Agenda item

A.17/18          

The Committee considered a report that sought to recommend that a Commercial Property Strategy be adopted.  Furthermore, the report also asked that the Committee agree a total borrowing limit of £60 million for this Strategy.

In his introduction, the Leader of Council outlined the draft Strategy to the Committee and provided an update on the views of the Overview and Scrutiny Panel, who had considered this agenda item earlier in the day.

Following this introduction, it became evident that Members wished to ask questions on exempt Appendix B and it was therefore PROPOSED and SECONDED and when put to the vote declared CARRIED:

RESOLVED

That in accordance with Section 100(A)(4) of the Local Government Act 1972, the public and press be excluded from the meeting during consideration of the following item of business as the likely disclosure of exempt information as defined in paragraph 3 of Schedule 12A to the Act is involved.

In addition to these questions being answered, the Leader of Council also provided the Committee with a confidential outline of some of the potential projects that were currently under consideration.

Once all Members were satisfied that they had no further issues to raise in exempt session, it was then PROPOSED and SECONDED and when put to the vote declared CARRIED:

RESOLVED

That the public and press be re-admitted to the meeting.

 In the ensuing discussion, the following points were raised:-

(a)  The Committee was of the view that the aspects of the current Strategy relating to ‘Development on Council Owned Land’ and ‘Commercial Property Acquisitions in the South Hams’ were effectively separate strands.  As separate strands, Members were of the view that the governance arrangements for these should be different.

In particular, the Committee recognised that the time constraints associated with open market competition were not so applicable for ‘Development on Council Owned Land’.  As long as they complied with the Council approved total borrowing limit and contained (as an appendix) a full and detailed Business Plan in each instance, then the Committee felt that such matters could be determined at a formal meeting of the Executive, with the appropriate delegations being in place from the Council.  As a further level of assurance, a Member also made the point that such decisions would then be subject to the Scrutiny Call-In Procedure Rules.

With regard to decisions relating to ‘Commercial Property Acquisitions in the South Hams’, the potential need to act very quickly (and therefore outside of the formal decision making process) was recognised.  That being said, Members shared some of the concerns that had been raised by the Overview and Scrutiny Panel in respect of the current proposals related to the delegated decision-making process being in need of further revision.  As a result, the Committee asked that the Leader give further consideration to the proposed delegated decision-making process for ‘Commercial Property Acquisitions in the South Hams’ in time for the next Executive meeting on 13 September 2018;

(b)  Whilst Members did still have some reservations, the Committee felt that a number of its risks had been mitigated by the proposal now being to only acquire Commercial Property that was located within the South Hams;

(c)  A Member was of the view that a 1% net yield return was very slim given the levels of investment being proposed.  Whilst accepting that a 1% return may be appropriate for proposals relating to Development on Council Owned Land, the Member felt that a 2% net yield return should be a reasonable assumption for Commercial Property Acquisitions in the South Hams;

(d)  A Member considered that it would be incredibly difficult to base any decisions on the ability to measure social factors and community gain;

(e)  In respect of a total borrowing limit, the Committee emphasised the importance of suitable governance arrangements being first put in place to underpin such decisions.  Moreover, Members were supportive of the suggestion of the Leader whereby, in the event of a total borrowing limit being set at £60 million, this should be capped at £30 million before the upcoming May 2019 local elections.  It was therefore PROPOSED and SECONDED and on being put to the vote declared CARRIED that:-

‘Subject to suitable governance arrangements being in place, a total borrowing limit of £60 million (capped at £30 million before 30 April 2019) be agreed for the Commercial Property Strategy.’

It was then:

RESOLVED

That the Audit Committee wish to express the following views to the Executive:-

1.    that the Committee endorse the principle of a Commercial Property Strategy that includes the following multiple objectives:

-     to support regeneration and the economic activity of the District;

-     to enhance economic benefit;

-     to grow business rate income;

-     to assist with the financial sustainability of the Council as an ancillary benefit;

-     to help the Council continue to deliver and/or improve frontline services in line with the Council’s adopted strategy and objectives; and

2.     that the proposed Commercial Property Strategy be revised to contain two separate strands to the governance arrangements (one part for ‘Development on Council Owned Land’ and one part for ‘Commercial Property Acquisitions in the South Hams’) with decisions relating to the ‘Development on Council Owned Land’ becoming a function of the Executive (through appropriate delegations from the Council and assuming that the proposed expenditure complies with the Council approved total borrowing limits) and further consideration being given to the proposed delegated decision-making process for ‘Commercial Property Acquisitions in the South Hams’ in time for consideration at the next Executive meeting on 13 September 2018; and

3.     that, subject to suitable governance arrangements being in place, a total borrowing limit of £60 million (capped at £30 million before 30 April 2019) be agreed for the Commercial Property Strategy.