Cabinet Member for Assets and Investments
Minutes:
The Chair welcomed Sir Christopher Howarth - Chairman of CIFCO Capital Limited, Henry Cooke – Director of CIFCO Capital Limited, Nigel Golder – Director of Asset Management at JLL, and Helen Rumsey of Ensor’s to the meeting.
Councillor Gould introduced the report which detailed CIFCO Capital’s performance for the last 12 months and the proposed business plan for the next 12 months.
Councillor Gould informed Members that since its inception in 2017, CIFCO had provided the Councils with close to £5.5m of net income and had delivered approximately £2.2m to the Councils in the last financial year. This was testament to the strong management of the CIFCO portfolio.
The Business Plan takes a prudent approach to CIFCO’s financial management over the next few years ensuring the portfolio provides income to the Councils, and a creates a long-term legacy for the Districts to benefit from in the future.
Councillor Gould provided Members with details of some of the key points in relation to CIFCO’s performance.
Councillor Gould then MOVED the recommendations in the report.
Councillor Ekpenyong SECONDED the recommendations.
The Assistant Director for Assets and Investments responded to questions from Councillor Mellen on issues including the current value of the equity invested in CIFCO, the timescales for publishing the financial accounts, and the capital expenditure which has been made to improve the estate.
Councillor Mellen then asked how the Council would continue to fund its investment at the current rate over the coming years in the current inflation environment which could lead to higher interest rates.
The Assistant Director for Corporate Resources responded that advice was taken from treasury management advisors regarding the type of borrowing, and that the Council is currently benefitting from lower rates as a result of short-term borrowing.
In response to questions from Councillor Welham, the Assistant Director for Assets and Investments advised that the equity value could not reduce to lower than zero, and that no further funds would be required to be invested as equity. The Assistant Director confirmed that the low equity value would not affect how decisions are made.
Councillor Mansel asked for clarification regarding the categories referred to in paragraph 4.11 of the report. In response, Nigel Golder confirmed that the leisure sector was included under the section of the chart titled alternatives. The Assistant Director for Assets and Investments advised that this could be amended for future reports.
The Assistant Director for Corporate Resources responded to a question from Councillor Field regarding the percentage return figures and confirmed that these were comparable to the figures previously seen from CCLA and Schroder.
Councillor Field then queried whether it was a valid assumption that values would recover, particularly in light of the impact of the Covid-19 pandemic. The Assistant Director for Assets and Investments advised that it was expected that the value of the portfolio would increase. Nigel Golder commented on the robustness of the current investments, and the changes in the market following the pandemic.
Following a question from Councillor Amorowson, the Assistant Director for Assets and Investments confirmed that she would be happy to liaise with colleagues within the Council regarding sustainable investments and divesting away from fossil fuels.
The Assistant Director for Assets and Investments responded to questions from Councillor Eburne regarding the expectations of future sales of existing properties, the purchases of new properties, and the timeframes for these, and whether there were any costs included in the budget for Energy Performance Certificate works.
Councillor Norris queried the difference in the interest paid figures for Babergh District Council and Mid Suffolk District Council as detailed under Financial Performance and Acquisition Progress in the report.
The Assistant Director for Corporate Resources explained that this was as a result of the difference in borrowing strategies of the two Councils.
In response to questions from Councillor Warboys, the Assistant Director for Assets and Investments provided clarification of the losses and how this was calculated.
Councillor Warboys then queried the risk management process undertaken. The Assistant Director confirmed that a comprehensive risk register was in place and advised that details of this could be shared with Members in future reports.
Councillor Meyer questioned CIFCO’s performance when measured against industry standards. The Assistant Director for Assets and Investments commented that CIFCO had performed better than the industry standard in terms of rent collection.
The Assistant Director then responded to a question from Councillor Meyer regarding the impact on revenue in the short term once capital values improve.
A break was taken from 7:55pm to 8:09pm.
Members debated the report on issues including: whether there would be any benefit in selling the assets and spending the money on housing, the impact of the Covid-19 pandemic, the level of risk compared to the size of the Council, the principles of borrowing money to invest, and the importance of the success of CIFCO to the residents of the District.
As the meeting was fast approaching the guillotine, the Chairman called for a motion to extend the meeting.
On the proposal of Cllr Richardson and seconded by Cllr Hadingham.
It was RESOLVED:-
To extend the guillotine to 10.00pm to enable the remaining business on the Council agenda to be conducted.
Members continued to debate the report on issues including: the potential to reinvest funds from the sale of properties into building homes within the District, and the ability to make investments which are sustainable.
By 17 votes for and 11 votes against
It was RESOLVED:-
(1) That the CIFCO Capital Ltd trading activity and performance for the year to 31st March 2021 be noted.
(2) That the CIFCO Capital Ltd.’s 2021/22 business plan for adoption by CIFCO Capital Limited be approved.
Supporting documents: