Closing the gap: community engagement
Alison Marr analyses the transfer of public assets to community bodies in Scotland and the disconnect within part 5 of the Community Empowerment Act 2015.
The Community Empowerment (Scotland) Act 2015 has been in force for the last six years in order to make it easier for communities to take over land and buildings from public authorities through the Community Asset Transfer (CAT) process.
Many public authorities already had processes in place to allow the transfer of surplus land and buildings to community bodies. However, the transfer process could be laborious and end without a successful outcome on either side. The Act ensures authorities make decisions within specified timescales, and if a community body is not happy with a decision, or a lack thereof, it can request a review of a decision and subsequently appeal to the Scottish Ministers.
Since its enforcement, a fundamental disconnect between the principles of protecting public assets and allowing communities to develop assets in their ownership has remained. Broadly speaking, the gaps are created due to funding and inconsistencies in the legislation, particularly around appeals.
Funding challenges
To enable the transfer of assets, relevant authorities must be satisfied by evidence that the community proposals are viable. However, communities are often unsuccessful in their transfer requests and appeals due to a lack of evidence of such funding.
Even with strong governance and a robust business case in place, a community group needs to consider whether it can deliver if funding is limited or uncertain. The Scottish Ministers have acknowledged the issue of the uncertainty of funding, but it takes the view that, if an organisation is robust enough, it will be successful in some, if not all funding applications. A community body needs to consider the amount of funding it is seeking, whether all of the funding is necessary to deliver the community benefit proposed and to obtain letters of support even if only in principal or on the understanding that the funding is conditional on approval of the application.
Two recent cases exemplify this point. The community bodies demonstrated good governance, a robust business case and a high value of community benefit in delivering their proposals. Evidence of sufficient funding has been the stumbling block.
St Andrews Environmental Network Ltd wanted to take over a former local office building in St. Andrews, which had a substantial back log of maintenance that needed to be addressed, along with further development, in order to achieve the intended community benefit. At appeal, the group could not provide sufficient commitment from funders.
Part of the hesitation from funders was because the Council was seen as an "unwilling seller". However, the Scottish Minister’s reporter pointed out that the legislation makes the reverse to be true, because the Act supports that the asset transfer is approved unless there are reasonable ground for refusal. In this case, it meant that the community body was unsuccessful because of the lack of evidence of sufficient funding.
A similar discussion took place in the appeal for a transfer of land near Inverness. The land sought was to be used principally for allotments. It is acknowledged that funders have a limited pot to draw from, and there was no guarantee it would be granted to the community group. However, even without firm commitments from funders, the proposal could still achieve many of the proposed benefits through the funding from local fundraising and smaller grants. The sustainability of the proposal was not dependent on high amounts of funding. In this case, the group was successful as the "gap" was smaller and its plans could operate without being successful in gaining all of the funding.
Transfers by way of lease or of land only have tended to have a stronger chance of success through the Act. If an organisation wants to take on a building, then it would be best practice to use the CAT process to seek a joint valuation with the relevant authority and obtain the condition survey to inform its funding goals.
Valuation is a key part of the Scottish Government Guidance which, although not law, both parties are advised to follow. A joint valuation will assist both parties during the review or appeal process as they don’t need to ascertain value all over again or have competing valuations.
In the St Andrews case, the relevant authority's valuation was higher than the applicant's as it considered market value for current use and also commercial sale. Ultimately, the Scottish Minsters decided that a valuation on the proposed restricted use was the one to use, provided that the asset was protected against a windfall benefit to the applicant through an unrestricted future sale by them. Realistically, it would have saved time and expense if the parties had obtained a joint valuation at the start. If there is still a gap in the funding or there are unrealistic aspirations that cannot be supported after the valuation, then a CAT application is less likely to be successful.
Inconsistencies in the legislation
There are also several inconsistencies with the routes of appeal open to community bodies, depending on the type of “relevant authority” and the subsequent failing. It is critical that community bodies are informed of the appeals process from the outset.
If the community body is dissatisfied with a decision, or lack of decision, and the relevant authority is a local authority, then the community body can first follow the review procedure set down in Section 86 and the Review Regulations[1]. Once this process has been followed, if the community body is still dissatisfied, it can appeal to the Scottish Ministers. Where the relevant authority is any authority, other than a local authority or the Scottish Ministers, the community body can proceed directly to the appeals process governed by the Appeal Regulations[2].
However, under the Appeal Regulations, there is no time period specified for the Scottish Ministers to issue a decision. Furthermore, there is no time period in the Act or Appeal Regulations stating when the relevant authority must then issue their fresh decision notice, if required to do so. This means that any direction notice issued by Scottish Ministers to the relevant authority under Section 85(5)(c) would need to specify the timescales in which the relevant authority has to take action. It may be the case that no such time period is specified in the direction notice.
If a relevant authority is quick off the mark, they can issue their fresh decision notice almost immediately, requiring the community body to issue its offer within 6 months. This may put the community body on the back foot if they have not yet employed a solicitor or are unable to get funding in place within that timescale.
Equally, it presents an opportunity for a relevant authority to drag its heels and wait out the community body, possibly waiting months before issuing the fresh decision notice. This may have the opposite effect, meaning the community body loses funding or misses funding deadlines.
The Appeal Regulations do not apply where a successful community body has issued an offer, but no contract has been concluded by the relevant authority. A separate route of appeal is set down in Section 90. However, Section 83(6) clearly states that this appeal process is not available where the relevant authority is the Scottish Ministers. Meanwhile, Section 90(11) suggests that this appeal process is open to a community body where the relevant authority is the Scottish Ministers.
On reading the Regulations,[3] they only cover scenarios where the relevant authority is not the Scottish Ministers, which would mean that Section 90(11) is incorrect. If this is the case, it presents an additional roadblock for a community body. If the relevant authority is the Scottish Ministers, the review process set out in section 87 is the only available route for further remedy but does not include a remedy if no contract has been concluded. If no contract has been concluded with the Scottish Ministers, then there is no process available by which a community body can compel them.
Community bodies need to be well informed before starting on the review and appeals process and have a full understanding of the possible outcomes. The legislation may only be six years old, but a legislative review may already be required, since the legislation may not actually achieve the outcomes originally intended by the Scottish Government, to empower communities and make the transfer of public assets to those communities easier.
Alison Marr is a Senior Associate at Morton Fraser MacRoberts
[1] The Asset Transfer Request (Review Procedure) (Scotland) Regulations 2016
[2] The Asset Transfer Request (Appeals) (Scotland) Regulations 2016
[3] The Asset Transfer Request (Appeal Where No Contract Concluded) (Scotland) Regulations 2016
