Just as we reported on the financial pain of some local councils that invested heavily in commercial markets, WLBC is review its Commercial Property Portfolio. We provide snippets of the long agenda below.
Purpose Of The Report
To provide Members with a review of the Council’s existing Commercial Property Portfolio advising on current performance and indicating future trends, demand and investment needs. To set out the further action that will be required to successfully manage the portfolio in the medium to longer term.
Recommendations To Cabinet
That delegated authority be given to the Head of Finance, Procurement and Commercial Property to make investments in accordance with the Commercial Property Strategy, subject to approval of scheme funding of up to £5m by the Strategic Assets Purchasing Committee and approval by Council of schemes for over £5m.
Recommendations To Council
That the terms of reference for the Strategic Asset Purchasing Committee be updated to include the following function: “To approve commercial property investments with a value of up to £5m in accordance with the Investing in West Lancashire – Commercial Property Strategy”.
The Council has a significant portfolio of commercial properties that generate a financial return, but which also contribute to other priorities, in particular supporting the local economy. These properties are occupied by third parties and provide rental income of circa £1.7 million to the General Revenue Account (GRA) per annum. The budgeted costs associated with these properties are on average £1.1 million per annum resulting in a £600,000 surplus, over the last three years (2016/17, 2017/18, 2018/19). These surpluses are used to supplement the funding of other GRA services. The Council also operates other commercial properties in ring fenced accounts, due to the terms and conditions under which they were obtained, where any surpluses generated must be used for specific purposes rather than being available for general use.
On Finances “That, subject to Council approving paragraph 3.3 below, that the acquisition and development of the Halton Castle site in Westhead on behalf of the HRA be agreed in principle and authority be given to the Chief Operating Officer to carry out all necessary due diligence and thereafter enter into all necessary arrangements with regard to the proposed purchase and development of the site for Council housing”. That call in is not appropriate for this item as this matter is one where urgent action is required given the timescales for the Halton Castle site scheme.
A new opportunity has also been identified at the Halton Castle site in Westhead, where the existing site could be redeveloped and 10 new homes built for purchase by the HRA. The cost of this development would be £1.92m, which once again could be funded primarily through HRA borrowing but also through applying for Homes England support of up to £30,000 per unit, which could bring up to £300,000 of funding into the Borough. This is proposed to be a package deal with the current developer Ecogee, where TVDL would charge a development fee for its services, in line with the profit margins achieved on other phase 1 affordable sites. From a Council housing perspective, officers have undertaken due diligence work!
Extra Council Tax Discounts
The Council has been provided with a government grant of £0.995m for 2020-21 to provide council tax discounts to economically vulnerable people and households. Under this scheme the government expects all recipients of working age local council tax support (CTS) to be provided with a further reduction in their annual council tax bill of £150. At the start of April there were just over 4,600 working age CTS claimants and consequently providing a £150 reduction in their council tax bill would cost around £0.69m. It is expected that there will be an increase in the number of working age CTS claimants this year as a result of the impact of the pandemic and the economic recession and consequently it is difficult to assess the full cost of this £150 reduction. Once this position has become clearer and the amount of funds remaining can be firmed up then proposals for further support will be drawn up.