This Investment and Regeneration Fund Strategy is part of our Transformation Programme, which aims to create a council fit to meet current and future challenges.
It has been approved by Full Council and enables the Council to invest £300 million in opportunities and assets, to generate income to reinvest in its services. The portfolio of investments will bring financial benefits to Torbay and bring forward regeneration schemes benefitting the Torbay economy.
Torbay Council, along with other local authorities, has had to find millions of pounds worth of savings and new income to achieve a balanced budget due to year on year cuts to central Government’s revenue support grant and increasing costs. We remain committed to creating a prosperous and healthy bay and that is why it is important for us to develop innovative and alternative ways of working so we can continue to deliver services that matter the most to our residents.
Our portfolio of investments will help raise £2.8 million in the 2018/19 financial year to pay for and support wider council services in Torbay. By way of example, £2.8 million is enough money annually to finance all of our library services, to maintain all our parks and gardens and to pay for our CCTV system to keep our town centres safer.
Without this income the funding will have to be found elsewhere, which could involve cutting another £2.8 million worth of council services.
Everything we invest in is rigorously assessed before being considered and we seek independent advice to ensure our Investment and Regeneration Fund is being used wisely.
This strategy runs alongside a comprehensive regeneration programme agreed by Council, which is in the process of being delivered. Unlike general investments acquired, regeneration schemes aren’t expected to provide an immediate income, but instead aim to bring forward regeneration in Torbay.
The strategy has been approved by Full Council and enables the Council to invest £300 million in opportunities and assets, to generate income to reinvest in its services.
The aim is to acquire and manage good quality investments and the return on these investments will help pay for and support wider council services.
Investments will increase revenue streams and may also increase business rates and council tax income through:
- the purchase of property and land, or
- providing loans to businesses or jointly financing projects with other investors for the benefit of the area.
This strategy isn’t just about buying a range of commercial property to generate a return on investments, it will also help to finance the work needed to deliver regeneration schemes in Torbay.
After all costs, and making provision for any potential costs in the future, the amount of income raised through the investment fund is expected to be around £2.8 million in 2018/19.
Without this return on investment we would have to make further significant savings. This could involve cutting another £2.8 million worth of council services.
By way of example, £2.8 million is enough money to finance all of our all our library services, to maintain our parks and gardens and to keep our town centres safer through the use CCTV for a year.
We minimise risks as much as possible and only consider investing in assets that achieve a suitable balance between the risks inherent in the investment, the wider benefits of the investment and the financial rewards obtained. Independent advice is sought for each acquisition and they are rigorously assessed before being considered.
In addition, the portfolio of investments acquired is diversified in order to spread risks through a balanced portfolio which includes consideration of where it is located and the type of properties held.
Not all of our investments are outside of Torbay - some are right on our doorstep. For example, the retail complex Wren Park in Torquay. The Investment and Regeneration Fund has also provided financial loans to support organisations which deliver services that benefit the area such as Belle Vue care home.
The Investment and Regeneration Fund Strategy is not solely designed to achieve regeneration; one of its objectives is to generate an immediate income from assets to close the gap in the Council’s finances. If the fund was used solely for regeneration projects in Torbay it is unlikely to produce the income required and the level of assured income would be less certain.
Despite this, the Investment and Regeneration Fund can still be used to help bring forward regeneration projects when appropriate. This may be through a commercial loan opportunity or by investing in construction projects in the Bay.
It is important to stress that this fund isn’t Torbay Council’s only form of investment – it runs alongside other regeneration schemes and we expect to spend over £55m in the next few years, supporting economic development projects in Torbay. Examples include EPIC, Claylands and Graphic Control.
We carefully consider how our investments are likely to perform and put measures in place to ensure that the capital is repaid within the expected useful life of the asset. We ensure that we consider potential alternative future uses for sites before committing to any purchase.
It is entirely possible that rather than being a burden, once the capital is repaid, ownership of these sites could be a real bonus for future generations.
There are many organisations operating in this market and it is likely that the involvement of councils will only have a minor impact on prices. We have set minimum yield criteria and if prices increased that made it impossible to meet that criteria we would not consider a purchase.
Yes, Torbay Council has the expertise to determine whether opportunities meet its financial and strategic criteria. The Cabinet (comprising elected members) considers every proposal brought forward and determines whether an opportunity should be pursued. We get external expert advice to consider financial returns to the Council, the structural suitability of the property and the security offered by its tenants. The Council takes all of these into account in making a final decision to invest in any specific property. Where such advice casts doubt on a potential purchase the Council will not pursue its interest, as indeed has happened on a number of occasions.
The Cabinet receive updates on the performance of the Investment and Regeneration Fund on a quarterly basis. The income received is also monitored on a quarterly basis as part of the Council’s overall revenue and budget monitoring reports which are presented to the Overview and Scrutiny Board and Council.
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