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 :OUR STORY 2013-18 • 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 RUNNYMEDE: OUR STORY

THE OPPORTUNITIES • 2012: Council debt free • Vibrant economy (13th of 324 authorities in ) • 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)

Property Investment Strategy - progress Expenditure to date by financial year Progress - by sector (by value) Progress by location (by value) MTFS Income Target VW Financial Services Milton Keynes AXIS 1, Langley, Berks Chiswick Green, Chiswick Pine Trees, Egham Business Park, Thorpe 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 () 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

Property Investment Strategy 2016/17 – 2021/22