Issue - meetings

RECOMMENDED THAT COUNCIL            increase the maximum investment limit from the Council’s cash reserves with Ermine Street Housing from £35 million to £45 million while retaining the maximum investment with Ermine Street at 60% of the Council’s total investment portfolio.

Council

AGREED        To increase the maximum investment limit from the Council’s cash reserves with Ermine Street Housing from £35 million to £45 million while retaining the maximum investment with Ermine Street at 60% of the Council’s total investment portfolio.

Councillor Simon Edwards, Portfolio Holder for Finance and Staffing, presented a report which invited the Council to consider increasing the maximum investment limit from the Council’s cash reserves with Ermine Street Housing from £35 million to £45 million, while retaining the maximum investment at 60% of the total investment portfolio.  He outlined the rationale for the proposal and, in particular, emphasised the increased flexibility that would be achieved.

In response to comments that it would have been helpful if the Council’s representatives on Ermine Street Housing Limited had been present for the discussion, Councillor Edwards acknowledged that whilst the Councillors concerned had not been obliged to declare an interest and withdraw from the meeting under the Members’ Code of Conduct, it had been their wish to do so.

Councillor Edwards proposed the recommendations from his Portfolio holder meeting held on 22 August 2017 that the Council:-

            “Increase the maximum investment limit from the Council’s cash reserve with Ermine Street Housing from £35 million to £45 million while retaining the maximum investment with Ermine Street at 60% of the Council’s total investment portfolio.”

Councillor Lynda Harford, Portfolio Holder for Housing, seconded the proposition.

During discussion:-

•           Councillor John Williams commented that the report before Council was dated 22 August 2017 and that the figures dated back to 31 March 2017.  He noted that the report indicated the expectation that the investment would reach £35 million by this quarter but that there was no confirmation within the report that this had happened. He therefore felt that the Council was being asked to make a decision based on out of date information and suggested that it would have been helpful to have been presented with the up to date figures.

•           Councillor Tumi Hawkins queried the valuation of the current assets of Ermine Street’s Property portfolio and other non-current assets which was indicated in the report at £24.7 million and suggested that further clarity and details were required around the valuation of the assets.  She was also concerned that the report did not indicate the level of interest received in respect of the investment and expressed the view that the Council needed all relevant information in order to make an informed judgment.

•           Councillor Aidan Van de Weyer referred to the indication in paragraph 14 of the report that there was a minimal level of risk but was of the view that the information provided on the valuation of the assets did not enable Members properly to evaluate the risk.

•           Councillor Bridget Smith expressed the view that a significant increase in house building in the District might be likely to result in a decline in the value of house prices and consequently in the value of the capital assets of Ermine Street Housing. There was also a concern that if there was a requirement to dispose of the assets of Ermine Street Housing, the Council might not be able to recoup its investments.

•           Councillor Tony Orgee did not consider that  ...  view the full minutes text for item 8

The Finance and Staffing Portfolio Holder agreed:

a)    To note the performance of the treasury management function; and

b)    To increase the maximum investment limit with Ermine Street Housing from £35million to £45million while retaining maximum 60% proportion of portfolio.

This decision was first published on Friday 25 August and so the deadline for call-in is 5pm on Monday 4 September (taking into account the Summer bank holiday). If not called-in this decision can be implemented on Tuesday 5 September.

The press and public are likely to be excluded from the meeting during consideration of the Appendix attached to this item in accordance with the provisions of Section 100(a)(4) of the Local Government Act 1972 (exempt information as defined in paragraph 3 (Information relating to the financial or business affairs of any particular person (including the authority holding that information). of Schedule 12A (as amended) of the Act).

The Finance and Staffing Portfolio Holder agreed:

a)    To note the performance of the treasury management function; and

b)    To increase the maximum investment limit with Ermine Street Housing from £35million to £45million while retaining maximum 60% proportion of portfolio.

The Finance and Staffing Portfolio Holder received a report on the performance of the treasury management function.  Regular monitoring was a requirement of the Council’s Borrowing and Investment Strategy.

Risk was being managed by spreading investments across available counterparties.  It was noted that the current counterparty investment limit for Ermine Street Housing was £35m. This had enabled the Council to receive higher levels of interest than were currently available from other approved parties, with minimal risk.  At 31^st March 2017 Ermine Street’s Property portfolio and other non-current assets was valued at £24.7million, supported by loans from the Council of £24.7million.  The investment limit of £35million was expected to be reached during Quarter 3 of 2017/18.  If the limit was increased to £45 million, predicted cash flow could sustain lending to Ermine Street until Quarter 2 of 2018/19.  At the 31 March 2017 level of investment balances, this would represent 60% of the total invested.

The Finance and Staffing Portfolio Holder agreed:

a)    To note the performance of the treasury management function; and

b)    To increase the maximum investment limit with Ermine Street Housing from £35million to £45million while retaining maximum 60% proportion of portfolio.