Issue - meetings

Capital Investment Strategy (Non-Treasury) 2020-2025

Meeting: 18/03/2020 - Cabinet (Item 145)

145 Capital Investment Strategy (Non-Treasury) 2020-2025 pdf icon PDF 168 KB

The Bournemouth, Christchurch & Poole Capital Investment Strategy (Non -Treasury) 2019-2022 (CIS) was approved by the Shadow Authority Executive Committee on 12 February 2019 prior to the creation of BCP Council on 1 April 2019.

The revised strategy has been updated to reflect the new Corporate Strategy and investment ambition of Bournemouth Christchurch and Poole (BCP) Council.

The strategy sets out the basis by which the Council wishes to assemble and hold a portfolio of investments assets that reflect its values and priorities in order to;

·           promote the financial health of the organisation by generating a target return across the portfolio;

·           make a positive contribution to the current or future delivery of services, in terms of scope, quality or cost;

·           contribute towards a Sustainable Environment;

·           deliver socio-economic benefits to the town; and/or

·           create Dynamic Places through strategic regeneration or redevelopment opportunities.

It provides a means of developing alternative sources of income to offset cuts to Council spending arising as a consequence of the Government’s austerity programme and to provide a degree of protection to frontline services.

The CIS approved by the Shadow Authority referenced not only investment assets but other legacy authority assets which generated an income such as finance leases and ground rents, however these will fall within the business as usual estate management remit of the Council and will be managed in accordance with the BCP Council Corporate Asset Management Plan.

The investment portfolio has therefore been realigned to consist of only the key assets acquired or held solely for investment purposes and includes legacy Bournemouth, Christchurch & Poole assets and it is appropriate to provide an updated financial projection.

A financial appraisal attached in Appendix B focuses on the current position in relation to the two largest multi-tenanted investments within the portfolio, Mallard Road Retail Park and Wessex Trade Centre.

 

Additional documents:

Decision:

RESOLVED that:-

(a)          the Capital Investment Strategy (Non-Treasury) 2020-2025 attached to the Report at Appendix A be approved; and

(b)          Cabinet delegate authority to the Corporate Property Officer to make minor amendments to the Capital Investment Strategy (Non-Treasury) 2020-2025 in consultation with the Cabinet Members for Regeneration & Culture, and Finance.

Voting: Unanimous

Portfolio Holder(s): Finance

                               Regeneration and Culture

Reasons

The purchase of investment assets assists with the management of sound finances and increases the Council asset base, providing a legacy for future generations.

It is appropriate that this Strategy is refreshed to ensure it aligns with the new BCP Council Corporate Strategy and reflects the current investment ambitions of the organisation.

Minutes:

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

Cabinet were requested to consider approval of the Capital Investment Strategy which had been refreshed to ensure it aligns with the new BCP Council Corporate Strategy and reflects the current investment ambitions of the organisation.

In presenting the report the Portfolio Holder highlighted amendments to the proposed recommendations which were hoped would address some of the concerns which had been raised.

The Vice Chairman of the Overview and Scrutiny Board addressed Cabinet advising that at their recent meeting the Overview and Scrutiny Board had requested that Cabinet consider amending paragraph 2.3.3 of Appendix A to remove all text following the end of the first sentence ‘In making an investment decision, the Council will take a balanced portfolio approach’.

In relation to the comments from the Overview and Scrutiny Board the Portfolio Holder stressed that the balanced portfolio approach would still be a responsible investment. The Portfolio Holder requested the below amendment prior to approval, that an additional paragraph be included at 2.1.9 to read:

“2.1.9 Further to the stated priorities, be exception, opportunities which may not fulfil all of these criteria may be brought forward for consideration by the Investment Panel where they otherwise reflect the values and priorities of the Council’s Corporate Strategy”

RESOLVED that:-

(a)           Subject to the inclusion of paragraph 2.1.9 as set out in the minutes above the Capital Investment Strategy (Non-Treasury) 2020-2025 attached to the Report at Appendix A be approved; and

(b)           Cabinet delegate authority to the Corporate Property Officer to make minor amendments to the Capital Investment Strategy (Non-Treasury) 2020-2025 in consultation with the Cabinet Members for Regeneration & Culture, and Finance.

Voting: Unanimous

Portfolio Holder: Finance


Meeting: 16/03/2020 - Overview and Scrutiny Board (Item 145)

145 Scrutiny of Finance Related Cabinet Reports pdf icon PDF 168 KB

To consider the following finance related reports scheduled for Cabinet consideration on 18 March 2020:

·                Capital Investment Strategy (non-treasury) 2020-2025

The O&S Board is asked to scrutinise the reports and make recommendations to Cabinet as appropriate.

Cabinet members invited to attend for this item: Councillor David Brown, Portfolio Holder for Finance and Councilor Mark Howell, Portfolio Holder for Regeneration.

The Cabinet report will be published on Tuesday 10 March 2020 and available to view at the following link: https://democracy.bcpcouncil.gov.uk/ieListDocuments.aspx?CId=285&MId=3727&Ver=4

Additional documents:

Minutes:

Capital Investment Strategy (non-treasury) – The Portfolio Holder for Finance introduced the report, a copy of which had been circulated and which appears as Appendix ‘F’ to the Cabinet minutes of 18 March 2020 in the Minute Book. The Board was advised that the strategy updated the legacy assets, including a financial appraisal at appendix B to the report. A key issue in asking Cabinet to approve the strategy was aligning with current corporate strategy. In the ensuing discussion several points were raised, including:

 

A Councillor suggested that paragraph 2.3.3 of the appendix should be removed. The Portfolio Holder responded that there was a need to make sure the portfolio was diversified. There would need to be a business case and due diligence for any change with a view to risk.

It was noted that BCP Council had inherited a number of investments through the preceding authorities and bringing them together within one strategy helped to provide a more balanced picture of the overall portfolio of the Council. At present there were certain investments in the portfolio which skewed the overall picture.

A Councillor commented that the net yield and profits percentages, as set out in Appendix 2, were far too low and therefore not worth taking the risk on the investments. The Board was advised that all investments would be scrutinised by the Section 151 officer who was content with this low risk strategy. The strategy aimed to find the right balance which could be reviewed periodically if not performing appropriately.

It was confirmed that Mallard Road retail park was not making a loss. The business plan was for a £1.8m surplus but it returned a £1.6m surplus. It was partly a long term investment in terms of property value. Original cost included fees.

The Board discussed the principle of investing within the BCP Council area. The Portfolio Holder noted that there was additional socioeconomic value if investing within area but by exception would look outside of the area if it would provide a particularly identified environmental benefit. However, there were plenty of investment opportunities within the local area.

Some of the Board members commented that the triple bottom line and proposal to invest within the area was limiting and showed a lack of ambition. The Portfolio Holder suggested that the strategy would ensure the best outcome for people of the area.

A Councillor asked about the Council’s Declaration of a climate change emergency and how an environmental impact would work for each case. The Board was informed that it would challenge the Council to look at the sustainable angle of investments and work with organisations to ensure that they become more environmentally sustainable but would be considered on a case by case basis to consider.

 

RECOMMENDED: That Cabinet amend paragraph 2.3.3 of Appendix A –‘Capital Investment Strategy (Non-Treasury) 2020-2025’ to remove all text following the end of the first sentence ‘In making an investment decision, the Council will take a balanced portfolio approach’.

Voting: For: 9, Against: 1,  ...  view the full minutes text for item 145