Issue - meetings

To receive a report from the Executive Director of Regeneration and Environment seeking approval to the Council’s main investment decision in Energetik.  This should be read in conjunction with Report No.175, on the Part 1 agenda.                                                                              (Report No.180)

  (Key Decision – Reference Numbers: 4266 and 4035)

(This document contains 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 to the Local Government Act 1972, as amended)

Please note this report is due to be considered at Cabinet on 18 January 2017 after the Council agenda is published.  Any changes to the report agreed at Cabinet will be reported to Council on the Council update sheet tabled at the meeting. 

Councillor Sitkin moved and Councillor Lemonides seconded the part 2 report (Report No: 180A) of the Executive Director Regeneration and Environment on the Council’s main investment decision in energetik. 

NOTED

1.               The report was considered in conjunction with item 9 report No: 156A on the part 1 agenda. 

2.               That Cabinet had approved the recommendations in the report including the business plan at their meeting on 18 January 2017, before referring the investment decision on to Council. 

3.               The supporting detailed information on the finances behind the investment proposals, the conservative estimates on the level of return expected based on fixed costs and the expert opinion that the Council should go ahead with the scheme.  

4.               That the scheme was financially viable and would be built to enable a doubling of capacity for future growth. 

5.               The concerns of the Opposition, while not opposed to the concept:

·       In relation to the finances and the ultimate risk to the Council taxpayer. 

·       The risks because of the current uncertainties in the world and the economy. 

·       The dependence of the project on Meridian Water being built as planned. 

·       The lack of provider choice for consumers. 

·       The lack of democratic transparency and accountability.

·       The lack of a role for the Opposition in the companies.  

6.               The view that there is a need for local authorities to be enterprising, to take the initiative, to do new things as far as is reasonable in the interests of the local residents and council tax payers. 

7.               Councillor Sitkin summed up by saying that the project was an investment in the future and would produce the highest dividends with the lowest rate of physical capital, saying that building society costs money.  He commended the report to Council.  

Following the discussion a vote was taken with the following result and the recommendations agreed:

For: 34

Against: 17 - The Opposition had asked that their names be recorded. 

Councillor Celebi

Councillor Chamberlain

Councillor Jason Charalambous

Councillor David-Sanders

Councillor Delman

Councillor Dines

Councillor Fallart

Councillor Alessandro Georgiou

Councillor E Hayward

Councillor R Hayward

Councillor Hurer

Councillor Jukes

Councillor Laban

Councillor Lavender

Councillor Milne

Councillor Neville

Councillor AM Pearce

Councillor D Pearce

Councillor Smith

Councillor Steven

AGREED to approve, following recommendation by Cabinet at its meeting on 18 January 2017:

1.               The addition to the Council’s capital programme, as set out in detail in the part 2 report. 

2.               The addition to the indicative capital programme as set out in detail in the part 2 report.  This will be subject to further reports to Cabinet. 

Councillor Achilleas Georgiou declared a disclosable pecuniary interest in this item, left the meeting when the item was discussed and did not vote. 

Councillors Alan Sitkin, Doug Taylor and Ahmet Oykener declared non pecuniary interests in relation to item 10 and 20 as Councillor Sitkin was the chair and the others were members of the energetik board.  They remained in the meeting during discussion of the item and were able to vote. 

A report from the Director of Regeneration and Environment is attached. This should be read in conjunction with Report No.175, agenda part one refers. (Key decision – reference numbers 4266 and 4035)

(This document contains 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 to the Local Government Act 1972, as amended)

(Report No.180)

Councillor Achilleas Georgiou (Deputy Leader) left the meeting for this item and took no part in the discussion, Minute No.2 above refers.

Councillor Alan Sitkin (Cabinet Member for Economic Regeneration and Business Development) introduced the report of the Executive Director – Regeneration and Environment (No.180).

NOTED

1.               That Report No.175 also referred as detailed in Minute No.8 above.

2.               Paragraph 3.52 of the report outlined the review that had been undertaken by KPMG. The Business Plan was prudent, robust and deliverable. Members’ attention was also drawn to paragraph 3.6.4 with regard to the anticipated investment returns for the company and for the Council. Councillor Sitkin highlighted a number of positive factors for Members’ consideration.

3.               The need for Councils to be innovative and identify revenue funding streams at a time of highly constrained Council budgets.

4.               Councillor Taylor concluded by supporting the proposal and highlighting the opportunity to the Council in moving forward with this business. The business offered a practical proposition; it would deliver financially and be of social value to the local community; and, the proposals had been the subject of robust and external independent evaluation. Councillor Taylor further outlined the benefits of the business, as set out in full in the report.

Alternative Options Considered: As detailed in Report No.175 (Minute No.8 above referred) and in paragraphs 5.15 and 5.16 of the report.

RECOMMENDED TO COUNCIL

1.               To approve an addition of the amount detailed in recommendation 2.2 of the report, to the Council’s capital programme, noting that development costs, as stated in recommendation 2.2 of the report, incurred to date had already been approved and added to the Council’s capital programme. This would bring the initial “Tranche 1” investment in energetic to the figure stated in recommendation 2.2 of the report.

2.               To approve an addition, of the amount stated in recommendation 2.5 of the report, to the indicative capital programme as part of the, amount as stated in the report, energetik Business Plan. It consisted of the forecast, figure stated in the report, Tranche 2 investment and a Business Expansion Fund of up to the amount stated in the report. This was in addition to the amount (stated in the report) required for Tranche 1. A further Cabinet report would be required to enable drawdown of the Tranche 2 funding by moving it into the Council’s Capital Programme.

DECISION: The Cabinet agreed to

1.              Note that the total additional project expenditure requested from the Council was up to the figure stated in recommendation 2.3 of the report as part of the amount (stated in the report) energetik Business Plan. The Council’s Tranche 1 and 2 investment would allow the business to make the necessary capital expenditures in advance of receipt of revenue required to deliver the heat networks which would eventually supply over 15,000 homes (or commercial equivalent).

2.              Approve the carry forward the unspent capital budget from the previously approved sum (as detailed in recommendation 2.4 of the report), currently forecast to be the  ...  view the full minutes text for item 19