Agenda item

The Executive Councillor for Strategic Resources will be in attendance to discuss with Members the Commercial Investment Strategy and its contribution to the economic growth of the District.

The Chairman reminded the Panel that the Executive Councillor for Strategic Resources has been invited to attend the meeting so that he could give Members more information on the Commercial Investment Strategy (CIS) and how the Strategy has contributed to the economic growth of the District.

In giving background detail the Panel was informed that before the creation of the CIS the Council’s property portfolio was worth £20.8m and that the plan was to sell it. A report was commissioned and it found that whilst the portfolio was generating income there was a number of processes that the Council was failing to do however the Cabinet decided that it would not sell its property portfolio.

The Commercial Investment Strategy was developed with consultants EC Harris and they concluded that as the investments were all in Huntingdonshire the Council should made future investments in a wider geographical area outside of the District. The consultants also suggested that as the type of properties the Council had in its portfolio was mainly light industrial, consideration should be given to widening the type of properties the Council invested in.

The consultants also provided a tool for the finance team which indicates to them what returns would be received on particular investments. This is important as the Council need to prove that a particular commercial investment represents good value for money for the tax payer.

Members were informed of the commercial investments the Council has invested including the purchase of a £1.4m property at 2 Stonehill, Stukeley Meadows, Huntingdon in the year 2015/16. The property is currently yielding in line with the Council’s expectations. The other investment made in 2015/16 was the £2.5m investment in the Churches, Charities and Local Authorities Mutual Investments Trust Property Fund which is yielding at around 4%.

In the year 2016/17, the Council have made two commercial investments including an office block in Hitchin for £2.185m with a yield of 7.4% and a retail park in Sudbury for £6.5m yielding 6.9%. Both properties are freehold and purchased with cash.

When asked would the social aspect of investments be considered in the future, the Executive Councillor for Strategic Resources stated that at the current point in time his mandate is to maximise income for the Council in order to pay for Council services. In addition the Members were informed that a social return means a lower monetary return.

The Executive Councillor for Strategic Resources informed Members that consultants EC Harris did suggest that the Council could invest in housing so that does remain an option but the returns are lower than commercial investments.

A Member asked are the Council looking at making investments with partner organisations in which the Executive Councillor stated that it does remain an option particularly as the Council are able to act fairly nimbly.

Following a question regarding the conclusions of the Peer Review, which came to a different opinion to the Executive Councillor, and how to reconcile those conclusions with the mandate the Executive Councillor has, the Panel heard that the Council are not adverse to investments within the District but it is recognised that there is a need to have a wide portfolio. In addition Members were informed that the Peer Review focused on how to use money to build things that wouldn’t get built.