Arlingclose has advised the London Borough of Tower Hamlets, on a series of innovative changes to the Poplar Baths Leisure and Residential Project, a multi-faceted regeneration scheme. This included advice on a debt refinancing package, subsequently expanded to include a partial handback of leisure services to the Council. The Council managed to negotiate this refinancing in a difficult market, achieving a reduction in payments with no disruption to services.
Increasingly, Arlingclose is being asked to provide advice on similar local authority contracts including Private Finance Initiatives, other forms of Public Private Partnerships and Joint Ventures and outsourced services. Often, the need for advice and engagement is driven by existing contractual arrangements but also changes in underlying economic conditions, developments concerning existing partners, political factors or a variation in service delivery requirements. The huge impact of COVID 19 and the measures adopted to control the virus has accelerated many of these issues, requiring a review, often urgent, of current outsourcing arrangements and relationships with those delivering services. This could apply to leisure services, outsourced back office provision, housing maintenance and management, technical services, and waste collection.
These contracts share many similar features, including relatively large values, complexity in terms of contractual and financial arrangements and key strategic importance in the delivery of essential services. To add to the finance officer’s burden, these issues often come with a ticking clock including key break dates in contract documentation and financing.
Eversheds Sutherland provided legal advice to the Council on the Poplar Baths Project. It regarded the innovative solution as a first in SOPC-based infrastructure (Standardisation of PFI Contracts). While SOPC-based concession agreements include mechanisms to enable temporary solutions in the current COVID-19 environment, in many projects these mechanisms serve only to kick challenges down the line. ES noted that there are several hundred PFI projects in the UK and countless others based on PFI, and Arlingclose’s experience from Poplar Baths will be of interest to those authorities looking to develop similarly favourable solutions - rather than letting potential challenging situations deteriorate over time.
While this can seem like a daunting task, below we set out a checklist of practical steps that can help ensure authorities achieve beneficial outcomes:
The COVID 19 pandemic and implications of “Lockdown” have thrown up many challenges for local authorities with outsourced and arm’s length service suppliers. It may also deliver the opportunity to review these arrangements and negotiate new deals that bring a degree of stability to service delivery and revenue savings too.