Issue - meetings

There will be a presentation at the meeting on the Commercial Estate. Presentation slides and an appendix are attached.

Derek Quilter, Divisional Director Property and Project Management gave a presentation to the Panel which covered the following:

·  Overview of the Commercial Estate

·  Key Facts

·  Gross Income Growth (Including Acquisitions)

·  Gross Income Growth (Excluding Acquisitions)

·  Breakdown of portfolio by type

·  Property types

·  Commercial Estate Ownership – Bath

·  Interesting facts

·  Current Commercial Estate Objectives

·  Statutory powers

·  Performance of the Commercial Estate

·  Performance

·  Gross Revenue Return Performance

·  Rent Arrears

·  Voids

·  Management Cost

·  Management Team of the Commercial Estate

·  Internal Staffing

·  Critical Partner

·  Acquisitions and Estate Development

·  Acquisition and Restructures

·  Office Development – BQS

·  Major Commercial Estate Development

·  Investment Funding

·  Emerging Strategy for the Commercial Estate

·  Context – Strategic Review Targets

·  Performance Targets

·  Existing Estate Management

·  Acquisition – future approach

·  Commercial Estate Objectives

Panel members made the following points and asked the following questions:

Councillor Barrett asked about the residential section and asked how many properties have been purchased, for how much and what is the income. The officer explained that 15 properties have been transferred to ADL. He added that ADL are producing a business plan that could come to this Panel if requested. He also indicated that Commercial Estate is nevertheless separate from ADL and this needs to be understood as the distinction is important, each having separate governance and objectives.

Councillor Pearce asked if the Council operates on a level playing field with other commercial landlords. The Strategic Director explained that the Council are subject to FOI requests, procurement rules and public scrutiny but that the Council’s tax status is beneficial as is its ability to borrow at exceptionally low rates.

Councillor Furse stated that diversity in the city centre estate is good, the Council should value diversity and local businesses.

Councillor Goodman asked David Stubbs – BNP Paribas if this report is the same as the one that came to the Panel in July. David Stubbs explained that it is a different report addressing different issues. The Strategic Director explained that the report that was brought to the Panel in July was written by officers, informed by work with BNP Paribas and 10% of the report was not included as there were references that were not suitable for publication. He further explained that today the Panel have an updated report which responds to requests for a lot of background information so there is more detail in this report. Councillor Goodman stated that the Panel do not have the full original report that he requested in July. He asked David Stubbs how the department could get the higher figure. David Stubbs explained that the Council could always do better and the key to future success is that targets should be constantly challenging. He explained that there is a big difference in the private sector as there are shareholders and drivers that are hard to inject into the Property department of a local authority. He explained that Shaftsbury Estate is a good exemplar.

Councillor Paul May, Cabinet Assistant (Finance and Efficiency) stated that we are a fortunate local authority to  ...  view the full minutes text for item 44

The Resources Policy Development and Scrutiny Panel have requested an update on the review discussions underway with BNP Paribas.

Councillor Goodman, seconded by Councillor Pearce, proposed the following motion:

‘That this item be deferred and the full report be given to the panel  and the meeting should be held in closed session if necessary with the Consultant from BNP Paribas in attendance to explain the report and answer question from the Panel ’…

There was some discussion on this motion. Councillor Pearce agreed that a full report was needed. Councillor Dando disagreed and explained that he wanted an officer summary and information on the direction of travel, not the full report. The Strategic Director stated that it is his view that there is enough information in this report today to discuss the issue but that equally officers can come back and present a fuller version in private session at a later date.

Panel members voted on Councillor Goodman’s motion and:

It was RESOLVED that this report be deferred until a meeting of the Panel later in the year (likely November 2016).

(Voting - 4 in favour and 3 against).

The slides are attached on the presentation on ‘Commercial Estate’.

Richard Long Head of Property Services gave a presentation to the Panel which covered the following:

·  Commercial Estate

·  Gross rental income over the last six years

·  Rent arrears

·  Voids

·  Growth of secure net income

·  Asset management plans

·  Acquisition and restructures

·  Funding options of future acquisitions and restructures

·  Cost of managing the Commercial Estate

·  Critical Partner

Panel members made the following points and asked the following questions:

In response to a query from Councillor Barrett, the officer explained that the cost of advice taken equates to £40k per year and that the budget to manage the Commercial Estate includes the money for consultant advice.

Councillor Goodman stated that he was disappointed to receive the information on the day of the meeting and asked three questions (1) What has the growth been since 2013? (2) Was the target of £1.5million achieved and (3) Regarding the three properties, once the borrowing is taken out, is there anything left? The officer responded that (1) He had not asked for the exercise to be repeated after 2013 which is why there are no figures. (2) The target was achieved and will now be one of the KPIs and (3) It is part of the net contribution. The Strategic Director explained the borrowing in the short term is 0.5% and long term is 4% which contributed to achieving the target.

Councillor Furse referred to the arrears graphs and asked why there were two peaks (June 2013 and June 2015) and why is there a move away from retail. The officer explained that the repair and maintenance recoveries and insurance recoveries explain the two peaks. He explained that there is an aim to release the authority from dependence on retail so acquisitions are being focused on non-retail. The Cabinet Member explained that this is about broadening risk.

Councillor Dando stated that he thought the news was quite good and asked for an update report (with an example Asset Management Plan) in 6 months.