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Council Minutes 4 May 2005

Minutes of a Meeting of the Council held on Wednesday 4th May 2005

Meeting of the Council of the City of Sheffield held in the Council Chamber within the Town Hall, Sheffield, on Wednesday, 4th May 2005 pursuant to notice duly given and Summonses duly served.

PRESENT

THE LORD MAYOR (Councillor Mike Pye)

THE DEPUTY LORD MAYOR (Councillor Roger Davison)

1 Arbourthorne Ward		10 Dore & Totley Ward	19 Mosborough Ward
Julie Dore		Anne Smith	Mike Peat
John Robson		Mike Waters	David Barker
Tim Rippon		Keith Hill	Sam Wall

2 Beauchief/Greenhill Ward		11 East Ecclesfield Ward	20 Nether Edge Ward
Anthony Holmes		Pat Fox	Ali Qadar
Simon Clement-Jones		Vic Bowden
Clive Skelton		Graham Oxley

3 Beighton Ward		12 Ecclesall Ward	21 Richmond Ward
Ian Saunders		Sylvia Dunkley	Martin Lawton
Chris Rosling-Josephs			John Campbell
Helen Mirfin-Boukouris			Terry Barrow

4 Birley Ward		13 Firth Park Ward	22 Shiregreen & Brightside Ward
Brian Lodge		Joan Barton	Jane Bird
		Chris Weldon	Peter Price
		Alan Law	Peter Rippon

5 Broomhill Ward		14 Fulwood Ward	23 Southey Ward
Paul Scriven		John Knight	Tony Damms
Alan Whitehouse		Andrew Sangar	Gill Furniss
Shaffaq Mohammed		Janice Sidebottom

6 Burngreave Ward		15 Gleadless Valley Ward	24 Stannington Ward
Jackie Drayton		Terry Fox	Vickie Priestley
Ibrar Hussain		Rosemary Telfer
Steve Jones		Garry Weatherall

7 Central Ward		16 Graves Park Ward	25 Stocksbridge & Upper Don Ward
Jean Cromar		Peter Moore	Martin Davis
Jillian Creasy		Ian Auckland	Martin Brelsford
Mohammad Azim		Barrie Jervis

8 Crookes Ward		17 Hillsborough Ward	26 Walkley Ward
John Hesketh		Robert MacDonald	Diane Leek
Sylvia Anginotti		Janet Bragg	Veronica Hardstaff
		Alf Meade	Jonathan Harston

9 Darnall Ward		18 Manor Castle Ward	27 West Ecclesfield Ward
Mary Lea		Pat Midgley	Kathleen Chadwick
Mohammad Altaf		Jan Fiore	Alan Hooper
		Jan Wilson	Trevor Bagshaw

			28 Woodhouse Ward
			Marjorie Barker
			Mick Rooney
			Ray Satur

1.	APOLOGIES FOR ABSENCE
	Apologies for absence were received from Councillors David Baker, Kate Dawson, Harry Harpham, Brian Holmes, Andrew White and Pat White.

2.	DEATHS OF FORMER COUNCILLORS DOROTHY WALTON AND DAVID MORGAN
	The Lord Mayor (Councillor Mike Pye) referred in sympathetic terms to the recent deaths of former Councillors Dorothy Walton and David Morgan and, after a number of Members of the City Council paid tribute to them, Members observed a minute’s silence in their memory.

3.	MINUTES OF PREVIOUS COUNCIL MEETING
	RESOLVED: On the motion of Councillor Pat Midgley, seconded by Councillor Joan Barton, that the minutes of the meeting of the City Council held on 6th April 2005 be approved as a correct record, with the addition of the name of Councillor Jillian Creasy to the list of those Members submitting apologies for the meeting.

4.	PUBLIC QUESTIONS AND COMMUNICATIONS

4.1	Petitions
	The Council received petitions containing (a) 295 signatures raising concerns with regard to the ending of the Netherthorpe/Upperthorpe Community Alliance Streetsafe Warden Scheme and, after hearing representations made on behalf of the petitioners by Ms. Rita Faulding and comments made by Councillor Chris Weldon (Cabinet Member for Neighbourhoods) in which he explained to the petitioners that funding for that scheme came from the Single Regeneration Budget and this had now ended and that Sheffield Homes was responsible for the City-wide Street Warden Service, which included Wardens in Netherthorpe and Upperthorpe, referred the petition to Councillor Weldon for consideration; and
	(b) 1,341 signatures asking that the Council took urgent action to slow down traffic before there were any further deaths on Hathersage Road and, after hearing representations made on behalf of the petitioners by Mr. Tony Meggett and comments made by Councillor Jan Wilson (Leader of the Council) in which she requested details of the issues raised by Mr. Meggett and referred to the decision of the West Planning and Highways Area Board at its meeting held on 12th April 2005 requesting officers to report in three months’ time on the reconfiguration of the Limb Lane/Cross Lane junction and Dore Moor Inn junction, provision of signage and display information for drivers and an enforcement and monitoring of speed levels undertaken at that location, the gulley cleaning that would be taking place in the next three months and that Limb Lane/Brickhouse Lane had been included in the summer Resurfacing Programme, referred the petition for consideration by the West Planning and Highways Area Board.

4.2	Public Questions Relating to the Netherthorpe/ Upperthorpe Community Alliance Street Safe Warden Scheme
	Mr George Stanton and Ms Laura Moynahan referred to the lack of consultation by the City Council with regard to the ending of the Netherthorpe and Upperthorpe Community Alliance (NUCA) Streetsafe Warden Scheme and asked why officers from Sheffield Homes had not attended a recent public meeting in respect of the Scheme and why two of the Street Wardens had not been offered posts as part of the Council’s City-wide Street Warden Scheme. The questioners also commented that the Scheme had been a social enterprise delivered by the community for the benefit of the community.
	In response, Councillor Chris Weldon (Cabinet Member for Neighbourhoods) explained that the Scheme had been funded by the Single Regeneration Budget but this funding source had now ceased. City Council officers had attended the meeting now mentioned and he would request that Sheffield Homes arrange a subsequent meeting with representatives from the NUCA. In respect of the issues relating to social enterprise, he indicated that he would want the Council to work with local enterprise wherever possible and this could be an issue to consider as part of the Sheffield First Agreement.

4.3	Public Questions Relating to Sheffield City Airport
	Greg Fletcher, Alan Kirbyshaw, Richard Lightening, Anthony Hall and Mike Moss asked questions relating to the outcome of the Economic Viability Assessment of Sheffield City Airport undertaken by York Aviation, in particular, (a) why had there not been wider consultation as part of the Assessment, (b) what would happen to the police helicopter and the medivac aircraft if the “Blue Skies” Business Park was developed, (c) had the report presented to the owners of the Airport by York Aviation in 2001 made any mention of Sheffield having sufficient airport capacity in the region and recommended “starter strips” and was there any evidence that that report had been implemented in full, (d) why was the report based on the views of the five people that had supported the “Blue Skies” development when there was a 900 signature petition submitted in December 2004 objecting to the planning application for the Sheffield Airport and (e) whether any of the airlines that had been approached by the airport operator to start services had ruled out operating to the airport in the longer term.
	In response, Councillor Jan Wilson (Leader of the Council) indicated that the issue relating to whether airlines would operate from the airport in the longer term was covered in the consultant’s report. The issue relating to the police helicopter and medivac aircraft would be given consideration and had been raised by the Chief Constable. She understood that the report presented to the owners of the Airport in 2001 had been implemented. As a number of the issues raised would be addressed as part of the item to consider the Economic and Viability Assessment of the Airport later in the meeting, the Leader asked that Louise Congdon (York Aviation) respond to those issues as part of that item.

5.	SHEFFIELD CITY AIRPORT
	The Council received a presentation from Louise Congdon, Managing Partner, York Aviation on the outcome of that company’s Economic Viability Assessment of Sheffield City Airport. Members of the Council had received an Executive Summary of the final report, which indicated that York Aviation was appointed in January 2005 to carry out an assessment of the Airport. The study was in response to the submission by Sheffield City Airport Limited and Sheffield Airport Property Limited of two planning applications in January 2004 for a conversion of part of the airport site to the “Blue Skies” Business Park and associated modifications to the airport.
	In response to a number of the questions asked by members of the public earlier in the meeting, Ms Congdon indicated that the consultees had been recommended to them by key economic partners in the city. A public open day had been publicised locally and the Sheffield Chamber of Commerce and Industry’s website offered the opportunity for people to make comments. She considered that there was sufficient notice for people to comment. In respect of the report prepared in 2001, she was unaware if the report had been implemented.
	Ms. Congdon gave a presentation summarising the conclusions of the Economic and Financial Viability Assessment. In respect of potential market demand, she referred to the City’s economy generating further demand for and being more dependent on international air links in the future but that the market would remain smaller than for other regional cities. Theoretically there was a market for a small number of scheduled services but attracting airlines would be difficult due to the physical constraints of the Airport limiting payload/range, even for operators of the new turbo-prop aircraft. As scheduled service operations would be perceived by airlines to be higher risk commercially due to past failures, they would expect substantial incentives from the Airport and/or public subsidies to recommence scheduled services. Even if services could be attracted, they would add relatively little to the connectivity of the City, given the services offered from other airports and would be less likely to provide good hub connections. Competition from low fare services at Robin Hood Doncaster Sheffield Airport would put pressure on airline yields and impact on the viability of scheduled services. With the proposed “Blue Skies” development, the Airport would be limited to a few general aviation aircraft and helicopter operations. The scope for scheduled helicopter operations had been raised but this was considered unlikely to be viable.
	In respect of the economic development issues, she indicated that given the relatively limited range of services the Airport would offer and the range of services from neighbouring airports, its importance to economic development would, at best, be marginal and would need to be weighed against the costs of retaining the Airport. Taking a wider view, Sheffield was not disadvantaged in terms of air service connectivity compared to other United Kingdom and European cities but only in terms of very local (30 minutes) access to air services. Whilst air service connectivity was important, there was no clear pattern that better connectivity translated itself directly to higher economic growth provided there was good access to a wider range of air services from other airports. This would require improved surface access links to other airports.
	Ms. Congdon then referred to a number of financial and viability issues. She stated that the Airport was losing around £400,000 per annum, with peak losses in access of over £1.1m and accumulated loses since the Airport opened of between £4.6m and £5.8m. The operator had made substantial efforts to attract new general aviation operators to the Airport, although the on-site aircraft operators had some concerns about the extent of support they had received. No evidence had been found that the operator had turned airlines away from the airport, although the current operational constraint added to the deterrent. There was little likelihood of the Airport being financially viable in the foreseeable future with estimated operational loses being in the range of £250,000 to £1m per annum. Given the costs of developing the airport and the continuing losses, it could cost in excess of £20m to buy out the developer. In addition, initiating new air services would require substantial levels of public sector financial support.
	She referred to a number of constraints that had been imposed by the Lease and Development Agreement. If, as expected, the operator could demonstrate in 2007 that the Airport was loss making, the Council was obliged under the Lease to allow the transfer of the freehold of land for £1 and the alternative use of the site, subject to planning approval. If it could be demonstrated that the operator had not used reasonable endeavours to attract business, then a closure could be challenged. However, the evidence was that the overall intent of the operator had been to achieve a viable business operating profitably, although some criticisms could be levelled at certain actions. It would be difficult to refuse the planned re-development of the site given that the existing Unitary Development Plan Policies, the Regional Spatial Strategy and other policy documents did not suggest a priority to retain the Airport and this would make it difficult to argue a special case in the new Local Development Framework. No overage payments would be due to the Council arising from the redevelopment of the site under the terms of the Lease but the developer was likely to see additional returns from early development if the Council approved the ‘Blue Skies’ development ahead of 2007 and the Council should seek compensatory benefits. There would not be a realistic way to secure retention of the Airport by operational subsidy alone and the developer would have to be bought out, otherwise the developer could simply wait until 2007 then exercise the right under the Lease. The costs of buying and operating the Airport were likely to exceed the likely benefits to be gained to the economic development of Sheffield.
	In summary, the conclusions were:-

	· It was always accepted that development of the Airport was high risk and might not succeed.

	· Original Agreements to facilitate the development of the Airport by the private sector required covenants allowing re-development of the land if the Airport demonstrably could not operate profitably. Without these Agreements, the development could not have been funded.

	· The market for the Sheffield City Airport now and in the future, was not strong given competition from other neighbouring airports and restrictions imposed by the runway length.

	· Sheffield was not fundamentally disadvantaged in terms of air service connectivity given the other regional airports.

	· The only option for retention of the Airport would be to buy out the developer and support the Airport’s operation at a potential cost in excess of £25m.

	· If the Council allowed the Airport to close two years earlier than the 2007 date, it should seek compensating advantages in terms of the development of the site or in relation to the role of Robin Hood Airport in serving Sheffield.

	Following the presentations, the Lord Mayor (Councillor Mike Pye) invited Members of the City Council to ask questions of Ms Congdon.
	Councillor Ray Satur asked for further information with regard to the point that the consultants could find no evidence that airlines had been turned away from the Airport by the operator. In response, Ms. Congdon indicated that she had spoken to all the airlines concerned and they had indicated that the fact that the other airlines had not made the airport viable was their main deterrent to starting new services. There had been an issue previously for British Airways in having to leave passengers’ luggage behind to enable the plane to take off due to the short runway. The route operated by KLM had not proved sufficiently profitable. Eastern Airways had indicated that it would only be interested in routes that other airlines had proved were potentially viable with smaller aircraft types. Flybe were standardising its fleet and its current planes could not use the runway at Sheffield with a full commercial payload. Another airline indicated that it would require £250,000 per month to start a new service from the airport. She concluded this point by stating that no airline had indicated it wished to operate from the Airport nor was there evidence that airlines had been turned away by the operator.
	Councillor Diane Leek referred to the reduction in core services at the airport and that she understood that this had restricted some airlines using the airport. She asked who had decided to reduce the core services and the reasons for this decision. She also asked if was possible to fly a shuttle service to the Robin Hood Airport, as there were poor road links to that airport.
	In response, Ms. Congdon indicated that at one point there was only one weekly flight to Jersey from the Airport and it was expensive to maintain the support services. The fire and security cover had been reduced when the airlines had ceased operating from the airport but it was unlikely that this had any direct effect on attracting airlines as those facilities could be reinstated. The journey time was too short to run a shuttle service to the Robin Hood Airport but improved road links to that airport were needed.
	Councillor Alf Meade considered that little had changed since the airport was established and questioned why it had been unsuccessful. In response, Louise Congdon referred to the change in the market and the impact of low cost carriers that had affected all airlines.
	Councillor Jillian Creasy supported the conclusions reached by the Study but considered that issues relating to the connectivity with the rail network should be taken into account, for example the high speed rail link could take passengers to Paris in five hours. She also highlighted a number of issues in relation to pollution and noise, the affect on house prices and businesses, and the possible steep rise in oil prices in the next five to ten years and the affect this could have on the airline industry. She asked if the consultants had taken into account the affect if the Government withdrew £9bn of tax breaks to the aviation industry and the impact this would have on the viability of airports.
	In response, Ms. Congdon indicated that the study had not taken rail travel into account in terms of connectivity. If there had been an expectation of growth at the airport there would have been greater environmental analysis in the Study. The Government’s White Paper on ‘The Future of Air Transport’ set out a framework within which future proposals for air development within the United Kingdom would need to be considered but there had been no estimate of the effect of tax breaks being withdrawn or possible increases in the cost of fuel.
	In response to a question from Councillor Garry Weatherall on whether there were any organisations willing to purchase the airport, Ms. Congdon indicated that she had spoken to one group but it had no interest in Sheffield City Airport due to its proximity to Robin Hood Airport. A number of local business people had expressed an interest but it was clear they had no concept of the financial implications or that they may have to buy out the developer.
	Councillor Terry Fox asked if the Memorandum of Understanding (MOU) was legally binding and also made the point that he could not understand how the airport site could be sold for £1. He asked whether there was mention in the Airport’s Business Plan of encouraging airlines to start services at the airport or if the issue for the airlines related to the length of the runway. He also asked for evidence of the need for £25m to buy out the developer and support the Airport’s operation.
	In response, Ms Congdon indicated that the Council’s Chief Executive should answer the issue relating to the MOU but, in preparing the report, York Aviation had taken the Development Agreement as being legally binding. The sale of land to Tinsley Park Limited, including a clause allowing the company to purchase the freehold of the airport land for £1, were expressly approved by the Department of the Environment and the District Valuer, having regard to the development value of the Business Park on the Airport Ancillary land and the potentially negative value of the Airport land developed as an Airport expected to generate losses for several years. In terms of its Business Plans, she had seen evidence that the operator had tried to attract other airlines to the airport. In respect of the potential costs of £25m, if the airport was brought back into public ownership, the developer would seek reimbursement of its costs and losses or equivalent to the development value of the site plus operational costs and incentives, otherwise the developer had no obligation to sell. The £1 provision to purchase the freehold in 2007 would remain in force.
	Councillor Pat Fox raised an issue that as the local economy grew the need for a local airport would become more important. Ms. Congdon indicated that that the Airport would add value but the issue was by how much and at what cost.
	Councillor Michael Waters referred to the comments from the Chairman of Peel Holdings in “The Star” Newspaper in which he had stated that there was room for both the Robin Hood Airport and Sheffield City Airport, although the consultant’s report did not appear to support this view. He asked if legal advice had been sought on there whether there had been a breach of the Lease in respect of the operator’s endeavours to attract new business? He also considered that the new turboprop aircraft could use the Sheffield airport and asked if this had been considered in terms of its viability.
	In response, Ms. Congdon stated that she was not in a position to comment on the quote from the Chairman of Peel Holdings. She indicated that the market for business travel from Sheffield Airport was not strong, in contrast to London City Airport that was able to sustain high fares due to the number of business customers. She had not sought legal advice in terms of whether there was any breach of the Lease. However, it was noted in the Report that although “the airport has been down graded to a general and business aviation only aerodrome”, the “Code “2C” runway was still in place as required by the Lease. Some of the support services and facilities had been removed from the airport but these could be reinstated if commercial air services could be attracted to the airport. Although there would be some commercial aircraft that could use the airport, the Dash 8-Q400, which was one of the more popular turboprops, could not use the airport at full payload. The British Aerospace 146 could use the airport but this aircraft was being phased out.
	Councillor Ian Auckland asked questions relating to the trading account of Airport Properties, the sale of the airport for £1 and whether the consultants were happy with the level of consultation that had been undertaken, whether the cost of relocation of the police helicopter had been taken into account and if there was a model for the airport operating now or in the future.
	In response, Ms. Congdon indicated that the accounts of Airport Properties were not relevant to the Agreements relating to the Airport. In terms of the Airport continuing, a number of airports operated at a loss with some airports receiving financial support. In respect of the consultation, she was surprised that there had not been a greater public response. There would be a cost to relocate the police helicopter if the “Blue Skies” development went ahead and this was an issue to be resolved.
	Councillor Jackie Drayton asked questions relating to the land value, whether overage payments were being received from both the airport and ancillary land, could there be a legal challenge on whether the operator had used reasonable endeavours to attract business and could there be discussions with Peel Holdings on the City Airport being complementary to Robin Hood Airport and the possibility of a helicopter link between both airports. She also asked whether it would be possible to buy the land back for business development.
	In response, Ms. Congdon explained that the land for construction of the Airport was acquired from British Steel for £1. AF Budge (Mining) Limited had been granted planning permission to develop the Airport with the development being funded from the returns on stripping the site for coal. However, having extracted the coal and preparing the site for subsequent development as an airport, the Company and its subsidiary, Sheffield Airport Limited, had ceased trading. A Development Agreement was signed in 1995 (with Tinsley Park Limited and its parent company Glenlivet Property Company Limited) to develop both a Business Park, on the airport ancillary land, and the airport itself on the former strip mine site. Both parts of the land generated overage payments and this related to revenues from the disposal of the site compared to the full development costs incurred on the land and subsequent redevelopment costs. This was calculated on the basis that the disposal proceeds should cover any shortfall in the development costs, any shortfall of investors’ return and meeting the developer’s profit, with the remainder split between the tenant, Sheffield Business Park Limited and the landlord (Sheffield City Council). In terms of any possible legal challenge it would be necessary to prove that Peel Holdings had not used its reasonable endeavours to attract business to the airport. In respect of the suggestion for a helicopter link to the Robin Hood Airport, domestic flights were very expensive and it was likely to save little time compared to road travel. There was also an issue on who would use such a link.
	In respect of the study, Councillor Anne Smith raised concern at the lack of connection with the business community believing that, in particular, there was little mention of the Chamber of Commerce and Industry. In relation to the public meeting organised by the consultants, she indicated that people had only been given four days’ notice. In respect of other airports, she asked for information on the amount of public funding and how long it had been before those airports became profitable. If it could be proved that the operator had not used reasonable endeavours to attract business to the airport, could there be a legal challenge?
	In response, Ms. Congdon indicated that the Chamber of Commerce’s Transport Committee had been consulted and individual business views had been sought via the Chamber’s website. If the operator could demonstrate in 2007 that the airport was loss making and not financially viable, then the use of the land as an airport may cease and the tenant (Tinsley Park Limited) may ask for the transfer of the freehold of the site for £1 by serving notice on the City Council. If an airport was to close, it was important that there was another nearby airport. She added that the majority of airports in the United Kingdom were developed on military airfields and few were newly built. Local authorities operated a large number of airports. In terms of any possible legal challenge, the advice that she had received indicated that it would be extremely difficult to prove that the operator had not used reasonable endeavours to attract business.
	In response to an issue raised by Councillor Vic Bowden that the other airports in the region were at least one hour’s drive and Robin Hood Airport was not a convenient replacement for Sheffield City Airport, Louise Congdon considered that Manchester, Robin Hood, East Midlands and Leeds airports all had the ability to generate further air services and businesses and Sheffield would still be reliant on other airports even if the Sheffield City Airport was still providing air services. There was a need to address road and public transport links to the other regional airports in any event.
	Councillor Martin Lawton asked whether there was a possibility of air services operating from the Airport in the next 15 years with a runway of only 530 metres. He also raised a number of issues with regard to the profit and loss account of the City Airport.
	In response, Ms. Congdon indicated that there was no commercial fixed wing aircraft in manufacture that would be able to operate on a runway of 530 metres and the Civil Aviation Authority (CAA) would not licence the runway on that basis for commercial scheduled services but only helicopters and small private aircraft. The gross profit figures were misleading and the airport was loss making taking legitimate overheads into account. There was a note on the company’s accounts that it was only able to continue trading through the substantial loans received from its owners (Sheffield Business Park Limited and Peel Airports Limited).