Archived decisions

Contact: David Evans, tel 01489 576387 email: [email protected]

1. Summary

1.1 This report was considered at the River Hamble Harbour Management Committee on 15 November 2006. It was agreed at that meeting to submit this report to the River Hamble Harbour Board for a decision on the recommendation set out on page 5 .

1.2 This report has been prepared in response to a question asked by Mr Sam Bourne at the River Hamble Harbour Management Committee meeting held on 3 May 2006, namely: "Can Hampshire County Council (in its capacity as River Hamble Harbour Authority) take a long lease on the mid-stream piles and mooring sites from the Crown Estate, thereby unifying the control and management of the moorings under a single organisation?" The report is now being submitted to the River Hamble Harbour Board for approval.

2. Reason

2.1 This report does not directly support any of the priorities of the Corporate Strategy but is nonetheless a key element in the continuing good management of the River Hamble.

3. Background

3.1 Historically the Harbour Authority leased the river bed and mooring sites of the River Hamble from the Crown Estate but owned the mooring piles themselves. The rent for the lease of the mid and lower Hamble (including the mooring sites) increased substantially throughout the 1990s as the Crown Estate sought to achieve a `market rental' for its assets. During the period when the Harbour Authority held the lease, it was to a large extent sheltering the Crown Estate from the ill-feeling caused by the substantial rent rises.

3.2 The leases were re-negotiated in the 1990s and there are now two extant leases for the foreshore and river bed of the River Hamble. The first, for 50 years commencing on 1 January 2002 (expiring 31 December 2051), is for the foreshore and bed of the River Hamble (lower and middle sections) at a peppercorn rent. This lease specifically excludes the mooring sites. The second is for the foreshore and river bed of the River Hamble (upper sections), and is on a 45 year lease from 1 June 1991 to 2036 at a rent of £100 per annum. Collectively they extend from the confluence with Southampton Water to a point just above Botley Mill on the River Hamble, and just above the Horse and Jockey on its tributary, the River Cur.

3.3 At about the same time it was agreed that the Crown Estate would purchase the mid-stream piles from the Harbour Authority for the sum of £500,000, because the mooring piles and pile sites were subject to capital regulations which made it financially unacceptable for Hampshire County Council to retain them. The purchase cost was payable in five annual instalments of £100,000 and final payment of this arrangement has now been received.

3.4 Mr Bourne proposes that the Harbour Authority should lease back the mid-stream mooring sites and piles from the Crown Estate. There are three possible scenarios:

(i) the Harbour Authority could take a lease on the mid-stream moorings currently managed by the Harbour Authority on behalf of the Crown Estate (about 600 moorings);

(ii) the Harbour Authority could take a lease on all mid-stream moorings, including those above and all those currently operated by commercial operators and yacht clubs (about 1,200 moorings in total); or

(iii) the Harbour Authority could take a lease on all the mooring sites in the River, including those in (ii) above and all those in boatyards and marinas.

4. Financial Implications

4.1 Capital regulations ended in 2004 and were replaced by the Prudential Code, allowing authorities to borrow where affordable and justified by a business case. Hampshire County Council has made a policy decision not to utilise the full level of supported borrowing it received from Government due to affordability concerns.

4.2 A 99 year lease on the mid-stream mooring sites and piles currently managed by the Harbour Authority on behalf of the Crown Estate (scenario (i) above) would cost at least £150,000 per annum (conservatively, £15 million for the life of the lease). This would still have to be capitalised under the Prudential Code and would have to be justified by a business case, including a demonstration of the long term affordability of such an arrangement through the Harbour Authority's income stream. There should be no long term liability on the County Council and no risk of the cost of financing such an arrangement being met by Hampshire council tax payers.

4.3 The costs of scenarios (ii) and (iii) above would be substantially higher. A long term commitment to any such lease could be detrimental to the County Council, particularly where circumstances might change significantly during the period of the lease. Further, the above estimated cost of the lease assumes that the Harbour Authority would be liable for the repair and maintenance of the pile moorings, which would represent an unknown commitment for a very long period. (It is likely that each pile would need to be replaced up to four times during the 99 year life of the lease and the pile irons would need to be replaced even more frequently.)

4.4 It has been argued that the benefits of taking out a long lease would not necessarily be financial but would give the Harbour Authority greater control over its own destiny, on the basis that a long lease would provide equity against which the Harbour Authority could borrow for capital projects. The counter argument is that the Harbour Authority could, if necessary, borrow from the County Council without the need for such equity, subject to County Treasurer's approval and in accordance with Financial Regulations applicable at the time. Borrowing against equity would only really be relevant if the Harbour Authority were to become separate from the County Council (for example, as a Trust Port) at some time in the future.

5. Other Relevant Issues

5.1 There are three other relevant issues:

(i) Under current arrangements, the Crown Estate decides how any new moorings which become available (up to the 3,261 moorings capacity limit) are allocated to the waiting list, yacht clubs and commercial operators. If the Harbour Authority were to take on a lease, this responsibility would transfer back to the Harbour Authority.

(ii) The Harbour Authority is not a marina operator. Taking a lease on the moorings would involve the Harbour Authority in a great deal of additional work, with little or no financial benefit, and would mean that County Council would be laid open to criticism and blame for every aspect of managing the moorings, which would deflect from the primary purpose of the Harbour Authority, namely the provision of a safe and efficient harbour.

(iii) A decision to take out a long lease on the mooring sites and piles might be seen as a positive move by those who would prefer to see the River Hamble managed as a Trust Port. With this in mind, it is recommended that any decision to take a long lease should be left up to the trustees of a Trust Port, should the governance arrangements for the River change at some future date.

6. Impact Assessments

6.1 This report provides advice to the River Hamble Harbour Management Committee and its recommendation will have no impact on equality of access to the River's services and facilities at this stage. Thus no formal Equalities Impact Assessment is required.

Recommendation

That the River Hamble Harbour Board, following consideration of the advice set out in this report, agrees not to take out a long lease on any mooring sites, piles or pile sites on the River Hamble for the foreseeable future.

1100/DE