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BID PROCESS ANALYSIS Stage 1 Report DRAFT

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BID PROCESS ANALYSIS Stage 1 Report DRAFT CITY AND COUNTY OF CARDIFF DINAS A SIR CAERDYDD COMMITTEE OF THE COUNCIL 10 May 2001 CABINET PROPOSAL AGENDA ITEM: European Capital Of Culture 2008 Background 1. Council, at its meeting on 5 April 2001, agreed to : · note the progress made as detailed in the report as part of Cardiff’s bid for European Capital of Culture 2008; · seek a partnership commitment from the National Assembly for Wales that £500,000 be allocated to the Council in its bid for the Capital of Culture 2008; · a matched contribution of £500,000 by the Council towards the bid preparation; · demonstrate Best Value throughout its bid and this would be carried out on a transparent and open basis; · the Deputy Mayor’s proposal that the preparation of the Council’s bid be extended to include input from other service areas which would add value to the process. 2. The Stage 1 Report (Draft for Consultation) has been received from the Consultants. · The Bid The report supports the Council’s view that cultural, economical and social potential arising from Cardiff being nominated for the capital of Culture justifies the submission of a bid. Moreover, if the bid is successful, the benefits would be enormous. To succeed, it needs the complete buy-in of the public, private, voluntary and cultural sectors and requires supremely strong leadership. · Bid Management The report concludes that given the urgency to make progress, the Council, in partnership with such key stakeholders should establish a Project Steering Group (possibly forming a limited company). The Consultants have suggested that to meet timescale deadlines it will be necessary to consider seconding Page 1 of 7 officers and/or appointing specialist consultants to undertake the task of preparing the bid. Within that process, further consideration could be given to the most appropriate vehicle to take forward the necessary work should Cardiff’s bid succeed. · Next Stages In summary, the report recommends the following actions by the Council: (i) agreement of the conclusions of the Stage 1 Report; (ii) the Council hosts a stakeholders meeting to seek the views of the stakeholders regarding the process (the Consultants would provide presentation if required); (iii) with the support of the Council and stakeholders, the Consultants be instructed to continue Stages 2 & 3 of the bid process and outline Business Plan by 31 May 2001; (iv) confirm the level of resources for the bid process by 31 May 2001; (v) agree the leadership and composition of a Project Steering Group by 31 May 2001; (vi) agree the decision-making powers and fiduciary powers of the Project Steering Group by 31 May 2001; (vii) with all these measures in place, agree to hold a press conference on 1 June 2001 to formally announce the bid for European Capital of Culture 2008. The Issues 3. The closing date for bid applications to the Department of Culture, Media and Sports is 31 March 2002. The key decisions and issues are outlined in the conclusions and recommendations of the consultants in the Stage 1 Report as detailed in above. 4. In making a decision on the recommendations for Bid Management, consideration should be given on the merits of establishing a Trust, a company limited by guarantee, or a company limited by guarantee with charitable status. The consultants advise that it is not generally appropriate for an organisation which aspires to operate and manage an arts project or to trade to opt for Trust status, and that the most appropriate vehicle to take forward the bid would be a company limited by guarantee for which charitable status would be sought (the latter process usually taking a minimum of six months). To meet the timescales the Council could purchase an, “off the shelf company limited by guarantee”, to use in the interim period whilst the final vehicle with charity status is processed. 5. If the proposal is agreed, a decision needs to be taken as to Council representation within the company/trust. Once this has been decided, a meeting of the stakeholders should be arranged in order that they can nominate representatives for the independent Project Steering Group, set up a company limited by guarantee the Directors of which would be representative of the stakeholders and then proceed with an application for the company to have charitable status. The composition and leadership of the independent Project Steering Group, and the company needs to be agreed by 31 May 2001, together with the protocol and Page 2 of 7 agreed procedures to draw down on the funding put in place jointly by the Council and National Assembly for Wales of £500,000 each. Both Project Steering Group and the company itself would progress all areas of the bid application up to the 31 March 2002. The funding provided and draw down allowed to be used for revenue expenditure only, no expenditure to be expended on any capital items. 6. An alternative arrangement could be for the Council itself to provide and undertake the operation to bid for the European Capital of Culture 2008. 7. In tandem with the above, the Consultants should be instructed to continue Stages 2 and 3 of the bid process and Outline Business Plan for completion prior to 31 May 2001. Page 3 of 7 ADVICE This report has been prepared in consultation with Corporate Managers and reflects their collective advice. It contains all the information necessary to allow Members to arrive at a reasonable view, taking into account the advice contained in this section. The Corporate Manager dealing with this report is Tom Morgan. Legal Implications This matter will require detailed legal advice on implementation of the recommendations and establishment of the proposed company. The legal issues are summarised below. Formation of Company Local authorities have a variety of specific powers enabling them either to form or acquire shares in companies. They should not, however, create a company with the intention of avoiding any statutory controls or to perform some function which the authority must perform itself. The Council has powers under section 144 and 145 of the Local Government Act 1972 to encourage visitors and to provide conference and other facilities and to provide or arrange for the provision of entertainment and to encourage others to do so. Also, new powers under the Local Government Act 2000 to promote the social, environmental and economic well-being of the area have just been brought into force. The general purpose of promoting Cardiff as described in the report would fall within these powers. The Local Government and Housing act 1989 (LGHA 1989) effectively restricts the Council’s freedom in terms of establishing companies and their subsequent operation. If any company established falls within one of the definitions, i.e. controlled or influenced companies, certain financial and operational restrictions will apply which would limit its activities. In particular, capital finance restrictions would be applied in the same way as they apply to the Council. It would be preferable if the company is to be involved in activities to which capital controls might apply, to ensure that the company formed is not controlled or influenced, and controls over the use of funding are maintained through grant conditions. Other issues A company is distinct from the local authority itself, even where the authority has control. The directors of the company owe a fiduciary duty to the company, and not to the authority itself. Accordingly, it is their duty to act in the best interests of the company, even where that conflicts with the interests of the authority. Members or officers appointed to boards of companies must comply with the provisions of company law applicable to such companies when matters are before the Council. Officers or members who agree to become directors of companies, or trusts as local authority representatives thereby take on duties and responsibilities which may give rise to legal liabilities which are distinct from those as members of the Council. Non-charitable trusts may be regulated them the LGHA 1989,s72, and subject them to the same rules as companies. This provision applies to any non-charitable trusts Page 4 of 7 subject to the influence of a local authority. ‘Influence’ is defined by reference to the same criteria as apply when determining whether a company is subject to local authority influence. Again, any trustee would owe his/her obligations to the trust rather than to the authority which has appointed him. However, the rules of limited liability would not protect an officer or member appointed as a trustee. Charitable trusts may be registered with the Charity Commissioners. They cannot, however, be brought within the controls of the LGHA 1989, Pt V. The formation of a company, or charitable trust as proposed within this report would appear to be within the powers of the Council. However, the form of the company or trust will need to be considered with some care because of the statutory controls upon the Council which may affect its finances and the way in which the Council may exert any influence on the project. In addition any members and officers who are appointed to the company or trust will need to take into account the liabilities and responsibilities that attach to them, and the limitations attached to any indemnities provided. Members appointed to the company by the Council will receive further advice in accordance with previous practice. The Council will wish to ensure that the Memorandum and Articles of Association of the company or trust are property drafted to reflect or there is in place an agreement to secure any controls which they may need to satisfy the statutory requirements or to ensure that their requirements for the project are met.
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