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    Full Council asked to reconsider an ‘in principle’ decision to purchase a commercial retail estate in Harpenden

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    News release: 01 November 2019
    St Albans City and District Council Cabinet’s ‘in principle’ decision to purchase the freehold of a property estate in Harpenden was considered by a special meeting of a Scrutiny Committee on Monday 28th October.  This followed a call-in1 of the decision by 5 councillors.

    The portfolio of properties consists of 30 retail and commercial units and 18 residential units in Harpenden.

    The Council’s Property, Housing and Resources Scrutiny Committee heard from local residents, Harpenden Town Council via letter, Knight Frank (the Council’s property advisers) and the Council’s Portfolio Holders for ‘Property, Commercial and Development’, and ‘Resources’. 

    Cllr Teresa Heritage, Chairman of the Planning, Housing, Resources and Commercial Scrutiny Committee2 said “This was a long but, in my view, excellent Scrutiny meeting, and I thank Councillors for their perseverance.  I think it was essential given that, in my estimation, the potential impact of the deal on the financial stability of the Council and the Rate Payers of the District could resonate for decades. I am also grateful for Councillors and Portfolio Holders for allowing so much debate and questioning in public. 

    “The issues raised related to the site’s valuation; the level of debt being proposed to fund it; the process followed in arriving at the ‘in principle’ decision to buy; the lack of consultation; and a lack of clarity of aims and outcomes for the acquisition.”

    The Committee made 7 recommendations.  These are:

    1. That the acquisition of the Harpenden Estate be referred to Full Council in December 2019 for consideration.

    2. That the Leader of the Council should consult with Leaders of all District Council Political Groups when considering commercial investments of over £1m.

    3. That the Leader of the Council should consult the Town Mayor and Chairs of Parish Councils in the City and District when considering commercial investments of over £1m, when such investment falls within that Parish area.

    4. That the Portfolio Holder for Resources provides the Audit Committee with a clear statement of, and reasons for, what the Council considers to be an acceptable level of debt. Such statement to be provided at the earliest opportunity so that the Audit Committee can comment before the Treasury Strategy is considered by Full Council in December 2019.

    5. That the Harpenden Estate Purchase not proceed until an independent ‘Red Book’ valuation is provided by a RICS registered valuer, and that in future an independent ‘Red Book’ valuation be obtained in respect of all commercial investments over £1m.

    6. That the Administration provides a report setting out how it plans to balance commercial rental levels (that underpin the purchase price of the Harpenden Estate) with its desire to offer softer terms from time to time to support local business and how this will maintain a level playing field for those businesses that do not benefit from having the Council as landlord, such report to be provided as part of the budget process for 2020/2021.

    7. That the Planning, Resources, Housing and Commercial Scrutiny Committee consider a report on proposed models for a Housing Company as part of the Harpenden Estate Purchase before it is established.

    Cllr Heritage continued: “Some members of the Committee clearly considered the acquisition of a substantial amount of commercial property in Harpenden at the cost of millions of pounds to be highly risky and should therefore be considered by Full Council.  

    “They were concerned about plans to balance commercial rental levels (that underpin the purchase price) with a desire to offer softer terms from time to time, to support local business.   

    “Although laudable, in my view this did not appear financially, nor commercially, prudent as it was not fully supported by evidence about the impact of the investment and the Council’s ability to service the loan – important considerations for local Rate Payers who could be impacted for decades. 

    “Some members of the Committee were especially concerned with what they felt was a lack of policy or strategy for how the Council proposes to maintain a level playing field for those businesses who don't benefit from having the Council as landlord.

    “When using public funds to finance large acquisitions, transparency is of the utmost importance.  For this reason, some members of the Committee were concerned that the introducers of the opportunity (drawing a fee on the acquisition cost), had also provided the only external valuation of the site. The Committee therefore called for an external, independent “Red Book” valuation of the site, to take place before any decision to acquire is made. 

    “The actual model of financing the acquisition was not debated, as other forms of financing are currently being considered.  This follows this month’s 50% increase in the interest rate charged to Local Authorities when they borrow from the Government.

    “Councillors also called for all models of a Housing Property Company to be scrutinised by the Committee prior to its establishment. 

    “Given the importance of Place, there was also concern that there had not been an early consultation with Harpenden Town Council councillors, to gain local knowledge and understanding.”

    The full agenda and a live webcast of public parts of the meeting are available on the Council’s website.  

    Councillor contact:
    Cllr Teresa Heritage, Chair of the Planning, Housing, Resources and Commercial Scrutiny Committee (who can be contacted via the Council’s press officer - details below).

    Contact for the press:
    Claire Wainwright, Executive and Communications Manager, St Albans City and District Council, 01727 819572; claire.wainwright@stalbans.gov.uk.

    Notes:

    1. Call-in - A Cabinet decision can be called in by councillors where they consider they have evidence which suggests the decision was not taken in accordance with the principles set out in Article 13.02 of the Council’s Constitution on Decision Making.   The Constitution can be found on the Council’s website.  Following a Call-In, the appropriate Scrutiny Committee considers the decision and if it still has concerns about it, the Committee can refer the matter back to Cabinet or Full Council with a recommendation on what action it thinks is needed.  The Committee cannot substitute its own decision for the decision made by Cabinet.

    2. More information about the role of the Council’s Overview and Scrutiny Committees is available on the Council’s website at: http://www.stalbans.gov.uk/council-and-democracy/Overview-and-Scrutiny/

    3. The Part 1 (publicly available) papers for the meeting are available on the Council’s website.