Agenda item

The Executive Member for Regeneration submitted a report for Executive’s consideration.

 

The report sought Executive approval to dispose of the Council’s freehold interest in the following properties in accordance with the Council’s Asset Disposal Process:

 

a. House of Fraser; and,

b. Zetland Car Park.

 

The Medium-Term Financial Plan (MTFP) Refresh 2024/25 to 2026/27 report agreed by Executive on 23rd August 2023 regarding the Council’s overall financial position set out the challenges faced in setting a balanced budget for 2024/25 and beyond.

 

The Review of Capital Receipts Strategy 2023/24 report agreed by Executive on 21st November 2023 regarding the Flexible Use of Capital Receipts set out the importance of securing capital receipts from asset sales that may be used to support the Council’s financial position in one of three ways:

 

a.    to fund investment in projects that will either deliver ongoing revenue savings or deliver transformation in public service delivery through cost and/or demand reduction in accordance with Government regulations governing the Flexible Use of Capital Receipts;

b.    to repay the Council’s debt and reduce the annual costs of repaying principal and/or interest on such debt; and,

c.     to invest in infrastructure through the capital programme.

 

The Asset Review report agreed by Executive on 21st November 2023 therefore recommended a significant programme of asset sales be brought forward, in addition to the existing pipeline of land and properties being brought forward for disposal.

 

Since these reports were agreed by Executive in November there had been a significant effort to generate market interest in the new and existing pipeline of land and properties. Some of this interest had developed into firm offers that had been considered agreeable within the context of the Council’s current financial position.

 

The two properties contained within this report had both been the subject of firm, credible offers that reflected their current valuations and were therefore brought forward for decision in line with the agreed Asset Disposal Process.

 

As the deal was yet to be fully concluded, and negotiations may have continued until the date of final completion, the name of the buyer and the valuations of the respective properties had been identified in a confidential appendix rather than in the main body of the report. These details would be released upon formal completion.

 

The Mayor recommended the report be amended to include an Overage Agreement and a time scale of 2-5 years to complete the process.

 

ORDERED that Executive approve:

 

1.    That the proposed amendment to include an Overage Agreement and timescale of 2-5 years for completion be accepted.

2.    The sale of the House of Fraser Building (37 Linthorpe Road) to (Ref A Buyer Name - Confidential Appendix I) for (Ref B HoF Valuation - Confidential Appendix I);

3.    The sale of Zetland Car Park to (Ref A Buyer Name - Confidential Appendix I) for (Ref C Zetland Valuation - Confidential Appendix I); and,

4.    Delegates responsibility to the Director of Finance and the Director of Regeneration for the negotiation of the final sales value of each property.

 

OPTIONS

 

Retain Both Properties Within Council Ownership

 

The assessment made through the Council’s recent Asset Review identified that the commercial potential of the two properties represented a liability rather than an asset to the Council. Retaining both properties would cost the Council £92,000 per year once holding and operational costs are taken into account.

 

Retain Both Properties Within Council Ownership Utilising Alternative Management Arrangements

 

The potential exists to seek alternative management arrangements for Zetland Car Park, that could potentially see an increase in income. This could not be achieved however without significant capital investment in improving the facilities and customer experience that would negate any potential benefit. As House of Fraser has already been marketed by respected national agents, it is not expected that alternative management arrangements would trigger any additional market interest.

 

REASONS

 

Disposal of the two properties as proposed would generate significant capital receipts that would contribute to supporting the Council’s financial position in one of three ways:

 

1.    To fund investment in projects that will either deliver ongoing revenue savings or deliver transformation in public service delivery through cost and/or demand reduction in accordance with Government regulations governing the Flexible Use of Capital Receipts.

2.    To repay the Council’s debt and reduce the annual costs of repaying principal and/or interest on such debt.

3.    To invest in infrastructure through the capital programme.