Agenda item

Note – Essential Reference Papers B – D are enclosed for Members only as they contain exempt information as defined by paragraph 3 of Part I of Schedule 12A to the Local Government Act 1972

That (A) the strategic and financial business case (presented in paragraphs 1.10 – 1.21 of the report submitted) for the proposed Property Investment Company be approved;

(B)     the Memorandum and Articles of Association, appended in draft form to the report submitted, be approved in principle with final approval delegated to the Executive Member for Finance and Support Services acting in consultation with the Head of Housing and Health and Head of Legal and Democratic Services;

(C)    the Shareholder Agreement, appended in draft form to the report submitted, be approved in principle with final approval delegated to the Executive Member for Finance and Support Service acting in consultation with the Head of Housing and Health and Head of Legal and Democratic Services;

(D)    the Property Investment Company, to be called Millstream Property Investments Limited, be incorporated as a company limited by shares wholly owned by East Herts Council;

(E)     authority to complete and submit the necessary documentation for incorporation be delegated to the Head of Legal and Democratic Services;

(F)     East Herts Council’s full Council assumes the role of Shareholder of the company;

(G)    authority to determine a Shareholder representative to attend general meetings or enter into communication with the company in place of such meetings be delegated to the Leader of East Herts Council;

(H)    a Shareholder Advisory Group of three elected Members of East Herts Council be established with the purpose of advising the Council when exercising its role as Shareholder, with advice provided by senior officers of the Council;

(I)      the identification of members of the Shareholder Advisory Group be delegated to the Leader of East Herts Council;

(J)     the composition of the company’s Board of Directors to be, in the first instance, three Core Directors who shall be officers of East Herts Council, with up to an additional three directors appointed at any time in the future as Independent Directors selected for their relevant expertise and experience;

(K)     authority to nominate the Core Directors be delegated to the Leader of East Herts Council acting in consultation with the Chief Executive;

(L)     authority to nominate the Independent Directors be reserved by full Council acting in its role as Shareholder; and

(M)    the key outputs of latest draft initial 30 year business plan, covering the purchase and management of the Council’s existing five residential properties, included in Essential Reference Paper ‘D’ of the report submitted, be noted.

The Leader advised that should it be necessary, the press and public could be excluded from the meeting, if Members wished to make any detailed reference to the exempt information in Essential Reference Papers ‘B’ – ‘D’.

The Executive Member for Finance and Support Services submitted a report presenting the strategic and financial business case for establishing a Property Investment Company, wholly owned by East Herts Council, for the purpose of generating revenue and capital income.  He reminded the Executive of previous deliberations by Scrutiny and the Executive which had helped refine the proposals and focused on transferring the Council’s five residential properties before considering further acquisitions.

The Executive Member also detailed the proposed governance arrangements for the company and asked the Executive to note that a report on the finalised business plan and the allocation of funding would be submitted to Council in due course.

In response to Members’ comments and questions, Officers clarified the proposed governance arrangements and the ability to call on external skills when needed.  The Council’s Constitution set out the circumstances in which the Leader’s responsibilities could be exercised by the Deputy Leader.  Officers also advised that the initial structure could be adapted over time as the company developed and emphasised that Council would still have overall control.

The Executive approved the proposals now detailed at recommendations (A) – (M) and supported the recommendations detailed at (N) – (Q) to Council.

RESOLVED - that (A) the strategic and financial business case (presented in paragraphs 1.10 – 1.21 of the report submitted) for the proposed Property Investment Company be approved;

(B)   the Memorandum and Articles of Association, appended in draft form to the report submitted, be approved in principle with final approval delegated to the Executive Member for Finance and Support Services acting in consultation with the Head of Housing and Health and Head of Legal and Democratic Services;

(C)   the Shareholder Agreement, appended in draft form to the report submitted, be approved in principle with final approval delegated to the Executive Member for Finance and Support Service acting in consultation with the Head of Housing and Health and Head of Legal and Democratic Services;

(D)   the Property Investment Company, to be called Millstream Property Investments Limited, be incorporated as a company limited by shares wholly owned by East Herts Council;

(E)   authority to complete and submit the necessary documentation for incorporation be delegated to the Head of Legal and Democratic Services;

(F)   East Herts Council’s full Council assumes the role of Shareholder of the company;

(G)  authority to determine a Shareholder representative to attend general meetings or enter into communication with the company in place of such meetings be delegated to the Leader of East Herts Council;

(H)   a Shareholder Advisory Group of three elected Members of East Herts Council be established with the purpose of advising the Council when exercising its role as Shareholder, with advice provided by senior officers of the Council;

(I)    the identification of members of the Shareholder Advisory Group be delegated to the Leader of East Herts Council;

(J)   the composition of the company’s Board of Directors to be, in the first instance, three Core Directors who shall be officers of East Herts Council, with up to an additional three directors appointed at any time in the future as Independent Directors selected for their relevant expertise and experience;

(K)   authority to nominate the Core Directors be delegated to the Leader of East Herts Council acting in consultation with the Chief Executive;

(L)   authority to nominate the Independent Directors be reserved by full Council acting in its role as Shareholder; and

(M)  the key outputs of latest draft initial 30 year business plan, covering the purchase and management of the Council’s existing five residential properties, included in Essential Reference Paper ‘D’ of the report submitted, be noted.

(N)   the initial 30 year business plan be finalised for presentation to full Council in due course in support of the allocation of capital resources;

(O)  the Executive recommends to full Council thatthe Council provides the company with a State Aid compliant loan and equity investment in line with East Herts Council’s existing financial policies, subject to Council’s approval of the company’s 30 year  business plan;

(P)   the Executive recommends to full Council that the four council-owned properties in Bishop’s Stortford known as 1 Old River Lane, 2 Old River Lane, 3 Old River Lane and Castle Bungalow, Castle Gardens and the council-owned property in Hertford known as 6 Water Lane are disposed of to the company, subject to full Council’s approval to release capital for equity and loan funding; and

(Q)  once the company’s initial 30 year business plan has been submitted to and approved by the Council, and subject to full Council’s approval of funding, the company may start trading.