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Agenda item

Approach to Disposal of Assets and Property Acquisitions

    Report by Corporate Director Alistair Cunningham

Minutes:

Cllr Philip Whitehead presented a report which (i) reviewed the process for the disposal of surplus assets to allow for the streamlining of the authority’s processes and (ii) considered an option to expand the Council land and property holding.

 

Cllr Whitehead explained that the Council have set out a commercial agenda and have a desire to be more business-like in its dealings, principally to mitigate the increasing financial challenge on Council revenue budgets. The council already holds commercial and strategic land and property, producing revenue to the Council, one business-like approach would be to expand this and a clear policy framework is required to make prudent property acquisitions.

 

It was noted that the current approach is for Cabinet approval to be sought on every individual disposal, irrespective of their size or scale. The proposed approach is to have a robust officer process to test the options for Council assets and consider re-use for either corporate or financial needs. Cllr Whitehead referred to the flowchart at Appendix 1 to the report and explained that the flowchart represented how the process for the disposal of surplus assets would be managed, which would include the involvement of Cabinet and local members.  Cllr Whitehead did concede that the flowchart was rather complex and may need further revisions agreed at a future Cabinet meeting.   

 

The Cabinet heard from Cllr Thorn, Chairman of the Financial Planning Task Group. Cllr Thorn commented on the observations and recommendations of the Task Group, as detailed below, and confirmed that subject to the comments being taken into account by the Cabinet, the Task Group supported the detail of the report:  

 

·       The need to clarify the final decision makers within the large membership of the Asset Gateway Group listed.

·       Recognise the significant experience and expertise of the inhouse Assets team more.

·       Be mindful of the council’s reputation (and values) when setting parameters for who and what we will invest in.

·       Clarify that the minimum 3% yield is after all costs rather than just borrowing costs.

·       In considering opportunities be aware of shifting markets and growth areas.

 

In response to questions from Cllr Clewer, officers confirmed that sites of special value that were surplus to requirements could still be considered by the Cabinet.

 

Resolved:

 

1.    To agree that in the future that Cabinet will receive an annual report on the overall disposal programme.

 

2.    To agree that a bi-annual update will be provided to Cabinet for noting and to consider additional sites declared surplus.

 

3.    To agree to maintain and enhance engagement with local elected members concerning proposed asset disposals.

 

4.    To endorse the process for decision making for disposals, as set out in Appendix One to the report.

 

5.    To agree that the financial threshold for pure commercial property acquisitions or commercial developments should achieve 3% or more after all costs, in line with the Capital Investment Strategy. Acquisitions for strategic land purchases or economic development purposes will be subject to other tests, as agreed by the Asset Gateway Group.

 

6.    To agree to negotiate the purchase of the investment, subject to further financial due diligence, as set out in the Part 2 paper and report back to Cabinet the outcome of negotiations. To delegate the decision to Corporate Director Growth, Place & Investment, in consultation with the Cabinet Member for Finance, Procurement, ICT and Operational Assets.

 

7.    To agree to delegate the decision to make commercial property acquisitions, subject to the threshold as set out in the Capital Investment Strategy, to the requirements of the Capital Investment Strategy, to the Corporate Director Growth, Place & Investment, in consultation with the Cabinet Member for Finance, Procurement, ICT and Operational Assets.

 

8.    To agree that strategic property acquisitions that do not meet the threshold will be reported back to Cabinet for consideration.

 

9.    To endorse the Approach to Asset Management, as set out in Appendix 2 of the report.

 

Reason for Decision:

 

To streamline the authority process associated with the disposal of surplus land and establish a forum for all operational needs to be considered as part of the asset review process. The process will include information being reported to Cabinet to inform of progress of the overall programme.

 

For the council to take a more commercial approach and address the challenges of revenue pressures facing the Council, one option is to explore the expansion of the property portfolio and the proposal is to allocate funds and create a policy framework for strategic property acquisitions.

 

 

Supporting documents:

 

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