Cheltenham Borough Council
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Agenda and minutes

Venue: Council Chamber, Municipal Offices

Contact: Rosalind Reeves, Democratic Services Manager 

Items
No. Item

1.

Apologies

Apologies have been received from Councillors Collins and Holliday

Minutes:

Councillor Collins, Flynn and Holliday.

2.

Declarations of Interest

Minutes:

Councillor Willingham declared a personal interest in agenda item 11 which did not preclude him from voting.

 

3.

Communications by the Mayor

Minutes:

The mayor wanted to remind Members that the Battle of Britain event was taking place this Sunday and requested that Members respond to Jennie Ingram if they are able to attend.  

4.

Communications by the Leader of the Council

Minutes:

The Leader reported that the 2050 consultation had concluded at the end of July and they were currently waiting on the reports and delivery options. He advised Members that they were proposing to hold a Members Seminar, although a date was yet to be confirmed.

5.

To receive petitions

Minutes:

None received.

6.

Public Questions

These must be received no later than 12 noon on Wednesday 5 September and must relate to the business for which the meeting was convened.

Minutes:

There were none.

7.

Member Questions pdf icon PDF 176 KB

Minutes:

1.

Question from Councillor Babbage to Cabinet Member Finance, Councillor Rowena Hay

 

Please provide a summary position of the council's investment property and other income generating property, including valuations, income generated, location and overview of tenants.

 

 

Response from Cabinet Member

 

 

I thank Cllr Babbage for his question which proved to be an interesting and informative exercise and I would also like to thank the significant amount of work and detail that officers have given in responding.

 

The main categories of a commercial property investment portfolio are:

·         Office

·         Retail

·         Industrial

 

The Council have a number of properties which are used primarily for service provision within these groups but are also capable of generating an income. Examples would include: Municipal Offices (office), Depot (industrial) and to a smaller extent Cafes in the Park (retail).  Service providing properties would not normally be considered pure investment properties but actually what the statics show is that all these Asset Groups are performing well.

 

The Council’s income generating portfolio has been summarised by the attached graphs by showing the numbers of assets held in each category, the income generated from each category and the yields being generated from that asset group.

 

A further three asset groups have been added to capture the entire property income generating elements of the Councils property portfolio. These have been split between:

  • Services – WC’s, Retirement and care accommodation
  • Leisure
  • Other – Primarily Land

 

It was a pleasing discovery on formulating this information that those Assets primarily held for service delivery were actually performing well. A yield of around 5% or above is what a traditional commercial fund would aspire to achieve.

 

The Council are now focusing on diversifying the more traditional individual asset groups within the portfolio, to spread the risk. Again there is a large amount of historic assets that are not under preforming as such, but they are very similar in nature due to the way in which Councils operate historically and have matured. An example would be the retail stock. This asset group is made up of a number of small individual units, either stand alone or forming part of a small parade of shops. There is traditionally no primary retail (town centre), but a number of units in secondary (town centre edges) and tertiary (within housing estates) locations. The purchase of Café Nero and future acquisitions look to diversify the historic portfolio balance.

 

 

 

 

 

 

 

 

In a supplementary question Councillor Babbage requested that this information be a standing item on the Asset Management Working Group and the Budget Scrutiny Working Group during the budget setting process. In response the Cabinet Member confirmed that this was the intention and she was conscious of the importance of a diversified portfolio.

8.

Notices of Motion pdf icon PDF 48 KB

Minutes:

Proposed by: Councillor Max Wilkinson and Seconded by: Cllr Flo Clucas

 

This Council notes:

 

·                The recent warnings from multinational businesses based in the south west, including Airbus and Honda, that exiting the EU customs union will be a catastrophe for trade and may lead them to relocate their manufacturing outside of the UK.

·                The number of Cheltenham citizens working for businesses that rely on free movement of trade within the European Union.

·                That, according to the Government’s own figures, under all Brexit scenarios the UK will be considerably worse off, not only in terms of international reputation but also the negative social, environmental and economic impact it will have on the people of Cheltenham.

 

This Council therefore agrees that there should be a ‘people’s vote’ on the final Brexit deal, which should include an option for the United Kingdom to remain a full member of the European Union.

 

In proposing the motion, Councillor Wilkinson wished to thank those in the public gallery who were in attendance supporting the motion for a people’s vote on the final Brexit deal, a cause which he had been campaigning hard for. He raised concerns about the incompetence of the government over Brexit talks and the fact that many leave voters had made their decision based on inaccuracies.  He feared that the most likely outcome was appearing to be a no deal Brexit supported by the far right. He cited food shortages, the cancelling of leisure and business trips and lengthy traffic jams as his key concerns, as well as the detrimental effect of immigration on public services, having stated that 4000 EU nurses and midwives had already left the NHS.    He further advised that 69% of voters felt that Brexit negotiations were going badly and felt they should be given a second vote now the facts were known. 

 

In the debate that followed, many Members confirmed that they supported the motion. Noting their key concerns as the number of key industries in Cheltenham who depend upon the skills of non EU citizens and the free movement of knowledge between countries, Erasmus programmes which benefitted many students, and the fact that the NHS was severely understaffed and relied upon EU workers. Concerns were also raised over security given the current climate and the detrimental impact on the hospitality industry, in particular Cheltenham racecourse which welcomed many visitors and riders each year, particularly from Ireland. Many Members shared Councillor Wilkinson’s sentiment that leave voters had made their decision based on deceit and inaccuracies and felt that democracy was about giving people the chance to vote on real facts. They reiterated the fact that the vote on the referendum in 2016 had been extremely narrow and that Cheltenham had voted to remain. Members felt strongly that young people should be given the chance to vote considering that the impacts of Brexit would affect them the most.

 

Other Members, however, stated that they would not support the motion. They discussed the uncertainty surrounding Brexit and felt that a  ...  view the full minutes text for item 8.

9.

Any other item the Mayor determines as urgent and which requires a decision

Minutes:

None.

10.

Local Government Act 1972 -Exempt Information

Council is recommended to approve the following resolution:-

 

“That in accordance with Section 100A(4) Local Government Act 1972 the public be excluded from the meeting for the remaining agenda items as it is likely that, in view of the nature of the business to be transacted or the nature of the proceedings, if members of the public are present there will be disclosed to them exempt information as defined in paragraph 3, Part (1) Schedule (12A) Local Government Act 1972, namely:

 

Paragraph 3; Information relating to the financial or business affairs of any particular

person (including the authority holding that information)

Minutes:

RESOLVED THAT

 

In accordance with Section 100A(4) Local Government Act 1972 the public be excluded from the meeting for the remaining agenda items as it is likely that, in view of the nature of the business to be transacted or the nature of the proceedings, if members of the public are present there will be disclosed to them exempt information as defined in paragraph 3, Part (1) Schedule (12A) Local Government Act 1972, namely:

 

Paragraph 3; Information relating to the financial or business affairs of any particular

person (including the authority holding that information)

 

11.

Property Acquisition

A report of the Cabinet Member Finance and Asset Management.

 

The Mayor will ask Council to suspend the normal rules of debate to facilitate a presentation from officers, followed by an opportunity for Members to ask questions of the Cabinet Member and the officers.

 

This will be followed by a debate and vote on the recommendations where normal rules will apply.

Additional documents:

Minutes:

The Mayor proposed suspension of the rules of debate set out in Rule 13 of the Council procedures for this agenda item in order to facilitate  the following :

 

1.    The Cabinet Member will propose the motion in the normal way (up to 10 mins)

 

2.    The Mayor will invite the Head of Property and Assets, Dominic Stead, and Simon Hodges, to give a presentation.

 

3.    This will be followed by a Q and A session where questions will be put to the Cabinet Member Finance, Councillor Rowena Hay who may ask officers to assist in any technical responses.

 

4.    The Mayor will then invite debate where normal rules of debate will apply concluding in a vote.

 

The Cabinet Member Finance introduced the report and explained that in response to enormous cuts in central government funding the council had already embraced radical changes to the way its services were organized and delivered. Adopting a commercial focus and growing the investment portfolio had been necessary as part of the drive towards financial sustainability. This represented a vital way forward for the authority given the continuing uncertainty around the fairer funding review outcome.

 

She reminded Members that the original basis of an Investment Property Portfolio Strategy was to establish a £10 million fund mainly financed through borrowing to purchase investment properties with the aim of generating a net yield in excess of 5%. However, like the Sainsbury’s acquisition, this particular acquisition fell outside the parameters previously set by Council and would require a further budget allocation of up to £18.1m to fund the acquisition and associated costs.

 

The Cabinet Member explained that this proposed acquisition of Ellenborough House, combined with other recent approved purchases of investment property, had resulted in the need to review the limits, to ensure that external debt falls within the approved boundaries.  She was requesting Council to increase the 2018/19 authorised limit to £185 million and the estimated 2019/20 limit to £185 million. Council’s approval was also sought to increase the 2018/19 operational limit to £175 million and the estimated 2019/20 operational limit to £175 million. This reflected the assessment of the expected capital borrowing need for this council, whilst allowing for a further £50million to be borrowed by 31st March next year, in the event that further capital acquisitions came forward to full council for approval with a detailed business case. These limits would continue to be reviewed by the Treasury Management Panel annually, for approval by Council at its February meeting.

 

The Cabinet Member went on to explain that the purchase of commercial property was to provide additional income for the Council, fulfil the intentions as set out in the report regarding the Investment Property Portfolio, and work towards meeting the challenges identified in the Medium Term Financial Strategy. In adhering to the revised guidance, the acquisition of commercial property was focused, to ensure that the asset made a contribution towards service delivery and or place-making, for example economic benefit, business rates growth and retention, or  ...  view the full minutes text for item 11.