Agenda item

Report of the Cabinet Member Finance

The Cabinet Member Finance introduced the report which set out proposals to increase investment in property in response to the financial pressures to increase revenue and to stimulate and encourage business growth and sustainable development by investing in sites for economic and regeneration purposes.

She reported that an initial allocation of £10 million in the Capital Programme was proposed for approval by Council and the report detailed the criteria for investment, the typical options available, the governance, and the available options for financing. The report also outlined the decision making process which utilized  the Property Acquisition Assessment Group.

The Cabinet Member informed Members that the Asset Management Working Group (AMWG) had considered this report and gave their support. Should the report be approved by Council the group would have a key role to play on any acquisitions proposed prior to any formal decisions as set out in appendix 2 of the report.

The Council had aspirations to grow its already successful investment property portfolio with a view to generating much needed revenue support as set out in 4a of the approved Medium Term Financial Strategy.

Cheltenham was uniquely placed to grow, sustaining and growing Cheltenham’s economic and cultural vitality was one of the key outcomes set out in the Corporate Strategy. The property investment strategy would aim to support this by focusing initially on investments within or in close proximity to the Borough of Cheltenham which would help secure existing or increase business rates income.

Members supported the recommendations and highlighted that it was important that wise investment were made to guarantee income for the council. Recognition was given to the building up of the council’s investment portfolio to date.

RESOLVED THAT Council be recommended :

1.    To allocate £1 million from unapplied capital receipts to pump-prime a property investment fund, supplemented by £9m of prudential borrowing, (i.e. total allocation of £10m) subject to using the option appraisal process at Appendix 2 and the criteria as set out in para 6.1 of this report.

2.    To allocate £200k from unapplied capital receipts to fund external advisers and pre-acquisition costs.

3.    To ring-fence a minimum of 50% of all future asset disposal proceeds to enhance the Council’s land and asset portfolio.

4.    To authorise the Cabinet, in consultation with the Asset Management Working Group and the Chairman of the Overview and Scrutiny Committee, to approve investments in commercial property up to £5m per transaction.

Subject to Council approving the above Cabinet

RESOLVED THAT

(i)            The Head of Property Services, in consultation with the Property Acquisition Assessment Group, be authorised to approve the appointment of advisers to assist the Council in its investment transactions.

(ii)          Head of Property Services, in consultation with the Leader of the Council, Property Acquisition Assessment Group and other Group Leaders, be authorised to make an offer/enter into negotiations on behalf of the Council, in accordance with the Investment Property Portfolio Policy, for the purchase of suitable property or site with any such transaction being subject to completion of necessary due diligence and approval by the Cabinet and Council, depending on the acquisition value.