Multiple Asset Transfer
The urgency with which local authorities are seeking to rationalise their use and ownership of assets has stimulated exploratory work in relation to multiple asset transfer prospects around the country. To that end, the Asset Transfer Unit has been working with a number of local authorities since Autumn 2010 to explore the potential for them to rationalise revenue spending and reconfigure services underpinned by the transfer of multiple assets to communities.
To date, multiple asset transfer initiatives fall into three broad categories:
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Place-based – looking at the transfer of a mixed portfolio of assets in a particular local authority or smaller geographic area to underpin new/expanding community enterprises;
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service led – exploring transfer options related to specific types of service – for example, libraries - this element has strong links to service redesign and modernisation
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asset type – identifying multiple transfer options for specific types of asset, for example community centres or sports facilities.
The key principles of multiple asset transfer generally mirror those that have emerged as best practice from individual transfers:
- community empowerment lies at the heart of the process
- any transfer must be financially viable and sustainable in the long term
- services available to local people should be enhanced
- transfer should result from genuine partnership working
The Multiple Asset Transfer programme explores the feasibility of empowering communities through the transfer of multiple assets – including:
- work with local authorities to identify opportunities for multiple asset transfer
- work with community organisations to explore the viability and sustainability of multiple asset transfer propositions
- developing models for transferring multiple assets which enshrine the key principles set out above
Ownership and Management Models
Multiple assets tend most frequently to be transferred in parallel to a number of different organisations – for example, in those areas like Warwickshire and Buckinghamshire, where the local authority is supporting the establishment of community managed libraries. However, councils are also beginning to explore multiple asset transfer to community consortia or Special Purpose Vehicles in relation to place and asset type multiples – for example, Northampton Borough Council in relation to some of its community centres, and the London Borough of Lambeth through its Community Hubs consultation exercise.
Initial Steps
The initiative for multiple asset transfer may stem from proactive local communities or a local authority; neighbourhood planning can provide a stimulus for the development of long-term plans for local assets and services, just as service transformation efforts on the part of a council can result in the same.
The first stage for any local authority considering multiple asset transfer is to identify the key objectives and outcomes expected of the programme. Currently, a strong motivation is cutting revenue costs and realising capital receipts/reductions in maintenance costs. The positive benefits of co-location, better joining up of services and attracting additional investment are also key motivators. These considerations inform the selection of buildings for transfer and the preferred ownership and management model.
Multiple asset transfer requires extensive community consultation at an early stage to ensure that the community can work with the council to shape proposals. Understanding and buy-in from local people – particularly users and volunteers - will help to address any concerns about loss of services and community space.
Viability of multiple asset transfer
A crucial factor in the success of any community asset transfer is that it is financially sustainable - so, income must exceed expenditure. Many buildings identified for multiple asset transfer currently operate at a loss, so they require a new business model together with associated planning. Community enterprise support enables organisations to explore new opportunities to earn income through trading and contracting.
Developing a business plan for the joint operation of a number of buildings is inevitably complex. However, it is a key element of the process – adding together
a number of liabilities does not, of itself, miraculously transform them into an asset!
Consequently, multiple asset transfer lends itself to the use of “counterweight assets” – i.e. the transfer of buildings or other assets which have strong earning potential to counterbalance buildings which will struggle to earn sufficient income to make them viable when transferred in isolation.
Selecting suitable organisations to transfer assets to
The programme has explored options for transferring assets to three different types of organisations:
- An existing voluntary or community organisation
- A temporary Special Purpose Vehicle
- A permanent Special Purpose vehicle
Transfer to an existing voluntary or community organisation has a number of advantages, including an established Board and staff team and a track record of delivery. However, if multiple asset transfer prospects involve land and buildings which are widely dispersed, the size of the area of benefit and the potential disconnect with local communities needs to be considered.
A special purpose vehicle (SPV) in this context is an organisation set up to receive a multiple asset transfer. Ideally this should be established and owned by local community organisations who opt to collaborate with one another to increase social benefit as well as for economic reasons.
A temporary special purpose vehicle can be set up to act as a holding body for multiple assets. The SPV can then seek to transfer assets on to local community organisations over a period of time as their skills and capacity increases. This option offers an alternative to disposal for local authorities, where local community organisations are not yet ready to take a transfer. Disadvantages include problems with business planning (as the SPV may hold a building for six months or six years), and viability (as the work of the SPV may include community capacity building to facilitate onward transfer). That said, there is scope to consider whether existing RSLs might undertake to perform such a role in the future.
A permanent special purpose vehicle (SPV) can be set up to own multiple assets in perpetuity. This affords the community organisations that jointly own and/or govern it the opportunity to develop expertise in property development and management. As a specialist organisation with a strong track record, the SPV could maximise property based income for local community organisations. However, it is crucial that the ownership model is robust, so that the permanent SPV supports and empowers local community organisations. More work is needed to investigate the impact of shared ownership of assets in relation to community empowerment objectives.
Further developments
This is a rapidly changing agenda and we will be posting updates on a regular basis. If you would like to discuss a multiple asset transfer proposition, please contact Debbie Lamb, debbie.lamb@locality.org.uk
If you are looking at the multiple asset transfer of libraries, please check out the information at www.communityknowledgehuib.org.uk or contact Anton.Schultz@locality.org.uk
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A practical guide to community asset transfer: Second edition, 2010
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Exploring how the trust developed £1.4M assets including a community resource centre, youth centre and library.
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Case Study: The St John's project plans to take on multiple community centres, with a land asset counterweight to make the project viable
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The urgency with which local authorities are seeking to rationalise their use and ownership of assets has stimulated exploratory work in relation to multiple asset transfer prospects around the country
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Northampton Borough Council are in the process of transferring 7 community centres to partnership body Community Spaces Northampton.