Issue - meetings

The Council is recommended to make the resolutions set out in the report at agenda item 8.

Portfolio Holder for Finance, Assets and Property.

The Leader of the Council moved the recommendations, Cllr Fairclough seconded the motion and Cllr Merryweather, Portfolio Holder for Finance, Assets and Property introduced the Capital Strategy 2024/25 and summarised:

·       That the strategy was a statutory requirement for local authorities

·       A contextual map had been developed to illustrate the linkages between treasury and non-treasury matters; and

·       Two enhancements on previous years had been made a) Annexe 2 covered the charging of interest on internal borrowing and repayment of HRA internal borrowing; and b) Annexe A3 appended to the Asset Investment Strategy outlined the principles of appraisals and viability assessments that the Council would follow.

Councillors Atkins and Martin spoke against the recommendations and expressed concern that the Strategy stated on page 17 that the Council ‘may decide to progress an investment project that does not ‘pay for itself’ if the non-monetary values are considered worthy enough and the funding shortfall can be covered from other sources.’

Councillor Merryweather countered that it was clear that financial sustainability was a cross cutting theme across the six priorities of the Council. Investment opportunities were informed by professional valuations, an assessment of capital and revenue impacts, and appraisal of options, as set out in the Strategy.

In accordance with Procedure Rule 17.1, the Mayor called a vote on the recommendations which were taken en bloc. The vote was carried, with 36 votes in favour and 10 abstentions.

RESOLVED:

1.     That the five-year Capital Strategy for 2024/2029, incorporating the Treasury Management Strategy, Prudential Indicators and Asset Investment Strategy, be approved.

2.     That authority be delegated to the Executive for the financial year 2024/25, subject to a positive recommendation from the Asset Investment Advisory Board and agreement from the Chief Executive and Strategic Director:

a) to bid, negotiate and complete on property acquisitions and investments in land and buildings with a total individual cost of up to £10m, subject to the decision fully satisfying all criteria and process requirements set out in the Strategy; and

b) to determine a funding strategy for the acquisition or investment in line with the Treasury Management Strategy; and

c) to appoint advisors and undertake appropriate due diligence for each property acquisition and investment proposal as necessary; and

d) to complete the legal matters and signing of contracts to execute the transactions referred to above.

The Executive are recommended to make the resolutions set out in the report at agenda item 10.

Portfolio Holder for Finance, Assets and Property.

The Executive RECOMMEND that the Council approves:

       I.          The five-year Capital Strategy for 2024/2029, incorporating the Treasury Management Strategy, Prudential Indicators and Asset Investment Strategy, for approval.

     II.          That Full Council delegate authority to the Executive for the financial year 2024/25, subject to a positive recommendation from the Asset Investment Advisory Board and agreement from the Chief Executive and Strategic Director:

a) to bid, negotiate and complete on property acquisitions and investments in land and buildings with a total individual cost of up to £10m, subject to the decision fully satisfying all criteria and process requirements set out in this Strategy; and

b) to determine a funding strategy for the acquisition or investment in line with the Treasury Management Strategy; and

c) to appoint advisors and undertake appropriate due diligence for each property acquisition and investment proposal as necessary; and

d) to complete the legal matters and signing of contracts to execute the transactions referred to above.

Cllr Merryweather, Portfolio Holder for Finance and Assets, introduced the Capital Strategy 2024/25 and summarised:

·       That the strategy was a statutory requirement for local authorities

·       A contextual map had been developed to illustrate the linkages between treasury and non-treasury matters

·       Two enhancements on previous years had been made a) Annexe 2 covered the charging of interest on internal borrowing and repayment of HRA internal borrowing; and b) Annexe A3 appended to the Asset Investment Strategy outlined the principles of appraisals and viability assessments that the Council would follow.

There being no further discussion, the Executive resolved unanimously to RECOMMEND that the Council approves:

       I.          The five-year Capital Strategy for 2024/2029, incorporating the Treasury Management Strategy, Prudential Indicators and Asset Investment Strategy, for approval.

     II.          That Full Council delegate authority to the Executive for the financial year 2024/25, subject to a positive recommendation from the Asset Investment Advisory Board and agreement from the Chief Executive and Strategic Director:

a) to bid, negotiate and complete on property acquisitions and investments in land and buildings with a total individual cost of up to £10m, subject to the decision fully satisfying all criteria and process requirements set out in this Strategy; and

b) to determine a funding strategy for the acquisition or investment in line with the Treasury Management Strategy; and

c) to appoint advisors and undertake appropriate due diligence for each property acquisition and investment proposal as necessary; and

d) to complete the legal matters and signing of contracts to execute the transactions referred to above.

Reasons:

The Capital Strategy is a whole organisation approach to capital investments (expenditure) and overall strategic planning.  It has historically been seen as a finance responsibility but should be steered by the leadership of the Council and is a responsibility of all.

(Report and annexes to follow)

The Overview & Scrutiny - Resources Committee is asked to consider the report and agree any comments or recommendations to be passed to the Executive on the proposed recommendations to Executive and Council as set out in the report.

68.1     The Senior Account addressed the Committee and introduced the Capital Strategy, Treasury Management Strategy, Asset Investment Strategy, and an infographic on the Capital Strategy. Notable changes to the strategies included:

·        A section about interest t be charged on internal borrowing incorporated into the Treasury Management Strategy 2024-25 due to increased internal borrowing as a result of mixed use schemes and housing development schemes, and;

·        The introduction of a new annexe to the Asset Investment Strategy 2024-29 outlining principles of appraisals and viability assessments.

68.2     Cllr Davidson noted an error in the ‘Prioritisation of capital projects’ table on page 5 of the Capital Strategy 2024-29, suggesting a reversal of the risk scoring such that a risk of greater than a £500,000 negative impact is displayed as score 1. Officers acknowledged this and confirmed that the correction would be made.

68.3     Cllr Atkins asked if standing asset investment appraisals will be revisited for current investments given the changes made to referred to in the principles of financial appraisals and viability assessments in annexe 2. The Senior Accountant clarified that this report does not propose reducing these period: maximum 50-year assessments are used for the General Fund and determined by the Minimum Reserve Provision (MRP) policy, while 60 year assessment periods have only been employed under the Housing Revenue Account as it is governed by different regulations.

68.4     The Chair asked if it were possible to achieve greater returns from investments over shorter payback periods, voiced concern over value for money and asked if the costs of pursuing non-monetary investment approaches could be more clearly communicated. The Senior Accountant clarified the differences between assessment periods and pay back periods, and ensured that full Value for Money reports, written by external consultants and which provide the costs of alternative options, will be provided to members in future. Officers agreed to return to members with a response regarding monetary and non-monetary options analyses at a future meeting.

68.5     Non-voting visiting member Cllr Austin noted information regarding the cost of alternative options was provided for the Cranleigh Leisure Centre, though only upon request. She also stated that she would like to see these provided as a matter of course in future.

68.6     Cllr Atkins raised a question regarding the use of asset register land values in land transfers between the HRA and General Fund. The Senior Accountant clarified that there is no planned change to including existing use value for HRA land within the viability assessment – this has been the procedure for some time. A ‘Do nothing’ option will be included in future reports to identify the existing value and revenue.

68.7     Cllr Atkins also queried the valuation methodology and the Council’s adherence to Royal Institute for Chartered Surveyors (RICS) standards and practices. The Portfolio Holder for Finance, Assets & Property clarified that RICS best practices and chartered surveyors are used in valuations, however the Council primarily uses the funding analyses and other comparables more suited to the strategic priorities of Local Authorities.

68.8     The  ...  view the full minutes text for item 68