Public cash for museum

In the latest deals, Events Square has been taken over by a newly-formed company run by the museum's trustees and the museum itself has become the landlord to a number of businesses.

The deals have been financed by the South West Regional Development Agency who previously gifted the site of the former TA centre to the museum.

The TA centre deal caused raised eyebrows when it was concluded in 2003 because the Ministry of Defence sold the land for £1 million to a private developer and the RDA, another branch of the same government, then bought it back a year later for £2 million and paid for it to be turned into a car park. The museum now keeps the car parking fees.

How much public cash is involved in the latest deals is not clear, but it is expected to be several million pounds.

Port Pendennis Partnership, the previous owners of Events Square - which fronts the museum - went into receivership. The RDA, using taxpayers' money, bought the property from the receiver and handed it over to Discovery Quay Square Ltd, whose directors are two of the museum trustees and museum director Jonathan Griffin. Two other directors will come from the freeholders around the square.

It is planned that all profits will be ploughed back into the square so that the area can grow and develop as a central hub of entertainment, retail and leisure facilities for Falmouth.

In another deal - also financed by taxpayers - the museum has become the landlords of a ground floor block of shops and cafes in Events Square and will benefit from the rents it collects.

Last year, while on the verge of bankruptcy, the museum received cash from the Heritage Lottery Fund. The RDA is unable to give cash hand-outs but it can assist with the financing of capital projects.

"We applied to them for a grant of £1.5m to buy an asset (the ground floor of Block C) which would yield an income," said Mr Griffin. "This provides revenue to help us survive. There is a claw-back arrangement so that the RDA gets the asset if the museum suddenly does spectacularly well."

He said the deal involving the ground floor had been completed earlier this year after 12 months of discussion. "There was no reason why we should use a subsidiary as the charity is allowed to own an asset like this which is not being developed but simply providing an income. If we had been intending to develop it then it would not have been within the charity's objectives and we would have had to bed it into a subsidiary."

Income from the traders is said to be currently in excess of £100,000- a-year and with the freehold under the protection of a trust, no tax will be paid on that sum, saving the museum an extra £40,000 a year.

Now that Events Square has changed hands as well, discussions are planned with the town mayor, Falmouth town centre manager, the town centre forum, the Chamber of Commerce and other parties involved in the development of Falmouth to discuss how its potential should be maximised.

Mike Rangecroft will continue to be responsible for all events held there.

Mr Griffin told the Packet: "Knowing that the partnership of the current owners, Port Pendennis Partnership, was being dissolved by a receiver, we talked to SWRDA about possible ways in which we could help. They agreed to help and, after discussions with the receiver, have purchased a package of assets."

He said the museum had been in discussions with SWRDA all the way through. "There was a suggestion that we should take on the square ourselves but we thought it much better if it involved more people - especially those with a vested interest in its success as a destination. It must work for all the businesses involved and be an asset for the town, not just for the museum."

Mr Griffin said that under the terms of the lease it is not possible to make a profit from the activities on the square. Any money raised goes back into running the events or the repair of the fabric. It would not have made sense for anyone else to have wanted to buy the square if they could not make money out it.

The new solution left the responsibility for the square with the people who have a vested interest in making it work.

The building work on Block A, adjacent to the square, is well advanced and it will not be long before the new shops, a pub and restaurant will be open.

A spokesman for the RDA denied it had a veto over a sale to any other group. He said they did have final approval of any sale once agreement had been reached with a purchaser, but that in no way suggested that they were able to influence the process of choosing a buyer. "PPP - or rather the receiver - could choose whoever they wanted to sell it to and the RDA would not have been in a position to withhold its consent unreasonably," he said.

The sale process had been handled by the receiver. Some other parties had expressed an interest but it was not known how the receiver evaluated that interest. The receiver clearly felt that Discovery Quay Square Ltd was the best offer.

In November last year the Packet exclusively revealed that the museum's trustees had consulted insolvency experts after running out of cash. Visitor numbers have been nowhere near the predicted levels and without additional funding the museum - which opened in 2003 at a cost of £28 million - would have faced closure.