Minutes:
(Ms. N. Largey, Solicitor, attended in connection with this item.)
The Committee considered the undernoted report:
“1 Background Information
1.1 Members will recall that at its meeting of 20 August 2013, an application was received from Folktown Community Interest Company (Folktown) to hold a weekly market in Banks Square for 42 weeks of the year. It is envisaged that this Market would take place every Thursday from March to December 2015 and the opening hours will be from 12.00pm to 8.00pm. There will be a minimum of 25 stalls and a maximum of 31 stalls in any week. It is planned for this market to be a long term venture.
1.2 Members will also recall that Fine and Dandy was also granted a licence to operate a small market in the Crescent Arts Centre on the last Sunday of each month until December 2013.
2 Key Issues
2.1 Folktown CIC made 3 requests to Committee. The first was to be granted a Market Licence, the second was to have the fee for their application and stall fees waived and thirdly to receive financial support to set up the Market, including first year administration and running costs.
2.2 Members agreed to grant the market licence and to refuse the application for financial support to set up the Market. It is worth noting that the request for financial support included paying market management and event team wages, office rent, insurance, the purchase of market stalls and waste bins, business plan fees, design fees and the purchase of computer and printer.
2.3 In relation to the application to have the application fee and stall fees waived Committee agree to defer consideration of the request to waive all or part of the fees to allow further clarification to be provided on the Council’s Markets Policy and in relation to Community Interest Companies.
2.4 Folktown CIC intends to charge a fee of £30.00 per stall per Market but in the first year they aim to charge £20.00 per stall per Market. Year one is estimated to bring in between £21,000 and £26,040.00 depending on the final number of traders attending each week.
2.5 Section 2.3 of the Appendix to the Markets Policy sets out the provisions in respect of a speciality market, which is defined as a market where there is a specialised theme or grouping of produce or goods that make the event more than a car boot sale or a traditional market.
2.6 Section 2.8 of the Appendix states that fees will be waived for any market which is organised by a charity or operated for ‘solely charitable purposes’. At the time of developing the Markets Policy, Community Interest Companies were not envisaged as being likely applicants for a market licence.
2.7 Folktown is registered with the Community Interest Company Regulator. Community Interest Companies were created by the Companies (Audit, Investigations and Community Enterprise) Act 2004 and are a special type of limited Company which is intended to benefit the community rather than private shareholders. A Community Interest Company (CIC) is a Social Enterprise and is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community.
2.8 In order to become a CIC, an application needs to be lodged with Companies House to include a Community Interest Statement which explains the company’s business plan and creates an asset lock, which is supposed to be a legal promise stating that companies’ assets will only be used for its social objectives and setting limits to the money it can pay to Shareholders.
2.9 In addition to registering with Companies House, the company must also be registered with the Community Interest Regulator, who assesses whether the company meets the criteria to become a CIC. The benefit in establishing a CIC as opposed to a Charity is, in part, due to the restrictions which are imposed on the trading abilities of Charities. No such restrictions apply to a CIC. In addition, the founder of a CIC can be paid for their work, can sit on the Board and be responsible for the strategic control of the company.
2.10 A copy of the relevant documentation lodged with Companies House, together with the applicant’s Community Interest Statement is attached to members’ papers for consideration. The applicant has also provided a copy of its Memorandum and Articles of Association, together with a copy of its Certificate of Incorporation on becoming a Community Interest Company, which is also attached to members’ papers.
2.11 The issue to be determined is whether the reference to markets held for “solely charitable purposes” could include events run by a CIC.
2.12 The definition of charitable purpose is set out in Northern Ireland in the Charities Act (Northern Ireland) 2008. It states that charitable purpose is a purpose that falls within a number of descriptions including the advancement of citizenship or community development (which includes rural or urban regeneration) and the advancement of the arts and culture. In addition, any purpose recognised as a charitable purpose under the Recreational Charities Act (NI) Act 1958 may also be considered a charitable purpose. Said legislation provides that it is charitable to provide or assist in the provision of facilities for recreation or other leisure time occupation if the facilities are provided in interests of social welfare for the public benefit.
2.13 In addition, the 2008 Act states that charitable purpose also includes any purposes that may reasonably be regarded as analogous to or within the spirit of any of the purposes referred to above.
2.14 It would therefore appear that a CIC can be considered to be an organisation which runs events for charitable purposes. The difficulty however is that the policy refers to markets which are held for ‘solely charitable purposes’. It was envisaged at the time of drafting the policy that such a provision would be used for fund raising type events for a specific purpose. CIC’s are different to charities in that that they are specifically set up so as to allow for board members and directors to be paid for the work that they carry out and have social objectives as opposed to charitable status.
2.15 According to the Community Interest Company Regulator’s annual report for 2012-2013, there were nearly 8,000 registered CIC’s. That is coupled with 6,738 organisations which are deemed charities in Northern Ireland. As members may be aware, charity registration has not as yet begun in Northern Ireland. In the interim period, the Charity Commission deems organisations which have registered with HMRC for charitable tax purposes to be charities.
2.16 If it is decided to waive fees for this particular CIC, then it may be difficult in future to refuse applications to waive fees from other CIC’s. In addition, members are reminded that the market rights which the Council hold are a private valuable right and should be treated as such.
2.17 In relation to the subject application, the applicant intends to run a large weekly market for most of the year. There will obviously be resource implications for Council staff in regulating the market. Such costs are unlikely to be fully met by the application fee and the stall fees that would be payable. It is also noted that there are only two members of the company who are also the only directors of the company.
2.18 Folktown’s Articles of Association permit the directors to be paid both remuneration and also expenses. The Community Interest Statement also states that ‘if the Company makes any surplus, it will be used for further development of our activities, in particular the festival, in the strive for better quality, better programmes, bigger acts and larger catchment area”. It does not however set a limit in terms of the percentages of income etc. that would be reinvested in the company or on what directors would be paid out of any income. Whilst that is understandable, members have to satisfied that this market would be held for ‘solely charitable purposes’.
2.19 Having taken advice from Legal Services, it is arguable that a CIC may be considered an organisation which runs events for charitable purposes. However, there is also case law which states that just because an event or organisation is benevolent does not necessarily mean that it is charitable in the legal sense. In the absence of any express provision in the policy relating to CIC’s, each application will have to be considered on its own merits. Generally however it is unlikely that a CIC will meet the test set out in the policy in respect of events for ‘solely charitable purposes’.
2.20 It is noted that the Policy is due to be reviewed in February 2014 and it is recommended that, at that time, specific reference is made to CICs. Further research will need to be undertaken to establish what would be a reasonable approach to take to CIC market applications. Based on early investigations it seems that the approach most in keeping with the Council’s objectives would be to assess each CIC on its own merits against a number of criteria. These would consider: how beneficial the proposed market is to the area; how much support there is for a market with local people and relevant stakeholders; how much preparation has been put into setting up the market; how much of the CICs profits will be reinvested into the local area; and how well the application meets the existing policy criteria. On that basis, it is likely that Folktown’s application would be approved and the licence fee waived. The award of a licence under these circumstances would be subject to annual review.
Fine and Dandy
2.21 Permission was granted for a market licence to Fine and Dandy in August 2013 Fine and Dandy have used this market to allow some art/craft students to trade to help promote their new goods. Due to demand Fine and Dandy wish to continue the market until July 2014 when the application expires.
2.22 Fine and Dandy have paid the annual £100 multiple market application fee and fees for the markets held.
2.23 Fine and Dandy have supplied the relevant details such as insurance and any food traders’ food safety registration details. Therefore it is recommended that Council agrees to the granting of a licence to Fine and Dandy until July 2014 when their application is up for renewal.
5 Recommendations
1. To accede to the request of Folktown CIC to waive the application and stall fee and this decision to be reviewed in 12 months time.
2. To review the Markets Policy in February 2014 and ensure there is suitable reference to applications from CICs; and
3. To agree to extension of Fine and Dandy market licence until July 2014.”
Proposal
Moved by Alderman Stoker,
Seconded by Councillor Hussey,
That the Committee agrees to adopt recommendations two and three only and defers consideration of recommendation one, viz., to accede to the request by the Folktown Community Interest Company to waive the stall hire fees at the Bank Square Market, pending the outcome of the review of the Council’s Markets’ Policy.
Amendment
Moved by Councillor Mac Giolla Mh?n,
Seconded by Councillor Ó Donnghaile,
That the Committee agrees to adopt the three recommendations as set out in the report.
On a vote by show of hands, seven Members voted for the amendment and eight against and it was declared lost.
The proposal standing in the name of Alderman Stoker and seconded by Councillor Hussey was thereupon put to the meeting when eight Members voted in favour and seven against and it was declared carried.