professional advisors on board and were carrying our works to keep the facility open and safe for users, albeit with a reduction in facilities.

2.10 The ice pad movement has resulted in resultant damage to stands and surrounding structures. Planet Ice (Basingstoke) Ltd has carried out remedial works and closed off some areas. The latest survey by external consultants, employed by Planet Ice (Basingstoke) Ltd was in April 2018. This suggested various further remedial works to cope with the continuing movement of the ice pad. The council has been provided with copies of the 2016 report and the results of the latest inspection.

2.11 Planet Ice (Basingstoke) Ltd advise the existing ice pad may last for a further short but unquantifiable period but ultimately, it would need removal and relaying at a cost in the region of up to £1m+ (as advised by Planet Ice (Basingstoke) Ltd). This sum has not been verified by the council but it is clear the repair works would be extensive and time consuming, requiring digging out the “permafrost” and relaying the rink.

2.12 The council entered into a Development Agreement with NewRiver Leisure Ltd on 19 March 2018 to regenerate the whole park. The agreement provides for the retention of the existing Milestones museum only, albeit there will be continuity with provision of a new Aquadrome and the private club of Loddon Bowls will also have continuity of operation, potentially off site. Other existing uses will be reviewed as part of the masterplan development.

2.12.1 The Development Agreement is on the basis that NewRiver Leisure Ltd will acquire the existing interests and the council has agreed in principle to seek a Compulsory Purchase Order to support site assembly if necessary.

2.12.2 The Development Agreement recognises that the ice rink has been an important part of the life of Basingstoke for three decades and NewRiver is required to explore options for a new rink as part of the wider leisure proposals. This would, of course, rely on a suitable operator, who is able to make it economically viable to run, being found and there being demand for it.

2.12.3 However, if a rink is included, it would be part of the whole regeneration project and unlikely to be available until 2025/26 at the earliest and it is by no means certain that the existing rink can last that long without fundamental repair.

3 Key issues for consideration

3.1 The timeline can be summarised:

Date Event

1999/2000 Various council committees agreed to refurbishment plans for the Lido and to dispose of the ice rink by way of a long lease

5 of 11 July 2000 115 year fully repairing lease granted to Planet Ice Ltd for a premium and nil rent

April 2006 Business transferred to Arena Group UK Ltd

September 2011 Head lease assigned by Arena Group to Standard Securities Ltd

September 2011 Arena Group lease back the ice rink

January 2012 Notice of Appointment of Administrators for Arena Group

September 2012 Sublease assigned to Arena (Basingstoke) Ltd

December 2012 Company changes name to Planet Ice (Basingstoke) Ltd

May 2013 Planet Ice (Basingstoke) Ltd advises issues with ice pad and not covered by insurance

March 2018 Development Agreement with NewRiver Leisure Ltd signed by council

Ongoing Discussions with both head lessee (Standard Securities Ltd) and Planet Ice (Basingstoke) Ltd to keep ice rink operational and retain the hockey team while longer term park regeneration options are developed

3.2 The long-term future of a rink in Basingstoke is part of the wider development of the leisure park regeneration proposals and assuming viable, any replacement as part of the total scheme is unlikely before 2025/26. The regeneration plan is comprehensive and so individual facilities will only be replaced as part of the delivery of the total plan.

3.3 The current issue is therefore to keep the rink operational while NewRiver has time to engage with Planet Ice (Basingstoke) Ltd and look at all the options. Additionally, the Bison ice hockey team is a business owned by Planet Ice and only a solution keeping Planet Ice as the operator can guarantee the continuing presence of the Bison; albeit the ultimate decision on the team’s future lies with the owner.

3.4 Planet Ice (Basingstoke) Ltd has recently advised that the rink deterioration is at such a rate that they anticipate they can continue to operate for the next two years while NewRiver carry out their investigations. This is subject to

3.4.1 There not being a failure on the ice pad requiring complete replacement

3.4.2 Receiving some financial contribution towards the current loss in running the rink, primarily as a result of high energy costs to keep the larger amount of ice frozen. As yet no evidence has been provided on the quantum.

6 of 11 3.4.3 Planet Ice (Basingstoke) Ltd has approached both their immediate landlord, Standard Securities Ltd and the council for financial assistance. The council is looking to the long term via its modernisation proposals with NewRiver and would find it difficult to justify subsidising, in the short term, what is a private commercial interest (See S5). Since the threat of closure first arose, the council has met on a number of occasions with Planet Ice (Basingstoke) Ltd and been in contact with the headlessee, Standard Securities Ltd. The outcome is that Standard Securities Ltd has agreed to provide some financial assistance that will allow the rink to continue to operate while longer term options are being investigated.

This financial assistance allows for the status quo to be maintained but does not cover the major financial repair costs to fully replace the ice pad.

3.5 In the event the ice pad fails completely, the repair cost would be significant and the tenants may be reluctant, or unable financially or practically to comply with their lease obligations.

4 Options Analysis

4.1 Currently the primary consideration is the matter of the interim continuation of the ice rink.

4.2 NewRiver is carrying out initial research on options, including ice, using specialist leisure advisors.

4.3 It currently appears that the contribution from Standard securities Ltd will enable Planet Ice to continue to operate the rink while the longer-term options are considered. This approach would only manage the impact of the structural problems not address them. In the event of the ice pad completely failing, the options become more difficult but can be summarised:

4.3.1 Accept a commercial reality if neither Standard Securities Ltd nor Planet Ice (Basingstoke) ltd is prepared to invest the significant sum to fully repair the ice pad. The current rink could close

4.3.2 The council could seek to enforce its repair rights against the head lease, Standard Securities Ltd. The outcome of such legal action is by no means certain, particularly as to whether Planet Ice (Basingstoke) Ltd would continue as operator. This would depend on whether head lessee would accept the repairing obligation/cost and not seek to pass it on to their own tenant

This situation is currently still hypothetical and no discussions have taken place on the basis of use of legal action.

4.3.3 The council could consider subsidising repairs but that raises issues of State Aid if public funds are to be used to support a private commercial business see section 5.8. The condition of the building and the problems with the ice pad would need to be assessed and taken into account in terms of determining the viability and proper use of public funds.

4.4 An alternative strategy would be not to allow the short-term approach in 4.3 above and to seek to put the rink back into good repair, in accordance with the

7 of 11 current lease obligations, immediately rather than let it continue in its current poor state. This would require significant investment as highlighted. The approach would follow 4.3.2/4.3.3 above with the council either seeking to enforce the existing lease obligations or directly contributing in combination with other parties. The difficulties and costs of overcoming the problems with the ice pad and the general age and condition of the facility as a whole may make this impractical and unviable

Corporate implications

5 Legal Implications

5.1 In 2000, the council decided to sell the rink to Planet Ice Ltd on a 115 year lease at a peppercorn rent, in return for a capital premium.

5.2 The ownership of both the head lease and operating company has changed since the original lease grant in July 2000. Planet Ice Ltd sold the business and the tenant changed its name to Arena Group (UK) Ltd on 05 April 2006, which subsequently assigned the head lease to Standard Securities Ltd. for a capital sum of £2,050,000 in September 2011, according to a Land Registry search by Legal .

Arena Group (UK) Ltd took a lease back of the rink from Standard Securities dated 26 September 2011 to continue to operate the rink. A Notice of Appointment of Administrators was filed in respect of the Arena Group (UK) ltd on 19 January 2012. A licence to assign the lease, dated 21 September 2012 permitted the grant of lease assignment to Arena (Basingstoke) Ltd and that company subsequently changed its name to Planet Ice (Basingstoke) Ltd on 18 December 2012

The lease back to Arena Group (UK) Ltd created the current underlease position whereby the operator pays a rent to their immediate landlord, Standard Securities Ltd. The council does not receive any rent under the original 115 year lease.

5.3 The headlease dated 24 July 2000 contains a number of relevant provisions including:

5.3.1 Throughout the term [the lessee] to keep the whole and every part of the demised premises and all additions thereto and all fixtures thereon and the drains soil and and other pipes and sanitary and water apparatus which serve the demised premises and adjoining property in good and substantial repair, order and condition.

5.3.2 Provisions restrict the use to that of ice rink and ancillary uses for the first 10 years of the lease. The second 10 years of the lease allows for other uses at the landlord’s discretion only, thereafter other uses can be proposed and the landlord’s (ie the council’s) consent cannot unreasonably be withheld or delayed; so the use is not restricted to an ice rink necessarily post 2020.

5.4 These repairing provisions place a high level of obligation on the tenants but clearly is only enforceable if the tenants are able to carry out the works.

8 of 11 Although not formally costed, clearly the cost of replacing the ice pad will be significant.

5.4.1 The Basingstoke rink is operated by Planet Ice (Basingstoke) Ltd a Special Purpose Vehicle (SPV) which leases and operates this rink alone. Latest company accounts (2016) indicate negative net liabilities.

5.4.2 The council’s direct tenant is Standard Securities Ltd and company accounts indicate assets adequate to carry out the repair liability

5.5 The questions to Full Council focus significantly on the period before 2000 but the granting of the lease at that time to Planet Ice Ltd effectively sets the marker on the repairing liability for the ensuing 115 years.

5.6 Should the council decide to subsidise the rink at any point, careful consideration needs to be given to ensure it does not breach State Aid rules. Should the council wish to consider providing any form of financial assistance to Planet Ice in the future to alleviate the issues identified within this report, possible approaches (than would not breach State Aid rules) could include:

5.6.1 Providing a loan on commercial terms, which the council could do by virtue of Section 1 of the Localism Act 2011 (powers of general competence).

5.6.2 Providing a loan at below market rate or providing a grant (with or without conditions and utilising Section 1 of the Localism Act 2011) relying on one or more existing exemptions available under the State Aid rules. In this case, the council would need to be satisfied that Planet Ice was not receiving additional funding from other public authorities which, when added to any funding granted by the council, would breach State Aid rules

5.6.3 Generally, the De Minimis Regulation allows support to an undertaking up to the approved level to be given outside of the aid rules. For example, it is not seen as aid because of its low value and the low prospect of it affecting cross- border trade. To rely on this Regulation, it is necessary to calculate the gross grant equivalent for the support to make sure it is beneath the allowable financial ceiling (€200,000) for any given three-year period.

5.7 At this stage there would be no state aid implications for the council if (as outlined in this report) SSL was to waive its right to recover a contribution to service charges from Planet Ice.

5.8 Additionally, it might be difficult to assist one operator on the park and not others in the event they have financial challenges in the future.

6 Financial implications

6.1 The council has no legal obligation to contribute to repairs and any voluntary contributions would need to be lawful within State Aid provisions.

6.2 There is no current budget provision for any such support.

9 of 11 6.3 Planet Ice (Basingstoke) Ltd is not currently seeking any subsidy from the council, as we understand they have reached a satisfactory arrangement with their immediate landlord, Standard Securities Ltd.

7 Risk management

7.1 At this time, no full risk assessment has yet been carried out as this report is to update members on the current position

8 Equalities implications

8.1 None at this time

9 Consultation and communication

9.1 There has been significant public concern over the condition of the rink and the lack of repairs in recent years. The Basingstoke Bison has a passionate fan base, who are keen to keep the team playing locally.

Our communications around the future of the ice rink aim to make a clear distinction between the long-term options being investigated for an ice rink in the redevelopment and the challenges of keeping the current rink open in the shorter term.

10 HR implications

10.1 None applicable at this time

Conclusion

11 Summary

11.1 The current position is that the long-term future of the ice rink is yet to be determined as part of the significantly larger leisure park regeneration proposals. If included, any new ice rink is a considerable number of years away.

11.2 The council has put in place a Development Agreement, which if implemented, will result in the delivery of a much larger Leisure Park for the residents of the borough, offering a diverse range of exciting new 21st Century leisure activities.

In relation to the ice rink, focus to date has been on keeping both the rink operational while the regeneration proposals are developed. The approach has therefore been to engage with both head lessee and more particularly the operator tenant in a constructive manner, given the council’s direct legal relationship is with Standard Securities Ltd.

11.3 Other solutions involving legal enforcement are uncertain as outlined above.

11.4 Members of Community, Environment and Partnerships Committee are invited to comment on the approach

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Victor Nicholls, Executive Director of Borough Development and Lead officer Deputy Chief Executive Mike Bovis Report author [email protected] Tel 01256 845360 Version Final Dated 15 June 2018 Status Open It is considered that information contained within Appendix 1 Confidentiality contains exempt information under the meaning of Schedule 12A of the Local Government Act 1972, as amended, and therefore cannot be made public.

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