Issue - meetings

Forward Plan item.

The Chairman explained that the Council had extensive property interests, including investment property; property used for the delivery of council services; and other miscellaneous land holdings.  The Council’s policy was to improve the quality of the portfolio and where appropriate rationalise interests and effect sales of low or non-income producing property. On 9^th September 2015, Council approved a £5m budget for purchasing investment property, which generated an additional revenue stream to support the Council’s activities.  

Cabinet was proposing to continue the strategy of purchasing commercial property investments, which would be funded by either internal resources or borrowing.  It was proposed to repay any borrowing (either internal or external) with capital receipts from the sale of low or non-income producing assets. The report to Cabinet recommended to Council the creation of a budget of £15m, to be used to purchase investment property over a five year time horizon.  This would allow the Council to remain an active investor in the commercial property investment market.  It would be recommended that the target yield should be 6% or such other target determined by Cabinet, and monitored by the Finance and Performance Scrutiny Sub-Committee.

Members noted that all acquisitions in excess of £250,000 would be formally decided by Cabinet in accordance with the Council’s constitution. 

Members were broadly supportive of the proposal and commented that consideration be given to the availability of low interest rates and that alignment with economic development priorities would be beneficial.

The Chairman thanked the group for their support and explained that each proposed acquisition would have a robust business plan which would take account of the matters raised by the group. Furthermore, the Chairman requested that officers clarified the role of the sub group that had been formed at the first meeting with regard to the forthcoming changes to the constitution, at the next meeting of the group, scheduled for 19 December.

The Property & Facilities Manager presented a summary of how the Property Asset List was being managed.  This included information on the structure and responsibilities of individuals within the team, and how the portfolio was being developed.

Members noted details of the Investment Portfolio and Operational Portfolio and the Property & Facilities Manager outlined the core areas of activity.  Members were advised that the outsourcing of services and restructuring of the team had led to a 25% reduction in payroll costs over the last two years.

The sub-committee discussed the Council’s temporary housing portfolio and were advised that the 17 units being constructed within the Bishopric flat development would be sufficient to accommodate the average number of families currently staying in Bed & Breakfasts due to a shortage of temporary housing. 

Members discussed opportunities for outsourcing functions of the Property & Facilities Department, in addition to the repairs and maintenance already outsourced to SSE.  It was confirmed that external surveyors were being instructed to manage larger repair and maintenance jobs, eg Billingshurst swimming pool re-tiling and recent repairs and decoration of Horsham Museum.  Members were advised that it was also anticipated that some aspects of commercial property management would be outsourced in due course.

The Property & Facilities Manager talked through the key objective for developing the property portfolio, which was to generate revenue to support the Council’s broader activities.  The target yield of 6% for new properties was noted.  The Property & Facilities Manager confirmed that the additional budget to expand the commercial property investment fund was £5m and that two properties had been purchased.  It was noted that the Cabinet Member for Finance & Assets was looking at ways of increasing this sum. 

The Cabinet Member for Finance & Assets was also at the early stages of developing a proposal for the Council to create an affordable housing portfolio, as was being done by other local authorities.

Members questioned whether performance targets and benchmarking were required to monitor how the portfolio was performing in terms of income and capital growth.  It was noted that the Accounts, Audit & Governance Committee received performance figures for the commercial property investment fund on a quarterly basis.

·         The sub-committee recommended that the Finance & Performance Sub-Committee look into how performance reporting for the property portfolio can be improved.