Agenda item

Millstream 30 Year Business Plan: 2019/20 Onwards

To consider a report of the Directors of Millstream Property Investments Ltd

 

Note – Essential Reference Paper ‘B’ is enclosed for Members only as it contains exempt information as defined in paragraph 3 of Part I of Schedule 12A to the Local Government Act 1972.

Minutes:

The Executive Member for Finance and Support Services and the Directors of Millstream Property Investments Limited submitted a report that presented Millstream’s Business Plan for the 30 year period commencing 2019/20.

 

The Executive Member reminded Members that Millstream Property Investments Limited had been formally established in April 2018.  Members were also reminded that the only properties due to be transferred in this first year were those that the Council already owned.  The Council as a shareholder was now looking ahead to next year in terms of how income from Millstream could contribute to the Councils revenue.

 

The Executive Member explained that the business plan had to be approved by Council.  The business plan would require Council investment which must also be approved by Members.

 

Helen Standen, as a Director of Millstream Property Investments Limited, presented the 30 year business plan to Council for approval and reminded members that the business plan would normally be presented in February/March alongside the council’s budget report, but since the budget was being presented in December this year, a decision had been made to do the same with the Millstream business plan.

 

Members were advised that the business plan had been prepared in line with requests and suggestions from both the elected Members who sit on the Shareholder Advisory Group and the Financial Sustainability Group as well as the Executive Member for Finance and Support Services and the Head of Strategic Finance and Property.  The Directors of Millstream were grateful for the guidance provided by all.

 

The Director stated that the plan suggested a programme of acquisitions and developments for 2019/20 to 2022/23.  This would see the property portfolio increase from the 3 properties on Old River Lane, Bishop’s Stortford to 49 properties, overall.

 

The Director stated that she was pleased to advise that 9 of these dwellings would be affordable homes, with the remainder available to let at market rents.  The business plan was detailed within exempt Essential Reference Paper “B”.

 

The Directors believed that the 30 year business plan provided a robust and stress tested approach to delivering high quality homes in the district whilst at the same time, providing an income stream which had been included in the budget papers presented to Members earlier during the meeting.

 

The report sought approval of the business plan, as well as capital resources detailed in recommendation B.  This would enable the company to acquire five properties on the open market in 2019/20 and also to facilitate the delivery of the Kingsmead Scheme referred to by the Executive Member for Finance and Support Services.  The Director summarised the requirements of recommendations C and D, as now detailed.

 

Councillor G Williamson moved, and Councillor A Alder seconded, a motion that the recommendations now detailed, be approved.

 

Councillor K Crofton moved and Councillor S Reed seconded, a motion that pursuant to Section 100 (A) (4) of the Local Government Act 1972 as amended, the press and public be excluded during consideration of the business referred to in Minute 327 on the grounds that it involved the likely disclosure of exempt information as defined in paragraph 7a of Part 1 of Schedule 12A of the said Act.

 

After being put to the meeting and a vote taken, this motion was declared CARRIED.  Councillor K Crofton raised a number of concerns in respect of the decisions Council was being asked to approve.  He referred in particular, to the margins detailed in the report submitted and expressed concern at the timescales proposed for the acquisition of the 49 additional properties to the property portfolio of Millstream Property Investments Ltd.  He believed that there were safer returns available in the commercial property market and felt that the matter should be reported back to Scrutiny.

 

The Executive Member for Finance and Support Services emphasised that, unlike commercial property investments, investment by the Council in residentialproperties could only be achieved by the setting up of a property investment company.  He stressed that as the proposals were small scale, the risks were very controllable and that the residential stock would not rise to 49 dwellings straight away.

 

The Executive Member for Health and Wellbeing commented that Councillors M Casey, D Oldridge, J Goodeve and himself formed the Shareholder Advisory Group that had been supportive of the proposals in terms of flexibility.

 

The Director commented on the good practice of looking to the future and she emphasised that Millsteam’s investments were reliant on the Council approving funding, and that the Council therefore retained full control of the future direction of the company.

 

Councillor J Jones queried how the Members of the Shareholder Advisory Group had been appointed and queried  whether Councillor K Crofton should be included in this group given his expertise in commercial property.  The Executive Member for Health and Wellbeing commented on how this group had been formed.  He confirmed to Councillor J Jones that the Directors of Millstream Property Investments were Helen Standon (Director), Jonathan Geall (Head of Housing and Health) and Jess Khanom (Head of Operations).

 

Helen Standen, as a Director of Millstream Property Investments Limited, responded to a query from the Executive Member for Environment and the Public Realm by summarising the decisions taken by Council to date and detailed the governance arrangements for Millstream Property Investments Ltd.  She stressed that Council would be making all the decisions relevant to Millstream.  The Executive Member for Finance and Support Services reminded Members that the business plan would be reviewed annually.

 

Councillor K Crofton proposed and Councillor J Jones seconded, an amendment that the recommendations A to D, as detailed in the report submitted, be deferred for future consideration by a Joint Meeting of Scrutiny.

 

After being put to the meeting and a vote taken, this motion was declared LOST.

 

Councillor B Deering moved and Councillor D Abbot seconded, an amendment that the Millstream 30 Year Business Plan be subject to approval year on year by the Council.

Following a request for a recorded vote by 5 or more Members, a recorded vote was taken on the Millstream 30 Year Business Plan 2019/20 onwards, subject to approval year on year by the Council.  The result was as follows:

 

FOR

Councillors D Abbott, A Alder, M Allen,
P Ballam, P Boylan, E Buckmaster,
G Cutting, B Deering, I Devonshire, H Drake,
J Goodeve, R Henson, G Jones, J Kaye,
G McAndrew, M McMullen, D Oldridge,
M Pope, L Radford, P Ruffles, S Rutland-Barsby, M Stevenson, N Symonds,
K Warnell, G Williamson, J Wyllie.

 

AGAINST

Councillors S Bell, S Cousins, K Crofton,
J Jones, S Reed, R Standley, T Stowe, J Taylor.

 

ABSTENTIONS

Councillors Mrs R Cheswright, T Page and C Woodward.

 

For: 26

Against: 8

Abstentions: 3

 

Council approved the recommendations as now detailed.

 

RESOLVED – that (A) under Section 100(A)(4) of the Local Government Act 1972, the press and public be excluded from the meeting during the discussion of Minute 327 on the grounds that it involved the likely disclosure of exempt information as defined in paragraph 7A of Part 1 of Schedule 12A of the said Act;

 

(B) Millstream Property Investment Ltd’s 30 Year Business Plan, including the programme of acquisitions, development and disposals, be approved subject to approval year on year by the Council;

 

(C)   up to:

·               £4.20m be loaned to Millstream on commercial terms or as shareholder cash loans;

·               £0.26m worth of shareholder asset-backed loans be made available to Millstream; and

·               £0.35m of state aid compliant grants be provided to Millstream

to:

(a) enable the company to acquire five open market properties in 2019/20 and (b) fund the delivery of the Kingsmead scheme;

 

(D) subject to a year on year annual approval by the Council, the resources are still required, up to:

·               £6.88m be allocated to cover commercial loans and shareholder cash loans to the Millstream; and

·               £2.03m worth of shareholder asset-backed loans be made available to Millstream and

to:

 

(a) enable delivery of the remaining elements of the acquisitions and delivery programme from 2020/21 onwards as laid out in Millstream’s 30 Year Business Plan, subject to approval year on year review by the Council; and

 

(E)   authority be delegated to the Head of Strategic Finance and Property to determine the balance of commercial and other loans relating the company’s activity from inception, the terms of the loans and the conditions for grant payments to the company with due regard to state aid regulations.

Supporting documents: