Agenda item

E.11/17          

Members were presented with a report that set out the business case, based on advice received, for the Commercial Property Acquisition Strategy.  The objective of the proposed strategy was to generate revenue streams to contribute to the financial sustainability of the Council, enabling it to continue to deliver, and where possible improve, frontline services in line with the Council’s adopted strategy and objectives.

As the agenda item commenced, Cllr Birch, a Member of the Invest to Earn Group credited with authoring the report, asked that the minutes reflect that he had taken no part in writing the report.

The Lead Member for Business Development presented the report. The report had been presented to a meeting of the Overview and Scrutiny Panel immediately prior to this meeting taking place and an amendment had been proposed and accepted to the third recommendation that included the Lead Member for Business Development in the delegated decision-making process. 

During discussion, it was clear that Members had mixed views on the proposal.  The s151 officer and Group Manager Business Development responded to technical queries.  Points raised during the debate included the following:

·           Members had not been elected to borrow significant sums on behalf of residents;

·           Borrowing would distort the market;

·           The retail property market was volatile;

·           The borrowing was for a long time, within such time there could be many changes within the market;

·           Borrowing £80m equated to £1,000 for every man, woman and child in the South Hams;

·           It was some Members’ view that the Council did not have the expertise to undertake this proposal.  The Leader responded that, if approved, then advice would be taken from the right people or organisations;

·           The proposal did not include a defined exit strategy, nor the cost of early redemption of borrowing.  In response to the second point, the s151 officer advised that the cost of early redemption would depend on the type of borrowing;

·           The borrowing would be spread across multiple tenants and multiple properties thereby mitigating the risk;

·           Whilst risks existed, safeguards were in place;

·           The possibility of a conflict if both South Hams and West Devon sought to acquire the same property;

·           If the council was to borrow, it should be invested in affordable housing.  The financial returns may not be as good, but at least the council would be supporting one of its priorities.

The Lead Member concluded the debate by stating that whilst the concerns raised were understandable, the expertise was there to get the right advice.  The strategy was to buy assets, so in addition to revenue, capital growth should also be considered.

It was then:

RESOLVED