23 April 2002 Disposal of the land to Wales Millennium Centre company

23 April 2002
The Minister for Culture, Sport and the Welsh Language (Jenny Randerson):

 On Monday 14 January, I tabled a statement in which I proposed to authorise a notifiable transaction to which Standing Order No. 19.13 applies, namely the disposal of the land at an undervalue to the Wales Millennium Centre company for the purpose of constructing and operating the Wales Millennium Centre. That statement indicated that it would also be necessary to enter into separate agreements with Cardiff County Council and Grosvenor Waterside, which would contain contingent liabilities. In the Plenary debate on 22 January, I explained that details of these contingent liabilities were still being negotiated, and I anticipated that it would become necessary for me to authorise the terms of those agreements in accordance with the urgency procedure, under Standing Order No. 19. I am now providing details of those transactions in accordance with Standing Order No. 19.20.
19.20.
Before describing the details of the contingent liabilities that have been entered into with Cardiff County Council and Grosvenor Waterside, it would be helpful to remind the Assembly of the history of the WMC site and why the need for these liabilities has arisen. When Cardiff County Council bought the site for the Wales Millennium Centre from Grosvenor Waterside plc last year, Grosvenor Waterside agreed to sell at less than what it considered to be full market value. It did so because it saw the WMC as a prestige project that would enhance the value of its other land holdings in the vicinity. Grosvenor Waterside did, however, obtain from Cardiff County Council an undertaking that it would be compensated to the full value of the land if the WMC project did not start on site by March of this year.
Cardiff County Council purchased the site from Grosvenor Waterside for £2.5 million. As part of the recently completed transactions, the council has transferred the site to the Assembly for a nominal sum. The council was only prepared to do this, however, if it was released from its undertaking to Grosvenor Waterside and if the National Assembly would enter into new undertakings with the council to compensate it if the WMC project did not proceed.
The plan, which I agreed with Cardiff County Council and Grosvenor Waterside, and which has now been implemented, is made up as follows: first, the council has transferred ownership of the site to the National Assembly at no cost; secondly, the Assembly has given a licence to the Wales Millennium Centre company to enter the site and commence construction, and has agreed to grant a lease of the site to the company for a peppercorn rent, which will be formally granted once the Charity Commission for England and Wales has given its approval to a legal charge in favour of the Assembly to protect its grant; thirdly, Grosvenor Waterside has released Cardiff County Council from its undertakings given in 2001; and fourthly, the Assembly has given new undertakings to Cardiff County Council and Grosvenor Waterside, which will compensate those bodies if the WMC is not fully built.
The negotiations leading to these transactions were concluded on the same date as the contract to construct the centre was awarded by the Wales Millennium Centre company to Sir Robert McAlpine. To avoid disruption to the agreed contract timetable, upon which the contract price was based, it was necessary for me to enter into the contingent liabilities with the council and Grosvenor Waterside without prior notification to the Assembly under Standing Order No. 19.13. My expectation that this would be the case was drawn to your attention in the Plenary debate on the WMC on 22 January this year.
I turn now to the details of those transactions that contain contingent liabilities, and on which I am required to report pursuant to Standing Order No. 19.20. An agreement has been entered into with Cardiff County Council that provides for payments to be made by the Assembly to the council in the event that the Wales Millennium Centre is not substantially commenced or in the event that the centre is not completed, leading to a sale of the site. This agreement reflects the fact that the council has transferred land to the Assembly at nil consideration. Payments may arise in two separate and distinct sets of circumstances. The first contingent liability is confined to the initial commencement phase of the project. The Assembly is required to make a payment of £2.83 million to the council in the event of works not being commenced, or diligently progressed, within six months of the grant of the lease or, if there is any impediment to the grant of the lease, within six months of the date on which the lease would have been granted. I am delighted to report that works have commenced—a fact that is blindingly obvious to Members—and that considerable progress is being made on the site. The Charity Commission’s approval to the Assembly’s legal charge is still awaited, which will then lead to the grant of the lease. It is currently anticipated that this will be in place by 10 June 2002.Once the period of six months from the grant of the lease has expired, the contingent liability to pay £2.83 million to Cardiff County Council will fall away and a more limited contingent liability to the council will take its place. At that stage, the land value contribution of £2.83 million from Cardiff County Council will be treated the same as the grant funding provided by the other public sector funders—namely the Assembly, the Millennium Commission and the Arts Council of Wales—in the event that the centre is not completed and the land is sold. In the event of default by WMC under the lease, as a result of which the Assembly or other funding body realises its security by selling the site, the Assembly will apply any proceeds of sale it might realise: first to discharge any outstanding liability of WMC to its leasing bank; secondly to discharge any outstanding liability to the public sector funders in proportion to their relative contributions; and finally, to pay any balance remaining to Grosvenor Waterside. This contingent liability is confined to funds realised on a sale of the site, and would have no impact on the Assembly’s wider resources.A separate agreement has been entered into with Grosvenor Waterside Investments Ltd that complements the above agreement. Under this agreement, the Assembly has agreed that, following any default resulting in a sale of the site, the Assembly shall pay Grosvenor Waterside the balance of any proceeds of sale that remain after first discharging WMC’s liabilities to its leasing bank and the various public sector funders, including repayment of the Assembly’s own grant. This liability is also confined to funds realised on a sale of the site and would have no impact on the Assembly’s wider resources.This statement sets out the contingent liabilities as promised on 22 January. It is a technical matter that is now concluded, but I am happy to answer questions.

Alison Halford:

 Thank you for your statement, Minister. Forgive me if I do not have the sums in my head but, the phrase ‘peppercorn rent’ was used when the deal was made to purchase the land for the new Assembly building, which we are all eagerly awaiting. Unfortunately, when the Auditor General examined the facts, it was far from a peppercorn rent, as it meant that certain car parks had to be handed over. That peppercorn rent came to many thousands of pounds. What do you call ‘peppercorn’, because it seems to be rather a strange term?

 

Jenny Randerson:

 It is a technical term that usually applies to the sum of £1. If it diverges widely from that, I will let you know. Your contribution dealt with two totally different buildings, Alison. The amount of care given to, and detail contained in, the planning and development of the Wales Millennium Centre—and I want to stick to the centre in this statement—means that it has been designed and planned down to a fine detail. I assure you that issues related to the handing over of car parks do not figure in this case.

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