The Committee considered a report by the Head of Finance and Customer Services seeking its views on proposed changes to the criteria for prudential borrowing in relation to property investment as agreed by the Cabinet in September 2012.  It was noted that the Cabinet had identified three categories of property investment for which prudential borrowing could be utilised to cover capital costs as follows:-

a)  Additions to the Council’s commercial property portfolio;

b)  Acquisition of derelict residential properties in order to restore and bring them back into use; and

c)  Strategic investment in order to progress stalled development.

The Cabinet, at its meeting on 12 June 2013, would be asked to agree to the variation of the criteria for prudential borrowing under category b) above to include consideration of the acquisition of property, which is not derelict, where the business case identifies that it would be suitable for use as temporary accommodation for those people who the Council has a duty to provide emergency housing, thereby reducing reliance upon bed and breakfast accommodation.  The Cabinet would also be asked to agree that the business case for such a scheme should include not only the income generated directly by the investment property, but also the reduction in the budget for alternative provision as currently provided by the Council.

The Committee was mindful that the number of households requiring housing assistance had increased considerably in the current economic climate.  The net budget provision for temporary accommodation in 2012/13 was £125,000.  Net expenditure on temporary accommodation in 2012/13 exceeded £300,000 with over 160 households being placed into bed and breakfast accommodation during that time.  A proposal currently being considered would halve the use of bed and breakfast accommodation at a cost to the Council of approximately £50,000 per annum.  This would reduce overall outlay by £100,000.

In response to questions by Members, the Officers confirmed that it was the intention that the management of the property would be outsourced to the private sector or a social landlord.  If at a future date the property was no longer required, the balance of prudential borrowing would need to be covered from the sale proceeds on disposal.  An evaluation of the expected future value of the property would form part of the business case of any scheme brought forward.  The Property Team would be asked to look at the suitability of Gatland House for this purpose, if they had not done so already.

RESOLVED:  That the Cabinet be informed that the Audit Committee raises no objection in principle to the proposed variation of the criteria for prudential borrowing to include the acquisition of property to provide alternative temporary accommodation to the bed and breakfast arrangements used at present subject to the following:-

Consideration being given to a robust and comprehensive business case initially by the Members’ Advisory Panel relating to Property Investment in accordance with the governance arrangements previously agreed;

The business case including, inter alia, details of on-costs, staffing costs, conversion/refurbishment costs and early  ...  view the full minutes text for item 12