Agenda item

A joint report of the Executive Member for Environment, Finance and Governance and Director of Finance was presented to provide Members with an update on the implementation of the Council’s Estates Strategy, report on asset disposals during the financial year 2021/2022 and update standing Asset Disposal Policy.

In accordance with the standing Asset Disposal Policy operated by the Council during the financial year 2021/2022, any proposed disposals or transactions with a value over £150,000 were considered and decided by Executive Committee. According to value, any proposed transactions below that threshold were decided by either the Director of Finance, or by the Valuation and Estates Manager.  During the same period, the Director of Finance and the Valuation and Estates Manager had met on a monthly basis, in order to monitor the progress with and implementation of the Council’s Estates Strategy.

The power to dispose of assets at an undervalue has not been utilised during the financial year 2021/2022.  Should the Council take any decisions to dispose of its assets under these powers, it would be reported in subsequent disposal updates.

Asset disposals approved in the financial year 2021/2022 were provided at paragraph 11 of the submitted report and further detail in respect of the individual asset disposal transactions recorded as having legally completed and reached financial close was set out in Appendix 1.

The variance in value between a number of the Capital Receipts and Valuations set out within Paragraph 11 and Appendix 1 had been caused by a number of factors including: the strict financial approach adopted by the Council in respect to abnormal cost deductions being different to that adopted by Buyers, fluctuation in market values, the occurrence of unplanned windfall disposal opportunities and the accounting basis under

which the Council classified surplus highway land within its Estate Portfolio.

In order to mitigate the financial and business planning implications of such variance, the Council adopted a structured cyclical approach to the revaluation of its assets in order to better understand, monitor and adjust the value of its Estate Portfolio.

In response to comments made by the Council’s External Auditors in previous years, further work to satisfactorily embed the Asset Disposal Policy was carried out during the financial year 2021/22 in order to ensure compliance.

On 13 April 2021, Executive approved the release of 3% of the value of any asset disposed of above market value as a financial contribution to be made available for the benefit of the Ward in which the subject asset was based.

Policy was amended to reflect this change, and as a result a process was introduced which determined that once the 3% community benefit contribution was triggered, the respective Ward Councillors in which the subject asset was based, would be invited to submit their proposals to the Director of Finance and the Executive Member for Finance and Governance would then consider, and agree, the Ward expenditure.

Since inception, two disposals had triggered this process, namely the disposal of Middlesbrough Warehousing in North Ormesby and Nunthorpe Grange Farmhouse.

The Asset Disposal Policy was not explicit in regard to the works that the 3% contribution could be spent on within the designated Wards, however there was an assumption that this would be works that the local authority would progress/carry out.  In the case of North Ormesby, the community benefit contribution assisted a third party organisation that provided significant community support.

Initially, the 3% community benefit contribution was intended to support the delivery of the following types of enhancements within local community areas, although this list was illustrative and not exhaustive:

• Enhanced physical environment – physical decoration, planters, resurfacing and play equipment.
• Expanded community facilities – additional street furniture, litter bins and dog waste bins.
• Improved security measures – additional lighting & security equipment.

It was suggested that further guidance should be developed in relation to how the 3% community benefit would operate and what checks and balances would be put in place.

Should the original intention to contribute to such local enhancements be progressed, the Asset Disposal Policy attached at Appendix 2 would need to be further amended to reflect this.  Suggested wording for inclusion within the policy would be:

• In the eventuality that an asset achieved a price in excess of the projected market value, 3% of the capital receipt will be made available for local community use for the Ward in which the asset was located.
• The funding would be retained by the Finance Directorate, only direct local authority, or expenditure procured by the local authority in line with procurement rules would be spent within Wards and agreement for use will be determined by the Director of Finance in consultation with the Executive Member, Finance and Governance and Ward Member(s) in which asset was situated.

In the event of the expenditure being deemed a key decision then the expenditure would be determined by Executive in line with normal decision making procedures.

AGREED as follows that the:

1.      Information provided was received and noted.

2.      Continued implementation of the Council’s Estates Strategy and progress with the disposal of assets             during financial year 2021/2022 was noted.

3.     Corporate Affairs and Audit Committee recommended to Executive that the Asset Disposal Policy   was amended to ensure that the 3% community benefit contribution was directed to benefits   whereby expenditure was limited to local authority direct or procured provision only.