Decision Maker: Cabinet
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: Yes
The Council's Strategy including objectives
and processes for acquiring property assets for investment
Consideration was given to a report of the Director of Finance and Director of Economy, which sought approval for the updated Commercial Property Investment Strategy and to continue an Investment Fund to facilitate development of a robust, property and alternative investment portfolio in order to generate a sustainable future income stream to support the Council’s mainstream service delivery.
The Cabinet was informed that the Council continued to be faced with an unprecedented financial challenge, with uncertainty around funding arrangements. This proposal, to revise the Commercial Property Investment Strategy (CPIS) and continue the Investment Fund, presented an opportunity to reduce this pressure by increasing revenue income to support the Council’s budget, by way of additional income streams from the acquisition of new investment property assets and alternative investments.
Members noted that the Chartered Institute of Public Finance and Accountancy (CIPFA) had recognised that commercial investment was an option for Local Authorities for future financial sustainability and had revised their Prudential Code of Practice in 2018 to take into account these new initiatives.
CIPFA had also recently issued a document entitled “Prudential Property Investment” which provided guidance on the provisions in the Prudential Code that related to the acquisition of property intended to make investment returns. It clarified a range of issues including changes to statutory guidance. The CPIS had been prepared having regard to the revised Prudential Code and the most recent CIPFA guidance.
The Cabinet was informed that there were a number of ways in which the Council could deliver elements of the Commercial Property Investment Strategy, whether in-house, via a property vehicle company or through arm’s length investment in a property fund. Since the adoption of the CPIS in 2017, management of the property estate had remained in-house and this was planned to continue in the short term, although the strategy allowed for external professional advisors to be engaged.
It was recommended that specialist professional advice was secured as and when required. In addition, as it was possible that some of the acquisitions may be out of borough, geographically use of external resource including on-going property management, may be more appropriate. Any acquisition costs including specialist fees would be included within the business case.
· Option 1 - Do not agree the Strategy and reallocate funds within the Capital Programme.
· Option 2 - Agree the Strategy and continuation and increase of the fund.
RESOLVED – That the Cabinet would consider the commercially sensitive information contained at Item 18 of the agenda before making a decision.
Report author: Emma Barton
Publication date: 17/12/2019
Date of decision: 16/12/2019
Decided at meeting: 16/12/2019 - Cabinet
Effective from: 25/12/2019