Issue - meetings

That (A) in principle approval be granted to develop a property investment company, the incorporation and trading of which is subject to future approval of a full financial business plan for the company; and

(B)     Articles of Association and a Shareholder Agreement be drafted for consideration alongside the business plan at a future date.

The Executive Member for Finance and Support Services submitted a report summarising the background around the development of a property investment company, wholly owned by the Council as part of an approach to diversifying its investment portfolio aimed at generating a revenue income stream.  This would be used to fund the Council’s priorities in the context of diminishing subsidies and grants from the government. 

The Executive Member explained how this would work, the legal basis of establishing the proposed company and potential community benefits which could be derived in relation to the formation of a property investment company, and referred to the Council’s social housing responsibilities.  The Executive Member assured Members that the Council would not be able to proceed further and beyond the recommendations as detailed, until the business plan had been reviewed in greater depth.

The Executive approved the recommendation, as now detailed.

RESOLVED – that (A) in principle approval be granted to develop a property investment company, the incorporation and trading of which is subject to future approval of a full financial business plan for the company; and

(B)   Articles of Association and a Shareholder Agreement be drafted for consideration alongside the business plan at a future date.

The Head of Housing and Health and the Head of Strategic Finance and Property submitted a joint report that set out the case for diversifying East Herts Council’s investment portfolio by establishing a property investment company, wholly owned by East Herts Council.  The Head of Housing and Health provided a summary of the report and outlined key elements and revisions requested by Members at the previous joint meeting in January 2017.  The Chairman drew Members’ attention to the recommendation as now detailed.

Councillor K Crofton referred to the previous report considered when Members had not been happy with the model proposed and when alternative viable schemes to be submitted for consideration had been requested.  He felt that the report before Members was virtually the same as the previous one.  He did not believe that the Council would make money on 20 houses and that what was being proposed would generate a loss.  Councillor G Cutting supported this view adding that alternative business proposals which had been asked for at the January 2017 meeting had not been explored. 

The Chief Executive referred Members to the Service Plans agreed earlier on the agenda this evening and cited by example, a number of business opportunities and proposals which the Council would be proceeding with such as:

·               KA8 (Leisure strategy to determine future direction) in terms of a large investment to reduce a subsidy;

·               a £500K investment in the Old River Lane - a joint venture project with partners;

·               KA48 (Undertaking feasibility on a project to build new homes);

·               KA135 (Accommodation review ensuring health and safety compliance) and the possibility of letting out office space in the Hertford building and the commercial opportunities which could generate approximately £600K. 

The Chief Executive explained that the Council needed to take a first step in the process and referred to the Council’s general power of competence.  She explained that the Council did not have the capacity to produce a lot of business cases for Members’ consideration and hoped that the Service Plans, agreed earlier, showed the significant amount of new ideas Officers were working on. 

Councillor G Cutting commented that service plan ideas already were part of the process.  The Chief Executive explained that it was simply a matter of capacity which was limited.

Councillor D Oldridge expressed his disappointment with the report which he felt was basically the same at that presented three weeks ago.  He sought assurances that the investments proposed would give good value for money and sought further information on alternative ideas.

Councillor M Freeman was of the view that the report was clearer and more focussed.  In response to a query from Councillor J Wyllie, the Acting Head of Legal and Democratic Services explained the legal position in relation to Directors of the proposed company who would also be employees of the Council.  The Chief Executive cited, by example, the CCTV partnership and Building Control which worked in partnership with seven other authorities in Hertfordshire.

The Head of Housing and Health explained  ...  view the full minutes text for item 576