WS1. Case study Linking your commercial strategy to your ...
Transcript of WS1. Case study Linking your commercial strategy to your ...
WS1. Case study
Linking your commercial strategy
to your medium-term financial
strategy
John Rice Director of Commercial Services
Summary
• Our Story
• Commercial approach – Investing for the
future
• Commercial property acquisitions
• Commercial Services & SPVs
• Regeneration schemes
RUNNYMEDE:OUR STORY
• Historically low Council Tax
• Sharply declining Revenue
Support Grant £5.6m to nil
• 2013 - No preparation for
austerity:
– Service reviews
– Zero based budgeting
– Voluntary redundancies
2013-18
RUNNYMEDE: OUR STORY
THE OPPORTUNITIES
• 2012: Council debt free
• Vibrant economy (13th of 324
authorities in England)
• Borough ripe for regeneration
• Political support if no cuts in
services
• Plenty of investment
opportunities
Investing for the future• Strategy: Adaptive Innovative Council
– Redefining our role - A bold commercial strategy
to be more self-sufficient
– Debt free to approved borrowing of £600M
– MTFS – generate £24M gross / £10M net income
– Changed from being a disposer of land to a
commercial development funder and developer -
using capital to generate revenue
– Place shaping regeneration schemes
– Demonstrating our confidence by investing in the
local economy
Strategic framework
• Capital Strategy 2019
• 2019/20 Treasury Management Strategy
• Property Investment Strategy 2016/17 – 2021/22
• Annual Investment Strategy
• Prudential and Treasury Management Indicators
• Minimum Revenue Provision (MRP)
Regeneration of the Towns
• Why?
– Continued economic viability of the towns
(economies cannot stand still – Amazon / F&B
changes / etc)
– Providing new housing (Local Plan targets)
– Place shaping
– Commercially viable development
– Creation of local jobs
Regeneration - Where?• Addlestone ONE - 213 residential units + 13,201 sq m
commercial including The Light 6 screen Cinema, Waitrose
store and 101 Bedroom Premier Inn
• Egham Orbit – 25M pool, sports hall, spa, gym, etc
• Ashdene House – 26 unit residential development
• Marshall Place – 10 house residential development
• Egham Gateway West – approx. 100 residential
units, 100 student units and 9,000 sq m commercial
including a 4 screen cinema
• Parkside (HRA) – 60 unit affordable residential
How funded
• £200M Funding for regeneration in the MTFS
• Development cash-flow funded by income
from commercial property
• RBC agree a payment profile for the
development (not a coupon)
• All regeneration schemes are commercial
and so income generating or in the case of
residential sales / lettings (PRS), achieve full
market value
Commercial Services
• RBC Commercial Services
• SPVs:
– RBC Investments (Surrey) Ltd
• Estate Agency Team to optimise income and
capital values
– RBC Services (Addlestone ONE) Ltd
• Service charge team – commercial properties
– RBC Heat Company
RUNNYMEDE: OUR STORY
Lessons learned
• Get a good team in place
• Analyse investments carefully
• Be sure you have a plan to pay back what you borrow
• Embed a project management approach
• Don’t expect too much too quickly in a changing world: contingencies
• Assure members and keep them on side
In conclusion• Runnymede BC is a small well managed local
authority that is financially sustainable as a
result of commercial activities
• In bottom 10 LAs for cost of Council Tax
• Lost Government Revenue Support Grant fully
replaced by income
• Strategy for current and future sustainability
• Strong Property Investment Strategy
• Commercial income funding a £200M
regeneration programme