Agenda item

Report of the Corporate Director for Growth and City Development

Nicki Jenkins, Director of Economic Development and Property, and Beverley Gouveia, Head of Property, presented a report which set out progress made on implementing Theme 2 (Asset Rationalisation) of the Together for Nottingham Plan and related IAB instruction 2.8. The following information was highlighted:

a)  The report sets out the closing down of the Asset Management theme that was in the together for Nottingham Plan and the IAB instruction relating to Asset Rationalisation.

b)  The Asset Management theme within the Together for Nottingham Plan focussed on three priorities: the expansion of capital receipts, improve the assurance of governance around disposals, and the implementation of the corporate landlord model for property management.

c)  The IAB instruction went further which instructed to further increase the pipeline of capital receipts.

d)  The Council has a strong record of delivery and performance in regards to delivery of capital receipts over the four year period, which showed an increase of delivery where the target was met in all but one year. Over the four year plan over £80 million of capital receipts has been secured.

e)  The Together for Nottingham Plan and IAB instructions pre-date the Section 114 Notice and approval of Exceptional Financial Support (EFS). The Council will need to pay back EFS through the delivery of capital receipts. As such work continues on identifying a pipeline of capital receipts through a disposals programme and is a theme within the Council’s Improvement Plan. Work is being done to ascertain the necessary timeframes for delivery and to accelerate the pipeline. This will be reported back to the Committee at a future meeting.

The following points were raised in discussion:

f)  The Committee queried how the Council achieved best value when it was disposing of assets. It was explained that best value was achieved throughout the process which included competitively pricing external agents through quotes, using the expertise of internal officers, and looking at the market value of the property to determine the price. Members noted that properties were achieving market value and in some cases achieving above market value.

g)  Members discussed Exceptional Financial Support (EFS) and the importance of generating capital receipts in order to pay that back. It was explained that within the current financial year the amount of EFS needed is around £41 million, and there is forecast to be a £25 million contribution from capital receipts towards returning EFS. The rest will need to paid for by temporary borrowing. The capital receipts expected to be generated in 2025/26 from the pipeline will pay off the remaining element of EFS from this financial year.

h)  It was clarified that properties were assessed on an individual basis as to whether they were sold by Council officers or outsourced for external agents to sell. If it was a specialised building it may require specific expertise which the Council did not have. It could also depend on market value or the capacity within the Team. Marketing reports are received prior to a property going to market which outlines factors such as estimated length of sale and agent skill set. This helps determines which external agent the Council opts for from a number of quotes.

i)  The Committee queried the disposals process and how factors such as social value were taken into account. It was explained that the Council owned an asset either because it was required for operational use, it generated income, or there was an economic or social reason. As the review takes place it will be determined whether a property meets that criteria (with operational use and income generated taking priority over economic or social reasons), and the disposals team work closely with finance colleagues to understand all of the financial implications such as income and expenditure. Proposals are then submitted to an officer group and then a report outlining the rationale for decision will be submitted for consideration by Councillor/s in line with the decision value as outlined in the Council’s constitution. The key consideration for social use was whether the Council had to own it in order to deliver that use.

j)  The Council is mindful of the third sector wishing to purchase properties and the potential issues of those parties with affordability, however the Council is unable to sell below market value as it needs to generate significant capital receipts and demonstrate value for money. The Council is looking at how it can support the voluntary sector, including the potential for a new delivery model for community assets. The Community Asset Transfer Policy is also currently being reviewed.

k)  The Committee heard that there is consideration given to whether an asset sits outside the City or is located within it. There is now a very small number of assets outside of the City and those that are have been held because of the revenue they generate.

l)  Members noted that a Disposals Policy was in development which looked to provide a formal policy for all Council departments when considering disposing of assets. It would incorporate social and economic value considerations. The Policy was in its early stages but would be going through scrutiny as part of its policy development function. The only disposals that have taken place so far are those surplus to requirement and none which have any social value.

m)  The Council is unable to mitigate all risk associated with property transactions, but it does work closely with partners to try to minimise them. It was explained, for example, that when capital receipts forecasting takes place, high risk properties are removed from the forecasts to prevent an expectation that large receipts will be realised, or a sale becomes significantly delayed. The Council has also terminated sales and gone back to market when the buyer does not perform or progress with sufficient pace.

n)  Capacity and issues with recruitment and retention is a challenge within the Council and nationwide. Additional resource has been allocated as it is needed if the Council is to meet its accelerated targets for delivering capital receipts. There was a consensus that robust processes needed to be in place so that assets surplus to requirements can be taken to market quicky given the challenging context of EFS.

o)  The Committee sought assurance on how future revenues will be generated as the pipeline for capital receipts dwindles. The work currently being done was to assess all the assets across different departments so the Council could understand exactly what it has in its portfolio. Currently, only assets identified as surplus to requirements were being disposed of. The shaping of the Disposals Policy from a political and officer perspective will then determine what type of assets the Council has left to dispose of in the future.

p)  Assets were assessed from an income, expenditure, and future liability perspective and so all costs were taken into account when determining the disposal of assets.

RESOLVED:

1.  to note the work undertaken to successfully deliver the action plan under Theme Two (Asset Management) of the Together for Nottingham Plan and IAB instruction 2.8.

2.  That as part of its policy development role, the relevant Overview and Scrutiny Committee consider the emerging Disposals Policy particularly around assets that have a social or economic value.

3.  That a breakdown of the number of properties disposed of internally and externally be provided, as well as a list of the different agents used when a property has been disposed of externally.