Agenda and minutes

Shareholder Committee
Tuesday, 3rd July, 2018 2.00 pm

Venue: Witham Room - South Kesteven House, St. Peter's Hill, Grantham. NG31 6PZ. View directions

Contact: Jo Toomey  Email: democracy@southkesteven.gov.uk

Items
No. Item

1.

Membership

2.

Disclosure of interests

3.

Minutes of the meeting held on 17 April 2018 pdf icon PDF 179 KB

                                                                                                                      (Enclosure)

    Minutes:

    The minutes of the meeting held on 17 April 2018 were agreed as a correct record.

     

    One Member asked a number of questions related to matters captured in the minutes of the previous meeting.

     

    Updated business plan

     

    At the last meeting Members were advised that a revised business plan would be presented at this meeting with the action notes made during a workshop held in January 2018 being supplied as a background paper.

     

    One of the Gravitas Directors explained that as the Committee’s direction during the workshop was to focus on delivering the scheme at Wherry’s Lane, a new business plan had not been produced at this time. It was suggested that the discussion on pipeline projects that formed part of the agenda for this meeting would inform any business plan that emerged.

     

    In order to bring the action notes from the workshop into the public domain the Director suggested that they could be attached to the agenda for the next meeting with the minutes of this meeting.

     

    Monthly activity report

     

    At its meeting on 17 April 2018 the Committee had requested a monthly activity report including financial reporting. The Committee was informed that the Chairman had met with the Directors to discuss the frequency of meetings, the outcome of which was reflected in the annual programme of meetings agreed by Council on 24 May 2018. Members were advised that the reporting patterns had been tailored around the frequency and timing of the meetings.

     

    Members were particularly interested in Gravitas’ expenditure to date. Directors reassured the Committee that costs incurred so far were within the cost envelope of money provided by the Council. As yet the land at Wherry’s Lane had not been bought by Gravitas, a non-key decision had been made that determined the land would transfer to the company upon receipt of planning permission. An overview of cashflow would be included as part of the update on Wherry’s Lane.

4.

Consideration of Directorships pdf icon PDF 170 KB

    Report number LDS302 of the Deputy Leader of the Council.     (Enclosure)

    Minutes:

    Decision:

     

    1.    The Shareholder Committee appoints the Assistant Director, Housing as a Director of Gravitas

    2.    The Shareholder Committee appoints the Assistant Director, Growth as a Director of Gravitas from such time as she becomes an employee of the Council

    3.    That the Strategic Advisor – Housing Led Regeneration continues to serve as a Director of Gravitas until the Assistant Director, Growth becomes an employee of the Council

     

    The Strategic Advisor – Housing Led Regeneration, the Assistant Director, Housing and the appointed but not yet in post Assistant Director, Growth left the meeting

     

    The Solicitor to the Council presented report number LDS302 which asked the Committee to consider the appointment of directors to Gravitas. The former Strategic Directors had agreed to step down given their changes in role and two new appointments were proposed: the Assistant Directors for Housing and Growth. Members noted that the appointee to the role of Assistant Director for Growth would not begin her formal employment with the Council until September 2018; the Strategic Advisor – Housing Led Regeneration had agreed to continue in the role as a director of the company until that time.

     

    The Assistant Director, Housing had been working for the Council for several months and Members agreed unanimously to the appointment of the Assistant Director, Housing as a Director of Gravitas.

     

    One Member asked whether any information was available on the second proposed appointment as they were not aware of her previous experience. One Committee Member gave a brief overview of the background of the proposed appointee.

     

    As the proposed appointee would be an employee of the Council it was suggested that the only further vetting that may be necessary would be any history relating to other directorship appointments. This was not a standard check but Members were advised that it could be carried out if necessary.

     

    A majority of Members voted in support of the appointment of the Assistant Director, Growth as a Director of Gravitas from the time she became an employee of the Council.

     

    Until that time, it was agreed that the Strategic Advisor, Housing Led Regeneration would continue to serve as a Director. Councillor Baxter requested that his vote in abstention be recorded.

     

    The Strategic Advisor – Housing Led Regeneration, the Assistant Director, Housing and the Assistant Director, Growth returned to the meeting

Exclusion of the public

Committee members agreed that the press and public should be excluded from the meeting during consideration of the following two items of business because of the likelihood that information that is exempt under paragraph 3 of Schedule 12A of the Local Government Act 1972 (as amended) would be disclosed to them.

 

14:29 – Members of the press and public were excluded from the meeting

5.

Gravitas development pipeline

    A presentation to be made to the Shareholder Committee.

    Minutes:

    One of the Gravitas Directors gave a presentation on potential pipeline projects.

     

    He explained that the Council had identified all the land in its ownership and was undertaking analysis of each site taking into consideration:

     

    ·         Site capacity and density

    ·         Planning policy

    ·         Possible delivery routes

    ·         Construction options

    ·         Tenure options

    ·         Investment return potential

     

    The Council was also exploring other opportunities to deliver housing including acquisition of land, stock transfers and purchase of new and existing market sale homes.

     

    Members were shown a series of maps which gave an overview of the distribution of sites across the district, the estimated viability of market sales, market rental and rental with an intermediate uplift.

     

    A range of sale options were highlighted: market sale, Help to Buy, discounted market sale or a local shared equity product. The disposal method would be based on the financial viability of each individual scheme.

     

    Identifying target markets and setting a minimum investment return were identified as potential selection criteria for projects in which Gravitas may be interested.

     

    An overview of the work that had been completed by the Council so far was due to be considered by the Growth Overview and Scrutiny Committee (OSC). Growth OSC would be asked to recommend schemes for detailed assessment, and consideration of the design layout and possible delivery mechanism.

     

    From the work that had been completed so far, it was anticipated there were at least 6 sites that presented an opportunity for Gravitas, with the potential to deliver 53 to 88 properties.

     

    In discussion, Members discussed the purpose of Gravitas. The Shareholder Committee was reminded that the company had been set up for commercial purposes; making a return on assets, generating new income for the Council, and developing land that would not otherwise be developed by the private sector. The relationship between the company’s and the Council’s objectives was also noted. Members suggested that it might be helpful to produce a one page overview of the guiding principles behind Gravitas to support their considerations.

     

    Other issues considered included:

     

    ·         Whether there was a role for Gravitas in the delivery of Spitalgate Heath Garden Village

    ·         Opportunities to create subsidiary companies including a rental arm

    ·         Whether the Shareholder Committee would be prepared to accept a return below its projected level

    ·         Options for the disposal of land by the Council

    ·         Different delivery models that the Council might consider and opportunities for Gravitas to get involved as part of those arrangements

     

    Action Points

     

    Ø  Circulate a one page overview of the guiding principles behind Gravitas

    Ø  Circulate a copy of the business plan for the Wherry’s Lane Development to Shareholder Committee Members

    Ø  Refresh the Gravitas business plan for consideration by the Shareholder Committee at its meeting in October 2018

6.

Update on Wherry's Lane

    Report of Gravitas.                                                                                (Enclosure)

    Minutes:

    Members noted the contents of the exempt update report that was circulated with the Committee agenda.

     

    Committee members received an update from the Directors on the progress of the planning application in respect of the Wherry’s Lane development. Discussion concentrated on how affordable housing could be provided through the development. The report had been withdrawn from the Development Management Committee meeting on Tuesday 26 June 2018 at the request of the company to enable the proposals for the delivery of affordable housing arising from the Wherry’s Lane development to be refined.

     

    Members discussed the Council’s policy in relation to Section 106 Agreements and affordable housing provision.

     

    The initial application for planning permission had been for the provision of offsite affordable housing located within Bourne funded through the payment of a commuted sum. A number of additional options were discussed:

     

    ·         Provision onsite as part of the scheme

    ·         Shared equity

    ·         Discounted sale

     

    Consideration was given to whether each proposed alternative had previously been used successfully in the district and how those examples might apply to the Gravitas development.

     

    Given the layout and nature of the scheme with shared areas that would be liable for a service charge, Directors did not consider that onsite provision of any affordable rented housing would be either practical or sustainable. Between shared equity and discounted sale, the Directors indicated that the latter was their preference.

     

    The Directors had concluded that it would be possible to supply 4 units on site for discounted sale within the development scheme with the balance of the value of the notional “commuted sum” being paid to the Council as a contribution to provide additional Council housing tailored to meet local needs in Bourne. A development site, currently in the ownership of the Council, had been identified.

     

    A discount would be applied to the sale price of the designated units for applicants who met prescribed criteria. Any subsequent sale would also be at a similarly reduced price and the criteria any buyer would need to meet would continue in perpetuity.

     

    Action:

     

    It was noted that the company had updated its proposals on the Wherry’s Lane scheme to include 4 discounted market sale units.

     

    16:05 – Councillor Jeal left the meeting

     

    Members of the Shareholder Committee received a brief overview of the company’s cashflow, which highlighted expenditure in respect of the Wherry’s Lane project. The majority of the costs to date had been associated with the preparation of the initial designs and the planning application. The update also gave a breakdown of calculations in relation to the commercial loan that the Council had made to Gravitas.

     

    Finally the Committee was given a brief overview on the process for re-charges, including the use of timesheet recording to capture officer time spent on Gravitas projects. Members were reassured that costs incurred by the Council on company activity during 2017/18 would also be attributed to the project.

7.

Close of meeting