Summary of Proposed Project – 18th May 2021

Notice from Parish Council Announcement of RESOLUTION TO BORROW At the Toppesfield Parish Council meeting of 6th May 2021, it was RESOLVED to seek the approval of the Secretary of State for Housing, Communities & Local Government to apply for a PWLB loan of £85,000 over the borrowing term of 50 years for the purpose of purchasing the Green Man barn and carrying out refurbishment and renovation works which will provide a new dedicated parish office and a multi-use room, including all utilities. The annual loan repayments will come to around £2,900. It is not intended to increase the council tax precept for the purpose of the loan repayments as the loan costs will be covered by savings on rent currently paid for the space used by the Parish Council at the village hall and by rent paid by the community brewery which currently occupies part of the building.  In addition we expect a growing income from the renting of the multi-use room. For information, a summary of the proposal is set out below. If you have any views or opinions you wish to feed in, or would like more details of the proposal please contact the parish council direct by 30 June 2021.  Kaaren Berry Clerk

Proposed purchase of the Green Man Barn by Toppesfield Parish Council

Overview of proposed project

• A purchase price of £55,000 has been agreed with the owner for the Green Man Barn;
• Part of the barn (the cart lodge and stable /hayloft) is currently rented by the community owned brewery. This arrangement will continue;
• The underused front part of the barn will be converted to a parish office and a small multi-purpose meeting room that will be available for hire;
• The total cost of the barn and associated work would be in the order of £90,000;
• The funding would come from the parish council’s own funds and a loan from the PWLB for £85,000;
• The loan would be repayable on an annuity basis (that is, equal instalments during the life of the loan) over 50 years and would bear a fixed rate of interest. PWLB fixed interest rates are set twice daily. The rate today (19 May 2021) is 2.46%pa;
• There will be no increase in the parish council precept to cover the cost of the loan. It is our intention that the cost of the borrowing would be covered by associated income (rent from the brewery and for the hire of the multi-use room) and savings by the parish council as rent on the currently used space would no longer be paid. A spreadsheet is attached showing the financial projections.
• We would like to complete on the purchase by autumn 2021 and complete the necessary work by spring 2022.

Background and rationale

The Green Man Barn is a Victorian stable block in good structural condition.

Part of the barn (the original stable and cart lodge) was converted and refurbished and is currently occupied by Pumphouse Community Brewery Limited.

The storage area of the barn is currently underutilised.

The parish council office has, for the past 20 years been located in a small rented space in the village hall; previously the space had been a galley-kitchen. There is no running water in the office and although there are toilets in the contiguous village hall, a pre-school occupies the hall every morning and some afternoons therefore making access difficult. Additionally the office is now very constrained for space and storage.

The barn would not only provide an adequately sized space for the clerk and visitors and save the current rental. It would also be able to offer a multi-use room available to rent.

The latter room would be made available to hire by service providers (e.g. mobile hairdresser, chiropodist etc), for training (such as IT skills) and for meetings of small groups, clubs etc, for whom the village hall is either not available or too large for them. It could also be used by the parish council for its meetings.

Used in this way the renovated barn would add a new facility to the village and would complement the amenities already present. For the community owned pub, it would also offer the potential to provide refreshments and food to hirers of the multi-use room.

Financial forecasts

The following is a review of the anticipated costs and income associated with this project.

Project Cost

The price of the barn has been agreed with the owner at £55,000. In addition we expect the transaction costs to be £3,000. That is a total purchase cost of £58,000.

The cost of creating a parish office and multi-use room is expected to be £32,000.

The total project cost would therefore be £90,000.

Financing cost

Of the total cost, it is intended that £5,000 would come from the parish council reserves and £85,000 from the Public Works Loan Board (‘PWLB’) for a period of 50 years. This loan would be at the fixed rate of interest applicable when the loan is drawn down and repayments would be made every 6 months.

Based on current interest rates, the annual cost of the loan will be £2,963.

Future impact on parish council budget

The parish council will save the cost of paying rent and hiring fees to the village hall, currently £1,350 per annum, and will                          receive rent from the brewery of £1,200 per annum.

Total annual income or savings will immediately therefore be £2,550.

We would however expect to generate some income from the hiring out of the multi-use room and assume, conservatively, that in the first year this would total £600 (£50 per month).

This would result in a net annual benefit to the parish council of £187

Over time, we would expect to see increases in the rent charged to the brewery, increased income from the multi-use room and  will avoid future increases in the rent charged by the village hall. In aggregate, and given the fixed amount of loan repayment, we expect the net benefit to the parish to increase.

Budget forecasts for the next 5 years have been prepared to demonstrate the projected impact on the budget. These can be  viewed on request to the Clerk.

SWOT Analyis

Strengths

• Initial income and savings exceed cost of loan.
• Income and savings from differing sources.
• Value of barn unlikely to fall.
• Better quality accommodation for Parish office (including toilets and running water).
• Office more secure and larger storage space.
• Fixed (known) cost of borrowing.
• Future increases in brewery rent received will enhance financial benefit.

Weaknesses

• Large debt for small council to take on

Mitigation: debt servicing covered by brewery rent, savings             on VH  rentals; debt is known cost so no increase in event               of higher base rates

• Need for management of the asset

Mitigation: new refurbishment will reduce likelihood of                    major maintenance / repairs in foreseeable future.                            Management of  bookings for room hire to be handled by                clerk in short term. If activity increases, possibility exists to               provide part-time employment.

Opportunities

• Multi-use room will provide extra small meetin.g space for community and potential income for parish
• Brewery (community owned, not-for-profit) will benefit from security of tenure.
• Multi-use room could enhance opportunities for community owned pub (provide meals etc for groups hiring room).
• Possibility of part-time employment in managing /cleaning/preparing multi-use room for rent.

Threats

• Brewery closes and rental ceases.

Mitigation: Space could be let to a new start-up brewery                as a  ‘ready-to-go’ venture. Brewery could be emptied                      and space rented

• Cost estimate of works increases

Mitigation: fixed price contract for works

• Low level of building/ design skills on PC

Mitigation: Local architect and building/construction                       manager will provide pro bono support