GD 2021 / 0012

Report on the establishment of the Manx Development Corporation

Contents

Page

Minister Foreword 3

Introduction 4

Project Steering Board 5

Establishing the Manx Development Corporation

Structure 6

Oversight and Governance 6

Business Model 8

Vision and Priorities 8

Next Steps 9

Appendices 9

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Minister Foreword

Tynwald has been clear in its view that the establishment of a Development Corporation in the Isle of Man, focused on the development of unoccupied or previously developed urban sites, is a priority.

The resolution of Tynwald Court in November 2020, that such a body be established by March 2021, was an ambitious and challenging target. However, I am pleased to present this report which shows the considerable progress that has been made in understanding the finer detail of how a Development Corporation is to be structured, what the oversight and governance arrangements will look like and how it will be resourced.

With the further support and endorsement of Tynwald at the March sitting to the proposals as set out in this report, the target will have been met and the Manx Development Corporation will have been established by the end of March 2021.

Establishing the Manx Development Corporation is an important first step for the repurposing of Government owned brownfield sites. Furthermore, it is a catalyst to realising the potential that can be achieved by unlocking a range of public and private development opportunities to enhance the appearance of our towns and contribute towards economic prosperity, alongside social and public realm benefits.

These potential benefits have been recognised by the Economic Recovery Group which has approved a level of interim funding to enable the Manx Development Corporation to be established and operate effectively during the early years of operation as it concentrates its efforts on the strategically important, priority sites.

I am delighted to be able to present this report to Tynwald and I hope you are able to support the accompanying Motion to enable the establishment of the Manx Development Corporation to progress.

Hon A Cannan MHK Minister for Treasury

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1. Introduction

In July 2018 the report of the Select Committee on the Development of Unoccupied Urban Sites1, was laid before Tynwald. The Report put the spotlight on the number of unoccupied or previously developed sites, particularly in Douglas, that were potentially ripe for development but recognised the barriers that had prevented successful redevelopment, in some cases, over a number of years.

In November 2018, Tynwald debated the report and approved the recommendations with one such recommendation being that a Development Agency was set up in partnership with local Government and the private sector.

During 2019, the Department for Enterprise commissioned an independent comparative study of urban development agency models2 to further inform the potential options available to establish such a body in the Isle of Man. The study concluded that the most effective way to leverage economic and social value from unoccupied urban sites would be to:

 Establish a Development Agency that is autonomous and accountable through transparency and trust;  Provide the Development Agency with sufficient powers to achieve its strategic goals, set within an agreed masterplan;  Coordinate multi-agency and Government initiatives to maintain economic development;  Identify strategic redevelopment areas and provide the framework to deliver cost neutral development outcomes;  Establish and maintain a flexible fiscal & funding environment in which development is economically viable;

At the sitting of Tynwald in November 2020, it was further resolved that the Department for Enterprise should take the lead in establishing a Development Corporation by the 31st March 2021.

These Tynwald decisions, together with the earlier research undertaken and more latterly in-depth analysis and further benchmarking of potential structures and governance models, have laid the foundations for the establishment of the Manx Development Corporation.

1 https://www.tynwald.org.im/business/pp/Reports/2018-PP-0108.pdf 2 https://www.gov.im/media/1367602/urban-development-agency-models-20-november-2019.pdf

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2. Project Steering Board

Following on from the Tynwald resolution in November 2020, the Department for Enterprise established a cross Government group, the Project Steering Board (PSB), to drive forward the implementation project.

Senior officers were nominated from Treasury, Cabinet Office, the Department of Infrastructure and the Department of Environment, Food and Agriculture joined those from the Department for Enterprise to form the PSB, bringing together their skills, knowledge and experience.

The PSB was chaired by Bill Shimmins MHK, with Lawrie Hooper MHK serving as Deputy Chair.

PSB membership:

Member Representing Bill Shimmins MHK (Chair) Political Member for Treasury Lawrie Hooper MHK (Deputy Chair) Political Member for Enterprise Andrew Stewart – Project Lead DfE Jann Jevons Project Manager Diane Brown Cabinet Office Emily Curphey DoI Brett Woods Jennifer Chance DEFA Chris Balmer Andrew Sidebottom Treasury Stephen Moore DfE

The project has also benefitted from the significant support of a senior legal officer from the Attorney General’s Chambers throughout in order to navigate the complexities of establishing the Manx Development Corporation.

The first PSB meeting was held on the 21st December 2020, with numerous further meetings, held both virtually and in person, together with a significant volume of work undertaken in between meetings to ensure the project remained on track.

The PSB will continue to meet and undertake any necessary work until the Manx Development Corporation is fully incorporated and the recruitment process is completed.

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3. Establishing the Manx Development Corporation

Structure

The Manx Development Corporation (MDC), whilst wholly Government owned, will be incorporated under the Companies Act 1931 as an autonomous, arm’s length company with its own legal persona.

As is usual practice for Government owned companies, the Treasury Minister will be the sole shareholder.

The MDC will have a small board consisting of a non-executive Chair and 2 further non-executive directors, with a Managing Director fulfilling the executive role in the company. These executive and non-executive roles will be crucial to the success of the MDC, therefore, suitably experienced and talented individuals will be sought as part of the recruitment process.

The remuneration for the Board and the Managing Director will be agreed by the Treasury Minister as the Shareholder.

Subject to Tynwald approval of the proposed structure, the MDC would initially be incorporated in late March and two interim Directors appointed whilst recruitment is commenced and concluded during April and May 2021.

The Board and Managing Director will determine further staffing requirements as the MDC matures and potentially requires additional resources as it commences commercial activity.

The MDC will also have access to subject matter experts from within Government to assist with initial strategic planning, site identification and any other relevant matters.

Oversight and Governance

Whilst the MDC will be established as an arm’s length company, there is a clear requirement for a mechanism to provide high level strategic direction to ensure that the MDC undertakes development activity which is aligned to wider Government aims and objectives.

Furthermore, there will need to be a mechanism for the MDC to seek approval for specific projects, including the requirement to transfer assets and / or provide finance.

It is therefore proposed that a new sub-committee of the Council of Ministers is established, the Brownfield Regeneration Steering Group (BRSG). The BRSG will provide the relevant strategic direction and hold the MDC accountable for

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delivery against an agreed implementation plan and annual work programme, including any associated budget.

As the Treasury Minister is the sole shareholder of the MDC, and consent of the shareholder will be required for asset transfer or the issuing of loans or other forms of finance, it is proposed that the Treasury Minister chairs the BRSG, thereby ensuring Treasury (and shareholder) primacy in respect of financial transactions.

The MDC will report at least quarterly to the BRSG to ensure effective monitoring of outcomes against agreed plans and Tynwald will receive a copy of the annual report and accounts of the MDC to ensure ongoing parliamentary scrutiny.

Further details on the role of the BRSG are outlined in the proposed Terms of Reference included at APPENDIX 1.

A detailed shareholder agreement will be entered into by the Treasury and the Board of the MDC which defines the specific governance arrangements under which the MDC must operate.

A preliminary Heads of Terms for this Shareholder Agreement sets out the key components of the intended relationship and commercial arrangements relating to funding, assets and due diligence and further information is contained within the document attached at APPENDIX 2.

The proposed structure is set out further below:

TYNWALD

COUNCIL OF MINISTERS

KEY STAKEHOLDERS GROUP 1 BROWNFIELD REGENERATION STEERING GROUP (BRSG) TREASURY Other Government MINISTER Minister for the Cabinet Office, Departments: Primarily Sole Treasury Minister (Chair), DoI, CabO, DEFA, DfE Shareholder Minister for Enterprise

Chief Financial Officer, Chief Secretary for the Cabinet Office, CEO GROUP 2 TREASURY Local Authorities Department for Enterprise, Director for Policy and Reform DEPARTMENT Other key stakeholders by invitation. Funder GROUP 3 Developers/construction, Strategic Asset MANX DEVELOPMENT CORPORATION retail, allied industries and ownership professions, other Board consisting of Non-Executive Chair & 2 Non-Executive landowners, investors, Board Directors & Managing Director residents, environment Part-time secondment of DfE expert(s) for start-up phase and climate change subject Office support and use of Government’s shared services matter experts. Policy levers IOM GOVERNMENT ENABLERS Property/Development Fund Legislation levers Creating the conditions for the successful development & De-risking Urban development exemptions delivery of Urban Strategies, National, Area and local Plans Land/Site Assembly Unlocking unoccupied urban sites Tax incentives

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Business Model

The priority for the MDC upon recruitment of the Board and Managing Director will be to work with the BRSG on developing a 3-year strategic implementation plan and annual work programme.

This will identify the priority sites for development and the potential for such sites to be transferred into the MDC and for the MDC to work on comprehensive site and wider master plans in respect of potential developments.

Detailed business cases will be developed by the MDC for consideration and approval by the BRSG, including the necessary financial arrangements.

In respect of interim funding, the Economic Recovery Group has approved initial funding for up to 2 years operation of the MDC, as it is expected to take some time until full commercial activity commences and revenues start to be generated, given the need to produce comprehensive plans for specific sites.

Vision and Priorities

Core to the work of the PSB has been the potential benefit of the MDC in raising standards of design, social benefit and public realm improvements across the Island. As such, the proposed Vision statement for the MDC is:

“That the Island’s urban landscapes will be perceived by its residents as vibrant, safe, of high design quality and environmentally efficient, and a key contributor to increased inward investment and recognition as a top International Business Centre.”

The PSB proposes to Tynwald that the purpose of the Manx Development Corporation should be:

“To be a catalyst for the positive transformation of the Island’s urban landscape for the benefit of all Manx Citizens”

and that the Company should fulfil the following priority roles:

 The development of unoccupied or previously developed sites transferred to the Manx Development Corporation, in line with Government strategies, urban regeneration masterplans and the Island Development Plan.

 Facilitate, enable and broker the development of unoccupied or previously developed sites in private ownership for the purpose of sustainable and suitable development, ensuring alignment with Government strategies, urban regeneration masterplans and the Island Development Plan. Activities could

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include shouldering some of the risk preventing privately funded development and regeneration.

 The provision of strategic and research support for Government in support of Island-wide urban regeneration.

The PSB proposes to Tynwald that the Manx Development Corporation Structure outlined is the most appropriate organisational design for realising the potential benefits of:

• More effective utilisation of Government owned unoccupied urban sites; • Commercial returns through medium to long-term investment; • Increasing design quality and environmental integrity of new build in all development; and • Spatial enhancement and public realm for the Island’s population.

4. Next Steps

The report concludes that the following actions should be taken:

 The Manx Development Corporation should be established in accordance with the proposed structure and governance arrangements set out in this report;  The Brownfield Regeneration Steering Group should be established in accordance with the Terms of Reference set out in this report; and  The Shareholder Agreement should be negotiated between the Treasury as shareholder, acting through the Brownfield Regeneration Steering Group, and the Manx Development Corporation in line with the stated intentions contained within the Heads of Terms.

5. Appendices

1. Terms of Reference for Brownfield Regeneration Steering Group 2. Heads of Terms for Shareholder Agreement between Treasury and the Manx Development Corporation

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APPENDIX 1

Council of Ministers CONFIDENTIAL Sub Committee Structure

BROWNFIELD REGENERATION STEERING GROUP (BRSG)

Terms of Reference

File Reference: Date Created:

Amended by:

Approved by:

Revision No. 0.05 Revision Date: 16-02-21

1. Purpose

1.1. This Council of Ministers Sub Committee – Brownfield Regeneration Steering Group (BRSG) - has been set up to ensure that the utmost priority is given to the three strategic objectives within the Programme for Government, being:

 An inclusive and caring society  An Island of enterprise and opportunity  Financially responsible Government

In doing so, the Sub Committee will ensure that these objectives are achieved within the life of the administration and that any issues with delivery of related priority projects are identified at the earliest stage and appropriately addressed.

1.2. The Sub Committee will set direction and establish work streams which will undertake detailed policy development on strategically important issues. Together with the other Council of Ministers Sub Committees, it will identify and draft policies to recommend to the Council of Ministers.

2. The Programme for Government

2.1 The Programme for Government details the priorities that will be delivered by Government over the term of its administration (to September 2021). All Council of Ministers Sub Committees must be focused on delivery of these priorities which will also form the basis for Departments, Offices and Statutory Boards planning.

2.2 This Brownfield Regeneration Steering Group is responsible for ensuring the delivery of the relevant priorities, targets and objectives within the Programme for Government. The Committee will also be responsible for reconciling any issues and seeking to ensure that Council’s priorities are delivered.

2.3 Government’s progress towards delivering the Programme for Government’s targets and objectives will be reported quarterly and available publicly on the performance management website.

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Council of Ministers CONFIDENTIAL Sub Committee Structure

2.4 The Brownfield Regeneration Steering Group will be invited to comment on quarterly updates before submission to Council of Ministers for consideration prior to publication.

3. Role

The role of this Sub Committee is as follows:

The overarching role of the Brownfield Regeneration Steering Group is to provide the Manx Development Corporation, a Government owned arms-length commercial company, with the appropriate Governance and Strategic Direction based on the terms in the Shareholder Agreement. To do this effectively, it will need fulfil the following roles and responsibilities:

 To support and monitor the development of government owned brownfield sites.

 To coordinate the Government’s cross-departmental approach to strategic regeneration on the Island, in order to provide the Manx Development Corporation with Strategic Direction aligned with the Island Development Plan, masterplans, Area Plans and local authority plans and further informed by the Government’s prioritised list of regeneration sites targeted for development.

 To proactively facilitate the conditions under which regeneration of unoccupied, unused or previously developed sites can flourish by addressing the Government-managed levers and barriers significantly impacting on the level of brownfield site regeneration.

 To be both cognisant and supportive of Government sponsored environment/climate change activities, the Economic Recovery Group programmes, the Programme for Government activities and Housing/Parking strategies when developing the Manx Development Corporation’s Strategic Direction.

 To approve, review and revise the Shareholder Agreement in consultation with the Manx Corporation Development Board, ensuring that the Agreement enables the Company to be adequately funded and resourced to deliver on its 3-year Strategy Implementation Plan and Annual Work Programme and Budget.

 To agree with the Manx Development Corporation Board a 3-year Strategy Implementation Plan, Annual Work Programme and Budget and Financial Governance Internal Controls, integrating a set of results-driven Key Performance Indicators and targets.

 To receive, review and respond to quarterly performance reports from the Manx Development Corporation Board illustrating the level of progress, delivery and achievement referenced against the agreed KPIs and targets.

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Council of Ministers CONFIDENTIAL Sub Committee Structure

 To receive, review and approve the Manx Development Corporation Board’s proposals for partnerships, joint ventures and undertakings in property development, investment, borrowings, lending and lease agreements.

 To receive, review and approve the Manx Development Corporation Board’s business cases (including site masterplans and design briefs) relating to capital projects, ensuring risk and viability assessments and 3rd party expert analysis, where appropriate.

 To oversee the Manx Development Corporation Board’s compliance with the Government’s Code, protecting intellectual property and patents, ensuring cyber security, data protection legislation and the compliance with the Equality Act (2017) and Health and Safety at Work Act (1974).

 To receive, review and approve the Manx Development Corporation Board’s proposed changes to the Manx Development Corporation’s name and logo/branding and the use of the name or branding for any application by a third party.

 To provide the relevant verbal and written reports and updates to the appropriate entities, in line with the arrangements and schedules agreed with CoMin and Tynwald.

4. Constitution

4.1. The Brownfield Regeneration Steering Group was established by the Chief Minister and its constitution was formalised as a Sub Committee of the Council of Ministers, minute Ref:______

5. Membership

5.1. The Committee shall comprise:

Chair: Treasury Minister Members: Minister for the Cabinet Office (Chief Minister) Minister for Enterprise

Officers routinely in attendance –

Officers: Chief Financial Officer, Treasury Chief Secretary (or delegated Senior Officer), Cabinet Office Chief Executive Officer; Department for Enterprise, Director for Policy and Reform Secretariat: Cabinet Office (Executive Office)

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5.2. The Executive Office (Cabinet Office) provide administrative and research support to the Sub Committee. Other officers will be co-opted to attend as and when required by the Sub Committee.

5.3. The Brownfield Regeneration Steering Group may co-opt persons from within Government or the community, in an advisory capacity, to assist with the consideration of issues referred to the Sub Committee.

6. Meetings and minutes

6.1. Meetings of the Brownfield Regeneration Steering Group will be scheduled and agreed with the Chair but shall take place at least quarterly.

6.2. Minutes will be prepared in accordance with Minute Taking Guidance prepared by the Chief Secretary’s Office and will be issued to the Committee no later than ten days following each meeting.

6.3. Agendas are compiled with the approval of the Treasury Minister.

6.4. A request for an item to be included on the agenda should always be accompanied by supporting documentation. The agenda and papers will, wherever possible, be distributed to members at least one week before each meeting by the Secretariat. In normal circumstances late papers will not be accepted, in exceptional circumstances approval for late papers to be circulated must be obtained from the Chair otherwise papers should be brought to the meeting under AOB and considered at the discretion of the Chair.

6.5. All documentation issued in relation to the Brownfield Regeneration Steering Group including the terms of reference, proceedings and papers are subject to the same statutory confidentiality as applies to the meetings and proceedings of the Council of Ministers, and should be therefore treated accordingly, unless agreement is given.

6.6. Documents should not be circulated for wider distribution other than to nominated officers without the necessary permission which will be agreed by the relevant document owner (which may be at political level).

7. Constitution

7.1 Council of Ministers Sub Committees were established by the Council of Ministers in March 2012 as part of the structure of standing Sub Committees1:

 National Strategy Group (NSG)

 Social Policy and Children’s Sub Committee (SPCC)

 Environment and Infrastructure Sub Committee (E&I)

8. Reporting

8.1. The Brownfield Regeneration Steering Group will provide quarterly updates to the Council of Ministers and will issue an Annual Report to Tynwald. This Report is separate to the submission of the Annual Report and Accounts produced by the Manx

1 Minute number 194/12, 22 March 2012

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Development Corporation, also delivered to Tynwald. Along with other Sub Committees, the BRSG minutes will form part of a routine distribution process to all Ministers. Signed Minutes will be provided to the Assistant Secretary to Council for upload to the Council of Ministers BoardPad.

9. Quorum

9.1 In order for there to be a quorum at a meeting, a majority of political members must be present. Ministers may assign a Departmental Member to deputise for them as required.

10 Lead Officer Group

10.1 The Brownfield Regeneration Steering Group will be supported by a “Lead Officer Group” (LOG) which comprises the Chief Officers of the Departments, Boards and Offices represented on the Sub Committee. The Lead Officer Group is chaired by the Director of Change & Reform.

10.2 The Lead Officer Group is directed by the Sub Committee and will ensure that the Sub Committee’s will is carried out and appropriate information is provided to the Sub Committee.

11 Sub Groups

11.1 The establishment of Sub Groups will be permitted (subject to approval), where there is a clear and agreed workstream, and where it is intended to report into the Sub Committee.

11.2 Proposed Sub Groups shall forward draft Terms of Reference to the secretariat for consideration by the Sub Committee.

11.3 Sub Groups shall report into the Sub Committee at least quarterly and forward minutes to the secretariat for routine distribution.

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Council of Ministers CONFIDENTIAL Sub Committee Structure

Appendix 1

MANX DEVELOPMENT CORPORATION STRUCTURE

TYNWALD

COUNCIL OF MINISTERS

KEY STAKEHOLDERS GROUP 1 BROWNFIELD REGENERATION STEERING GROUP (BRSG) TREASURY Other Government MINISTER Departments: Primarily Minister for the Cabinet Office, Sole DoI, CabO, DEFA, DfE Treasury Minister (Chair), Shareholder Minister for Enterprise GROUP 2 Chief Financial Officer, Chief Secretary for the Cabinet Office, CEO TREASURY Local Authorities Department for Enterprise, Director for Policy and Reform DEPARTMENT Other key stakeholders by invitation. GROUP 3 Funder Developers/construction, Strategic Asset retail, allied industries and ownership professions, other landowners, investors, residents, environment and climate change subject MANX DEVELOPMENT CORPORATION matter experts.

Board consisting of Non-Executive Chair & 2 Non-Executive Board

Directors & Managing Director Part-time secondment of DfE expert(s) for start-up phase Office support and use of Government’s shared services

Policy levers Legislation levers IOM GOVERNMENT ENABLERS Property/Development Fund Urban development Creating the conditions for the successful De-risking exemptions development & delivery of Urban Strategies, Land/Site Assembly Unlocking unoccupied urban National, Area and local Plans Tax incentives sites

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Council of Ministers CONFIDENTIAL Sub Committee Structure

Appendix 2

The Relationship between the Brownfield Regeneration Steering Group (BRSG) and its Key Stakeholders

Tynwald Governance oversight of the Manx Development Corporation is performed annually by Tynwald through the laying down of an Annual Report from the BRSG (this is over and above the MDC Annual Report and Company Accounts).

CoMin CoMin will receive quarterly updates from the BRSG. The updates will be based on Manx Development Corporation’s Strategy Implementation Plan and Annual Work Programme and Budget. CoMin will also receive the BRSG’s Annual Report for Tynwald, in addition to the Manx Development Corporation’s Annual Report and Company Accounts.

CoMin’s Sub Committees share a responsibility for ensuring a flow of relevant knowledge and information between the relevant Sub Committees and government departments for use in the development and provision of the BRSG’s Strategic Direction to the Manx Development Corporation and in providing feedback on its implementation and efficacy.

Treasury The Treasury Minister is the sole Shareholder and manages the controlling interest in the Manx Development Corporation. The Shareholder will ensure that the interests of the Government of the Isle of Man, the General Revenue and the public interest are protected through exercising sufficient control over the use of public money. The Shareholder has elected that its shareholder decisions shall be made by the BRSG. Treasury’s concurrence and Shareholder primacy are assured through the Treasury Minister’s role as the Chair of the BRSG.

Treasury and the BRSG will adhere to the arrangements for the provision of land and cash in line with the funding model set out in the Shareholder Agreement. Treasury Officers may liaise directly with the Manx Development Corporation’s Board on strategic and operational matters.

The Strategic Asset Management and Valuation function is critical to the set-up and ongoing success of the Manx Development Corporation. This function will be a key contributor to the development of the BRSG’s Strategic Direction, regeneration levers and barriers and in working with the Manx Development Corporation directly to develop business cases for government owned assets.

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The BRSG will secure Treasury’s support for the provision of expertise and information to assist Manx Development Corporation to develop its Strategy Implementation Plan, business cases and business development proposals.

Cabinet Office The Cabinet Office is represented on the BRSG at Ministerial Level by the Minister for the Cabinet Office and by the Chief Secretary (or delegated substitute) and the Director for Policy and Reform.

The Cabinet Office’s Policy Planning function is central to achieving a government aligned Strategic Direction for Manx Development Corporation. This function will be a key contributor to the development of the BRSG’s Strategic Direction and addressing regeneration levers and barriers.

The BRSG will secure the Cabinet Office’s support for the provision of expertise and information to assist Manx Development Corporation to develop its Strategy Implementation Plan, business cases and business development proposals.

Department for Enterprise DfE is represented on the BRSG by its Minister and CEO due to the direct, supportive relationship between DfE’s functions, mission, stakeholders, Business Agency and Manx Development Corporation’s purpose and roles.

DfE is a key stakeholder for the BRSG and will contribute to the development of the Strategic Direction and addressing regeneration levers and barriers, primarily through its Strategy and Policy function and the Business Agency. DfE will facilitate regeneration focused discussion with key stakeholders to support the development of government and privately owned land by Manx Development Corporation.

DfE will provide resources to the BRSG to coordinate the BRSG meetings and for subject matter expertise within the Manx Development Corporation, as agreed and funded, if necessary, by Treasury.

The BRSG will secure the DfE’s support for the provision of expertise and information to assist Manx Development Corporation’s to develop its Strategy Implementation Plan, business cases, and business development proposals.

DEFA The exclusion of the Minister and CEO for DEFA in the BRSG is an intentional action to avoid any potential conflicts arising if DEFA were to be directly involved in the review and support to Manx Development Corporation’s business cases for development projects within the BRSG, which will then subsequently require Planning/Building Regs approval.

DEFA is a key stakeholder for the BRSG and, where it is appropriate to do so, the BRSG will engage DEFA directly in the development of the Strategic Direction. DEFA’s

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Planning function will be key contributors to the work on addressing regeneration levers and barriers.

DOI The exclusion of the Minister for DoI in the BRSG is an intentional action to avoid any potential conflicts arising is DOI were to be directly involved in the review and support to Manx Development Corporation’s business cases for development projects within the BRSG, which will then subsequently interface and need approvals from DOI in relation to properties and asset management, car parking, land leases, infrastructure development and road closure requests.

DOI is a key stakeholder for the BRSG and, where it is appropriate to do so, the BRSG will engage the DOI directly in the development of the Strategic Direction, especially in relation to the Commercial Public Estates and Housing function and DOI’s responsibilities with Local Authorities.

DOI will be key contributors to the BRSG’s work on addressing regeneration levers and barriers.

Local Authorities Local authorities are key stakeholders for the BRSG and Manx Development Corporation and there are easily identifiable synergies between all parties.

The BRSG will seek local authorities’ opinions and requirements within the development of the Strategic Direction.

The BRSG will encourage Manx Development Corporation to identify opportunities for partnerships and joint ventures with local authorities, where it enables the regeneration and repurposing of government owned unoccupied and previously developed sites, enhances spatial development and public realm and/or contributes to resolving built environment issues such as affordable housing and car parking in the Island’s towns.

The Private Sector The BRSG will uphold and support an inclusive and collaborative stakeholder model in relation to stakeholder management with the private sector.

The BRSG will call upon the expertise and professional opinions/advice from the private sector and will encourage the Manx Development Corporation to engage with industry groups, especially through the Business Agency and ConstructionIOM.

The BRSG role in facilitating the creation of the best conditions for regeneration through addressing levers and barriers will benefit the private sector as well as Manx Development Corporation.

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Manx Citizens and Special Interest Groups The BRSG will take into account the reports, studies and outcomes of consultative processes generated across government, and especially by the Cabinet Office, DfE, Treasury, DEFA and DOI pertaining to the needs and expectations of the Manx populace regarding their relationship with the built environment, spatial enhancement and public realm within the Island’s towns.

When developing the Strategic Direction, the BRSG will take into account key points of view and evidence from eco-system sustainability stakeholders on strategic factors such as the environment, climate change and circular economy, along with quality and diversity design.

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Manx Development Corporation CONFIDENTIAL

PROPOSED HEADS OF TERMS

This Heads of Terms is made on the day of 2021

BETWEEN

(1) The Treasury (a Department of the Isle of Man Government) of 3rd Floor, Government Offices, Douglas, Isle of Man, IM1 3PZ (“Shareholder”)

and

(2) Manx Development Corporation (a company to be incorporated in the Isle of Man under the Companies Act 1931 as a private, government owned, arms-length company whose registered office will be situated at 1st Floor, St George’s Court, Upper Church Street, Douglas, Isle of Man (“MDC”)

(The Shareholder and MDC are together referred to as the “Parties”).

SUBJECT TO CONTRACT

BACKGROUND

(A) The Shareholder is the registered owner of all of the issued share capital of the MDC.

(B) The Parties intend to enter into a shareholder agreement (the “Shareholder Agreement”) which will seek to regulate the exercise of their rights in relation to the MDC and for the purpose of making certain commitments as set out in the Shareholder Agreement.

(C) This Heads of Terms (the “Heads of Terms”) sets out the principal terms and conditions which will be included within the Shareholder Agreement and are predicated on the delivery of the requirement by Tynwald, set out in amendment 3 a) to the Area Plan for the East, approved by Tynwald on 18th November 2020, moved by Mrs Clare Barber, MHK:

“Treasury to finalise a long-term management strategy requiring the centralisation of strategic control of government land assets by March 2021”

(D) Whilst the Shareholder will be the decision-maker in respect of all Shareholder functions as set out in the Shareholder Agreement and the Articles of Association of the MDC, the Shareholder will consult and take guidance from the Brownfield Regeneration Steering Group (as hereinafter defined) when making certain of those decisions and the basis of this arrangement is set out in the BSRG Terms of Reference.

(E) It is intended that this Heads of Terms will be approved by Tynwald before it is entered into by the Parties.

(F) The MDC is a private company, run at arm’s length from Government.

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Manx Development Corporation CONFIDENTIAL

1. STATUS OF THE HEADS OF TERMS

The terms of this Heads of Terms are not exhaustive and are expressly subject to contract until the Shareholder Agreement is entered into. The terms are not intended to be legally binding between the Parties except where specifically stated.

1.1. Conflict with the Articles

1.1.1. The Shareholder shall, to the extent that it is able to do so, exercise its voting rights and other powers of control lawfully available to it as a shareholder of the MDC to procure that the provisions of the Shareholder Agreement are properly and promptly observed and given full force and effect according to the spirit and intention of the Shareholder Agreement.

1.1.2. The Shareholder shall, when necessary, exercise its powers of voting and any other rights and powers lawfully available to it as a shareholder of the MDC to amend, waive or suspend a conflicting provision in the Articles to the extent necessary to permit the MDC and its business to be administered in accordance with the Shareholder Agreement.

1.2. Timescale for Company Incorporation and the Shareholder Agreement

1.2.1. In accordance with the Tynwald Resolution in November 2020, the MDC will be incorporated on or before 31st March 2021.

1.2.2. The Parties agree to negotiate in good faith with a view to sign the final written Shareholder Agreement on or before the 23rd July 2021.

1.2.3. Either Party may at any time, by giving notice to the other, terminate negotiation for the Shareholder Agreement without having to give any reasons for doing so.

1.2.4. The Party giving notice will not incur any financial liability to any other Party, unless it has breached a legally binding obligation of this Heads of Terms.

2. ESSENTIAL PRE-CONDITIONS TO AN AGREEMENT

The Shareholder Agreement between the Parties is conditional upon:

2.1. the Parties negotiating, drafting and agreeing the satisfactory terms of the Shareholder Agreement governed by the laws of the Isle of Man.

2.2. the approval of and consent to the Shareholder Agreement being given by the Parties (including any necessary internal, shareholder, board of directors, Departmental treasury, CoMin, Tynwald or Ministerial noting/approval as required).

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Manx Development Corporation CONFIDENTIAL

3. AGREED TERMS OF THE SHAREHOLDER AGREEMENT

3.1. Term of the Shareholder Agreement

3.1.1. The Shareholder Agreement shall commence on [•] (the “Commencement Date”) and shall continue until it is terminated in accordance with clause 3.1.2.

3.1.2. Subject to clause 3.1.1, the Shareholder Agreement shall terminate:

(a) when a resolution is passed by the Shareholder or creditors of the MDC, or an order is made by a court or other competent body or person instituting a process that shall lead to the MDC being wound up and its assets being distributed among the MDC’s shareholder, creditors or other contributors; or

(b) upon the appointment of a receiver or liquidator over the whole or any part of the assets of the MDC or the making of any arrangement with the creditors of the MDC for the affairs, business and property of the MDC to be managed by a supervisor; or

(c) upon the expiration of twenty eight (28) days’ notice in writing served on the MDC by the Shareholder.

3.1.3. Termination of the Shareholder Agreement will not affect any rights, remedies, obligations or liabilities of any of the Parties that have accrued up to the date of termination, including the right to claim damages in respect of any breach of the Shareholder Agreement which existed at or before the date of termination.

3.1.4. Where, following an event referred to in clause 3.1.2, the MDC is to be wound up and its assets distributed, the Parties shall agree a suitable basis for dealing with the interests and assets of the MDC and shall endeavour to ensure that, before dissolution:

(a) all existing contracts of the MDC are performed to the extent that there are sufficient resources;

(b) the MDC shall not enter into any new contractual obligations; and

(c) the MDC’s assets are distributed as soon as practical; and OR

(d) any assets or intellectual property rights belonging to or originating from the Shareholder shall be returned to it by the MDC and all such intellectual property rights shall be erased from the computer systems (to the extent possible) of the MDC.

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3.2. Purpose of the MDC (the “Purpose”)

The overarching Purpose of the MDC is:

“To be a catalyst for the positive transformation of the Island’s urban landscape for the benefit of all Manx Citizens”.

3.3. Role & Responsibilities of the MDC

3.3.1. The development of unoccupied or previously developed sites which are owned by Departments and Statutory Boards forming the Isle of Man Government (“Government”) transferred to the MDC in line with Government strategies, urban regeneration masterplans and the Island Development Plan.

3.3.2. Facilitate, enable and broker the development of unoccupied or previously developed sites in private ownership for the purpose of sustainable and suitable development, ensuring alignment with Government strategies, urban regeneration masterplans and the Island Development Plan. Activities could include shouldering some of the risk preventing privately funded development and regeneration.

3.3.3. The provision of strategic and research support for Government in support of Island-wide urban regeneration.

3.4. Scope of the MDC (the “Scope”)

3.4.1. To develop agreed Government owned brownfield sites directly, or indirectly through the commissioning of development and construction by third parties.

3.4.2. To facilitate, enable and broker development throughout the Island, in line with the Government strategies, urban regeneration masterplans and Island Development Plan.

3.4.3. To conduct strategic and operational property development activities for public benefit, furthering urban regeneration or through commissions from Government Departments, with a similar goal.

3.4.4. To enter into commercial agreements for joint ventures with private developers and investment companies where it is in the interest of the Shareholder to do so.

3.4.5. To act as a landlord for Government controlled assets which are transferred into the ownership of the MDC.

3.4.6. To act as a landlord for privately owned assets, where it has commissioned development in the interests of the Shareholder.

3.4.7. To deliver public realm and spatial enhancement whenever possible.

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3.5. Governance of MDC

3.5.1. The Government’s Three Fundamental Principles of Corporate Governance and the Seven Internationally agreed Principles of Conduct shall apply to the MDC Board and its employees.

3.5.2. The Corporate Values of Respect, Integrity, Collaboration and Innovation shall apply within the MDC corporate culture and in all stakeholder relationships.

3.5.3. The MDC shall not engage anywhere in any political activity or provide funds in connection with the carrying on by any third party of any political activity.

3.5.4. The MDC will not appoint any agent or intermediary to conduct the whole or part of the business.

3.5.5. The MDC will seek the approval of the Shareholder prior to making any of the following decisions to:

(a) sell, transfer, lease, licence or in any way dispose of all or any part of its business or assets including, in particular, any of its real estate;

(b) create any mortgage or security interest, lien or other charge other than any arising by operation of law or prior agreed limits over any of its assets;

(c) give any material guarantee, indemnity or security in respect of the obligations of any other person other than in accordance with pre- agreed financial controls;

(d) borrow any sum or factors or discounts any book debts, except in respect of the purchasing or leasing of plant or equipment in the ordinary course of business;

(e) enter into any material contract or alter, in a material way, the commercial terms of any material trading arrangements in either case outside the ordinary course of business;

(f) undertake in any financial year any material single item or material series of items of capital expenditure or commence any litigation, arbitration or administrative proceedings, or claim outside the ordinary course of its business which might by itself or together with any such other proceedings or claim have a material adverse effect on the financial position of the MDC;

(g) alter any of the rights attaching to shares in the authorised share capital of the MDC;

(h) alter the name or Registered Office of the MDC;

(i) alter its Articles of Association;

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(j) grant or create any rights (by licence or otherwise) over or in any intellectual property owned or used by the MDC;

(k) amalgamate or merge with any other company or business undertaking, or acquire any subsidiary directly or indirectly, or acquire shares in any other company or directly or indirectly participate in any partnership or joint venture;

(l) apply for the listing or trading of any shares in its issued capital or debt securities on any stock exchange market;

(m) pass any resolution for its winding up or present any petition for its administration (unless it has become insolvent);

(n) appoint any agent or intermediary to conduct the whole or part of the business;

(o) enter into any partnership or joint venture agreement.

3.6. Appropriate controls to achieve financial governance will be determined by the Shareholder in discussion with the MDC as part of the Shareholder Agreement negotiations. The determination of appropriate controls will take into account the arms-length nature of the MDC and its need for flexibility and agility, alongside the need to supervise the public purse and protect public assets.

3.7. Within the Shareholder Agreement, the Shareholder shall require the MDC to develop and deploy a management system and associated Policies demonstrating robust principle controls for financial, environmental, social and corporate governance. Furthermore, the shareholder will oblige the MDC to put in place a set of agreed key performance indicators for financial and risk management, auditing, AML, GDPR, cyber-security, health & safety, employee well-being, diversity & inclusion. The Shareholder shall agree with the MDC the timescales for achieving the required financial governance, principle controls and KPIs and this agreement will be reflected within the Shareholder Agreement.

3.8. Expectations of the Shareholder regarding Commercial Returns

The MDC shall operate as a commercial company with a view to generating profit longer term. The Shareholder has confirmed that the Purpose and Scope shall include the remit to develop/enhance public realm and to unlock urban focused property development through undertaking activities such as site-assembly, where there may be no immediate financial return or the level of return may be less than the minimum expected by a private developer. Viability assessments will take account of broader social and economic benefit for the Island.

3.9. Funding Model Principles

3.9.1. The funding requests to Treasury will be made on a business case by business case basis for the development of individual sites, taking into account the

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Strategic Direction and the IOMG’s current and future land and property asset needs. If the MDC is considering funding from a source other than Treasury, details of the proposed alternative arrangements will be included within the business case. The business case will be constructed by the MDC in full consultation with the appropriate Government Departments and, where applicable, local authorities. All business cases will include a masterplan consisting of the development brief and the proposed contractual arrangements under which development will take place, along with a cost/economic & social/environmental/design quality benefit analysis. The business case will also provide a forecasted return on investment (ROI) along with viability and risk assessments and a Stakeholder impact analysis.

3.9.2. Funding for projects may be made available to the MDC by Shareholder on a loan basis using a floating Debenture, specifying the terms and conditions of lending with respect to:

- Interest rate applied: Bank rates for Government owned, “Arms-length” companies. - Repayment amount and frequency: To commence at a date to be agreed with the Shareholder which takes account of the MDC’s need to build retained earnings and to reinvest in public realm projects. - Fixed repayment date or ‘on demand’: As above. - Charges secured on the loan: The MDC’s assets.

3.9.3. A request for funding may also be based on the MDC Board’s need to respond in an agile way to an emerging opportunity within the private sector or local authority owned land or property.

3.9.4. The contractual arrangements between the MDC and the Shareholder for the transfer and development of Government owned land and property assets may vary from site to site and potential options include (but are not limited to):

(a) by transferring the Assets at market value to the MDC by the relevant Government Department, adhering to para 8.1 of FPN F.03 of the Treasury’s Financial Regulations. In such circumstances, the Shareholder may not require payment for the purchase of land or property at the time of transfer and in such circumstances each sale will be subject to a charge document enabling the Shareholder to secure any non-payment of the sale price by means of a charge against the land/property. As in the case of the repayment of Government loans, MDC will reimburse the relevant Department for the cost of the property or land transferred on a date to be agreed with the relevant Department and which takes into account the MDC’s need to build retained earnings and to reinvest in public realm projects.

(b) by way of a procurement contract won after an open tender process.

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(c) under licence from Government.

3.10. Payment of Dividends

3.10.1. The policy under which MDC distributes dividends back to the Shareholder will be presented in the Shareholder Agreement and will enable a flexible approach, in the event that cash is needed to be retained within MDC for future investment.

3.10.2. The MDC Board will comply with its legal duties in setting the dividend for the MDC.

3.11. Approval of Business Cases

3.11.1. In instances where the MDC requires the approval, consent or permission of the Shareholder before making a decision as defined in clause 3.8 above and/or to any business case submitted for a Capital Project (a “Business Case”), the MDC will submit their request for approval, consent or permission to the Shareholder and to the BRSG in such format as the Shareholder and the BRSG shall reasonably require.

3.11.2. The MDC shall ensure that all Business Cases which are submitted align with the strategic direction set by the BRSG and notified to the MDC (the “Strategic Direction”).

3.12. Exchange of Information and Communication

3.12.1. Within the Shareholder Agreement, the Shareholder will require the MDC to produce a 3-year strategy implementation plan (the SIP) based on the Strategic Direction. A copy of the SIP will be provided to the Shareholder and the BRSG and will not be implemented until it is approved by the Shareholder. The Shareholder Agreement will set out the calendar for the production, presentation and annual reviews of the SIP.

3.12.2. The MDC will produce an annual work programme and budget detailing the short-term actions and deliverables for the following twelve (12) months, referenced against a budget forecast. The Shareholder Agreement will set out the calendar for the production, presentation and annual reviews of the annual work programme and budget.

3.12.3. Except as stated below, the MDC shall supply to the Shareholder and the BRSG such information relating to the affairs of the MDC as the Shareholder or BRSG may reasonably request from time to time.

3.12.4. The MDC will give the Shareholder access to information to assist the Shareholder properly and effectively to respond, within the required timescale, to requests for information for Tynwald questions and other information required for the Shareholder to fulfil its responsibilities on behalf of Government or in accordance with the law.

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3.12.5. For the avoidance of doubt, in no circumstances shall the MDC be obliged by the Shareholder Agreement to supply to the Shareholder personal data (including sensitive personal data) in respect of an individual employee (other than Directors).

3.12.6. When the Shareholder is consulted or its consent is required, it will use best endeavours to respond substantively to any reasonable request by MDC within one (1) calendar month of the request having been received.

For the purposes of ensuring open communications between the Parties, the following meeting (in addition to statutory corporate meetings) will, as a minimum, take place during each calendar year:

3.12.7. The Shareholder (who may invite representatives from the BRSG to accompany it) will meet with representatives from the MDC Board on a quarterly basis to discuss matters generally covered by the Shareholder Agreement and requirement for Business Case presentations and a record of matters discussed at such meetings will be made and circulated to the Shareholder.

3.13. Auditing, Reporting and Performance Management

3.13.1. The MDC will produce published annual, audited accounts. External Audit of the MDC’s accounts will be undertaken in accordance with the provisions of the Audit Act 2006.

3.13.2. The MDC will agree a set of performance and budget related KPIs with the Shareholder, defining targets that are referenced against the SIP and annual work programme and budget. The MDC will provide the Shareholder with quarterly performance reports based on the KPIs and targets.

3.14. Directors’ Appointment

3.14.1. The Directors shall be appointed by the Shareholder in accordance with the MDC’s Memorandum and Articles of Association.

3.14.2. In order to assist the Shareholder in the appointment of NEDS and to help ensure the correct balance of qualification and skills on the MDC Board, upon the vacancy for NEDs arising the Board will compile a list of the recommended skills required by applicants (“Skills List”) and will submit this Skills List to the Shareholder for its consideration.

3.14.3. The Shareholder will advertise for NEDs in an open and transparent manner.

3.15. Directors’ Remuneration

The Shareholder shall set the Remuneration for NEDs and for the Executive Directors in consultation with the Chair of the MDC Board.

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3.16. Shared Services

3.16.1. Unless the Shareholder approves otherwise, the Board shall instruct Government internal shared services (“IOMG Shared Services”) to provide all/any shared services (i.e. services defined as “Internal Resources” in Treasury Financial Regulations – “Shared Services”) it requires.

3.16.2. The MDC shall negotiate a service level agreement with each IOMG Shared Service provider that it intends to use in the carrying out of its business.

3.16.3. In the event that the Shareholder provides approval to the MDC obtaining Shared Services other than from IOMG Shared Services the cost of this alternate provision will be met by the MDC and the Shareholder will not be obliged to provide any subvention or any form of funding to cover such costs.

3.17. Transparency

3.17.1. The MDC gives its consent to the Shareholder to publish to the general public the Shareholder Agreement in its entirety, including any changes to the Shareholder Agreement agreed from time to time.

3.17.2. The MDC shall assist and cooperate with the Shareholder to enable the Shareholder to publish the Shareholder Agreement.

3.17.3. The MDC acknowledges that the Shareholder may be required on occasion to disclose Information without consulting or obtaining consent from the MDC. The Shareholder shall notify the MDC of any disclosure to the extent that is permissible and reasonably practical for it to do so but (not withstanding any other provision in the Shareholder Agreement) as soon as reasonably practical. Where the requirement to disclose is imposed on the Shareholder by the Freedom of Information Act 2015, the Shareholder shall be responsible for determining whether any Commercially Sensitive Information and/or any other information is exempt from disclosure.

4. VARIATION

Each Party is responsible for its own costs in connection with the Shareholder Agreement, whether or not it proceeds (including, without limitation the preparation and negotiation of this heads of terms, the negotiation and drafting of the Shareholder Agreement and any documents contemplated by it).

5. COUNTERPARTS

The Shareholder Agreement may be executed in any number of counterparts and by the Parties on separate counterparts. Each counterpart of this Agreement shall constitute an original of the relevant document, but together the counterparts shall constitute one document

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6. SEVERABILITY

If any provision of the Shareholder Agreement shall be held illegal or unenforceable, such provision shall be deemed separate and divisible from and shall in no way affect or impair the validity or enforceability of, the remaining provisions.

7. GOVERNING LAW

The Shareholder Agreement constituted by this Heads of Terms shall be governed and construed in accordance with the laws of Isle of Man and all Parties irrevocably agree to submit to the non-exclusive jurisdiction of the courts of the Isle of Man.

AS WITNESS the hands of the Parties or their duly authorised representatives on the date first stated above.

Signed etc.

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Appendix 2

Manx Development Corporation CONFIDENTIAL

DATED 2021

The Treasury

and

Manx Development Corporation Limited

HEADS OF TERMS

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TABLE OF CONTENTS

1. STATUS OF THE HEADS OF TERMS ...... 2

2. ESSENTIAL PRE-CONDITIONS TO AN AGREEMENT ...... 2

3. AGREED TERMS OF THE SHAREHOLDER AGREEMENT ...... 3

4. VARIATION ...... 10

5. COUNTERPARTS ...... 10

6. SEVERABILITY ...... 11

7. GOVERNING LAW ...... 11

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