The recommendations in the extract minute from the Cabinet were proposed by Councillor Derek Bastiman and duly seconded. Councillor Maw welcomed the principle in the strategy of borrowing at historically low interest rates to invest in property for net financial returns. Councillor Randerson repeated his question at the Council meeting on 2 March about whether Council Tax and business rates could be levied on unoccupied commercial properties to which he was still awaiting a response. He noted the recommended size of borrowing of £30m from the Public Works Loan Board to support the implementation of the strategy which would need careful monitoring.
RESOLVED that full Council:
(i) approve the proposed Commercial Property Investment Strategy (the Strategy) described in this report and attached at Appendix A, together with the objectives, Prudential Indicators and limits, investment criteria and governance arrangements, and resolve that the Strategy be adopted;
(ii) approve a capital fund of £30m funded from borrowing from the Public Works Loan Board and a revenue budget of £100k funded from the Council’s Investment Fund, to facilitate the purchase of properties and to pursue development opportunities that meet the criteria contained within the Strategy;
(iii) approve the changes required to the current approved and operational borrowing limits and associated Prudential Indicators as set out in Appendix B, in order to accommodate the increased prudential borrowing requirements set out in this report;
(iv) amend Article 8.9 (ii) of the Constitution to alter the terms of reference of the Audit Committee to include
'(j) receive quarterly reports on the implementation of the Commercial Property Investment Strategy and make any recommendations to full Council'
(v) delegate authority to the Audit Committee to approve the risk/ rate of return scoring matrix referred to at Appendix A.2.1
(vi) delegate authority to the Director (LD) to make the necessary amendments to the Constitution arising out of this report
And accordingly note the Cabinet’s approval of:
(i) the proposed governance arrangements for the Property Investment Governance Board (PIGB) and the Property Selection Team (PST) set out at paragraph 6 of this report and at Appendix A3 of the Strategy (with the amendment that the relevant Portfolio Holder with investments responsibility sit on the PIGB instead of the Deputy Leader of the Council)
(ii) the delegation of authority to the Commercial Director, following consultation with the PIGB, to approve expenditure and to acquire and/or dispose of such legal estates and interests in land and to make such property investments as are within the overall limit and criteria of the Strategy, subject to the Commercial Director preparing a business case and risk assessment in line with the Strategy, and to take any and all decisions necessary for the implementation of the Strategy, save for where authority is reserved to the Leader of the Council under the Strategy
· To enable the Council to build a stronger commercial property portfolio through the purchase of prime or nearly prime investment property within the Borough and wider Local Enterprise Partnership regions that can generate income and financial returns to contribute towards the revenue shortfall identified in the Councils Financial Strategy and to stimulate economic growth
· To generate income and financial returns from development and regeneration projects throughout the Borough and wider Local Enterprise Partnership regions to both stimulate economic growth and to contribute towards the revenue shortfall identified in the Council’s Financial Strategy;
· To establish governance arrangements and control measures to manage the risks associated with commercial property investments