Agenda and minutes

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Items
No. Item

1.

Declarations of Interest

    Members are required to declare any disclosable pecuniary, personal or personal and prejudicial interests they may have and the nature of those interests relating to items on this agenda and/or indicate if S106 of the Local Government Finance Act 1992 applies to them.   

    Minutes:

    There were no declarations of interests.

2.

Urgent Items of Business

    To determine whether there are any additional items of business which, by reason of special circumstances, the Chair decides should be considered at the meeting as a matter of urgency.

    Minutes:

    There were no urgent items of business for the Sub-Committee to consider.

3.

Minutes pdf icon PDF 54 KB

    To consider the minutes of the meeting of the Property Growth Fund Sub-Committee held 27th February 2018.

    Minutes:

    Decision:

     

    The Minutes of the meeting of the Property Growth Fund Sub-Committee, held 27th February 2018, were approved and signed by the Chair as a correct record.

4.

Exclusion of Press and Public

    To consider that the press and public be excluded from the remaining part of the meeting pursuant to Section 100(A)4 of the Local Government Act 1972 on the grounds that discussions may involve the likely disclosure of exempt information as defined in the provisions of Part 1 of Schedule 12A to the Local Government Act 1972 and public interest would not be served in publishing the information.

    Minutes:

    Decision:

     

    That the Press and Public be excluded from the meeting during consideration of the following two items of business, in accordance with the provisions of Section 100A (4) of the Local Government Act 1972, as amended.

     

    Reason for Decision:

     

    Should the press and public remain during debate on these two items there may be a disclosure of information that is deemed to be exempt under Parts 1 and 4 of Schedule 12A of the Local Government Act 1972.

5.

Property Growth Fund - Project Overview

Minutes:

The Sub-Committee considered a report of the Director of Economy the purpose of which was to bring members up to date with the Property Growth Fund programme and to seek approval for the use of the delegated authority of the Director of Economy to incur costs in working up projects.

 

Alternatives considered:

 

The Council was not required to proceed with any or all of the projects that were presented in the report. To do nothing would require no expenditure, nor expose the Council to the risks of property investments. However, the benefits of those investments would not be achieved.

 

Decision:

 

1.    The inclusion into the programme of the potential acquisition of Central Retail Park be approved and the Director of Economy be authorised to approve expenditure to undertake due diligence in accordance with the powers delegated to him by the Property Growth Fund Sub-Committee.

 

2.    The inclusion into the programme of the potential development of the Kirkholt Health Centre be approved and the Director of Economy be authorised to approve expenditure to undertake due diligence in accordance with the powers delegated to him by the Property Growth Fund Sub-Committee.

 

3.    The status of the remainder of the Property Growth Fund programme, as detailed in the Director of Economy’s report be noted.

 

Reasons for the recommendation:

 

The recommendations were presented to enable appropriate due diligence to be undertaken in respect of the potential acquisition of Central Retail Park and the development of Kirkholt Health Centre and to report progress with regard to the use of the Property Growth Fund.

6.

Green Lane, Heywood - Acquisition of Property

Minutes:

The Sub-Committee considered a report of the Director of Economy that set out details of an opportunity to use the Council’s Property Growth Fund to acquire an investment property at Green Lane, Heywood. An indicative plan of the property to be acquired was included with the Director’s report.

 

Alternatives considered:

 

The Sub-Committee could decide not to acquire this property in which case it would not be able to achieve the financial benefits as described within the report. The Sub-Committee could also express a wish to acquire the property but at a lower purchase price. Seeking to renegotiate the purchase price carried a risk that the vendor would not proceed.

 

Decision:

1.    The proposed acquisition of premises at Green Lane, Heywood, using the Property Growth Fund, at a purchase price of £2,012,500 (two million and twelve thousand and five hundred pounds), as set out in the submitted report be approved, noting that the financial model showed that the targeted minimum 6.5% yield was estimated to be achieved, subject to the identified risks.

 

2.    The Head of the Council’s Legal Services be authorised to complete the formal legal documentation to complete the purchase.

 

3.    The Sub-Committee approves that the Council opts out to tax the land and buildings, referred to in the submitted report.

 

Reasons for the decision:

 

The acquisition of the premises was expected to provide a financial return as set out in the body of the report and in accordance with the criteria for the use of the Property Growth Fund. It was therefore recommended that the Council opt to tax the land and buildings as it is necessary to ensure the Council remains below its 5% partial exemption limit for VAT (as the cost of breaking the exemption limit would be estimated at around £1m per annum). It is also expected that opting to tax will have no adverse impact on rental income for current or future tenants (as they are likely to be able to absorb/reclaim the VAT charged on the lease). The current tenants are being charged standard rate VAT on rent as the current building owners have also opted to tax the site.

 

In considering the report the Sub-Committee considered additional comments provided by the Authority’s Chief finance Officer which noted that the Council was bound by the Prudential Code as issued by CIPFA, which stated that local authorities should not borrow more than, or in advance of their needs purely in order to profit from the investment of the extra sums borrowed. This applied to non-financial as well as financial investments. The Code also stated that authorities should also consider carefully whether they could demonstrate value for money in borrowing in advance of need and could ensure the security of such funds.