Other Agreements

There are other contracts and agreements that are sometimes required when the transfer of ownership takes place in addition to leases/licences which give a right to occupy the land/building.

A management agreement is an agreement between the local authority (or owner) and another organisation to work together in the operation of the building for the benefit of local people. It does not give any rights to occupation, security or legal interest in the building.

A service level agreement is an agreement, for an agreed period, between two partners, setting out the services to be provided in return for resources, usually financial or staffing. Performance requirements and quality standards will be set as part of the agreement as well as procedures for monitoring and review. They are sometimes required in order to enable a peppercorn rent to be justified for a community building, since such an agreement allows a monetary value to be put to services that can be set against the rental income “lost” to a local authority or other public sector owner. Some Local Authorities argue that it would be iniquitous to allow peppercorn rents to all groups who use community buildings given their varying age and condition as some groups would get a better deal than others. It is argued that without other management and service level agreements put in place in return for favourable lease agreements a benefit for the wider community cannot be guaranteed and the group can just get the benefit of the building without providing community benefits in return.

A development agreement – there is no formal definition of these agreements – they are usually between a council and a developer and set out the basis on which land or buildings will be developed. These are sometimes relevant to asset transfer projects when a building or piece of land is part of a wider regeneration scheme or development proposal.

Funding and Loans – in order to develop or improve an asset a new or existing organisation may have to borrow money or accept grants. Grants may come with a variety of conditions related to timing of their approval and release and conditions on their use. They may also involve restriction on the asset that they are applied to (its future use, sale etc). In the case of loans these may attract arrangement fees as well as agreed rates of interest. They will also have similar provision a grant as well as others on security, termination and variation. These have to be carefully considered, with the benefit of legal advice in order to determine what risks they may carry for the project in terms of its financial viability into the future.