Agenda item

Breckland Bridge Extension

Report of Executive Member for Contracts & Assets, Councillor Paul Hewett.

 

Appendices are private & confidential and will be discussed under Agenda Item 17 if applicable.

 

Minutes:

(The Executive Member for Finance and Growth, and Maxine O’Mahony the Executive Director for Strategy and Governance left the meeting prior to this item).

 

The Executive Member for Contracts and Assets presented the report to Members that asked if the Council should continue the Breckland Bridge property development joint venture partnership.  He highlighted that there were some changes in the scheme due to lessons that had been learnt along the way.  Whilst it was considered a risk for the Council in terms of costs if projects should overrun, everything had been put into place to mitigate those risks.  He went onto recommend Option two to Members.

 

Reasons for Recommendation:

 

Overall the performance outputs of the joint venture have been good based on the two projects which had been completed (Riverside and Mileham) and the forecast outputs from the third project (Chapel Road, Attleborough) were positive.  It had been an effective partnership so far and the Council had been able to obtain income from land receipts and loan interest.  The joint venture had also added capacity to the Council’s property teams and thus access to strategic property advice.  The guidance had been efficient and cost effective and delivered at speed which would otherwise had to have been procured.  It should not be under-estimated given the additional activity the joint venture had undertaken.  The joint venture had also undertaken work to prepare sites for a more delivery-focused business plan over the next period, subject to the decision to continue. 

 

The Council needed to consider whether to continue with the partnership and the main reasons for doing so were set out below:

 

·             Breckland Bridge was now established and should deliver both a financial return and housing return over the next 5-10 years. 

·             The next business plan was financially viable, based on the assumptions upon which it had been modelled and providing the risks were managed and the controls embedded within the legal documentation were adhered to. 

·             There were added benefits to being in the partnership and the changes that were proposed reflected the learning from the first business plan period.  This would improve the outputs for the second period which would be more delivery focused with less overhead on the company.  It would not lose the flexibility of receiving services from the partnership as required.  The re-focused financial vision would also assist the joint venture.

·             Delivery over the initial period had been good and the partner Land Group wanted to stay involved in the joint venture.

·             Projects had been successfully delivery on time and within budget and achieved what they set out to achieve and they (Mileham) had made a financial surplus.

·             The ability to access additional property development expertise and skills efficiently.

·             Additional ad-hoc work property related could be undertaken without the need for procurement.

·             Allowed for delivery quickly without need for individual procurement on individual projects.

·             There was an established and trusted partnership infrastructure and there was no need to re-procure the partner.

·             By continuing the joint venture, the Council gained further value from the procurement investment and set up costs.

·             There were known break points over the next 10 years should the Council wish to exit.

·             The Council earns an enhanced rate of return on its surplus cash.

·             An independent property development consultant had undertaken a thorough assessment of the proposed financial model for the next phase of the partnership and concluded that - the Council would appear to receive a return commensurate with the risk likely for these types of development

 

The Council had obtained development and delivery capacity and expertise and skills to deliver complex projects on time and budget against low land values and at the same time creating a financial surplus subject to managing the identified risk.

 

Options

Option 1 – Continue to be a partner in the Breckland Bridge joint venture vehicle and in doing so:

 

a) Issue an Extension Notice (on the basis of the terms set out in the report) to the Land Group LLP to continue the partnership per the Shareholders Agreement.

 

b) The Leader of the Council to continue as the nominated Shareholder Representative and to undertake all necessary shareholder decisions except for the approval of the business plan annually which is delegated to Cabinet.

 

c) To continue the existing governance arrangements and in doing so:

                           i.          Delegate all the relevant shareholder consent matters to the Shareholders Representative.

                          ii.          Delegate the appointment (and any subsequent removals or re-appointments) of:

-          the Officer Director to the Chief Executive.

-          the External Director to the Shareholder Representative.

-          the Member Director to the Shareholder Representative.

                         iii.          Indemnify the Council’s appointed Directors from personal liability.

 

d) To continue the appointments of the current Breckland Council appointed Directors to Breckland Bridge until changed by either the Chief Executive or Shareholder Representative (as per c) above.

 

Option 2 - As per Option 1 above with the addition of:

 

e) Approve the additional small site project delivery.

 

Option 3

 

Do not continue to be a partner in the Breckland Bridge joint venture vehicle and do not extend the partnership.

 

If the Council should not continue the joint venture all three initial projects from the initial business plan had been completed and any additional authorised projects any current debt or surplus in the company would be distributed or supported by the shareholders.  The Council would receive (if surplus exists) or contribute (if debt exists) 90% to the total.  Appendix 3 provided further analysis on the alternative options available to the Council if the option was taken.  Further analysis of the options in Appendix 3 would be undertaken and brought back to Members.

 

RESOLVED that Cabinet Approve Option 2 as stated below:

 

Continue to be a partner in the Breckland Bridge joint venture vehicle and in doing so:

 

a) Issue an Extension Notice (on the basis of the terms set out in this report) to the Land Group LLP to continue the partnership per the Shareholders Agreement.

 

b) The Leader of the Council to continue as the nominated Shareholder Representative and to undertake all necessary shareholder decisions except for the approval of the business plan annually which was delegated to Cabinet.

 

c) To continue the existing governance arrangements and in doing so:

                           i.          Delegate all the relevant shareholder consent matters to the Shareholders Representative.

                          ii.          Delegate the appointment (and any subsequent removals or re-appointments) of:

-          the Officer Director to the Chief Executive.

-          the External Director to the Shareholder Representative.

-          the Member Director to the Shareholder Representative.

                         iii.          Indemnify the Council’s appointed Directors from personal liability.

.

 

d) To continue the appointments of the current Breckland Council appointed Directors to Breckland Bridge until changed by either the Chief Executive or Shareholder Representative (as per c) above.

 

e) Approve the additional small site project delivery.

 

RECOMMEND TO FULL COUNCIL that:

 

a) The new business plan be agreed as outlined in summary in Table 3 of the report.

 

b) The financial requirements of the business plan be agreed and delegate the S.151 Officer to undertake any related ancillary matters in order to implement the recommendations of the report and amend the capital and revenue budgets and any other on-going expenditure and release of funding including the following:

(i)       Award loans in accordance with the Council’s adopted Treasury Management Policy.

(ii)     Release up to £20,000 for the legal fees to undertake the legal due diligence and extension documentation.

(iii)    Provide the funding and approval of the provision of the client support post.

 

Supporting documents: