Meeting documents

The Cabinet were presented with a report seeking approval for the business case for setting up a local authority trading company, focusing on Property Development and Management and agreement to the setting up of this company.

The Cabinet supported the recommendations in the report and accordingly

RESOLVED that

1)      the business case, as detailed in Appendix A, for setting up a local authority trading company, focusing on Property Development and Management be approved.

2)      the establishment of a local authority trading company to allow the Council to exercise the power to trade contained in the Local Government Act 2003 and the Localism Act 2011 to facilitate income generation based on the Articles of Association detailed in Appendix B be approved.  The Director of Resources to have the delegated authority to agree the final version of these.

3)      the Chief Executive and the Director of Services be appointed as Company Directors.

4)      the following SBDC delegations be approved:

- The Director of Resources to have the authority to make secured loans to the trading company, up to the limits in the approved Company Business Plan.

- The Director of Resources to have the authority to make unsecured working capital loans to the trading company, up to the limits in the approved Company Business Plan.

- The Director of Resources to have the authority, following consultation with the Leader, to use any sums specifically set aside in the Council’s Capital programme to purchase assets on receipt of a viable outline business case.

       5)  the matters set out in this report relating to the issue of affordable housing 

            be noted, and that authority be delegated to the Director of Resources, in

            consultation with the Leader, to establish suitable arrangements to address 

             those points.

6)      authority be delegated to the Director of Resources to undertake any further actions to give effect to the contents of this report, in consultation with the Leader.

And further

The Cabinet were presented with a report seeking approval for the business case for setting up a local authority trading company, focusing on Property Development and Management and agreement to the setting up of this company.

The Cabinet were advised that there was a robust business case, set out in appendix A for the establishment of a local authority trading company to develop and manage property in order to deliver a financial return to the Council. The company would also deliver wider beneficial impacts e.g. increasing housing supply and / or new commercial property.

The Business Case did not envisage that the Company would repay the Council loans. Instead the Council would continue to receive an interest return. The Council therefore would need to amend its Minimum Revenue Provision (MRP) policy to ensure that it did not have to set aside revenue each year to cover these loans. The amended Minimum Revenue Provision Policy was set out in appendix C.

The Company would be a private limited company, with SBDC as the sole corporate shareholder. The proposed Articles of Association were detailed in Appendix B.  The primary aim of the company would be to develop and manage property in order to deliver a financial return to the Council.

South Bucks District Council (as Shareholder) would appoint (and dismiss) the Company Directors, whose role it would be to oversee the operation of the Company, ensuring it delivers its aim, whilst complying with all the legal and financial duties imposed on companies. As the requirements of Company Directors under the Companies Act could conflict with Members roles as elected members and representatives of their communities, it was proposed that the Chief Executive and the Director of Services be appointed as Company Directors. The Cabinet were advised the Members would oversee the company via the Shareholder role and that a strong Shareholder Agreement would facilitate effective Member oversight.

As it was intended for the Company to operate commercially in a competitive environment, it would be necessary for South Bucks District Council to implement a number of specific delegations in order to ensure quick decisions were able to be taken when appropriate.

The Cabinet supported the recommendations in the report and accordingly

RESOLVED that

1)      the business case, as detailed in Appendix A, for setting up a local authority trading company, focusing on Property Development and Management be approved.

2)      the establishment of a local authority trading company to allow the Council to exercise the power to trade contained in the Local Government Act 2003 and the Localism Act 2011 to facilitate income generation based on the Articles of Association detailed in Appendix B be approved.  The Director of Resources to have the delegated authority to agree the final version of these.

3)      the Chief Executive and the Director of Services be appointed as Company Directors.

4)      the following SBDC delegations be approved:

- The Director of Resources to have the authority to make secured loans to the trading company, up to the limits in the approved Company Business Plan.

- The Director of Resources to have the authority to make unsecured working capital loans to the trading company, up to the limits in the approved Company Business Plan.

- The Director of Resources to have the authority, following consultation with the Leader, to use any sums specifically set aside in the Council’s Capital programme to purchase assets on receipt of a viable outline business case.

       5)  the matters set out in this report relating to the issue of affordable housing 

            be noted, and that authority be delegated to the Director of Resources, in

            consultation with the Leader, to establish suitable arrangements to address 

             those points.

6)      authority be delegated to the Director of Resources to undertake any further actions to give effect to the contents of this report, in consultation with the Leader.

And further