Agenda item

Report of the Coprorate Director of Growth and City Development

Councillor David Mellen, Portfolio Holder for Strategic Regeneration and Communication, and Nicki Jenkins, Director or Economic Development and Property gave a presentation detailing the work around Nottingham Together Theme 2: Asset Management. They highlighted the following information:

(a)  Following the recommendations made by the Caller report the City Council voluntarily agreed a ban on all additional external borrowing. This means that all Capital projects must be funded, either by grant funding such as the Levelling Up Fund and Transforming Cities Fund, or by Capital receipts for the sale of land/properties;

(b)  The Council owns around 3600 properties, split into three areas, General, Housing Revenue Account and Bridge Estate. This presentation and the information relates only to the properties that fall into the General area, it does not apply to the properties within the Housing Revenue Account or the Bridge Estate;

(c)  Asset Management aims to bring property and land to sale, in a timely way, once they have been declared surplus to operational requirements in order to support current commitments within the Capital Programme;

(d)  Since the Asset Rationalisation programme started, forecasted income for 20/21 and 21/22 have been exceeded, and in 22 year to date £5.3million has already been achieved. This money is not then committed to capital projects until it has been received through the sale process;

(e)  Future forecasts will show two sets of figures, those properties identified as available for sale, in the pipeline, and properties earmarked for receipt within the year. Both of these figures will be risk adjusted and it is the risk adjusted figure that is used to inform the Capital Programme;

(f)  The forecast for this year is higher than for other years as there is a handful of high value assets in the pipeline for disposal this year;

(g)  The programme risk register is monitored on a monthly basis by the Asset Rationalisation Board (ARB), as is the risk adjusted forecast. The very high value assets are prioritised in the process and they are monitored on a weekly basis and reported to the ARB;

(h)  There is a heavy focus on the governance and assurance around decision making in order to maximise capital receipts. A new disposals policy has been developed and implemented to ensure all disposals reach best consideration or market value. A sale is below market value must be justified by a business case report to the ARB;

(i)  There are a 3 methods of sale considered in each disposal, auction, informal treaty with bids, and public treaty. Each method has its benefits and the best method varies from property to property but the default position is open market.  All properties are publicly advertised prior to disposal;

(j)  There are two types of property, Operational and Non-Operational. Operational properties are declared surplus when a service identifies them as no longer needed to deliver a service. Non-Operational Properties are identified as surplus when they are no longer generating income or repair costs are too high, are at high risk of being void, where there is significant management cost, or where there is capital growth in a particular sector;

(k)  There is an ongoing review process in place that looks at the Non-Operational properties to ensure those likely to bring beneficial capital receipts are brought into the programme;

(l)  Once identified as surplus each asset is appraised and expert advice from Legal and Finances colleagues is sought. Where external expertise is required this will also be commissioned. The Corporate Asset Management Group then reviews this information followed by review by the ARB. Formal decision making takes place through the Council’s governance Framework;

(m)Continuing forward, work is ongoing to complete the review of all commercial assets and with services to bring forward properties as surplus and investment properties are being reviewed to ensure that they are still viable;

(n)  The implementation of the Corporate Landlord model is progressing, aiming to improve efficiency and bringing together the work of the Property team;

(o)  A new Community Asset Policy is being developed and is will be out for consultation soon, and a new Corporate Asset Management strategy is being developed;

During comments and questions from Committee Members, the following points were highlighted:

(p)  Committee members asked if there was sufficient strategic thinking happening around disposals of assets and the requirements of the city, with the example of student housing being used. The Corporate Asset Management Strategy, will be developed following the implementation of the Corporate Landlord model, which will improve strategic asset management and better strategic oversite. However it is not possible to compel developers to use land or properties for specific uses once sold, plans for use sometimes change and this is not under the control of the Council;

(q)  The Council is currently working to complete regeneration projects that were approved years ago. The Asset Rationalisation programme is trying to  create a level playing field moving forward to ensure regeneration projects continue to be affordable in the longer term;

(r)  It is no longer possible to let community centres for peppercorn rents. There are a variety of different arrangements in place for properties and it is important that these are standardised. Leases with repair clauses are being replaced with more emphasis on the property not becoming problematic in terms of repair costs. At the same time leases are being redesigned to ensure that they do not become a burden on community groups. The development of the Community Asset Policy will ensure consistency and will ensure that community groups know what expenses they are liable for from the start of their lease;

(s)  Once a community property is identified as surplus work is done with interested community groups to help them prepare business cases for purchase;

(t)  Every decision to sell a property is assessed to establish the revenue impact of sale versus rental income and how this then impacts on the property budget overall and how the capital receipt contributes to reducing debt;

(u)  The Asset Management Strategy is taking a long term view, not just looking to the immediate short term;

(v)  Many commercial properties are in a less than satisfactory state of repair and require capital investment to bring them up to a better standard. Maintenance of stock has not been prioritised as it should have been and data around rental income generation is also historical Many leases on commercial properties have not been reviewed or assessed in many years, work is underway to rectify this and to update values attributed to assets;

(w)  Resources to facilitate the completion of sales are stretched, but the Council always prioritises the high value assets to ensure timely capital receipt.

The committee thanked both the Portfolio Holder, and the Director of Economic Development and Property for their continued hard work, and for that of their colleagues supporting them.

Resolved to record thee Committee’s appreciation and significant recognition of the progress made on the Asset Rationalisation Programme, whilst still acknowledging the challenges that remain.