Agenda, decisions and minutes
Venue: Civic Centre, Windmill Street, Gravesend, Kent
Contact: Committee Section
An apology of absence was received from Cllr Brian Sangha.
The minutes of the meeting held on Monday, 11 November 2019 were signed by the Chair.
Declarations of Interest
Cllr John Burden declared a non-pecuniary interest in relation to item 7 ‘Elizabeth Huggins Cottages Charity Housing Association’. He is a Director on the Board of the Association and an appointed representative from the Council; he advised that he would leave the room for the duration of the discussion and decision making of the item.
Delegated Decisions - Cabinet Members
To report any decisions made by Cabinet Members under their delegated powers.
There were no decisions to report.
The Cabinet were presented with a proposal for the establishment of a Local Authority Trading company (the Holding company). Their approval was sought:
· For the establishment of a Local Authority Trading company (with Subsidiaries to follow).
· In principle of the draft Business Case template, which will be used to seek approval for creation of future trading subsidiaries of the Holding company, and to outline the activities of those subsidiary companies.
· In principle to amend the Council’s Constitution and Contract Procedure rules to ensure that the Council continues to have robust contract management arrangements in place.
The Director (Corporate Services) guided Members through the report explaining in depth each of the following sections:
· Financial Background to the establishment of the LATCo.
· The Council’s key objectives and long-term ambitions for the LATCo.
· Governance Arrangements and Operating Model.
· Governance Operating Model (The Holding Company, Shareholder Group, Cabinet, Overview Scrutiny and Full Council).
· The Proposed Company Structure.
· An Overview of the Company’s Articles of Association.
· Next Steps for the Formation of the LATCo.
Before opening up the item for questions, the Chair made the following points to Members:
· The recommendations outlined that Cabinet will only be making recommendations to Full Council rather than making any decisions itself; the item will be submitted to Full Council allowing all Members to have their voices heard in the decision making process. As a result of the decision being made by Full Council, it cannot be called into the Overview Scrutiny Committee.
· Shareholder Group, page 9 – It was the Chairs intention that the suggested Membership of the Shareholder Group will include a co-opted member from the Council’s Workers Union. Additionally, although not a requirement, the Chair of the Overview Scrutiny Committee will be included as a non-voting Member of the group, subject to the views of Cabinet and Full Council.
· Paragraph 5.2, page 10 – The current Cabinet was set up in May 2019 in anticipation of the LATCo being formed with the aim being that Cllr Lenny Rolles, Cabinet Member for Commercial Services, will act as Chairman of the LATCo Parent Company Board. If any conflicts of interests between the Portfolio and the operations of the Board arose then the Leader would take on the Cabinet Members services in order to allow Cllr Rolles to concentrate on his independent position as Chairman of the Parent Company Board.
· Paragraph 6.2, page 11 – There was no legal requirement, but it was the Chairs intention to replicate political balance on the LATCo Board; the three available Member positions on the Board will be filled with two Labour Councillors and one Conservative Councillor so that there would be representation from the principal opposition group.
The Chief Executive added that Local Authority Trading Companies were well established throughout Local Government and explained to Members of instances where senior officers and Councillor’s had fallen afoul of the Governance Arrangements resulting in the loss of their jobs. However, he reassured the Committee that the report was of an ... view the full minutes text for item 54.
The Cabinet were advised of an approach to Gravesham Borough Council by Elizabeth Huggins Cottages Charity Housing Association (the Charity) seeking the potential for the Council to grant a long term loan to the Charity. Such a loan would provide the Charity with access to borrowing which would be used to fund development of housing at their site at Cross Lane West and provide a long term investment income stream to the Council. Additionally, their approval was sought to negotiate and agree the final terms of a long term loan with Elizabeth Huggins Cottages Charity Housing Association.
The Assistant Director (Corporate Services) guided Members through the report giving a summary of the arrangements under which any such loan facility may be made available to Elizabeth Huggins Cottages Charity Housing Association. The full conditions for the loan advancement to Elizabeth Huggins were listed at paragraph 4.8 of the report.
The Committee raised general concern over the Charity’s ability to pay back the loan and what would happen to the loan if any Government policies changed how much was required to be paid.
The Assistant Director (Corporate Services) stated that if the Council were made aware of any changes in Government policies prior to the formal agreement of the loan then they would be considered as part of the loan agreement however the validity of the loan could become an issue with any significant changes. If anything changed during the course of the loan agreement then the Council would engage with the Charity to address those loan conditions.
The Director (Corporate Services) admitted that it was a risk to the Council but they had approached the loan agreement in a similar manner to what was entered with the St Georges Centre redevelopment deal. Following the principles of an income strip deal, officers had mapped out how much the rental income will grow over the next 50 years using retail growth estimates with the principal repayments of borrowing to the Council increasing in line with the rental income growth. It was estimated that during that 50 year period the Charity will generate sufficient money to payback their loan as well as the accumulated interest. Additionally, the level of income the Charity should generate was of a high enough level that there was a safety buffer if there were any issues.
In response to further concern and questions, the Director (Corporate Services) and the Assistant Director (Corporate Services) explained that:
· Phase 1 of the loan agreement was self-contained and prior to release of the £2 million loan the Charity would need to secure the remaining funding from external sources. Cllr Pritchard was actively seeking additional grant funding from external sources to fund the rest of the payments required to complete the project. Originally the external funding was delayed as the organisations were reluctant to offer grant funding until there was a determination to bring the scheme forward. As a result of the Council agreeing to loan the £2 million to complete phase 1, the ... view the full minutes text for item 55.