Friday 26 April 2024

The Policy & Resources Committee is providing additional detail on the decision to invite expressions of interest for the lease for the Fermain Café.

While this is part of the ordinary commercial operations of the States of Guernsey and in keeping with its approach to other coastal cafés and kiosks, the Committee fully appreciates the strong feelings many customers of the Café have shared, and is happy to provide a greater insight into the process.

The Fermain Café has been leased to its current tenant with a 21-year term since 2003, meaning the lease is due to end on 31^st October this year. The lease does not contain any clause determining a right to renew, but a renewal - or a new lease or an extension - can be granted subject to agreement by both parties.

In the early part of the 21-year period, the tenant and States made agreements to carry out improvements to the site in exchange for a concessionary rent period. This included converting the kiosk of the former battery building into toilets and the former public toilets into the kiosk and café that is there today.

Since 2009, the tenant has approached the States with various proposals to further invest in the Café, including extending and altering the premises, in exchange for extensions to the 21-year lease. The States has been very open to exploring these proposals, however the tenant has not pursued them.

In 2009, the States did agree an extension of the lease to 2038 on the condition the tenant's proposed alterations to improve the premises were carried out by May 2015. However, by 2014 it became apparent the tenant was no longer intending to proceed with these works. The States invited the tenant to submit a new request for a new completion date in order to keep the extension of the lease in place, however no such request was received.

While this meant the original end date for the lease remained in place, the States has continued to be open to any new opportunities for investing in the site that the tenant wished to consider, and has met with the tenant on multiple occasions over the term of the lease to discuss new ideas. However, the tenant has not progressed the matter beyond initial meetings.

Most recently in March 2023, the tenant approached the States to discuss purchasing the site, or to revisit an extension of the lease. A sale would not be considered, given the importance of the site remaining in the island's ownership.

The States is not opposed to renewing the lease to the current tenant, who has undoubtedly made a success of the business which is popular with islanders and visitors and has a strong and loyal customer-base.

However, the States is mindful that the tenant's previous proposals to carry out improvements to the site have never been progressed, and the States regularly receives interest about the running of and investment in publicly-owned kiosks and cafés. Therefore, it was considered the fairest approach, and the one which ensured the community could be confident the site was being used and run in the best possible way, was to invite all interested parties including the current tenant to put forward expressions of interest for the new lease. As part of this process, preapplication planning advice was sought to understand the future potential for the site. There is no predetermined plan or development proposals and any potential enhancement or redevelopment of the site would have to meet strict planning requirements due to the sensitive coastal location and access restrictions.

The States made the tenant aware of this in April 2023, a full year before inviting those expressions of interest.

Mark Ogier, Director of Estates, States Property Unit said:

"A number of concerned members of the community have been contacting my team, the Policy & Resources Committee and their Deputies, with questions about the decision to invite applicants for the lease of the Fermain Café. So, we are more than happy to share as much detail as we can.

We have sought to treat the tenant fairly throughout our relationship, as we would any of our tenants. We are also obliged to ensure we are doing the best thing possible on behalf of the community with the important sites we look after, and that means that at appropriate times we need to go out to the market and see what other prospective applicants would put forward. This should not be seen as a criticism of any current tenant, it is just good commercial practice.

In a competitive market where commercial decisions need to be made, a lease-holder whose lease is coming to an end after a very long period, is often asked to retender to renew or extend that lease. Their submission is treated impartially and considered on its merits against any other proposals put forward. If the strongest submission received comes from the current tenant, the States will be more than happy to agree a renewal of the lease."

Deputy Bob Murray, property lead for the Policy & Resources Committee said:

"The decision to invite the market to bring forward expressions of interest for this site is an operational one, but it is also one that I support. It is a perfectly normal practice in any commercial environment, to re-tender a lease from time to time, and in this case it hasn't happened for 21 years. The States are often criticized for not acting in a more business-like way, but that is exactly the approach that has been taken here. Having to compete to hold on to a lease is not a punishment, and I don't believe it is unfair either. In fact, fairness is one of the main reasons for ensuring there is a competitive process. We have been transparent with the tenant and we are sharing this information today to be as transparent as possible with the community too."

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