Agenda item

The Cabinet considered a joint report of the Corporate Director of Regeneration, Economy and Growth and Interim Corporate Director of Resources which provided an update on commercial headleases previously approved by Cabinet under the council’s Property Investment Strategy (for copy see file of minutes).

Councillor Temple thanked Cabinet for the opportunity to follow up his motion to Council, requesting that a report be provided to Cabinet. 

He stated he was pleased to see that the Milburngate development is forecast to pay the Council a higher net rental income than the lease payment the Council will have to pay on to the commercial investor, with which it has contracted.  He added that the need for such updated modelling is a reminder that the investment is not without risk and stressed the importance that the performance of such major investments is monitored regularly by Cabinet and information is made available to all Councillors.  Councillor Temple asked the Portfolio Holder for Finance to outline how, and how often, Cabinet will monitor the ongoing financial performance of each of these headleases against their expected outcomes over the coming decades.

Councillor Napier thanked Councillor Temple for his question, saying he also welcomed the latest updated modelling for the Milburngate development which indicates a surplus position across the life of the headlease.  He emphasised that is not the sole purpose of the deal. 

Councillor Napier referred to the management arrangements underpinning the property investment strategy which state that any variation from budgeted performance will be reported as part of the quarterly forecast of outturn reports to Cabinet and Scrutiny, and, that if performance is lower than originally forecast, considerations will be given to opportunities to improve performance.  Active management of the portfolio on a day to day basis will be undertaken by the Council’s Corporate Property and Land and Finance teams, in line with the proposed Corporate Landlord model.

Councillor Marshall commented that the report shows the Council is a progressive Council, prepared to take well-managed risks to drive the economy.  He explained that the covenant and headlease on the properties at Freeman’s Reach helped to regenerate the city and retain hundreds of jobs.  Opportunities will continue and the Council will support schemes for the benefit of residents whilst continuing to manage risks.  These schemes will create much needed jobs and provide income from business rates.

Councillor Napier highlighted the Council’s strong track record of prudent financial management adding that the property investment strategy focuses on regeneration, job creation and job retention.  He pointed out that all headlease arrangements taken by the Council to date are forecast to return a surplus for the Council and they have allowed the retention and creation of jobs, and, he gave assurance that the Council will continue to monitor the financial performance of each headlease in the future.

Resolved:

That the report be noted.