|
Councillor Mrs N.J. Bramhall, Executive Member for Property, introduced a proposal to create a local authority Property Investment and Development Company to the Executive. The proposed new company would further the Council’s approach, adopted in December 2014, to property investment, development, borrowing and Joint Ventures. The vision to establish this company had also been incorporated into the Council’s 5 Year Plan that had been shaped to respond to the financial pressures facing the Council. The primary objective being to provide new ways in which the Council could continue to fund high quality services and improvements for the community through alternative income sources.
The report set out the business case to create a property trading investment and development company which would be wholly owned by the Council. The company would promote the development of a number of Council owned assets as well as purchasing other assets for investment and development purposes both inside and outside the Borough. Some existing Council assets would therefore be transferred to the Company to allow that to happen.
The Executive Member noted that the establishment of a commercial trading company would enable the Council to bring forward its own sites quickly and would also enable the Council to operate in a fast paced competitive market place in areas where the Council cannot currently act.
The report provided further information on the proposed company structure and governance; the Shareholder function; role and responsibilities of the Board of Directors; resources to be available to the Company; process for the establishment of the Company; Articles of Association; Objects; Shareholder Agreement; tax liability; risks; staffing implications; state aid; company loan facilities; legal implications; powers to fund the company; asset transfers; procurement; options and financial implications.
The report was considered by the Overview and Scrutiny Committee on 8 September 2016 as part of the Council’s good governance arrangements. The outcome of that meeting was tabled in an Addendum. The Executive Member for Property thanked the Committee for its consideration of the proposals and its report. It was also confirmed that the Committee’s request that a Non Executive Director be appointed would feature as an option under the Shareholder Agreement. Members asked questions around the governance of the proposals, (including an assurance that there would be careful monitoring of the performance of the company); the opportunity to undertake affordable housing schemes through the companies activities and whether the Freedom of Information Act applied to its activities. It was confirmed that the meetings of the Property Sub Committee would be held in public.
RESOLVED that:
(i) the Head of Legal Services be authorised to incorporate (a wholly owned) Local Authority Trading Company in accordance with the arrangements described in this report;
(ii) the Shareholder function of the Council be delegated to an Executive Sub-Committee to be known as the Property Sub-Committee;
(iii) the membership of the Property Sub-Committee be the Leader, Deputy Leader, and Executive Members for Finance and Property, and the Leader be authorised to make any future changes or further appointments required in accordance with the terms of reference of the Sub-Committee;
(iv) the remit and terms of reference of the Property Sub-Committee be agreed as set out at Annex 1 of the report presented;
(v) the Property Sub-Committee be authorised, in consultation with the Head of Legal Services and Head of Property, to finalise and document the following arrangements between the Council and the Company:
a. The Memorandum and Articles of Association for the Company;
b. Shareholder Agreement between the Company and the Council including the first Business Plan;
c. Appointment of a Company Secretary and Auditor;
d. Resourcing Agreement for the Company to use Council staff and facilities in furtherance of its business;
e. Loan and draw down facilities to the Company. Loan and Draw Down agreements to be subject to the financial caps set out in the exempt information at Part 2 of the Executive’s Agenda. These can be amended or increased as agreed by the Property Sub-Committee;
f. Transfer of agreed Council assets into the property company set out in the exempt information at Part 2 of the Executive’s report, together with further assets as directed by the Property Sub-Committee;
g. The appointment of Directors and Managing Director(s) to the Company with the Director and Managing Director(s) being members of the Property Board. The Property Board is tasked with the day to day management of the business.
(vi) the terms of reference for the Property Sub-Committee be agreed as set out at Annex 1 to the Executive’s report and that the Constitution be updated by the Monitoring Officer as an administrative update.
Reasons for decision:
Setting up a property investment and development company would enable the Council to undertake property trading activities in order to enhance the economic wellbeing within the Borough to enable the Council to meet the funding challenges set down by Central Government.
Alternative options:
Not to proceed with the forming the Local Authority Trading Company.
|