Agenda item

This report seeks approval for the use of up to £35,000 from the Investment Advisory Board Reserve to commission the Council’s external property advisors, Montagu Evans, to undertake a detailed feasibility study and due diligence on the development potential of the Wey Hill site in Haslemere.

Recommendation

It is recommended that the Executive approves the use of up to £35,000 from the Investment Advisory Board Reserve.

9.1       Cllr Merryweather introduced the report, including the Exempt annexe, and recommendation to approve the use of up to £35,000 to commission a detailed feasibility study for a council-owned and operated open market residential rental development. The site had previously been targeted for site assembly and then capital sale to the private sector for development. However, the results of the preparatory work by the council’s Housing team, supplemented by a high-level review by the council’s external advisors, had concluded that the council could undertake the development itself and achieve more of the council’s strategy goals. The funding now required was for preparation of the detailed development scheme, and would be funded from the Investment Advisory Board Reserve, which had been established for this purpose.

Two Members had registered to speak on this item:

9.2       Cllr Simon Dear expressed his opinion that the proposed budget was an absurd amount for the work being commissioned. Given the recent Member briefing that had set out the extent of the Council’s budget pressures, he recommended that it would be better to continue the involvement of the council’s in-house housing team. He had dealt with them on a number of occasions and had been profoundly impressed with their level of expertise and practicality. Cllr Dear noted that if the land was sold off it would need to be a price that was ‘best consideration’; if it was retained, was there a similar test of ‘best exploitation’ or getting the best economic use from it?

9.3       Cllr Jerry Hyman was critical of the quality of the memorandum in the Exempt Annexe, and agreed with Cllr Dear that the work should be carried out in-house rather than spending residents’ money on feasibility studies that assumed that residential and commercial returns would hold up. He was not sure that this was something the council should be doing, and that there was sufficient information to make a decision.

9.4       Cllr Merryweather responded by pointing out that he Medium Term Financial Plan currently projects a need to increase property investment returns by £1.2m by 2023-24, and the Investment Advisory Board Reserve was established to fund the exploration of projects for that purpose. The Housing Team had done a tremendous job in assembling and packaging the land and getting outline planning permission so that it could be sold to a private developer. The decision to develop the site directly as part of the council’s investment strategy was on the proviso that due diligence would be carried out by external professional advisors.

9.5       Cllr Anne-Marie Rosoman also commended the work of the Housing team so far in assembling the site, and assured Cllr Dear and Cllr Hyman that the feasibility study would build on that work, and would not ignore it and start again. The budget sought was for up to £35k and the council would not be making the most of the opportunity for this site if it did not explore it thoroughly.

9.6       The Executive RESOLVED that up to £35,000 from the Investment Advisory Board Reserve be used to commission the Council’s external property advisers, Montagu Evans, to undertake a detailed feasibility study and due diligence on the development potential of the Wey Hill site in Haslemere.

Reason: In 2017/2018 the Wey Hill site was targeted for land assembly, packaging and capital sale.  The site had since been identified as a potential opportunity for development by the Council under the Property Investment Strategy.  The high-level assessment of the development potential of the site concluded that there was more than likely a viable residential scheme for the Site whilst providing the policy compliant level of affordable housing. Therefore, funding was required to engage Montagu Evans to undertake further due diligence into the development potential and prepare a detailed development scheme for the site.