2 Strategic direction for Property
The AMP brings the strategic property dimension into the Service
Planning process and reflects the requirements of the Comprehensive
Performance Assessment (CPA) as well as notable practice in asset
management from particularly the Royal Institution of Chartered
Surveyors (RICS) and Department of Communities and Local Government
(DCLG).
Embedding the practice of Asset Management into the Council is
the primary responsibility of Property Services and the Asset
Review Group but requires cooperation and help from all service
areas.
The Council’s property holdings should be regarded as corporate
rather than individual service assets. However, subject to
governance arrangements and formal approval, assets may, in
appropriate circumstances, form part of a ring fenced project.
The critical mass of the holdings creates a significant place
shaping influence and the ability potentially to contribute to the
Council’s objectives set out within the Community Strategy, Local
Strategic Partnership and the Corporate Plan. In particular
effective use of resources will contribute to the “Bath Vision” by
providing capital and/or revenue to complement and encourage
further external investment in the public realm.
The Property Board provides the client body which promotes the
strategic importance of the Council’s assets and emphasises the
need to make best use of the Council’s property base within the
overall governance structure explained below.
2.2. Governance
Property asset management processes in Bath & North East
Somerset require engagement from across the Authority in order to
ensure a balance between corporate and service perspectives.
Responsibilities within the process include:
Cabinet – Cabinet approves the AMP.
Cabinet Member for Resources – Member responsibility for the
management of all resources including property.
Corporate Performance and Resources Overview and Scrutiny Panel
– responsible for overseeing the decisions of the Cabinet and
Cabinet Member.
Property Board – Chaired by the Chief Executive; the Property
Board is an informal board whose terms of reference comprise
responsibility for the administration of the property portfolio
including setting targets and monitoring performance. It comprises
senior members and officers.
Chief Property Officer – Responsible through the constitution
for the management of the Council’s property holdings including the
development of asset management and the best use of resources and
for ensuring timely production of the AMP. The Chief Property
Officer also holds the only professional delegation in relation to
all property matters.
Property Services Asset Review Team – deals with asset
management and implementation of the AMP including reporting to the
CPO, Cabinet Member and Property Board on targets and
performance.
Capital Strategy Group – This officer group monitors the capital
programme both in terms of spend but also receipts including
capital receipts from property sales and developments. CSG reports
into the Projects Programme Board which gives the member
perspective on the work of CSG.
Occupying Departments – the occupiers are generally responsible
for property on a day to day basis including security and all other
routine tasks. In multi occupied offices a building manager is
appointed to coordinate these matters.
2.3. Objectives
Property Board has given clear instructions that the property
portfolio is to be managed so as to maximise total financial
return. This can manifest itself in a number of ways depending on
the nature of the particular interest, and the structure of the
portfolios has been developed so as to reflect these differing
circumstances.
The following statements can be seen to supplement this overall
objective. The Council’s will
- Use and develop assets to help deliver corporate priorities and
service delivery needs.
- Make a significant investment in the quality of operational
property, whilst optimising the utilisation of land, buildings,
energy and other resources.
- Improve the accessibility to properties in response to the
community's choices.
- Ensure fitness for purpose.
- Ensure that the revenue portfolio achieves financial targets
established and managed by reference to industry standard
performance indicators.
- Manage all properties in the most economic, effective and
efficient manner.
- Support the Council in the progression of its major property
based strategic developments.
- Maintain the contribution to the built environment and to the
tourism economy derived from the Council’s Property
Assets.
2.4. Issues and
Drivers
2.4.1. Finance
The Council is experiencing pressures on both the revenue budget
and the capital programme.
The Council’s Property Assets contribute to overall financial
performance in the following three ways as under
- The programme of capital receipts provides one of the key
funding sources for the capital programme.
- Non operational assets provide a significant element of net
income to support the revenue budget.
- By providing the opportunity to improve utilisation and
efficiency in all areas of property occupation.
The above can manifest themselves in both revenue and capital
outcomes. At the simplest level the sale of a surplus piece of land
will result in a capital receipt; but this would also give rise to
revenue savings in terms of reduced maintenance and management
costs. In certain circumstances transactions can provide a
combination of benefits which can be tailored to corporate
requirements and/or market circumstances. An example of this would
be a long leasehold investment where any restructuring could be
negotiated around a capital receipt, a future geared ground rent or
a combination of the two. Capital and revenue are therefore
inextricably linked.
It will be possible to steer the direction of individual
transactions to reflect the aspirations of the Council and also to
take advantage of market conditions. Such decisions will
undoubtedly have an effect on the level of revenue performance
and/or the level of anticipated capital receipt.
To this end there are changes to the Council's future service
and financial planning taking effect from 1 April 2008
including:
- Removing the specific capital receipts target of £5.2m per
annum in general support to the capital programme.
- Limiting the support from income arising from the commercial
part of the estate at its current level plus inflation, in order
that any excess gives the Council access to income to fund
prudential borrowing.
- Services having to fund the cost of borrowing over and above
Government allocations (borrowing and grants) and specified capital
receipts from within their own revenue budgets.
2.4.2. External
guidance
Much of the effort in managing the assets is undertaken in the
background of Central Government rules and regulations in
particular Comprehensive Performance Assessment (to be replaced by
Comprehensive Area Assessment in 2009).
Additionally there is a wealth of existing and emerging guidance
available on the subject of Asset Management. At the time of
publication of this AMP the following are timely
- Tenanted Non residential property guidelines produced by the
Royal Institution of Chartered Surveyors (RICS) September
2007.
- Evaluation of Corporate Capital and Asset Planning in Local
Government published by York Consulting on behalf of DCLG November
2007.
- RICS Public Sector Asset Management Guidelines. Published 16
January 2008.
- Framework for Local Authority Asset Management (DCLG) February
2008.
These latter guidelines summarise the business benefits of good
asset management as follows:-
- “release of capital for re-investment or debt reduction;
- efficient running costs;
- better public service provision by improved property and
co-location of services;
- property in good condition;
- improved property utilisation and bringing together similar
uses into the same property, rather than providing them
separately;
- improved productivity, changes in corporate culture and
facilitation of corporate change;
- improved delivery of community objectives through the more
effective use of property;
- innovative strategic procurement.”
The above statements provide a succinct summary of the drivers
and aspirations underpinning asset management.
2.4.3. CPA/CAA
One of the biggest pressures in 2008/2009 will be preparations
for the transition from CPA to CAA. The CAA regime moves the
Council towards an output based assessment rather than a tick box
approach and the introduction of ongoing challenge advocated in
this AMP will form the cornerstone of the Council’s Use of
Resources insofar as this relates to real property.
2.4.4. Property Policy
Sitting alongside the AMP is the Property Policy which provides
clear protocols for the mechanics of property and asset management
within the Authority.
The policy sets out to
- Clarify the roles and responsibilities of occupiers, Property
Services and other specialists within the Council.
- Confirm the allocation of every property interest owned by the
council to an appropriate Divisional Director together with an
assessment of the legal land holding powers and consequent
appropriations.
- Set out robust arrangements for financial management of the
council’s property assets including identification of all costs on
a property by property basis.
