Agenda, decisions and draft minutes

To receive any apologies for absence.

There were no apologies for absence.

Apologies had been received from Visiting Member Councillor Blacker and Chair of Overview and Scrutiny Committee, Councillor Harrison.

To approve the minutes of the previous meeting on 20 June 2024 as a correct record.

The minutes from the meeting held on 20 June 2024 were APPROVED.

To receive any declarations of interest.

As a Director of Pathway for Care, Cllr Lewanski declared a non-pecuniary interest in Item 4 - Companies Performance Update – Summer 2024.

As a Director of Greensands Holdings, Cllr Michalowski declared a non-pecuniary interest in Item 4 - Companies Performance Update – Summer 2024.

To receive the Companies Performance Update – Summer 2024 report on the performance of Council-owned companies and to note the observations from Overview and Scrutiny Committee.

The Chair stated that this report was the summer 2024 update on the performance of Council companies. The report provided an overview of the performance of the companies currently owned, or part owned, by the Council. The currently operational companies were Greensand Holdings Limited, Horley Business Park Development LLP and Pathway for Care Limited.

These companies were considered in turn:

Greensand Holdings Limited had recently commenced preparations to transfer its assets, including an office building and development land into Council ownership. An outline ‘Step Plan’ process had also been drafted to enable the dissolving of Greensand Holdings Limited in agreement with its directors. The Plan would help ensure that the company’s affairs were properly managed during preparations for dissolution in an orderly manner.

Horley Business Park Development LLP was in the process of being dissolved through a Members Voluntary Liquidation (MVL). A registered Insolvency Practitioner had been appointed and the financial affairs of the LLP have been fully resolved.

Pathway For Care Limited was placed into Administration in January 2024. The company’s affairs were being managed by the appointed Administrator, who was investigating the circumstances leading to this position.

More information on the details of these company arrangements was available in the confidential Part 2 section of the report.

The Council was continuing to take all available steps to derive best available value for the borough and its residents from its stakes in these companies, and to mitigate as far as possible losses sustained.

It was also previously agreed to close an inactive wholly-owned company, RBBC Limited. The First Gazette Notice was published on 18 June 2024 and the company would be struck off the Companies Register not less than two months from that date.

The Vice-Chair of the Overview and Scrutiny Committee stated that the Managing Director had agreed at the Overview and Scrutiny Committee to provide further information on one of the recommendations. This was for a better explanation and detail of costs incurred versus the grant funding from Surrey County Council and the Lottery for example, ensuring the report was fully transparent. One of the points made by the Chair of Overview and Scrutiny Committee was a more in-depth review of the Capital Plan through the Scrutiny Budget Task Group.

In response to a member question relating to the actual costs to the Council’s balance sheet when the companies ceased to exist, it was explained that the Council kept records of expenditure, and this would be brought forward to the next meeting.

RESOLVED the Sub-Committee noted the Companies Performance Update, as set out in the report, and considered the observations from the Overview and Scrutiny Committee.

To consider and approve the recommended option for the Redhill Distribution Centre asset as set out in the report.

The Chair explained that the five industrial units at Redhill Distribution Centre had been let to a single tenant since the Council acquired the property in 2018.

However, it was likely that the majority of those leases would not be renewed when they expired later this year, and the Council therefore needed to consider options for the future of the property.

The report set out and summarised the options that were available to the Council and recommended that, rather than commit to significant expenditure at this time, the Council carried out repairs once units become vacant and then re-let them, pending a longer-term decision on the future of the asset.

The exempt report in Part 2 of the agenda contained financial information pertaining to the existing lettings of the asset.

A visiting member referred to paragraph 9 on page 21 of the report, explaining that it would be preferable if the units were made more energy efficient by improving their EPC ratings. It was confirmed that the Council would be working with incoming tenants on their green credentials and work to understand their business needs and make greener improvements on the buildings. It was agreed that plans would be shared with members.

RESOLVED that the Partner, Shareholder and Trustee Executive Sub-Committee:

(i)             Considered the available options for the Redhill Distribution Centre asset when current leases end in December 2024, as set out in the report; and

(ii)            Approved the recommended Option 1, as set out in the report, to put Redhill Distribution Centre into good repair when the current tenant’s lease ends and authorises the Property Services Manager to market the vacant space.

To note an acquisition by lease and to approve a capital allocation and an asset transfer at 13 Marketfield Way, Redhill, as set out in the report.

The Chair explained that under the terms of a Section 106 planning agreement, the Council had been granted a long lease of a property at 13 Marketfield Way, Redhill.

Terms had been agreed for the Council to grant an underlease of this property to YMCA East Surrey along with a sub-underlease to a local healthcare provider, Alliance for Better Care.

These tenants would be providing a variety of services to residents in Redhill and the surrounding areas, including healthcare; housing and services for young people and children.

Because of the benefits that YMCA and Alliance for Better Care would be providing to the local community, it was proposed that the lease would be granted at a peppercorn rent. This constituted a disposal at ‘less than best consideration’ under Local Government legislation, because the rent was lower than the market rental value of the premises.

However, legislation did allow Councils to undertake such disposals if they would assist in securing economic, social, or environmental well-being improvement in their area.

The recommended grant of this proposed lease would achieve such benefits.

A second decision was also required in respect of the expenditure on the fitting out of the premises.

Although the funding for the works had been provided by the developer, the actual expenditure would be undertaken by the Council and, as this exceeded £250,000, it constituted a Key Decision and therefore required approval.

Members stated that they were pleased that the Council could provide a facility that the residents of Redhill would welcome, and the team was thanked for their work on this.

A visiting member stated that it would be good to have more details of what the tenants were planning to offer from the site. It was asked whether there was enough funding to fit out the facility to the required standard and also whether the pathway that was currently locked would be returned to the public realm.

In response it was stated that in terms of funding the Council had benchmarked as much as possible but would not know the full extent until they went out to tender. Costs would be reviewed, and the Council may have to scale back should the budget be exceeded. In respect of the access path the Council needed to be assured that it was a safe route from the station to the main road. The Council was not trying to overturn a planning decision and ward Councillors would be kept up to date on this.

It was noted that there was no break clause in the lease at 5 years. This was what was agreed with solicitors for longevity.

RESOLVED that the Partner, Shareholder and Trustee Executive Sub-Committee:

(i)             Notes the acquisition by lease of an asset comprising community facilities at 13, Marketfield Way, Redhill;

(ii)            Approves the allocation of a £0.379 million capital contribution from the developer of 13 Marketfield Way to fund fitting-out works;and

(iii)          Approves the disposal of the community facilities at 13 Marketfield Way, through the grant of  ...  view the full minutes text for item 13.

To approve a Capital Investment Plan – Regent House Redhill and recommendations for investment, as set out in the report.

This item was considered in the exempt part of the meeting.

As set out in the paper before the Sub-Committee, the Partner, Shareholder and Trustee Sub-Committee was asked to approve the following recommendations to ensure that the Council’s Regent House asset be maintained in good repair:

RESOLVED that:

(i)             BNP Paribas Limited be appointed for a further period of 12 months from 1 August 2024, to allow continuity of service while completing a planned procurement for the appointment of managing agents for Regent House; and

(ii)            BNP Paribas Limited be instructed to enter into a contract with Schindler Limited to carry out lift replacement works at Regent House at a cost to the Council of £0.340 million, funded within the approved Capital Programme.

To discuss and note the Property Portfolio Performance Quarter 4 2023/24.

The Chair stated that Members would be aware that the Council owned a number of property assets that provided the Council with a significant rental income stream.

Annex 1 to this report sets out the performance of these income-producing properties as at the end of Quarter 4 2023/24, including information about rental income, yields and vacancy rates.

The Annexe to the report in Part 2 of the agenda provides additional confidential information about existing and proposed tenancies, as well as opportunities and threats relating the properties.

A Member stated that it was noticeable that the retail sector was significantly below yield market rates. In response it was explained that the Council currently obtained its data from Knight Frank who had mostly withdrawn from small retail and was focusing on new retail which currently commanded a higher yield and the Council was looking to access more prominent data for its retail assets.

Further questions relating to the yields shown on page 57 of the report were asked by a visiting member. It was explained that in terms of The Rise, the yields were lower because there were some vacant units which were being actively marketed.

The Sub-Committee considered the exempt report.

RESOLVED that the Partner, Shareholder and Trustee Executive Sub-Committee received the report and provided feedback.

RECOMMENDED that members of the Press and public be excluded from the meeting for the following item of business under Section 100A(4) of the Local Government Act 1972 on the grounds that:

(i)             It involves the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 1A of the Act; and

(ii)            The public interest in maintaining the exemption outweighs the public interest in disclosing the information.

RESOLVED – that members of the Press and public be excluded from the meeting for the following item of business under Section 100A(4) of the Local Government Act 1972 on the grounds that:

(i)             It involves the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Act; and

(ii)            The public interest in maintaining the exemption outweighs the public interest in disclosing the information.

The Sub-Committee considered the Part 2 exempt report and annex and answered questions from Visiting Members on item 7 – Capital Investment Plan – Regent House, Redhill and item 8 – Property Portfolio Performance Quarter 4 2023/24.

The Sub-Committee then returned to the public session to agree the recommendations.

To consider any other urgent business.

There was no other business discussed at the meeting.