Agenda item

The establishment by the Council of a local authority wholly owned company (the Company) to develop, deliver, own and manage property as well as new development on a case by case basis using either Public Works Loan Board (PWLB) funding or external financing dependent which is the most viable option.

The company will initially focus on the refurbishment of existing properties suitable for residential lettings.  Consideration will also be given, on a case by case basis to the delivery of new build property developments, if deemed financially viable.

Caroline Kay (Bath Preservation Trust - BTP) said in her statement that BTP welcomed the report and that properties owned by the Council would be put back in use, which would help meeting housing needs in the centre of Bath.  The Trust would hope that there would be clear governance within the company in order to avoid sub-letting of properties.  The Trust would also hope that the Council would get the best value in order to generate revenue and achieve its objectives.  Caroline Kay also said that it was not clear in the report if other Councils, who undertook the same approach, were successful in this exercise nor it was clear what external and internal advice was given to the Council.  Caroline Kay asked for an assurance that planning guidelines would not be breached by future tenants.

Councillor Robin Moss welcomed the principle of using assets to generate an income for the Council.  In Councillor Moss’ view, this may have a potential impact on Council’s budget as it would be difficult to predict with certainty what the economic situation would be in years to come.  Councillor Moss also asked which external and internal advice had been taken on board, which Local Authorities had been used as model and who those Group Members who participated in the consultation were.

Councillor Dine Romero said that she had understood the need to create an additional income for the Council and asked if these properties would be subject of the ‘right to buy scheme’.  Councillor Romero also asked if these properties would be part of the affordable housing scheme.

Councillor Charles Gerrish welcomed the point raised by Caroline Kay in terms of sub-letting and said that he would ensure that this issue is taken forward before finalisation of any letting contract.  The Council’s key issue is to get sensible return on investment without the need to overcharge its tenants.  The Council’s objective would be to generate estimated revenue.  Councillor Gerrish also said that he was not in position at this stage to announce internal and external advisors, though bullet point 5.27 of the report might give some indications on local professional advice.  The new company would follow existing planning regulations.  One of Local Authorities used as a model was Mendip Council (6 months in existence).  Councillor Gerrish also said that Local Property and Development Company was not registered housing company so it would not be covered by Government legislation in terms of the ‘right to buy’ scheme.  Also, in terms of affordable housing, if the company would develop additional sites then they would abide to planning rules like everyone else.

Councillor Charles Gerrish said that the proposal would the delivery of the Council’s Medium Term Financial Plan for the period 2016/17 to 2019/20, with an additional £600K of recurring income targeted by the end of this period.

Councillor Charles Gerrish moved the recommendations.

Councillor Patrick Anketell-Jones seconded the motion by saying that the Council would need to look at innovative options and opportunities to generate income to protect frontline services.  Setting up this property company would enable our vacant accommodation above shops etc. within the commercial estate to be rented into the private market.

RESOLVED (unanimously) that the Cabinet agreed to the:

1)  Approval of the Outline Business Case for the establishment of the Company

2)  Establishment of a Company limited by shares, for this purpose, to be wholly owned by the Council in line with the proposed structure set out in the report.

3)  Approval of the composition of the Company's Board.

4)  Utilisation of appropriate investment to deliver, own and manage residential and property developments on a case by case basis.

5)  Transfer the relevant Title of the existing residential properties to the Company, subject to approval of the terms of such transfer by the Corporate Property Officer in accordance with S123 of the Local Government Act.

6)  Delegate to the Leader the exercising of all Council functions as sole shareholder of the Company, with the exception of any changes regarding ownership of the Company.

7)  Delegation to the Chief Executive and Strategic Director of Resources, in consultation with the Leader and the Cabinet Member for Homes & Planning, of the approval of Council investment  in the Company within approved budgetary provisions, including but not limited to the:

i)  terms of Council investment

ii)  business cases for future development proposals to be undertaken by the Company.

iii)  terms of any guarantee to be provided to support the provisions of the investment

iv)  terms of any loan or equity agreement between the Council and the Company

v)  such others matters as are regarded as necessary to enable the provision of the investment, progress of the developments and their subsequent sale,  lettings and on-going management.

8)  Delegation to the Strategic Director (Resources) in consultation with the Leader to finalise and agree the and Articles of the Company and other such matters necessary to (i) incorporate and register the Company and (ii) facilitate the objectives identified in this report.

9)  Full Approval of the existing Capital funding provision of £6.536M to support investment in the Company in accordance with 2.6 above.

10)Note that all further decisions regarding the future level of Capital Funding for potential investment in the Company will be subject to the approval of the Full Council and form part of the Budget process for 2016/17.

11)Agree that an annual report will be provided by the Company to the Council setting out its activities, performance and accounts.

12)The Strategic Director (Resources) is given delegated authority to finalise the service provision arrangements between the Council and the Company for all required support services, including officer support.

13)Indemnification, to the full extent permissible under the Local Authorities (Indemnities for Officers and Members) Order 2004, of the Council officers and Members in respect of any personal liability arising as a result of their appointment as directors of the Company.