Meeting documents

2.1. Corporate Context

The AMP brings the strategic property dimension into the Service Planning process and reflects the requirements of the Comprehensive Performance Assessment (CPA) as well as notable practice in asset management from particularly the Royal Institution of Chartered Surveyors (RICS) and Department of Communities and Local Government (DCLG).

Embedding the practice of Asset Management into the Council is the primary responsibility of Property Services and the Asset Review Group but requires cooperation and help from all service areas.

The Council's property holdings should be regarded as corporate rather than individual service assets. However, subject to governance arrangements and formal approval, assets may, in appropriate circumstances, form part of a ring fenced project.

The critical mass of the holdings creates a significant place shaping influence and the ability potentially to contribute to the Council's objectives set out within the Community Strategy, Local Strategic Partnership and the Corporate Plan. In particular effective use of resources will contribute to the "Bath Vision" by providing capital and/or revenue to complement and encourage further external investment in the public realm.

The Property Board provides the client body which promotes the strategic importance of the Council's assets and emphasises the need to make best use of the Council's property base within the overall governance structure explained below.

2.2. Governance

Property asset management processes in Bath & North East Somerset require engagement from across the Authority in order to ensure a balance between corporate and service perspectives. Responsibilities within the process include:

Cabinet - Cabinet approves the AMP.

Cabinet Member for Resources - Member responsibility for the management of all resources including property.

Corporate Performance and Resources Overview and Scrutiny Panel - responsible for overseeing the decisions of the Cabinet and Cabinet Member.

Property Board - Chaired by the Chief Executive; the Property Board is an informal board whose terms of reference comprise responsibility for the administration of the property portfolio including setting targets and monitoring performance. It comprises senior members and officers.

Chief Property Officer - Responsible through the constitution for the management of the Council's property holdings including the development of asset management and the best use of resources and for ensuring timely production of the AMP. The Chief Property Officer also holds the only professional delegation in relation to all property matters.

Property Services Asset Review Team - deals with asset management and implementation of the AMP including reporting to the CPO, Cabinet Member and Property Board on targets and performance.

Capital Strategy Group - This officer group monitors the capital programme both in terms of spend but also receipts including capital receipts from property sales and developments. CSG reports into the Projects Programme Board which gives the member perspective on the work of CSG.

Occupying Departments - the occupiers are generally responsible for property on a day to day basis including security and all other routine tasks. In multi occupied offices a building manager is appointed to coordinate these matters.

2.3. Objectives

Property Board has given clear instructions that the property portfolio is to be managed so as to maximise total financial return. This can manifest itself in a number of ways depending on the nature of the particular interest, and the structure of the portfolios has been developed so as to reflect these differing circumstances.

The following statements can be seen to supplement this overall objective. The Council's will

• Use and develop assets to help deliver corporate priorities and service delivery needs.
  
• Make a significant investment in the quality of operational property, whilst optimising the utilisation of land, buildings, energy and other resources.
  
• Improve the accessibility to properties in response to the community's choices.
  
• Ensure fitness for purpose.
  
• Ensure that the revenue portfolio achieves financial targets established and managed by reference to industry standard performance indicators.
  
• Manage all properties in the most economic, effective and efficient manner.
  
• Support the Council in the progression of its major property based strategic developments.
  
• Maintain the contribution to the built environment and to the tourism economy derived from the Council's Property Assets.

2.4. Issues and Drivers

2.4.1. Finance

The Council is experiencing pressures on both the revenue budget and the capital programme.

The Council's Property Assets contribute to overall financial performance in the following three ways as under

• The programme of capital receipts provides one of the key funding sources for the capital programme.
  
• Non operational assets provide a significant element of net income to support the revenue budget.
  
• By providing the opportunity to improve utilisation and efficiency in all areas of property occupation.

The above can manifest themselves in both revenue and capital outcomes. At the simplest level the sale of a surplus piece of land will result in a capital receipt; but this would also give rise to revenue savings in terms of reduced maintenance and management costs. In certain circumstances transactions can provide a combination of benefits which can be tailored to corporate requirements and/or market circumstances. An example of this would be a long leasehold investment where any restructuring could be negotiated around a capital receipt, a future geared ground rent or a combination of the two. Capital and revenue are therefore inextricably linked.

It will be possible to steer the direction of individual transactions to reflect the aspirations of the Council and also to take advantage of market conditions. Such decisions will undoubtedly have an effect on the level of revenue performance and/or the level of anticipated capital receipt.

To this end there are changes to the Council's future service and financial planning taking effect from 1 April 2008 including:

• Removing the specific capital receipts target of £5.2m per annum in general support to the capital programme.
  
• Limiting the support from income arising from the commercial part of the estate at its current level plus inflation, in order that any excess gives the Council access to income to fund prudential borrowing.
  
• Services having to fund the cost of borrowing over and above Government allocations (borrowing and grants) and specified capital receipts from within their own revenue budgets.

2.4.2. External guidance

Much of the effort in managing the assets is undertaken in the background of Central Government rules and regulations in particular Comprehensive Performance Assessment (to be replaced by Comprehensive Area Assessment in 2009).

Additionally there is a wealth of existing and emerging guidance available on the subject of Asset Management. At the time of publication of this AMP the following are timely

• Tenanted Non residential property guidelines produced by the Royal Institution of Chartered Surveyors (RICS) September 2007.
  
• Evaluation of Corporate Capital and Asset Planning in Local Government published by York Consulting on behalf of DCLG November 2007.
  
• RICS Public Sector Asset Management Guidelines. Published 16 January 2008.
  
• Framework for Local Authority Asset Management (DCLG) February 2008.

These latter guidelines summarise the business benefits of good asset management as follows:-

• 'release of capital for re-investment or debt reduction;
  
• efficient running costs;
  
• better public service provision by improved property and co-location of services;
  
• property in good condition;
  
• improved property utilisation and bringing together similar uses into the same property, rather than providing them separately;
  
• improved productivity, changes in corporate culture and facilitation of corporate change;
  
• improved delivery of community objectives through the more effective use of property;
  
• innovative strategic procurement.'

2.4.3. CPA/CAA

One of the biggest pressures in 2008/2009 will be preparations for the transition from CPA to CAA. The CAA regime moves the Council towards an output based assessment rather than a tick box approach and the introduction of ongoing challenge advocated in this AMP will form the cornerstone of the Council's Use of Resources insofar as this relates to real property.

2.4.4. Property Policy

Sitting alongside the AMP is the Property Policy which provides clear protocols for the mechanics of property and asset management within the Authority.

The policy sets out to

• Clarify the roles and responsibilities of occupiers, Property Services and other specialists within the Council.
  
• Confirm the allocation of every property interest owned by the council to an appropriate Divisional Director together with an assessment of the legal land holding powers and consequent appropriations.
  
• Set out robust arrangements for financial management of the council's property assets including identification of all costs on a property by property basis.