Issue - meetings

In May 2021 the Council approved the formation of BCP FuturePlaces Ltd, (“FuturePlaces”) a wholly owned Urban Regeneration Company (URC). The fundamental purpose and principles of FuturePlaces is to drive “Place Making”, regeneration and property market transformation both across key sites owned by the Council and the wider area to support the aspirations set out in the Council’s Big Plan.

This report seeks approval for funding changes to the business model due to a revised approach as proposed in the Councils 2022/23 Budget as to how the company will be funded. It also seeks approval for the revised company business plan as Council approval as sole shareholder as such a change is a reserved matter under the Shareholders’ Agreement.

It also seeks approval to streamline the Gateway Approval process outlined in the Commissioning Plan. The changes seek to remove duplication and ensure that each new stage builds on, and complements, its predecessor. There will not be a reduction in the work required to investigate options for delivery of each project and it is still based on HM Treasury Green Book guidance.

RECOMMENDED that Council: -

(a)        approve an increase in the working capital loan facility to £8m (from £400k) to support BCP FuturePlaces Ltd from July 2022; and

(b)        approve the revised BCP FuturePlaces Ltd Business Plan attached to the report and the confidential Appendix 1.

RESOLVED that Cabinet: -

(c)        delegate authority to the Chief Finance Officer (s151) to agree and finalise the terms of the working capital loan; and

(d)        delegate authority to the Chief Executive to amend and finalise the Commissioning Contract to reflect the new gateway process and business plan.

Voting: Unanimous

Portfolio Holder: Development, Growth and Regeneration

Reason

To contribute to the Council’s Corporate vision, specifically helping to create dynamic places, investing in the homes our communities need, revitalising and re-inventing our high streets and local centres in line with the vision set out in the Big Plan.

FuturePlaces was formed to ensure BCP Council has the capacity, expertise, and resources to drive investment in regeneration and unlock value from major Council owned sites; it will also enable BCP Council to ensure that we deliver new homes and create well designed, local neighbourhoods.

The new funding model accords with the proposal contained in the 2022/23 Budget approved by Council.

The Portfolio Holder for Regeneration, Economy and Strategic Planning presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'C' to these Minutes in the Minute Book.

Cabinet was advised that in May 2021 the Council approved the formation of BCP FuturePlaces Ltd, (“FuturePlaces”) a wholly owned Urban Regeneration Company (URC), and that the fundamental purpose and principles of FuturePlaces is to drive “Place Making”, regeneration and property market transformation both across key sites owned by the Council and the wider area to support the aspirations set out in the Council’s Big Plan.

Further to this Cabinet was informed that this report sought approval for funding changes to the business model due to a revised approach as proposed in the Councils 2022/23 Budget as to how the company will be funded, and that it also sought approval for the revised company business plan as Council approval as sole shareholder as such a change is a reserved matter under the Shareholders’ Agreement.

In addition Cabinet was advised that the report also sought approval to streamline the Gateway Approval process outlined in the Commissioning Plan, and that the changes seek to remove duplication and ensure that each new stage builds on, and complements, its predecessor. Further to this Cabinet was informed that there will not be a reduction in the work required to investigate options for delivery of each project and it is still based on HM Treasury Green Book guidance.

RECOMMENDED that Council: -

(a)        approve an increase in the working capital loan facility to £8m (from £400k) to support BCP FuturePlaces Ltd from July 2022; and

(b)        approve the revised BCP FuturePlaces Ltd Business Plan attached to the report and the confidential Appendix 1.

RESOLVED that Cabinet: -

(c)        delegate authority to the Chief Finance Officer (s151) to agree and finalise the terms of the working capital loan; and

(d)        delegate authority to the Chief Executive to amend and finalise the Commissioning Contract to reflect the new gateway process and business plan.

Vote: Unanimous

Portfolio Holder: Regeneration, Economy and Strategic Planning

The Leader Councillor D Mellor and the Deputy Leader Councillor P Broadhead were provided with dispensations with regards to this item and were therefore able to participate in the discussion and voting thereon.

To consider the BCP Future Places Report scheduled for Cabinet consideration on 22 June 2022.

The Committee is asked to scrutinise and comment on the report and if required to make recommendations or observations as appropriate.

Cabinet members invited to attend for this item: Councillor Phil Broadhead, Portfolio holder for Development, Growth and Regeneration

Please note that this report contains an appendix with exempt information ‘as defined in Paragraph 3 in Part I of Schedule 12A of the Local Government Act 1972. If the Committee wish to discuss information in relation to this appendix it may wish to make a decision to exclude the press and public.

(Paragraph 3 - Information relating to the financial or business affairs of any particular person (including the authority holding that information)

The Portfolio Holder for Development, Growth and Regeneration and the Director for Regeneration presented a report, a copy of which had been circulated to each member and a copy of which appears as Appendix 'A' to these minutes in the Minute Book. The Director of Regeneration and representatives from FuturePlaces were also in attendance and provided responses to a number of enquiries. A number of points were raised and responded to in the ensuing discussion including:

·     Clarification was sought on how the loan would be financed, through the Public Works Loan Board or by other means. It was confirmed that a working capital loan of £8million would be financed by borrowing which would be lent at a commercial rate to the company through the PWLB.

·     It was noted that the anticipated 30 percent profit margin was reflective of the industry norm. The Council procured other services on a cost-plus basis and in order to demonstrate best value these were compared against day rates. There was relative confidence that this had been benchmarked and fell within industry ranges.

·     In response to a question, it was confirmed that the company was 100 percent owned by BCP Council. There was scope for dividends, but these would flow straight back to the Council.

·     Concern was raised regarding the lost £3 million in the first year of operation for a company formed by a London Borough. A point was raised regarding potential loses by the company if the Council did not subsequently agree the individual business cases brought forward by the company. The Portfolio Holder advised that this was why Councillors were members of the Board to ensure that there was follow through on a collective vision. The Gateway process followed a full process of several stages from concept to final approval.

·     In response to an enquiry the Committee was advised that there was a benefit of having a division with a singular focus and expertise.

·     It was noted that Seascape’s purpose was to purchase homes to house homeless persons and other direct purposes, but it was also able to make a profit. A Councillor Commented that they were confident in the Portfolio Holder and Officers to deliver development.

·     This was the first time using a specific funding methodology which would be reviewed annually. It was suggested that this needed to be more frequent, perhaps quarterly. It was explained that this was in line with other Council companies where an annual update was received through Cabinet. Regular updates on individual projects would come forward through the gateway process.

·     In response to a line in the report a query was raised regarding when it would it not be appropriate for Futureplaces to repay borrowed monies. Payment to the company would allow this to be repaid and it was confirmed that it was always appropriate for debt to be repaid.

·     There were a number of headline projects within the business plan. It was noted that some of these were comprised of sub-projects which would be deployed over  ...  view the full minutes text for item 16