Agenda, decisions and minutes

To elect a Chairman of the Sub-Committee for the 2017/18 Civic Year.

RESOLVED:  That Councillor Julian Cunningham be elected as Chairman of the Sub-Committee for the remainder of the 2017/18 Civic Year.

RESOLVED:  That Councillor Julian Cunningham be elected as Chairman of the Sub-Committee for the remainder of the 2017/18 Civic Year.

Members should notify the Chairman of other business which they wish to be discussed by the Sub-Committee at the end of the business set out in the agenda. They must state the circumstances which they consider justify the business being considered as a matter of urgency.

The Chairman will decide whether any item(s) raised will be considered.

There was no notification of other business.

There was no notification of other business.

Members are reminded that any declarations of interest in respect of any business set out in the agenda, should be declared as either a Disclosable Pecuniary Interest or Declarable Interest and are required to notify the Chairman of the nature of any interest declared at the commencement of the relevant item on the agenda. Members declaring a Disclosable Pecuniary Interest must withdraw from the meeting for the duration of the item.  Members declaring a Declarable Interest which requires they leave the room under Paragraph 7.4 of the Code of Conduct, can speak on the item, but must leave the room before the debate and vote.

(1)     The Chairman reminded Members that, in line with the Code of Conduct, any Declarations of Interest needed to be declared immediately prior to the item in question; and

(2)     The Chairman announced that he would be varying the order of business on the agenda so that, following the exclusion of the press and public, Item 8 (the Part 2 item on Options for Housing Investment Company) would be considered in advance of Item 6 (the Part 1 item on the same matter).

(1)     The Chairman reminded Members that, in line with the Code of Conduct, any Declarations of Interest needed to be declared immediately prior to the item in question; and

(2)     The Chairman announced that he would be varying the order of business on the agenda so that, following the exclusion of the press and public, Item 8 (the Part 2 item on Options for Housing Investment Company) would be considered in advance of Item 6 (the Part 1 item on the same matter).

To receive petitions, comments and questions from members of the public.  At the time of producing the agenda none had been received.

Any other public participation requests received within the agreed time will be notified to Members as soon as practicable.

There was no public participation.

There was no public participation.

REPORT OF THE DEPUTY CHIEF EXECUTIVE

To consider the purpose of the Sub-Committee and its Terms of Reference.

RESOLVED:  That the content of the report be noted and taken into account when considering future reports to the Sub-Committee

REASON FOR DECISION:  To ensure that the sub-committee understands its role in taking forward commercial activities through trading companies.

The Deputy Chief Executive presented a report informing Members of the purpose of the Sub-Committee, specifically its role and function in the operation of the Council’s commercial activities operated via trading companies.  The following appendix was submitted with the report:

Appendix A - Extract from Council Constitution setting out Sub-Committee’s terms of reference.

The Deputy Chief Executive advised that the overall spirit of the Terms of Reference was that the Sub-Committee should consider as shareholder all those matters that related to the Council’s ownership or potential ownership in wholly or partly owned local authority companies.  Given that the Terms of Reference were based on examples found in other authorities, it would of course be necessary to keep these under review as the Council’s involvement in such companies developed.  In this regard, proposals will be put to the 10 April 2018 Council meeting as part of the Constitution Review report to amend the Terms of Reference so as to clarify the proactive approach of the Sub-Committee in considering matters relevant to local authority companies, prior to the establishment of the relevant company by Cabinet.

The Deputy Chief Executive explained that there were elements of the decision making around trading companies which were not the responsibility of the Sub-Committee.  The Cabinet’s terms of reference included the following, which was added in the 2017 Constitution Review:

“5.6.34     To agree to the establishment or wind up of a Council wholly or partly owned Local Authority Company, and to approve investment, loans, resource arrangements and asset transfers, act as corporate shareholder, save as otherwise delegated to the Cabinet Sub-Committee (Local Authority Trading Companies’ Shareholder), Executive Members or Officers under the Sub-Committee terms of reference.”

The Deputy Chief Executive stated that there would be many decisions that were the responsibility of the directors who would be appointed to manage the company.  The role of the Sub-Committee was to maintain an oversight on the company and to take ownership decisions, as defined within the memorandum and articles of association establishing the company.  Those areas of responsibility could, in theory, be different from company to company, but in practice were likely to be broadly similar.  Members would be fully aware of the need for a trading company to be ‘light on its feet’ and be able to make commercial decisions quickly (ie. ‘act commercially’), without local authority processes unnecessarily slowing down those decisions. Therefore, it was anticipated that the emphasis would be on delegating decisions to the directors wherever it was sensible to do so.

The Deputy Chief Executive reminded Members that the Sub-Committee’s decisions were subject to scrutiny, and that with a quorum of three Members, the Delegation arrangements included as part of Appendix A to the report provided emergency arrangements should a decision needed to be made in the event that it was not possible to convene a quorate Sub-Committee meeting within suitable timescales.

In response to a Member’s question, the Chief Executive confirmed that Careline was not included in the remit of the Sub-Committee, as  ...  view the full minutes text for item 5.

REPORT OF THE DEPUTY CHIEF EXECUTIVE

To consider a Part 1 report on options for the establishment of a Housing Investment Company.

[Note: this item was considered after Minute 8.]

[Prior to the consideration of this item and Minute 8 below, Councillor David Levett made a Declarable Interest in that he was a director of a property letting company which was currently dormant, but that he had applied to Companies House to wind up this company.]

RESOLVED:

(1)     That it be agreed that no further work be undertaken to investigate buy to let investment options; and

(2)     That further work be undertaken to investigate potential conversion/development opportunities, subject to future consideration of the business plan for specific proposals.

RECOMMENDED TO CABINET:  That the principle of setting up a wholly owned holding company and trading companies for the purposes of development; and letting existing and future assets as residential dwellings be approved, and the Chief Finance Officer and Executive Member for Finance and IT be given delegated authority to determine the detail of the structure.

REASON FOR DECISION:  To explore the options for making best use of existing assets.

[Note: this item was considered after Minute 8.]

[Prior to the consideration of this item and Minute 8 below, Councillor David Levett made a Declarable Interest in that he was a director of a property letting company which was currently dormant, but that he had applied to Companies House to wind up this company.]

The Deputy Chief Executive presented a Part 1 report setting out the investigations that had been undertaken with regard to the potential options for investing in residential property on a buy to let or development basis.  The following appendix was submitted with the report:

Appendix A – Proposed Scheme of Delegation.

The Deputy Chief Executive advised that the Overview and Scrutiny Committee had requested to see this report and accompanying Part 2 report at its meeting to be held on 20 March 2018, and so the views of that Committee may be referred to Cabinet for consideration at its meeting to be held on 27 March 2018.

The Deputy Chief Executive stated that the Sub-Committee had considered the Outline Business Case (OBC) for a Housing Investment Company appended to the Part 2 report (See Minute 8 below).  In summary, the OBC  showed that the return on investment would be marginal and less than other potential ways in which the Council could invest its capital. There are a number of reasons for this, including:

·           The cost of property in North Hertfordshire;

·           A mature rental market;

·           The cost of buying in the necessary expertise; and

·           Small size of the likely property portfolio meaning costs were not spread/diluted.

The Sub-Committee noted that the findings of the Outline Business Case suggested that the Council should cease work on buying existing residential property on the open market for private rental and should instead focus on other housing options which could provide greater returns.  Additionally, the model of buying existing residential properties would not provide the community benefits of bringing new housing stock into circulation, whereas conversion/development options could provide new housing for the area.

The Sub-Committee therefore supported the proposed recommendation that no further work be undertaken to investigate buy to let investment options.

The Deputy Chief Executive referred to the £3Million allocation in the Capital Programme for Housing Investment.  Although purchasing existing residential properties for renting did not provide sufficient return to be an attractive investment option, the Council currently owned property which could potentially be rented out as residential lettings to generate income. The Council owned the bungalow adjacent to Town Lodge in Gernon Road, which was vacant and could be rented out in order to generate an income, thereby ensuring the Council was obtaining value from its asset.  Alternatively, the site could be redeveloped as part of any proposals for the wider Gernon Road site.  The Council also owned the current Careline offices in Harkness Court, Hitchin which would be vacated later this year when Careline relocated to the District Council Offices.  Options had been explored for the conversion of the building to residential flats for letting  ...  view the full minutes text for item 6.

To consider passing the following resolution:

That under Section 100A of the Local Government Act 1972, the Press and Public be excluded from the meeting on the grounds that the following report will involve the likely disclosure of exempt information as defined in Paragraph 3 of Part 1 of Schedule 12A of the said Act.

RESOLVED:  That under Section 100A(4) of the Local Government Act 1972, the public and press be excluded from the meeting for the following item of business on the grounds that it involves the likely disclosure of exempt information as defined in Paragraph 3 of Part 1 of Schedule 12A of the said Act (as amended).

RESOLVED:  That under Section 100A(4) of the Local Government Act 1972, the public and press be excluded from the meeting for the following item of business on the grounds that it involves the likely disclosure of exempt information as defined in Paragraph 3 of Part 1 of Schedule 12A of the said Act (as amended).

REPORT OF THE DEPUTY CHIEF EXECUTIVE

To consider at Part 2 report on options for the establishment of a Housing Investment Company.

[Note: this item was considered before Minute 6.]

RESOLVED:  That the contents of the report be noted.

REASON FOR DECISION:  To consider commercially sensitive information to inform its decision making on the proposals for a housing investment company.

[Note: this item was considered before Minute 6.]

The Deputy Chief Executive presented a Part 2 report containing details of commercially sensitive information relating to the proposals for a housing investment company.  The following appendices were submitted with the report:

Appendix A – Outline Business Case and Addendum; and

Appendix B – Initial Assessment of Potential Development Sites.

The Sub-Committee considered the Outline Business Case and Addendum and the initial assessment of potential development sites.  Members further considered information relating to the letting of existing assets, opportunities for development and establishing a trading company.

RESOLVED:  That the contents of the report be noted.

REASON FOR DECISION:  To consider commercially sensitive information to inform its decision making on the proposals for a housing investment company.