Issue - meetings

To consider a report of the Strategic Head of Estate & Asset Management.

The report outlines the extent of the Councils Commercial portfolio, the performance and suitability of the significant assets to support council objectives for the next five years.

The Panel is requested to note the content of the report and recommend further areas for review.

Contact Officer James Kington on 07815 997564 or james.kington@stockport.gov.uk

A representative of the Corporate Director (Corporate & Support Services) & Deputy Chief Executive submitted a report (copies of which had been circulated) that aimed to outline to the Panel the extent of the Councils commercial portfolio.

The Panel were advised that the Council’s commercial portfolio were arranged in two main portfolios, the tenanted non-residential properties and the investment and development account and was considered through three key lenses as follows: -

·       Commercial suitability;

·       Capital and revenue costs; and

·       Climate Action NOW (CAN) objectives.

James Kington (Strategic Head of Estate & Asset Management, Stockport Council) attended the meeting to respond to Members’ questions.

The following comments were made/issues raised:

·       The existing tenanted non-residential property portfolio was explained together with the capital asset value and the current rental income.

·       It was clarified that the portfolio included assets which provided a stable and relatively secure income in comparison to others that were more sensitive to economic forces and requiring greater management by the Council as the landlord.

Commercial Ground Leases

·       Commercial ground leases were of significant duration, commonly 125 years with older agreements being of shorter and many reaching a life where tenants were seeking an extension or renewal.

·       Clarification was sought regarding the number of years left on a lease and the charges incurred. In response, it was noted that the rentals were static and it would be dependent on the lease terms.

·       The Panel enquired about the 204 units generating just under £300m in rental income and whether it was the right thing for the Council to be doing. In response, it was commented that the units were held for historic reasons and would be low intensive to manage and on a day to day basis would not require much work. More work would be required where leases are being renewed, but it was really good to have these assets as a Council.

Industrial Units

·       The Council has two main estates of ‘nursery’ units occupied by a variety of small businesses who require smaller units.

·       The nature of the tenants can require significant management and the rent arrears has increased due to the recent economic situation.

·       The two estates are now approaching 50 years old with a lack of investment.

·       The units do offer valuable space to businesses seeking to get established in the borough providing employment opportunities and additional non-domestic rating revenue.

·       The Panel enquired about repairs insurance on these units. In response, it was stated that full repair insurance would be sought in most cases but dependent on the leasing arrangements.

·       Clarification was sought on the location of the nursery units. It was commented that one of the nursery units was in Enterprise Centre Two, just off Chester Gate and the other was in Heaton Norris.

Retail Units

·       Retail units were located across the borough in a mixture of small parades and a single precinct.

·       The units have residential space on floors above which were managed separately by Stockport Homes Limited.

·       The retail units were largely occupied by local retailers rather than national or regional businesses and required significant management to address issue such as rental arrears.

·       The Panel sought clarification on the estates policies being aligned with other policies e.g. Climate Change and Active Travel policy. In response, it was noted that policy alignment was already being progressed and would be looked at further with Stockport Homes.

·       It was commented that consideration would be given to encouraging the district centre work that was currently ongoing with the new district centre managers to bring together the estates and asset management to link in with the vibrant local centres and the active travel policies.

·       Clarification was sought regarding the fairness of the rent and income being generated. In response, it was stated that it was fair for the areas and types of units and that the rents were market tested and were based upon what people could afford.

Miscellaneous Commercial Premises

·       These  ...  view the full minutes text for item 3

To consider a report of the Strategic Head of Estate & Asset Management.

The report outlines the extent of the Councils operational portfolio, the suitability of the significant assets to support service deliver for the next five years.

The Panel is requested to note the content of the report and recommend further areas for review.

Contact Officer James Kington on 07815 997564 or james.kington@stockport.gov.uk

A representative of the Corporate Director (Corporate & Support Services) & Deputy Chief Executive submitted a report (copies of which had been circulated) that aimed to outline to the Panel the extent of the Councils operational portfolio and the suitability of the significant assets to support service deliver for the next five years.

The Panel were advised that property assets were arranged in four main portfolios:-

·       Operational Estate – Land & Property held for service delivery

·       Education/School Estate – Land & Property held for the delivery of education

·       Tenanted Non Residential – ground leases, industrial units and retail units

·       Investment & Development Estate – Land & Property held for income generation or held for sale to generate capital receipts.

James Kington (Strategic Head of Estate & Asset Management, Stockport Council) attended the meeting to respond to Members’ questions.

The following comments were made/issues raised:

·       It was clarified that reports on both Tenanted Non-Residential and Investment & Development estates would be submitted to the Scrutiny Review Panel.

·       The Panel welcomed the language being used for the library estate so that local residents could understand the concerns.

·       The Panel considered that the neighbourhood level of working with officers working locally and hot-desking in the community, would be a good use of the library estate and neighbourhood working and would be recommending that more be done to make use of the library estate.

·       Clarification was sought regarding how external sources of funding was decided and sourced. In response, it was stated that strategically a number of projects would be identified in advance relating to the funding using in-house quantity surveyors and architects, while staff would be monitoring funding opportunities, various projects and specific funding streams.

·       It was commented that the approach from the Council regarding Heritage Assets should as an asset and not a liability.

·       The Panel enquired about how there could be a change of thinking relating to heritage assets. In response, it was commented that sites needed to be maintained so the holders would not be questioned about its ownership. It was all about challenging the team to maintain the sites with investments and having a more targeted approach and vision for the assets.

·       It was proposed that consideration be given to the work already being done by the estates team to ensure the Council were the right custodians of the heritage assets and there was a plan.

·       Clarification was sought regarding how often were the heritage assets valued. In response, it was stated that the re-instatement value for normal assets was on a 5 year rolling programme and heritage assets was done on a 3 year rolling programme.

·       The Panel enquired about the carbon reduction commitments and how it aligned with the welfare of the children within the buildings and were steps being taken e.g. ventilation etc. In response, it was stated that the key priority was the welfare of the children and it was also a priority to keep the schools opened as much as possible with minimum interruption.

·       Clarification was sought regarding the varied assets (approximately 192) across the borough and the details relating to these assets. In response, it was noted that a list of those assets would be shared with the Panel following the meeting.

·       Were all properties rented internally or were some rented externally to private companies. It was stated that the rented properties to third parties would sit within the ‘Tenanted Non-Residential’ and the ‘Investment & Development’ estates.

·       It was commented that heritage sites were a concern and consideration should be given to the commercial viability of the assets not becoming the driving factor even though it would cost a bit more to maintain.

RESOLVED – (1) That the scope of the review include detailed reports as follows: -

·       A review of both Tenanted Non-Residential and Investment & Development estates to be submitted to the next meeting of the Scrutiny Review Panel.

·       A detailed list of the varied assets (approximately 192) across the borough  ...  view the full minutes text for item 3