Agenda and minutes
Venue: Town Hall, Watford
Contact: Caroline Harris
Apologies for Absence
Apologies for absence were received from Councillors Connal, Fahmy, Grimston, Hastrick, Jeffree, Mauthoor and Mills.
Disclosure of Interests
There were no disclosures of interest.
Report of the Managing Director
The Chairman set out the way he proposed to manage the meeting due to Council having public and exempt reports to discuss.
In order to provide councillors with an opportunity to ask questions in the open and exempt parts of the meeting and be able to participate in the debate, he would be asking Council if members were agreeable to suspending Standing Order 15.6, as this allowed councillors to speak only once.
The Chairman moved that Standing Order 15.6 be suspended.
On being put to Council the motion was CARRIED.
Council received a report of the Managing Director which set out details of an opportunity for the council to acquire a 40-year head lease in Croxley Business Park with an option to obtain the freehold of the Park at the end of the term.
The Mayor was invited to move the report. The Mayor thanked the Labour councillors for attending Cabinet and also for the discussions they had held with officers, being mindful of the commercial confidentiality of the subject. He was grateful to the officers for their work through the long negotiations that had taken place. He noted that Columbia Threadneedle Investments (CTi) had approached the council due to its good reputation in managing property. In addition he thanked those who had been involved in the due diligence process, some of whom were present at the meeting.
The Mayor considered the proposal was a good deal for the local taxpayers. CTi would be giving the council £88 million at the start of the agreement to offset some of the risks. The council would be paying rent of £9.2 million per annum, which would be index linked to RPI with certain restrictions. Modelling had been carried out to show annual income to the council over the whole 40 year term. He reminded councillors that local government had had its funding cut by 70% by central government. Many councils had cut services. Watford Borough Council had been very prudent and felt it necessary to look at other ways to generate income. The council already owned the neighbouring Watford Business Park. This proposal would enable the council to manage both sites. He concluded by stating that this was a good deal for local taxpayers, for the local economy and it protected the council’s services.
The Managing Director advised that this was a major decision for council. It would have a major impact on the council’s finances for the next 40 years, if agreed by Council. It was important that members understood the opportunities provided by the proposal but also the risks, enabling them to weigh up those risks in proportion to the potential benefits. He stated that officers had commissioned in depth professional advice and ensured that no stone was left unturned about the financial issues, prospects and risks of the proposal. It was important to ensure that as a legal transaction it was safe, secure and robust. Officers had therefore commissioned Lambert Smith Hampton as the property advisors, Grant ... view the full minutes text for item 50.
Exclusion of press and public
The Chair to move: 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 as it is likely, in view of the nature of the business to be transacted or the nature of the proceedings, that if members of the public were present during consideration of the item there would be disclosure to them of exempt information as defined in Section 100(1) of the Act for the reasons stated below in terms of Schedule 12A.
that under Section 100A (4) of the Local Government Act 1972, the public and press be excluded from the meeting for the following items of business as it is likely, in view of the nature of the business to be transacted or the nature of the proceedings, that if members of the public were present during consideration of the item there would be disclosure to them of exempt information as defined in Section 100(1) Schedule 12A for the reasons stated in the reports.
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.
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.
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 ... view the full minutes text for item 52.