Agenda item

Agenda item

Acquisition of Leasehold Interest in Croxley Business Park - Part B

Report of Managing Director

 

This report is considered Part B in accordance with Paragraph 3, Part 1, Schedule 12A as it contains information relating to the financial and business affairs of the Council.

Minutes:

Members posed further questions in this part of the meeting, which were responded to by the Managing Director and advisors.  Following the questions the members debated the report.

 

Council moved back into Part A

 

The Chairman invited Mayor Taylor to sum up.

 

Mayor Taylor felt the report had been given a good scrutiny and he thanked the advisors for attending.  He felt it was a cautious report.  On a recent visit to the park he had noticed the quality of the site.  Reference had been made about Brexit, if there were a downturn in the economy it was possible that businesses would move out of London and look to other sites, particularly this area.  The MLX had also been mentioned.  He assured councillors that work on this route had not stopped.  Discussions had been held with Transport for London and viable transport options were due to be reported in June.  This deal was for 40 years and although Brexit had been mentioned no one knew what would happen in the next 20, 30 or 40 years. 

 

The Mayor stated that he had briefed the Leader at Three Rivers and the Managing Director had done the same with the Chief Executive.  Both councils would benefit from a thriving and successful business park.  He was pleased with the response from the Labour Group.  Councillor Bashir was correct that the council had pushed very hard on the deal.  The key thing would be the governance.  The Property Investment Board was already in place which met regularly.  Reports would be brought back to the council for scrutiny. 

 

There was a risk if the council did nothing.  It was important to look at the transaction and balance the risks.  The benefit of this proposal was that it would be over 40 years and at the end the council would pay £10 to inherit an asset that was currently valued at £240 million.

 

The Mayor moved the recommendations set out in the officer’s report.

 

On being put to Council the recommendations were CARRIED unanimously.

 

RESOLVED –

 

1.      that the Council enters into a 40 year lease on the Park with CTi including the option of acquiring the freehold of the Park at the end of the lease term for  £10 on the terms set out in this report, and in particular as specified within the various legal agreements (Part B) including:

 

         1.1    – the summary of the Agreement for Lease

         1.2    – the summary of the Head Lease Agreement

         1.3    – the summary of the Asset Management Agreement

 

2.      that the starting assumption shall be to withdraw £1.5m pa to support the Council’s budget in Years 1-10, reducing to £1m inflated thereafter until year 35, noting that the financial model would enable the Council to withdraw up to £2m pa over the first ten years if required.

 

3.      that the Managing Director be given delegated authority in consultation with the Mayor to give final approval to the terms of the transaction.

 

4.      that the appointment of Threadneedle Portfolio Services Limited (TPSL) as Asset Managers and Workman LLP as Facility Managers as set out in the Park Management Agreements subject to 1.3 above to provide asset management continuity for a maximum period of 5 years during which period a full procurement process would then take place be approved.

 

5.      that the appointment of Grant Thornton as the Council’s financial advisers be approved.

 

6.      that a budget of £300,000 for the procurement of professional advice relating to this transaction be approved.

 

7.      that the existing advisory board to the Mayor, the Property Investment Board chaired by the Portfolio Holder for Housing & Property, provides oversight of the governance, business plan and performance of the Park, with an annual report to Cabinet and Budget Panel and also has oversight over the use of the £88m top up fund and that the terms of reference of the Property Investment Board be amended accordingly.

 

8.      noting that the reserve fund is earmarked specifically to mitigate risk within the proposal, that the Director of Finance be authorised to make appropriate investment of the top up fund of £88m in accordance with the financial model, providing the right balance between security, liquidity and yield, based on advice from the Council’s investment manager and amend the Treasury Management Policy accordingly.

 

9.      that the Council’s Capital Strategy be amended for the impact of this transaction on the operational boundary and authorised limit. That the:

 

       Council’s operational boundary be £194M

       Council’s authorised limit be £209M.

 

10.    that Council notes the risks and mitigation strategies that will be put in place.

 

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