Governance Arrangements - General
Acquisitions and developments must conform to the adopted Regeneration and Investment strategy. Any deviation from the agreed strategy will require Council approval.
The Council’s Senior Leadership Team will initially consider each proposal as an initial step and recommend that the proposal proceeds in principle to the Executive.
When any decision to proceed with a development or acquisition is being considered, local Ward Members (where applicable) will be briefed at the earliest opportunity and be able to share their views with Executive Members and be consulted before the final decision is made. Executive Members, along with the Head of Paid Service and S151 officer, will consider each and every proposal on its own merits and specifically how each proposal meets the Council’s multiple objectives and desired outcomes.
The Head of Paid Service in consultation with the Executive Members and S151 officer will consider debt proportionality (the amount borrowed to date against the net service expenditure ratio) on a case by case basis for each acquisition as part of the decision making process, with information provided to them and the s151 officer, the Head of Paid Service and the Leader of the Council. Investment Indicators are set out within the Council’s Investment Strategy. Table 2 of the Council’s Investment Strategy shows the aggregate of Regeneration and property income and treasury income as a percentage of the Council’s gross service expenditure.
The Council undertakes sensitivity analysis of the interest repayments on its borrowing requirements as a percentage of its available reserves to ensure there is sufficient coverage in the event that income is below that forecasted. The Council also put 10% annually of all rental income and income from energy prices into a Maintenance, Management and Risk Mitigation (MMRM) Reserve. This is part of the Council’s contingency arrangements.
Officers, working with their specialist advisors in the market will sift opportunities and only present to Executive Members, opportunities that closely meet the Strategy. They will then lead the Executive Members into debate over the specific benefits and risks of each opportunity before the Executive Members make a decision. In this way, risk will be transparent through the process.
Projects and their outcomes will be kept under constant review by officers and reports to Executive and Audit Committee.
Governance - Development on Council Owned Land
The Council will delegate the authority and decision making function relating to ‘Development on Council Owned Land’, including debt finance, to the Executive, assuming that the proposed expenditure complies with the Council approved total borrowing limits.
This delegation is to include the granting of associated leases in excess of 15 years as and when required, as recommended by the Head of Assets, on a project by project basis.
Any project will be subject to Due Diligence and Legal Searches and occasionally other data as need arises.
Specialists will be commissioned to act on behalf of the Council to source suitable development and tenant opportunities and manage the due diligence process.
Officers will provide Members of the Executive with a set of data and an indicative cash flow for each project under investigation. These will aid decision making on whether to proceed or not.
Governance - Regeneration and Investment Acquisitions within the South Hams
The Council will delegate the authority and decision making functions, including debt finance, relating to ‘Regeneration and Investment Acquisitions in the South Hams’ to the Head of Paid Service in consultation with the Section 151 Officer and Members of the Executive, assuming that the proposed expenditure complies with the Council approved total borrowing limits.
Any project will be subject to Due Diligence and Legal Searches and occasionally other data as need arises.
Assuming the bid remains as per that authorised at the time of sign off, the final sign off prior to exchange and payment of deposit (typically 10%) is made by the Head of Paid Service in consultation with the S151 officer and Leader of the Council. If anything material has changed, the Executive Members will be re-consulted.
This process of delegated authority is required because there is often very little time (a number of days) to secure a bid on an opportunity of strategic interest, especially if it is off market. Off market bids avoid price inflation caused by competing bidders.
The Executive Members have been made aware that they will be required to process and respond in a very quick timeframe so as to provide their view.
When South Hams District Council acquire a Regeneration and Investment in line with this strategy, a report will be presented (for noting purposes) to the subsequent meeting of the Executive.