Meeting documents

Mr Adam Smith, Director of Property and Assets, will provide Members with a presentation on the recently created Property and Assets department.

Contributors:

Mr John Chilver, Cabinet Member for Resources

Mr Adam Smith, Director of Property and Assets

Papers:

PowerPoint presentation at the meeting.

The Vice Chairman welcomed Mr John Chilver, Cabinet Member for Resources and Mr Adam Smith, the Director of Property, to the meeting. Members received a report on the review of the Customer Service Standards and asked questions on the report. During the session and in answer to subsequent Members’ questions, the following main points were noted:

·         The Property Department was composed of four specialist teams - asset management, major projects, strategic programmes, property services.

·         Asset Management handled the County’s assets and investment portfolio and investment decisions. 

·         Major Projects delivered LASR (Local Asset Strategy Review) and the OPE project (One Public Estate).

·         Strategic Programmes ran for 2-5 years and involved more change management and transformation than a major project. Two programmes were running - the Aylesbury Town Centre Programme and Schools Capital Programme.

·         Property Services included facilities, soft services (such as reception and post room), hard services (planned preventative maintenance or PPM), and health and safety. Projects were worth up to £1 million.

·         To help manage the Property and Assets portfolio, a revised governance structure was being developed. The Asset Strategy Board would continue to take an overall corporate view in terms of capital slippage- setting overall asset budget, balancing different business unit priorities, and monitoring capital slippage throughout the year. The Property Board was a senior Member and officer advisory board dealing with the Property Strategy and  making recommendations about investment to the Cabinet and Full Council; and the Portfolio Progress Group monitored whether anticipated benefits from the projects were actually being delivered – ‘doing things right’ and ‘doing the right things’.

·         Every three months the Property Board updated the corporate management team (CMT), every 12 months the Property Board and Asset Strategy Board agreed the capital expenditure split, and every 6 months the two Boards joined to exchange information.

·         Strategies were divided into 5 areas - Finance, Benefits realisation, Risk management, Resource management (Property) and Stakeholder management. 

·         Challenges included retention of qualified staff, modernising local government and not knowing what the future would look like, and failure of tenants in the retail sector.

·         Opportunities included Aylesbury town centre regeneration, efficient use of existing staff through matrix management approach, and a focus on return on investment. All work was aligned to Council objectives.

·         Department aimed to establish the right culture within Property and the Council, as well as having the supply chain on board. This was linked to procurement strategies and how the Council sold itself to the marketplace.

·         For the Resources portfolio, the revenue budget was 2.2 million and capital budget was circa 11-12 million.

·         None of the departmental budget was outsourced, but contractors were managed efficiently through procurement protocols.

·         The value of investment in property assets was just under £75 million.

·         Revenue capital this year was targeting £8.4 million.

·         Weighted yield on the investment portfolio was 6.48%?

·         Top 20 corporate properties with descending current net book value taking land and buildings together included a number of schools. Carter Jonas had conducted the asset valuation. Members requested further detailed information as to how this information was arrived at, particularly how the values were calculated. The Director of Property agreed to provide this information.

ACTION: Director of Property and Assets

·         The Council had a broad aim of £250 million investment portfolio that could be reviewed. The Department had already secured £80 million. A proportion of this was funded by borrowing. A yield of less than 6% would not be considered viable (this was a target for the whole portfolio and not individual investments). The Council attempted to have a diversified portfolio and geographically located in different places. It relied on the advice of Carter Jonas.

·         There was no depreciation on the capital value of the two retail parks owned by the Council, The Vale Park in Aylesbury and Knaves Beech in High Wycombe. However, the Council would be prudent about acquiring new properties in the retail sector given the downturn in the retail sector.

·         Members questioned why there were not two separate boards – one for the investment portfolio and one for existing properties. An Investment Group Board was being set up to handle the new investment property portfolio as a sub-group to the Property Board.

·         Members requested further clarity around the Boards and governance structure.

ACTION: Director of Property and Assets

·         Permanent members of the Property Board included the Cabinet Member for Resources (Mr John Chilver), Cabinet Member for Planning and Environment (Mr Bill Chapple), Director of Property (Mr Adam Smith), Director of Resources (Ms Sarah Ashmead), and the Head of Property Portfolio who was responsible for the management of the portfolio. The Asset Strategy Board had three elected members.

·         The Chairman questioned whether there was an overreliance on Carter Jonas (CJ). CJ attended monthly progress meetings with the Director of Property and Assets and his team and had KPIs to meet. The Director of Property met with the senior partner of CJ every three months for a one-to-one to discuss broader property issues. The Council attended retail forums independently of CJ. Every 6 months a full review was conducted with CJ, in addition to the meetings that the Cabinet Member would have. Carter Jonas pursed active asset management which meant that they were in regular contact with commercial and retail tenants, monitored tenant intentions and flagged issues early on. Mr Chilver was quite confident that the Council was taking the measures that it could to mitigate risks but acknowledged that risks remained.

·         The Director of Property and Assets had implemented an interim structure change rather than a re-structure. This meant that there were a number of acting Heads of Service, but posts would be filled permanently when the outcome of unitary was known. Acting Heads of Service were full-time employed people.

·         Property Asset Management Plan had six principles. The Chairman requested that the Director of Property provide the current principles to the Committee.

ACTION: Director of Property and Assets