Public Document Pack

AGENDA FOR THE CABINET

Your attendance is requested at a meeting of the Cabinet in Committee Rooms 1 & 2 - Deanes on Tuesday, 28 June 2016, at 6.30 pm.

Lisa Kirkman Head of Law and Governance

Councillor C Sanders (Chair) Councillor T Reid (Vice-Chair) Councillor S Bound Councillor H Eachus Councillor J Izett Councillor M Ruffell Councillor R Tate

For more information please contact the Democratic Services team: 01256 844844 Or email: democratic.services@basingstoke.gov.uk Visit: www.basingstoke.gov.uk/cabinet

Public Participation Scheme Members of the public are invited to address the committee on all items presented at a committee meeting. Public speaking on these items will take place at the same time that the item is considered.

If members of the public wish to address the meeting they should notify Democratic Services prior to the meeting.

The public participation scheme is available to access through the council’s website - www.basingstoke.gov.uk/participation

Members are encouraged to obtain any points of clarification on the reports on the Agenda in advance of the meeting.

COMMITTEE PAPERS If you need this information in a different format, such as large print, please contact Democratic Services. Page 1

Alternatively all documents associated with this agenda can be accessed through the Council’s website on http://www.basingstoke.gov.uk/committeemeetings

Please note

It is likely that part of this meeting may need to be held in private as some agenda items may involve the disclosure of exempt or confidential information within the terms of Schedule 12A of the Local Government Act 1972. Members of the press and public may need to be excluded for that part of the meeting if necessary. Those items are at the end of the agenda.

Details of any representations received about why the meeting should be open to the public – none

AGENDA

Members of the public will be invited to speak at the relevant item

1. APOLOGIES FOR ABSENCE

2. DECLARATIONS OF INTEREST

3. URGENT MATTERS

To consider any items of business, other than those shown on this agenda and which, by reason of special circumstances to be stated at the meeting, in the opinion of the Chairman, should be considered at the meeting as a matter of urgency.

4. MINUTES OF THE MEETING HELD ON 16TH MAY 2016

5. TREASURY MANAGEMENT ANNUAL REPORT 2015/16 5 - 26

This report shows the activity within the council’s treasury management function for the year ending 31 March 2016.

Recommendation from the Cabinet Member for Finance, Service Delivery and Improvement for Council Decision.

6. 2015/16 REVENUE AND CAPITAL OUTTURN 27 - 82

This report compares the final revenue and capital position for 2015/16 with the budget and identifies the reasons for variances.

Recommendation from the Cabinet Member for Finance, Service Delivery and Improvement for Council Decision.

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7. PROPERTY AND ALTERNATIVE INVESTMENT STRATEGY - 83 - 138 INVEST TO GROW FUND

The report proposes the establishment of a Council based Invest to Grow Fund with the overarching objective to stimulate job creation, deliver new homes, and attract significant inward investment into the Borough.

Recommendation from Cabinet Member for Property and Development and Cabinet Member for Finance, Service Delivery and Improvement for Cabinet and Council Decision.

8. IMPLEMENTATION OF AN AFFORDABLE HOUSING SCHEME:- 139 - LAND AT SANDRINGHAM COURT, SOUTH HAM, BASINGSTOKE 162

This report provides details of an affordable housing scheme to be undertaken by Affinity Sutton Housing Association.

Recommendation from the Deputy Leader and Cabinet Member for Property and Development for Cabinet Decision.

9. DISPOSAL OF THE FORMER PADDOCK ROAD SURGERY SITE - 163 - ADELPHI HOUSE 198

This report is to seek authority to the entering into of a conditional contract for the potential sale of a council owned property, the former Paddock Road Surgery, South Ham, Basingstoke.

Recommendation from the Deputy Leader and Cabinet Member for Property and Development for Cabinet Decision.

10. ADOPTION OF NEIGHBOURHOOD PLAN FOR OVERTON 199 - 256 This report is to give an update on the Overton Neighbourhood Plan (ONP) which has now reached an advance stage of production and a local referendum on the Plan is due to be take place on 23 June 2016.

Recommendation from the Cabinet Member for Planning and Infrastructure.

11. EXCLUSION OF PRESS AND PUBLIC

To consider whether, in view of the nature of the remaining items on the agenda, any of them are likely to involve the disclosure of exempt or confidential information within the terms of Schedule 12A of the Local Government Act 1972

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12. CONFIDENTIAL/ EXEMPT ITEMS FOR INFORMATION

Item 7 - Property and Alternative Investment Strategy - Invest to Grow fund

Confidential Appendix 3

Item 8 - Implementation of an Affordable Housing Scheme:-Land at Sandringham Court, South Ham, Basingstoke

Confidential Appendix 4

Item 9 - Disposal of the former Paddock Road Surgery site - Adelphi House

Confidential Appendix 5

Page 4

Agenda Item 4

Minutes of the Cabinet meeting held on 16 May 2016 at the Civic Offices, Basingstoke and Deane Borough Council at 18:30

Members of the Cabinet in attendance: Councillors C Sanders (Chairman), S Bound, H Eachus, J Izett, T Reid, M Ruffell, R Tate

01/16 Apologies for Absence [Item 1]

No apologies were received.

02/16 Declarations of Interest [Item 2]

Councillors S Bound, J Izett and R Tate declared an interest relating to agenda item 6 – Local Plan Adoption, due to their membership of the Manydown Executive Committee and left the room for the item.

03/16 Minutes [Item 4]

The Minutes of the meeting held on 12 April 2016 were confirmed by the Cabinet as a correct record and signed by the Chairman.

04/16 Appointments to Executive Committees [Item 5]

Resolved: That Cabinet appoints:

1) Councillors Eachus, Izett and Reid to the Basing View Executive Committee.

2) Councillors Bound, Izett and Tate to the Manydown Executive Committee

05/16 Local Plan Adoption [Item 6]

Councillors Bound, Izett and Tate left the meeting for this item.

The Cabinet Member for Planning and Infrastructure introduced the report which set out the modifications proposed by the inspector who examined the Submission Local Plan and sought approval for adoption of the Local Plan 2011- 2029 and the withdrawal of the saved policies of the Adopted Basingstoke and Deane Borough Local Plan 1996 – 2011. He thanked all members for their contributions to shape the policies, officers for their hard work throughout the process and residents for their engagement in the process.

Visiting member, Councillor Harvey was invited to address the Cabinet. He raised concern regarding the idea of a presumption in favour of development policy and the effect that would have over the planning process. He also raised concerns regarding neighbourhood plans and figures being a starting

Page 5 point for development over the planned period and the sustainability of the five year housing land supply over the longer period.

The Cabinet Member for Planning and Infrastructure acknowledged Councillors Harvey’s concerns stating there were no easy answers. He stated that National Planning Policy Framework (NPPF) wanted the development process to be permissive to those who want to develop and the Local Plan had to reflect that in order to be sound but accepted there was a tension between the apparent constraints to development that are enshrined within the Local Plan and the overall permissive nature of development within the NPPF, an example being the interpretation of the figures considered in neighbourhood plans. He further added that what was currently considered as a five year housing land supply may change in the future as this was based on a prediction for future development.

The Cabinet supported the proposal, highlighting that it was important that throughout the planning process the correct infrastructure was put in place such as roads, schools, and open space to protect the quality of life for residents.

Resolved: That Cabinet note the outcome of the Basingstoke and Deane Local Plan Inspector’s Report (Appendix A of the report)

Recommendation to Council:

1) That in accordance with Section 23 Planning and Compulsory Purchase Act 2004 and regulation 26 of the Town and Country Planning (Local Planning) (England) Regulations 2012, that the council adopts the Basingstoke and Deane Local Plan, incorporating the main modifications as set out in Appendix B of the report, together with minor updates and drafting changes authorised by the Portfolio Holder for Planning and Infrastructure, together with the Head of Planning and Infrastructure

2) That the saved policies of the Adopted Basingstoke and Deane Borough Local Plan (1996-2011) be withdrawn.

Reasons for Decision:

Following the receipt of the Inspector’s report, which concluded that, subject to a number of modifications, the submitted Local Plan was sound and capable of adoption, the Local Plan can now be adopted to form the Development Plan for the borough. The Local Plan is a key policy document which sets out the planning framework for the area and is a key tool in delivering the objectives of the corporate plan. Upon adoption of the Plan, the saved policies of the Adopted Basingstoke and Deane Borough Local Plan (1996-2011) can be withdrawn as these are effectively superseded by the more up to date Plan.

Page 6 06/16 Adoption of Oakley and Deane Neighbourhood Plan [Item 7]

The Cabinet Member for Planning and Infrastructure introduced the report which recommended that the plan was ‘made’ by Council following a positive referendum result. He commended the Oakley and Deane Neighbourhood Planning Group on their hard work and a well written, detailed plan that will provide a model example for other neighbourhood plans.

Recommendation to Council:

Cabinet recommends to Full Council, under section 38A(4) of the Planning and Compulsory Purchase Act 2004, to make the Oakley and Deane Neighbourhood Plan with immediate effect, with the consequence that it becomes part of the statutory development plan for Basingstoke and Deane Borough.

07/16 Urgent Matters [Item 3]

Devolution across Hampshire and the Isle of Wight

Due to the rapidly changing landscape of devolution, the Leader of the Council considered that Cabinet should receive an update on the current proposals. He provided the Cabinet with a chronological summary of the report detailing the development of proposals to date which covered the initial proposal for a Hampshire and Isle of Wight Combined Authority to the latest discussions on the Heart of Hampshire Combined Authority. He further added that Hampshire County Council (HCC) had announced that a public consultation would take place with residents regarding a Hampshire Unitary Authority.

Visiting members Councillors Tilbury and Harvey were invited to make their comments. Councillor Tilbury stated that there was a democratic deficit in all of the proposals, particularly with the HCC proposal. The only local democracy would be parish councils. He further added that HCC was not popular with residents; felt the proposal had nothing to do with localism and that there was no support for an elected mayor.

Councillor Harvey felt that the HCC proposal was a takeover bid that would wipe out the second tier of borough councils. He stated that a Hampshire wide unitary authority would see Basingstoke governed by Winchester and create a unitary council of over £1.3 million people. He questioned how we would deal with the threat and stand up for our residents. He further added that BDBC had significant assets and it would not be in the interest of its residents to hand those assets over. He felt that there would be drastic changes to the services delivered to the residents of Basingstoke and Deane should it be encompassed by a unitary authority and gave examples of areas where BDBC has provided additional funding to services such as the arts, voluntary sector and supporting vulnerable people. He also highlighted that the HCC proposal would force BDBC residents to pay higher council tax. He

Page 7 concluded that an all-encompassing single unitary authority for Hampshire was unrealistic and undemocratic.

The Cabinet discussed the proposals and made a number of comments which included:

 A directly elected Mayor would not be a popular idea.

 The two tier system that currently exists works well.

 The HCC proposal would remove decision making further away from residents and would unlikely be supported.

 The HCC proposal has nothing to do with value for money or democratic accountability.

 This authority should explore all options starting from the premise of what is the best service delivery for the residents of Basingstoke and Deane.

 The HCC proposal has thrown out the possibility of securing additional government funding.

 The lack of partnership and prior discussion by HCC is disappointing.

 There is an opportunity for discussion about future services and the efficient use of revenue for better services for residents.

 A centralised unitary authority, divorced and devolved away from residents will be unable to respond in the areas of cost saving or produce any value for residents.

 There is a need for change and to continually look at how residents can be better represented and how services can be delivered but this is unlikely to be achieved on a pan Hampshire scale. It should be more devolved to those people who understand and live within an area and who can deal with the issues at a local level.

 The best way to achieve savings would be to abolish HCC.

 Localism is about more innovative thinking, creativity and flexibility.

 Double devolution has always been a fundamental part of looking at devolution but HCC have not shown any meaningful interest in participating in discussions.

 96% of the boroughs residents are happy with services provided by BDBC.

Page 8  We need a bottom up approach to ensure we get the best deal for our residents.

Resolved: That Cabinet

1) Note that the achievement of a single pan HIOW combined authority as originally envisaged is considered to be potentially no longer deliverable.

2) Note the progress made by the constituent councils of the proposed Solent Combined Authority and the likely agreement of a devolution deal with Government for those authorities in the south of Hampshire.

3) Note the revised draft devolution proposal for the Heart of Hampshire, including Basingstoke and Deane, submitted to Government on 4 May 2016, for the purposes of gauging Government’s degree of interest.

4) Resolve that the Leader and Chief Executive continue to work alongside colleagues in Hampshire and the Isle of Wight to develop a model for devolution that meets local need.

5) Notes that Hampshire County Council tabled on Friday 13 May 2016, indicative proposals for the potential creation a of single unitary local authority across Hampshire, supported by an Executive Summary of a report by Deloitte LLP entitled, “Hampshire County Council, Initial analysis of options for local government in Hampshire and the Isle of Wight”, which would result in the abolition of the county council, Basingstoke and Deane Borough Council and ten other district and borough councils in Hampshire

6) With regard to the Deloitte’s Executive Summary report circulated by HCC, Cabinet noted:

 that the research appeared to be commissioned solely by HCC, and had an apparent preference for maintaining as much of Hampshire County Council’s existing infrastructure in the new arrangements as possible

 all of the options that involved abolishing the county council produced a saving compared to the current two tier arrangements

 the lack of a bottom up approach focusing on the needs of residents and local democratic accountability

 the Chief Executive has written to the Chief Executive of Hampshire County Council requesting sight of Deloitte’s Full Report and the brief provided to them for the work they have undertaken and those documents are awaited

Page 9

Recommendation to Council:

1) That a report should be provided to Council outlining the updated Heart of Hampshire proposals and related matters, including matters related to unitarisation.

2) That a budget of up to £200,000, be allocated from the Stability and Resilience Reserve, to be delegated to the Executive Director of Finance and Resources, to undertake work, either in isolation or in partnership with other similarly interested local authorities, to identify the issues and options for unitary local government, to include a focus on strengthening democratic accountability for local residents.

Reasons for Decision:

Government has made it clear that future funding will be more forthcoming for areas with an established combined authority and a directly elected Mayor. This decision will enable the council to continue to explore how revised joint working arrangements could deliver improvements for our communities.

The meeting ended at 19:46

Chairman

Page 10 Agenda Item 5 Report to: Cabinet 28 June 2016 Portfolio holder presenting: Cabinet Member for Finance, Service Delivery and Improvement

Subject: Treasury Management Annual Report 2015/16 Status: Open Ward(s): All Key Decision: No Key Decision Ref: n/a Report Of: Cabinet Member for Finance, Service Delivery and Improvement Executive Director of Finance and Resources – Kevin Jaquest Tel. 01256 845513 or Email [email protected] Head of Financial Services – Phillip Hood Tel. 01256 845660 or Contact: Email [email protected] Accountancy Manager - Dean Pletts Tel. 01256 845506 or Email [email protected] Appendix 1 – Treasury Management Income 2015/16 Appendix 2 – Investment Holdings Appendix 3 – Benchmarking (Risk and Return) Appendices: Appendix 4 – Unrealised Valuation Gains and Losses Appendix 5 – Compliance with Strategy Limits and Prudential Indicators Papers relied on to produce this None report

1 Executive Summary

1.1 This report shows the activity within the council’s treasury management function for the year ending 31 March 2016.

1.2 This summary contains the information required for members to discharge their responsibilities for the monitoring of the treasury management function. Detailed information in support of this summary is contained in the main body of this report.

1.3 In accordance with the Local Authority (Capital Financing and Accounting) Regulations 2003 the council is required to have regard to the Treasury Management Code of Practice. The code requires the council to receive three treasury management reports as part of an annual cycle: a strategy report prior to the start of the year; a mid-year report and an annual report after the end of the year.

1.4 At over £3 million in 2015/16, interest earnings from investments and cash balances are a very important source of income in enabling the council to achieve its corporate priorities. Page 11

1 of 21 1.5 The key points to note on the performance for this year are as follows:

Overall Impact on Forecast Income (£68,000 Adverse Variance)

. Net interest and investment income was £3.082 million before the use of reserves, compared to budgeted income of £3.150 million. This was £68,000 less than estimated. A breakdown of the variance is shown in Appendix 1.

. The forecast shortfall will be met by a contribution from the Interest Rate Risk Reserve which was set up specifically to deal with in-year variances in accordance with the council’s financial policies.

. The budget for interest and investment income was revised to £3.150 million from £3.500 million. This followed a Council approved budget transfer of £350,000 from the Interest Risk Reserve in December 2015 and the figures in this report compare the outturn with this revised budget.

. Income from Strategic Investments was £61,000 lower than estimated. This was mainly due to returns from the council’s externally managed funds, which were £76,000 less than estimated.

. Income from Operational Investments was £48,000 lower than estimated. This was mainly due to interest from floating rate supranational bonds where the continuation of low interest rates resulted in £64,000 less income than estimated.

. Income from Liquidity Cash was £32,000 higher than expected due to higher than estimated cash balances during the year.

Overall Position of the Investment Portfolio and Returns

. At 31 March 2016 the council had cash investments of £160.5 million having started the year with investments of £163.3 million. The average balance held during the year was £175.0 million.

. Details of the investments held at 31 March 2016 can be seen in Appendix 2.

. The overall return for the year was 1.80% compared to the estimate of 1.86%. Within this, strategic investments returned 2.29%, operational investments returned 1.45% and liquidity cash returned 0.44%.

. Despite being lower than anticipated the overall return still remains significantly higher than other local authorities’ average returns and this has been achieved with one of the lowest levels of credit risk.

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2 of 21

Investment Criteria

. The council’s investment criteria are a reflection of the council approved Investment Strategy for the year.

. Adjustments to the council’s investment criteria can be made by the Chief Financial Officer (Executive Director of Finance and Resources) during the year based on changes in risk indicators and on advice from Arlingclose Limited (the council’s treasury advisors). There were no changes to the investment criteria during the year.

Compliance with Policy, Strategy Limits and Prudential Indicators

. All transactions during the year have complied with the council’s agreed policy statement, approach to ethical investment, treasury management strategy limits, treasury management practices and all accounting codes of practice.

. All types of investments remained within the agreed strategy target ranges and approved prudential indicator limits and the council complied with its Capital Financing Requirement (the need to borrow to finance capital expenditure) and its Minimum Revenue Provision (MRP) requirement (the need to set aside funds to repay debt).

1.6 This report does not require a decision but is to be noted in accordance with the council’s constitution, treasury management practices and accounting codes of practice.

1.7 Detailed information in support of this summary is contained in the remainder of this report.

2 Recommendation

2.1 It is recommended that Cabinet recommends Council to note:

2.1.1 The Treasury Management Annual Report for 2015/16 which includes the Prudential Indicator Actuals for 2015/16;

2.1.2 That the Capital Financing Requirement and the Minimum Revenue Provision requirement are both nil.

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3 of 21 PRIORITIES, IMPACTS AND RISKS

Contribution To Council Priorities This report accords with the Council’s Budget and Policy Framework and supports the development of an effective and efficient council.

GLOSSARY OF TERMS

Term Definition Corporate Bonds These are very similar in nature to gilts except that rather than being issued by the Government they are issued by other organisations eg banks and commercial companies in order to raise capital. Counterparties These are the organisations responsible for repaying the Council’s investment upon maturity and making interim interest payments. Debt Management Agency Deposit facility A facility run by part of the HM Treasury which accepts (DMADF) deposits at fixed rates for periods up to 6 months. Gilts (Treasury Bonds) These are issued by the UK Treasury in order to finance public expenditure. Gilts are generally issued for a set period and pay a fixed rate of interest for that period. At the end of the set period the investment is repaid (at face value) by the Treasury. However, during the life of a gilt it will often be traded (bought and sold) at a price decided by the market. Local Authority Bonds Similar to gilts, these are issued by some UK local authorities rather than the Treasury in order to raise capital. Diversified Credit Funds Externally managed pooled investment schemes investing in wide ranging mix of credit instruments including Gilts, Corporate Bonds, Investment Grade Credit, Asset Backed Securities, Senior Mortgages, Leverage Loans and High Yield Bonds. Money Market Funds Externally managed pooled investment schemes investing in short term cash instruments. Enhanced Cash Funds Similar to Money Market Funds but containing cash instruments with a longer duration to enhance the yield. Reverse Repurchase Agreements (Repo) An agreement to purchase a security from a counterparty, typically a bank, and then sell the security back to the bank on a predetermined date for the principal amount plus interest. The security is collateral to be used in the event of a default by the counterparty. Supranational Bonds These are very similar in nature to gilts except that rather than being issued by the Government they are issued by supranational bodies such as the European Investment Bank. Term Deposits These are loans to banks or other counterparties which are for a fixed period and at a fixed rate of interest. T-Bills (Treasury Bills) These are short dated, tradeable instruments issued by the UK Treasury at a discount. Whilst no interest is paid the discount results in a capital gain that is the effective yeild.

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4 of 21 MAIN CONSIDERATIONS

3 Background Information

3.1 Treasury management in local government is governed by the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Treasury Management in the Public Services and in this context is concerned with “the management of the council’s cash flows, its banking and its capital investments; the effective control of the risks associated with those activities and the pursuit of optimum performance consistent with those risks”.

3.2 The council has adopted the code and complies with its requirements, one of which is that interim operational reports are provided to members and that mid-year and annual reports are presented to full Council on the treasury management activity each financial year.

3.3 Given the current situation in the financial markets it is worth reminding members of the council’s treasury management policy objectives which are:

. To invest prudently having regard to the security of investments. . To maintain liquidity in the investment portfolio to meet the council’s spending plans. . To aim to achieve the optimum return on investments commensurate with the proper levels of security and liquidity and predictability of returns.

3.4 In accordance with the code of practice the first objective is deemed to be the primary objective and the others are secondary considerations.

3.5 The code also requires that local authorities have a separate body or committee responsible for the monitoring and scrutiny of the treasury function. The council has delegated this responsibility to the Audit and Accounts Committee and a copy of this report will be scrutinised by the committee on 27 June 2016.

4 Investment Strategy

4.1 In order to understand and put into context the performance of the council’s investment portfolio, it is also necessary to appreciate the council’s approved strategy for investments.

4.2 The council has three different types of cash balances.

4.3 Strategic Cash – These relate to reserves that the council has decided that it wishes to invest for the foreseeable future and has no plans to spend. These balances, estimated at £87 million, can be invested in the longer term (up to 10 years). The strategic cash investments yielded an average for the year of 2.29%.

4.4 Operational Cash – These relate to reserves that the council has either already committed to spend in its Capital Programme or has made available to fund future spending plans. These balances, estimated at £60 million, can only be invested in the medium to short term as they need to be available if and when required. The operational cash investments yielded an average for the year of 1.45%. Page 15

5 of 21 4.5 Liquidity Cash – These relate to cash balances required in order to manage the council’s day to day cash flow requirements. These balances estimated at £14 million can only be invested in very short dated instruments and are currently represented by Money Market Funds. Liquidity cash yielded an average for the year of 0.44%.

4.6 The investment types and amounts in each investment segment as at 31 March 2016 are shown in the following chart:

4.7 Details of the council’s specific investment holdings as at 31 March 2016 showing the names of the counterparties, their credit ratings (where applicable) and the amounts invested can be seen in Appendix 2.

5 Financial Market Conditions

5.1 In order to understand and put in context the performance of the council’s investment portfolio, it is necessary to appreciate the key changes in the interest rate environment and the market’s assessment of credit risk (the risk that an investment will default and will not be repaid).

5.2 The Bank of England continued to hold the UK Bank Rate at 0.50%. Conflicting economic data from the world’s major economies, particularly indications of a sharp slowing of growth in the Chinese economy, caused the US Federal Reserve to delay its much anticipated rate rise until December 2015 which introduced a large amount of volatility into financial markets. Volatility intensified at the start of 2016 as concerns of an impending economic slowdown grew. This caused a sharp fall in the price of risk assets such as equities and corporate bonds and an increase in the price of perceived safe assets such as government debt. Market interest rates fell significantly as expectations of future interest rate rises by central banks were re-evaluated. A fragile improvement in sentiment was seen during March which caused a small increase in market rates and restored some confidence in the outlook for credit risk.

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6 of 21 5.3 The following chart shows the movement in interest rates over the last 12 months.

Interest Rates (Last 12 Months) 2.50

2.00

1.50 10yr Gilt % 5yr Gilt % 12-month rate % 1.00 3-month rate % 7-day rate % 0.50 Bank Rate %

0.00

31 Jul 15

31 16 Jan

30 Jun 15

31 15 Oct

30 Apr 15

30 15 Sep 29 16 Feb

31 Dec 15

31 Aug 15

30 15 Nov

31 Mar 16 31 15 May

6 Treasury Management Activity during 2015/16

6.1 Below is a summary of investment activity during the year:

INVESTMENT PORTFOLIO ACTIVITY (at cost)

Holding Investments Investments Holding 31/03/15 Made Realised 31/03/16 £'000 £'000 £'000 £'000 Strategic Investments Government Gilts 33,066.6 0.0 0.0 33,066.6 Local Authority Bonds 4,059.5 0.0 0.0 4,059.5 Diversified Credit Funds 20,000.0 10,000.0 0.0 30,000.0 Deposit Accounts 13,500.0 0.0 (13,500.0) 0.0 Supranational Bonds 0.0 10,004.3 (10,004.3) 0.0 Cash Plus Funds 15,000.0 0.0 (5,000.0) 10,000.0 Corporate Bonds 4,089.0 0.0 (4,089.0) 0.0 Local Authority Deposits 0.0 30,000.0 (20,000.0) 10,000.0 Operational Investments Government Gilts 15,916.0 5,113.6 (4,476.0) 16,553.6 Local Authority Deposits 16,000.0 5,000.0 (8,000.0) 13,000.0 Supranational Bonds 0.0 19,578.9 0.0 19,578.9 Deposit Accounts 0.0 9,500.0 0.0 9,500.0 Bank Deposit (LAMS) 1,000.0 0.0 0.0 1,000.0 Treasury Bills 19,986.4 63,449.7 (83,436.1) 0.0 Fixed Loans 7,000.0 10,000.0 (17,000.0) 0.0 Liquidity Cash Money Market Funds 13,650.0 117,200.0 (117,150.0) 13,700.0 Treasury Bills 0.0 5,697.5 (5,697.5) 0.0 Total Investments 163,267.5 285,544.0 (288,352.9) 160,458.6 Page 17

7 of 21 6.2 No short term borrowing was undertaken during the year as part of daily cash flow management.

7 Changes to the Investment Portfolio

7.1 The chart below shows the changes to the investment portfolio during the year by comparing the percentage of the portfolio that was invested in the different types of instrument over the preceding twelve months:

7.2 The main changes during the year were the additional use of other bonds (supranational) and an increase in the amount placed within diversified credit funds. Treasury bills and money market funds were used to accommodate cash receipts as a replacement for bank deposits which were reduced in line with the council’s approved strategy.

8 Investment Portfolio Benchmarking

8.1 The council takes part in a quarterly investment benchmarking service provided by its treasury management advisors, Arlingclose Ltd. This highlights the effect of changes in the council’s investment portfolio and compares the council against other Arlingclose clients on the basis of size of investments, length of investments and the amount of credit risk being taken.

8.2 The results of the quarterly client benchmarking at 31 March 2016 are shown in Appendix 3.

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8 of 21 8.3 The graphical format used for the benchmarking can be interpreted with reference to the diagram below.

High Low risk / High return High risk / High return (optimal position) (risk rewarded)

Low risk / Low return High risk / Low return

Investment Returns Investment (risk averse) (worst position)

Low

Low Credit Risk High 8.4 Typically, the council would aim to be in the top left corner of the chart where a higher return is achieved for less risk. The most recent benchmarking results show that the council is within this area of the chart and also has a return well above the “best fit” or “linear trend line” of all other authorities measured.

8.5 It should be noted that the benchmarking shows a snap-shot of the average running yield on internally managed investments held including short term cash. Investments managed by external fund managers are not included. It shows the council’s running yield at 1.98%. This differs from the annual performance for the investment portfolio due to returns from investments that are held and mature throughout the course of the year.

8.6 At 31 March 2016 the average credit rating of the internally managed investment portfolio was approximately AA+ (risk score 2.2) on a value weighted basis and AA+ (risk score 1.6) on a time weighted basis, which indicates that less credit risk is being taken with longer term investments. The average period to maturity was 1.8 years.

8.7 Although the council’s interest and investment income has reduced over recent years the benchmarking results do demonstrate that its returns are still more than double those of many other local authorities. These returns are also being achieved whilst taking a much lower amount of indicated credit risk than most other authorities as defined by the average credit risk scores.

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9 of 21 9 Investment Income Performance Compared to Estimate

9.1 A summary of the performance of investments is shown below:

INVESTMENT PERFORMANCE SUMMARY for 2015/16 Revised Actual Estimate Return 2015/16 2015/16 Strategic Investments Gilts 3.70% 3.68% Local Authority Bonds 6.65% 6.59% Corporate Bonds 4.65% 4.65% Diversified Credit Funds 2.30% 2.04% Short Term Investments 0.45% 0.61% Average Strategic Investments 2.33% 2.29%

Operational Investments Gilts 2.24% 2.16% Supranational Bonds 1.00% 0.78% Long Term Loans 2.25% 2.26% Short Term Investments 0.45% 0.45% Average Operational Investments 1.47% 1.45%

Liquidity Cash 0.45% 0.44%

Average Overall Return 1.86% 1.80%

9.2 The overall return on investments was 1.80% compared to an estimate of 1.86%.

9.3 Returns for the year were affected by the continuation of low interest rates with long term rates actually falling over the course of the year (see 5.3).

9.4 Strategic investments returned an average yield of 2.29% compared to the budget estimate of 2.33%.

9.5 Operational investments returned an average yield of 1.45% compared to the budget estimate of 1.47%.

9.6 Liquidity cash yielded 0.44% compared to the budget estimate of 0.45%.

10 Performance of Externally Managed Funds

10.1 Externally managed funds can generate returns through income distributions and have the potential for capital growth through changes in the value of the units. Combining these two elements gives the total return for the fund.

10.2 The council invested in diversified credit funds primarily in order to gain access to the income distributions that they generate. In addition to the income distributions there is also the possibility of gains in capital value which, when realised, would add to the total return. Unrealised short term fluctuations in capital value have no impact on the council’s annual income and the council anticipates holding these funds for a minimum of 3 to 5 years as part of its strategic cash investments.

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10 of 21 10.3 Externally managed funds include the M&G Alpha Opportunities Fund and the M&G Total Return Credit Investment Fund. The combined income distribution for these funds was 2.33% which consisted of income distributions of £239,000 and £226,000 respectively.

10.4 A further investment of £10 million was made in externally managed funds at the end of October 2015, specifically, Blackrock’s Fixed Income Global Opportunities Fund. The council did not receive any income distributions from this fund as the income generated was accumulated to the value of the holding.

10.5 The combined income return from all of the council’s diversified credit funds was 2.04% for the year compared to the budget estimate of 2.30%.

10.6 The nature of these funds means that returns are more volatile and more difficult to predict than many of the council’s other investments and as they are part of the council’s strategic investments their performance should be viewed over a long term period (3 to 5 years).

10.7 Total performance information for these funds, including income distributions and any capital appreciation, is available quarterly and is supported with half- yearly comparative information and analysis by KPMG Investment Advisory who will be reporting separately to the Audit and Accounts Committee.

10.8 The latest fund valuations as at 31 March 2016 are shown in Appendix 4.

11 Unrealised Valuation Gains and Losses

11.1 Some of the council’s longer term investments are tradable and have quoted market values that can vary over the life of the investment. These valuation changes are not recognised as income until they are realised (i.e. sold or mature).

11.2 The unrealised valuation gains and losses as at 31 March 2016 for the council’s investments with quoted market prices are set out in Appendix 4.

11.3 Concerns of a slowdown in global growth as mentioned in section 5 have affected the valuations for corporate debt, impacting on the council’s holdings in externally managed funds which showed an unrealised loss of £630,858 (-1.6% versus original cost) at 31 March 2016.

11.4 Conversely, the valuation of the council’s internally managed bonds and gilts showed an unrealised gain of £4.134 million.

11.5 The valuation gains and losses on the council’s investments would only be realised if the council chose to sell them or disinvest.

12 Compliance with Strategy Limits for 2015/16

12.1 As part of the strategy for 2015/16 approved by Council on 26 February 2015, limits were set for different types of investment.

12.2 All types of investment have remained within the agreed strategy and limits during the year and a breakdown of the investment portfolio as at 31 March 2016 compared to the strategy limits is shown in Appendix 5.

Page 21

11 of 21 13 Prudential Indicator Limits

13.1 Under the prudential capital finance system the council determines, at a local level, its capital expenditure and borrowing provided that it can demonstrate that its plans are affordable, prudent and sustainable. Under the Prudential Code of Practice there is a statutory requirement to set, monitor and report Prudential Indicators and Limits.

13.2 The Prudential Indicator Limits relating to treasury management and the compliance with those limits are set out in Appendix 5.

13.3 The fixed and variable rate exposure limits allow the council to manage the extent to which it is exposed to changes in interest rates and the limit for amounts invested beyond a year was set at £131 million and ensures that the council keeps enough short term cash for operational purposes at all times.

13.4 The Head of Resources is required under the Prudential Code to report to council the 2015/16 actuals for the following non-treasury management prudential indicators.

. Actual capital expenditure - for 2015/16 was £5,664,422. . Actual ratio of financing costs to net revenue stream – for 2015/16 was minus 19%. . Actual external debt - as at 31/03/16 was £66,400. . Actual net borrowing - as at 31/03/16 was minus £160,392,100 (this figure is negative because the council has net investments rather than net borrowing). . Actual capital financing requirement - as at 31/03/16 was nil. . Actual minimum revenue provision requirement – as at 31/03/16 was nil. 13.5 The purpose of the ratio of financing costs to net revenue stream is to identify what proportion of net revenue costs relate to the financing of debt. However, as the council has large investments and no long term debt, the ratio is negative and shows that interest income is the equivalent of 19% of the council’s net revenue expenditure.

13.6 External debt is made up of borrowing and other long term liabilities. Parish council deposits with the council were £66,400 and are deemed to be temporary borrowing.

13.7 Net borrowing is the difference between borrowing (£66,400) and investments (£160,458,500). This represents net investments for the council.

13.8 The capital financing requirement is the council’s underlying need to borrow to finance capital expenditure that has not been financed by its own resources. As all of the council’s capital expenditure has been financed through the use of capital receipts and contributions or through revenue reserves, the capital financing requirement is nil as is the minimum revenue provision requirement (i.e. the council’s need to set aside amounts to repay borrowing).

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12 of 21 14 Investment Criteria

14.1 Selecting suitable investment criteria within the limits set by Council is the responsibility of the Chief Financial Officer (Executive Director of Finance and Resources).

14.2 At present new long term investments can only be made using the following council approved instruments: government issued bonds (Gilts); supranational bonds with AAA credit ratings; deposits or bonds with other local authorities. Highly secured repurchase agreements with banks or building societies are also possible, subject to individual evaluation.

14.3 Short term investments can only be made using the following council approved instruments: Treasury Bills; Local Authority loans; AAA rated money market funds and enhanced cash funds; the HM Treasury’s Debt Management Agency Deposit Facility. Overnight deposits with highly rated banks are allowed and the council operates a select list of those available which is monitored for any risk indicators on an on-going basis.

14.4 The use of collective investment funds has also been approved for both long term and short term investments with funds approved for use specialising in fixed income, short term cash and diversified credit.

14.5 During April 2015 and May 2015 a number of bank ratings were updated to reflect changes made following reviews by all of the major rating agencies. However, there were no changes to the council’s investment criteria as a result of these reviews.

15 External Service Providers

15.1 Arlingclose Limited is appointed to provide treasury management advice and KPMG Investment Advisory is appointed to act as an advisor on asset allocation and fund manager selection and fund manager performance monitoring in respect of the council’s long term investment strategy.

15.2 The council is clear as to the services Arlingclose and KPMG provide under their respective contracts and is also clear that responsibility for treasury management remains with the council.

16 Training

16.1 The treasury management code of practice requires the Chief Financial Officer to ensure that all members tasked with treasury management responsibilities, including the scrutiny of the function, have access to appropriate training relevant to their needs and understand fully their roles and responsibilities.

16.2 Treasury workshops are provided for members of the Audit and Accounts Committee and are open to all members of the council. The workshops are delivered by a combination of external training providers, council officers and Arlingclose Limited. A ‘Treasury Management for Elected Members’ training session was held in June 2015 and was provided by Arlingclose Limited. A treasury management strategy workshop was provided by officers in February 2016. The workshops were attended by members and reserves of the Audit and Accounts Committee.

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13 of 21 16.3 Officers responsible for treasury management attend external workshops and seminars as part of their continued professional development.

17 Events since the Reporting Date

17.1 The total value of the council’s diversified credit funds, at the latest valuation date on 30 April 2016, was £29,784,642. This represents an improvement in the valuation of £397,814 since 31 March 2016 and reduces the current unrealised loss to £215,358 (-0.7% versus original cost). There have been no significant amendments to the investment portfolio since 31 March 2016 and all investment sums due to mature since the reporting date have been received as expected.

18 Financial Implications

18.1 All of the activities and returns in this report culminate in a financial impact on the council’s interest and investment income. An analysis of the forecast interest and investment income compared to the estimate for 2015/16 is shown in Appendix 1.

18.2 The net effect of all of the activities is a forecast reduction of interest and investment income of £68,000 compared to the budget which will be met from the Interest Risk Reserve in accordance with the council’s financial policy.

18.3 In accordance with the council’s financial policies the reserve will need to be replenished by way of a first call on any outturn surplus reported in the council’s revenue monitoring outturn report for 2015/16.

19 Risk Issues

19.1 There are considerable risks associated with investments. The main risks are credit risk (the risk of default by the counterparty) and interest rate risk or market risk (the risk that interest rates in the financial markets will move adversely).

19.2 The investments in diversified credit funds have an increased exposure to credit risk in order to generate enhanced returns, but reduce the council’s exposure to interest rate risk. This additional exposure to credit risk is managed by external fund managers who have the necessary expertise and resources to ensure that an appropriate level of risk is taken.

19.3 Returns from these externally managed funds are expected to be more volatile than returns from the council’s internally managed investments and there is the possibility that the value of the investment could reduce in the short term and therefore the fund holdings should be seen as medium to long term investments with a 3 to 5 year time horizon.

19.4 All investment risks are constantly monitored and are also reviewed annually along with all the other risks as part of formulating the council’s annual Treasury Management Strategy. The annual review of the strategy includes examination of alternative types of investment.

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14 of 21 19.5 The significant risks relating to Treasury Management are recorded on the council’s Corporate Risk Register with details of how these risks are mitigated.

20 Other Issues

20.1 There are no Human Resources, Equalities or Legal Implications.

21 Communications and Consultation

21.1 None required.

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15 of 21 Appendix 1

TREASURY MANAGEMENT INCOME for 2015/16

Estimate Actual Variance 2015/16 2015/16 2015/16 £'000 £'000 £'000 Interest and Investment Income

Strategic Cash Interest from Gilts 1,396 1,396 0 Amortisation of Premiums Gilts (Non-capital) (269) (265) 4 Interest from Local Authority Bonds 265 262 (3) Amortisation of Premiums on LA Bonds (Capital) (14) (14) 0 Interest from Corporate Bonds 51 51 0 Distributions from Diversified Credit Funds 575 499 (76) Interest from Short Term Cash Investments 163 177 14 Sub Total 2,167 2,106 (61)

Operational Cash Interest from Gilts 487 487 0 Amortisation of Premiums on Gilts (Non-capital) (135) (129) 6 Interest from Supranational Bonds 213 149 (64) Amortisation of Premiums on Supranational Bonds (86) (86) 0 Interest from Long Term Fixed Investments 360 360 0 Interest from Short Term Cash Investments 70 80 10 Sub Total 909 861 (48)

Liquidity Cash Interest from Short Term Cash Investments 68 100 32

Miscellaneous Interest Received 8 5 (3)

Total Interest and Investment Income 3,152 3,072 (80)

Interest Paid (16) (4) 12

Appropriations (Reserve Movements) From Capital Adjustment Account for Premiums on Bonds (Capital) 14 14 0

Total Income for Treasury Management 3,150 3,082 (68)

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16 of 21 Appendix 2 Investment Holdings as at 31 March 2016 Credit Rating Cost Amount Type of Investment Yield (%) Rating Agency Start Date Maturity Date (£) Strategic Cash Gilts UK Treasury 5.00% coupon 3.01 Aa1 Moody's 28/07/2010 07/03/2018 3,403,200 UK Treasury 5.00% coupon 2.87 Aa1 Moody's 05/08/2010 07/03/2018 5,721,500 UK Treasury 4.50% coupon 4.00 Aa1 Moody's 09/02/2009 07/03/2019 5,986,497 UK Treasury 4.75% coupon 3.88 Aa1 Moody's 16/11/2009 07/03/2020 10,730,000 UK Treasury 3.75% coupon 3.37 Aa1 Moody's 05/08/2010 07/09/2020 7,225,400 Local Authority Bonds City of Leicester 7.00% coupon 6.34 Not Rated N/A 16/06/1998 25/01/2019 976,100 City of Salford 7.00% coupon 6.34 Not Rated N/A 16/06/1998 25/01/2019 976,100 Dudley MBC 7.00% coupon 6.34 Not Rated N/A 16/06/1998 01/02/2019 976,100 LAB Investments 7.125% coupon 6.36 Not Rated N/A 16/06/1998 18/02/2019 1,131,208 Diversified Credit Funds

Page 27 Page M&G Alpha Opportunities Fund variable Not Rated N/A 01/12/2014 1 month notice 10,000,000 M&G Total Return Credit Investment Fund variable Not Rated N/A 26/11/2014 3 days notice 10,000,000 BlackRock Fixed Income Global Opportunities Fund variable Not Rated N/A 22/11/2015 3 days notice 10,000,000 Strategic Cash Total 67,126,105

Strategic Cash (pending Alternative Investment Programme) Local Authority Deposits Birmingham City Council 0.50 Not Rated N/A 22/01/2016 22/04/2016 5,000,000 Sheffield City Council 0.45 Not Rated N/A 29/01/2016 29/04/2016 5,000,000 Cash Funds Insight Liquidity Plus Fund variable AAAf S&P 31/01/2015 4 days notice 5,000,000 Royal London Cash Plus Fund variable AAA Fitch 31/01/2015 3 days notice 5,000,000 Strategic Cash (Alternative Investments) Total 20,000,000

17 of 21 Appendix 2 (continued)

Investment Holdings as at 31 March 2016 Credit Rating Cost Amount Type of Investment Yield (%) Rating Agency Start Date Maturity Date (£)

Operational Cash Gilts UK Treasury 4.00% coupon 2.61 Aa1 Moody's 28/07/2010 07/09/2016 3,234,000 UK Treasury 4.00% coupon 2.51 Aa1 Moody's 05/08/2010 07/09/2016 3,251,700 UK Treasury 1.75% coupon 1.93 Aa1 Moody's 10/03/2014 22/07/2019 4,954,257 UK Treasury 2.00% coupon 1.53 Aa1 Moody's 24/06/2015 22/07/2020 5,113,616 Supranational Bonds European Investment Bank Floating Rate Note 0.59 Aaa Moody's 06/11/2015 22/02/2017 5,012,145 European Investment Bank Floating Rate Note 0.68 Aaa Moody's 06/11/2015 25/05/2018 5,018,550 European Investment Bank 4.75% coupon 1.11 Aaa Moody's 27/10/2015 15/10/2018 5,528,619 European Investment Bank Floating Rate Note 0.69 Aaa Moody's 09/10/2015 16/04/2019 4,019,540 Local Authority Deposits Swindon Borough Council 2.25 Not Rated N/A 07/11/2011 07/11/2016 5,000,000

Page 28 Page Lancashire County Council 2.25 Aa2 Moody's 15/11/2011 15/11/2016 5,000,000 Middlesbrough Council 2.36 Not Rated N/A 25/11/2011 25/11/2016 3,000,000 Fixed Deposits (Banks) Lloyds Bank (LAMS Scheme) 1.68 A1 Moody's 16/01/2013 16/01/2018 1,000,000 Deposit Accounts Svenska Handelsbanken 0.40 Aa3 Moody's 30/08/2015 On Call 4,750,000 Santander UK plc 0.40 A2 Moody's 30/08/2015 On Call 4,750,000 Operational Cash Total 59,632,427

Liquidity Cash Money Market Funds Goldman Sachs Liquid Reserves variable AAAm S&P 31/01/2016 On Call 2,000,000 SSgA GBP Liquidity variable AAAm S&P 31/01/2016 On Call 1,000,000 Blackrock Sterling Liquidity variable AAAm S&P 31/01/2016 On Call 3,700,000 Morgan Stanley Sterling Liquidity variable AAAm S&P 31/01/2016 On Call 2,000,000 Deutsche Managed Sterling variable AAAm S&P 31/01/2016 On Call 2,000,000 Invesco Short Term Liquidity Portfolio variable AAAm S&P 31/01/2016 On Call 1,500,000 BNP Paribas Insticash Sterling variable AAAm S&P 31/01/2016 On Call 1,500,000 Liquidity Cash Total 13,700,000

Grand Total 160,458,532

18 of 21 Appendix 3

Page 29 Page

19 of 21 Appendix 4

Unrealised Valuation Gains and Losses as at 31 March 2016

Written Un-realised Nominal Purchase down Value Market Gain/(Loss) Holding Value (£) (£) Value (£) (£)

Externally Managed Funds (Long Term) Shares M&G Alpha Opportunities 97,893 10,000,000 10,000,000 9,681,573 (318,427) M&G Total Return Credit Investment 99,874 10,000,000 10,000,000 9,814,637 (185,363) BlackRock Fixed Income Global Opportunities 1,018,200 10,000,000 10,000,000 9,890,618 (109,382)

Total 1,215,967 30,000,000 30,000,000 29,386,828 (613,172)

Externally Managed Funds (Short Term) Shares Insight Liquidity Plus Fund 5,073,876 5,000,000 5,000,000 4,988,279 (11,721) Royal London Cash Plus Fund 4,987,586 5,000,000 5,000,000 4,994,035 (5,965)

Total 10,061,462 10,000,000 10,000,000 9,982,314 (17,686)

Total External Fund Holdings 11,277,429 40,000,000 40,000,000 39,369,142 (630,858)

Internally Managed Bonds (Long Term) £ Government Gilts 46,750,000 49,620,171 47,584,397 51,259,050 3,674,653 Local Authority Bonds 3,764,000 4,059,508 3,804,815 4,263,106 458,291 Supranational Bonds 19,000,000 19,578,854 19,492,935 19,494,310 1,375

Total Long Term Bonds 69,514,000 73,258,533 70,882,147 75,016,466 4,134,319

Total Unrealised Gain 3,503,461

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20 of 21 Appendix 5

Compliance with Strategy Limits as at 31 March 2016 2015/16 Holding Holding Strategy 31/03/16 31/03/16 Limits Approved Instruments £m % Government Gilts 49.6 30.9% Max 95% Treasury Bills 0.0 0.0% Max 95% HM Treasury (DMADF) 0.0 0.0% Max 100% Supranational Bonds 19.6 12.2% Max £50m Local Authority Loans/Bonds 27.1 16.9% Max £40m Money Market Funds 13.7 8.5% Max £25m Collective Investments: Short Term Cash Funds 10.0 6.2% Max £15m Collective Investments: Diversified Credit & Bond 30.0 18.7% Max £50m Bank/Building Society Repurchase Agreements 0.0 0.0% Max £25m Bank Ovenight Call Accounts 9.5 5.9% Max £15m Bank Fixed Loans (LAMS) 1.0 0.6% Max £5m Corporate Bonds (direct) 0.0 0.0% Max £5m Total 160.5 100.0%

Long Term Investments (beyond 365 days) 117.3 73% Max 95% Short Term Investments (up to 365 days) 52.5 27% Min 5% Total 169.8 100.0%

Compliance with Prudential Indicators for 2015/16 2015/16 Indicator Limit as at 31/03/16 External Debt Indicators Authorised Borrowing Limit £50,000,000 £66,400 Operational Borrowing Boundary £25,000,000 £66,400 Treasury Management Indicators Upper Limit on Fixed Rate Exposure 100% 52% Upper Limit on Variable Rate Exposure 100% 48% Sums Invested Beyond One Year (Nominal) £131,000,000 £83,514,000 Upper Limit on Long Term Investments Maturing (Nominal) in one year £25,000,000 £24,000,000 in two years £25,000,000 £9,000,000 in three years £25,000,000 £19,514,000 in four years £25,000,000 £19,000,000 in five years £25,000,000 £12,000,000 in six years £15,000,000 £0 in seven years £15,000,000 £0 in eight years £15,000,000 £0 in nine years £15,000,000 £0 in ten years £15,000,000 £0 Note: External Debt consists of Parish Deposits but there has been no requirement for short- term borrowing for cash flow purposes in 2015/16.

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21 of 21 This page is intentionally left blank Agenda Item 6

Report to: Cabinet 28 June 2016 Portfolio Holder Presenting: Cabinet Member for Finance, Service Delivery and Improvement

Subject: 2015/16 Revenue and Capital Outturn Status: Open Ward(s): All Key Decision: No Key Decision Ref: n/a Cabinet Member for Finance, Service Delivery and Report of: Improvement Head of Financial Services – Phillip Hood (01256) 845660 or email: [email protected] Contact: Principal Accountant - Paul Mahoney - (01256) 845598 or email: [email protected] Appendix 1a - Summary of Outturn Variances Appendix 1b – Outturn Reconciliation to Statement of Accounts Appendix 2 - Explanations of Outturn Variances by Portfolio Appendix 3 - Business Units Outturn Appendix 4 - Carry Forward Requests Appendices: Appendix5 - Additional Budget Requests Appendix 6 - Summary Capital Outturn Appendix 7 - Explanations of Variations Over £20,000 on Capital Expenditure Appendix 8 - Revised Capital Programme Appendix 9 - Capital Programme Changes Appendix 10 – Manydown outturn figures Papers relied on to

produce this report

1 Executive Summary

1.1 This report compares the final revenue and capital position for 2015/16 with the budget and identifies the reasons for variances. The report then goes on to recommend transfers to and from reserves.

1.2 The net revenue outturn was £626,100 under the latest budget with expenditure achieving 99.38% and income achieving 100.80% of their respective budgets.

1.3 After allowing for requested carry forwards of £137,800 and a contribution to the Interest Risk Reserve of £325,000 to replenish balances in accordance with the councils financial policies, there is a remaining surplus of £163,300 which it is recommended be used to provide additional budget provision for strategic budgets including Manydown, Leisure Park and Corporate Governance assurance.

Page 33 1.4 Final capital expenditure was £5,664,000 or 81% of the latest budget. This leaves a surplus of £1,335,000, consisting of £983,000 in delayed expenditure and £352,000 in savings.

1.5 The delayed expenditure is proposed to be re-phased into future years. The savings will be used to fund future capital schemes, with the exception of savings of £106,000 which were funded from revenue savings and are therefore recommended to be used to provide further revenue budget for the strategic budgets referred to above.

2 Recommendation

It is recommended that Cabinet requests Council to:

2.1 note the revenue outturn for 2015/16 was a net surplus of £626,100.

2.2 agree the carry forward requests , new funding requests for strategic budgets and the contributions to and from revenue reserves as shown in the shaded areas of Appendix 1(a) and 1(b).

2.3 note that any on-going revenue impacts identified from a detailed review of the outturn, will be included in budget monitoring reports for 2016/17 and the budget strategy for 2017/18.

2.4 note the capital outturn and agree the revised capital programme detailed in Appendix 8.

Page 34 PRIORITIES, IMPACTS AND RISKS

Contribution to Council Priorities This report accords with the council’s Policy and Budget Framework and supports the development of an effective and efficient council.

GLOSSARY OF TERMS Term Definition Capital outturn Actual expenditure in the year on long term fixed assets such as land, buildings or equipment (or grants for such items). Capital receipts Income from the sale of fixed assets Capital charges or capital financing Charges to reflect the cost of the Council holding costs capital assets e.g. depreciation. Capital charges are reversed in the accounts and therefore have no impact on Council Tax. Commuted sums One off lump sums paid by property developers to cover on-going maintenance costs associated with new developments e.g. open space maintenance. Revenue outturn Actual expenditure on day to day items Carry forward requests Requests to use unspent budget in one year to fund additional expenditure in the next. This is usually due to a delay in spending from one year to the next. Transfer Payments Expenditure on areas such as housing benefits where the council is making welfare payments Business Unit Recharges Recharges of staff and their related costs e.g. offices and IT.

3 2015/16 Revenue Outturn

3.1 The final revenue outturn was £626,100 under the latest budget approved in December which included the use of £350,000 from the Interest Risk reserve to make up for reduced investment income. The final outturn consisted of expenditure savings of £294,400 (0.62% of expenditure budgets) and additional income of £331,700 (0.80% of income budgets).

3.2 Many services were at or close to budget e.g. rent income from the council’s property portfolio was within £40,800 or (0.25%) of the budget of £16.1 million. The only areas in which there were budget variances greater than £100,000 were increased planning income of £278,500 and rental income from Festival Place was £114,000 lower than the revised budget due to a reduction in the level of forecast income following external audit of Festival Place accounts. After this adjustment the Festival Place income received was still £43,000 higher than the original budget.

Page 35 3.3 Further details of the final spend figures for each portfolio, along with reasons for variations over £10,000, are provided as Appendices 2 (services) and 3 (business units).

3.4 The table below breaks down the revenue outturn by portfolio. A more detailed analysis of the revenue outturn is shown in Appendices 1a and 1b.

Table 1 – Analysis of revenue outturn by portfolio

Latest Final Final Outturn Budget Outturn Variance* 15/16 15/16 15/16 £000’s £000’s £000’s Portfolio Services: Communities, Service Delivery and Improvement (217.5) (163.8) 53.7 Finance and Resources 1,909.2 1,910.9 1.7 Housing & Regeneration 451.6 346.6 (105.0) Leader 606.5 622.4 15.9 Partnerships 2,926.3 2,865.0 (61.3) Planning and Infrastructure (237.9) (622.6) (384.7) Regulatory Services and the Environment 3,945.0 3,886.6 (58.4) Agency Accounts (2,307.7) (2,415.2) (107.5) Holding Accounts 2,674.6 2,635.7 (38.9) Business Units 22,081.0 22,011.9 (69.1) Net cost of services 31,831.1 31,077.6 (753.5) Investment Property Trading Accounts (14,502.3) (14,412.6) 89.7 Interest & Investment Income (3,150.0) (3,081.1) 68.9 Disposal costs of fixed assets 0.0 3.4 3.4 Business Rates (3,392.0) (3,392.0) 0 Council Tax (6,637.0) (6,637.0) 0 Government Grants (8,642.8) (8,677.4) (34.6) Corporate Income (36,324.1) (36,196.7) 127.4 Total net cost of services before reserve (4,493.0) (5,119.2) (626.1) movements Contributions to Reserves 4,493.0 5,119.2 626.1 Net movement in General Fund Balance 0 0 0

*Note: In this table and throughout this report income, surpluses and favourable variances are shown as negative numbers (i.e. in brackets) and expenditure, deficits and unfavourable variances are shown as positive numbers.

3.5 Most of the outturn variations were forecast in the budget monitoring process and have been taken into account in developing the Council’s budget strategy and reserves strategy (e.g. the rent risk reserve, the interest rate risk reserve).

Page 36 3.6 The following table shows services with income or expenditure variations of more than £10,000 (detailed explanations can be seen in Appendix 2):

Table 2 – Main revenue forecast variations by portfolio

Final Outturn Portfolio Budget Book Service Area Variance £ Communities, Service Delivery & Improvement Car Parking 48,651 Highways Maintenance And Improvement 25,547 Community Support and Development (12,882) Finance & Resources Local Tax Collection 51,578 Council Tax Support Scheme (35,071) Housing & Regeneration Homelessness (58,965) Housing Strategy (30,553) Housing Benefits (11,786) Leader Economic Development 16,138 Partnerships Sports And Recreation (39,306) Planning & Infrastructure Planning Development (317,657) Parks & Open Spaces (62,742) Building Control (34,838) Local Land Searches 11,211 Planning Policy 19,891 Regulatory Services & The Environment Cemeteries (34,911) Street Cleansing (16,757) Elections (13,577) Environmental Protection (12,513) Kerbside Recycling & Bring Bank Sites 56,272 3.7 At the end of quarter 3 there was a forecast net surplus of £128,600 before replenishing the Interest Risk Reserve. The final revenue surplus of £626,100 was therefore £497,500 better than expected. Although this was a good performance further work will continue to further improve forecasting accuracy.

3.8 Detailed analysis of the outturn, including identification of further savings opportunities, will be undertaken with senior budget managers over the next 2 months, in order to identify any on-going budget implications for inclusion in the budget strategy and monitoring reports.

4 Additional Budget Requests and Carry Forward Requests

4.1 As detailed in Appendices 4 and 5, there are the following requests for budget carry forwards and additional budget totalling £407,100. Carry forward requests relate to unspent budget in 2015/16 which is now expected to be spent in 2016/17. The additional budget requests relate to areas that require additional funding.

Tables 3 &3a – Additional budget requests and carry forward requests

3. Additional Budget £ Requests Strategic budgets: Manydown Contingency & Corporate Governance 159,300 Assurance Leisure Park 90,000 Basing View - Breaking Barriers 20,000 Total budget requests* 269,300 * Includes funding of £106,000 of revenue funding for capital purposes savings Page 37

3a. Carry Forward Requests £ Planting in Town Centre areas 64,000 Homelessness 31,000 Housing Strategy 30,000 Youth Hub Feasibility 12,800

Total carry forwards 137,800

5 Proposed Contributions to and from Reserves

5.1 For the reasons explained below, the following allocations, totalling £407,100 are recommended to specific reserves. In accordance with Financial Regulations, funding may be released from reserves by: heads of service (up to £50,000), portfolio holders (up to £100,000), cabinet (up to £250,000) and Council (over £250,000).

Table 4 - Proposed carry forwards, new budget requests and contributions to and from Reserves

£ Net revenue outturn savings (626,100) Less: Replenishment of Interest Risk reserve (Note 1) 325,000 Net revenue outturn savings after replenishing Interest Rate Risk (301,100) reserve Revenue funding for capital purposes saving (Note 2) (106,000) Available for allocation (407,100) Allocations: Additional funding requests – Strategic budgets, including Manydown Contingency, Governance Assurance, Leisure Park and Basing View – 269,300 Breaking Barriers Carry forward requests 137,800 Total proposed allocations 407,100 Remaining balance 0

Notes:

1. This figure consists of £69,000 draw down from the reserve to cover the shortfall on interest income and a £394,000 replenishment of the risk reserve in accordance with the councils approved financial policy.

2. This is in respect of savings arising from capital programme schemes that had been funded from revenue in 2015/16.

5.2 As shown in appendices 1a and 1b a sum of £68,000 on the Operational Asset Maintenance Reserve will be moved into the Efficiency, Transformation and Digital reserve to provide funding of up to £451,000 for the Digital project, as agreed by Council on 25 February 2016.

Page 38 6 2015/16 Capital Outturn

6.1 Total capital expenditure in 2015/16 was £5,664,000. This is £1,335,000 less than the latest capital programme of £6,999,000 (excluding capital programme provisions) agreed as part of the budget report in February 2016. The table below shows that the variance from the revised programme was a combination of savings, delays, advanced and additional spend.

Table 5 – Reasons for capital variations

Reasons for £000’s Variance: Additional Spend 109.0 Advanced Spend 41.0 Delayed Spend (1,024.0) Savings (461.0) Total (1,335.0)

6.2 Appendix 7 summarises the final spend on schemes by portfolio and compares this against the latest programme.

6.3 The main variations on capital relate to the following schemes: Existing Satisfactory Purchases (£363,500), ICT Replacement (£227,000), Basing View – Infrastructure & Public Realm (£138,000) Housing Renewal Grants (£136,000) and AMP Works – Various (£102,000). Detailed reasons for variances against the latest programme are explained in Appendix 6.

7 Main Capital Programme Achievements

7.1 40 capital schemes were either commenced or completed during 2015/16 delivering a wide range of improvements for residents.

7.2 Disabled Facilities Grants

202 Mandatory Disabled Facilities Grants were approved in 2015/16 to assist with adapting homes for disabled residents to support independent living.

The adaptations funded by the Mandatory Disabled Facilities Grants included:

 124 bathroom adaptations;  48 stair lift installations;  16 Major adaptations including construction of extensions and provision of new facilities within existing dwellings;  3 ceiling hoists installations;  25 improvements to access into and around dwellings.

7.3 Existing Satisfactory Purchases

Funding of £262,500 was used as a loan to assist Sentinel Housing Association to secure 7 units of accommodation under an ESP (Existing Satisfactory Purchase) scheme. The properties enabled the council to ensure a significant decrease in the use of bed and breakfast for accepted homeless households. Page 39 7.4 Parking & Access

During 2015/16 a further nine sites were investigated and eight projects completed as part of the council’s prioritised Parking in Residential Areas programme. This included the construction of approximately 40 additional parking spaces within the four cul-de-sacs off Grampian Way, Buckskin, which are now fully occupied following flooding in 2014. In all, up to 100 new spaces were constructed in the following streets:

 Prescelly Close/Quantock Close/Exmoor Close/Bodmin Close (Buckskin)  Renoir Close (Grove)  Malvern Close (Buckskin)  Wessex Close (Brookvale & Kings Furlong)  Sunny Mead (Oakley)

In addition, drop kerbs were provided at approximately 20 locations to help improve access for disabled people.

8 Review of Existing Capital Programme 2016/17 – 2019/20

8.1 The capital programme, which was approved as part of the Policy and Budgetary Framework by Council in February 2016, has been revised to reflect actual capital expenditure in 2015/16 and the latest position on capital schemes. The revised programme is attached at Appendix 8. Details of changes made at scheme level are included as Appendix 9.

Table 6 – Summary of latest proposed capital programme

Total 2015/16 2016/17 2017/18 2018/19 2019/20 Programme £000 £000 £000 £000 £000 £000 Latest Approved Programme excl Capital Programme Provisions (March 2016) 6,999 6,904 6,481 3,691 3,455 27,530

2015/16 Advance Spend 41 (41) 0 0 0 0 2015/16 Delayed Spend (1,024) 1,023 1 0 0 0 Net Scheme Savings (461) 96 78 67 9 (211) Scheme Additions 109 (33) (3) 0 0 73 Scheme Virements 0 125 0 0 (225) (100) Other Scheme Rephasings 0 (222) 46 23 153 0 Additions Funded From S106 Developer Contributions 0 0 3 0 138 141 Additions Funded From New External Funding 0 5 0 0 0 5 New Proposed Programme excl Capital Programme Provisions June 2016 5,664 7,857 6,606 3,781 3,530 27,438

Page 40 9 Capital Receipts

9.1 Capital receipts are monitored and reviewed monthly. The table below shows actual receipts received in 2015/16.

Table 7 – Capital Receipts

Outturn Type of Receipt 2015/16 £ Receipts 100% available for Capital Programme:

Vehicles 124,200 Property 135,100 Loan Repayment 2,200

Total Capital Receipts 261,500 9.2 Total capital receipts received in 2015/16 were £261,500 which mainly related to proceeds from property land disposals and lease restructuring of £135,000 and vehicle sales of £124,000.

9.3 These new capital receipts will provide additional funding for future capital. schemes. Capital receipts generated are required to fund the existing capital programme.

10 Joint Committees

10.1 The Joint Manydown Committee’s (JMC) final position for 2015/16 was net income of £137,400 compared to a budget of £128,900 (see appendix 10). The variance was due to a lower charge than estimated for the one off cost of seed collection. Estimates have been made for Crown estates charges and tree works and maintenance as figures were not available from Hampshire County Council at year end.

10.2 The net income was divided equally between the council and HCC, with this council’s share included in Industrial & Commercial income.

10.3 The final accounts for the JMC are shown in Appendix 10. In addition, a separate report, drawing together all aspects of Manydown, will be reported to the Audit and Accounts Committee.

11 Corporate Implications

11.1 Financial Implications

11.1.1 The financial implications are included throughout the report.

11.2 Risk Issues

11.2.1 There are no risks arising from this report as it is concerned with the reporting of historic factual information.

Page 41 11.3 HR Issues

11.3.1 There are no significant issues.

11.4 Equalities

11.4.1 No significant implications

11.5 Legal Implications

11.5.1 No significant implications

11.6 Any Other Implications

11.6.1 No significant other implications.

12 Communication and Consultation

12.1 Consultation will be through the cabinet report and consultation process.

13 Portfolio Holder Comments

13.1 This report shows that over the past year the council has successfully managed and controlled its finances within the agreed budget. In addition, through the early identification of savings and additional income in the mid- year monitoring report to Cabinet in December 2015, the council has also been able to fund an extension of the grant programmes for disabled facilities grants and the purchase of existing dwellings to provide temporary accommodation for those at risk of homelessness.

13.2 Budgets in areas such as planning have already been adjusted to reflect the higher level of income experienced in 2015/16 and a further analysis of the outturn will be undertaken as part of the budget strategy process to ensure that any on-going implications are reflected in future years’ budgets.

13.3 Whilst we will continue to strive for improved budgeting and forecasting accuracy, it should be recognised that many areas are demand led and difficult to accurately forecast as they are beyond the council’s immediate control e.g. interest rates and income from planning applications. In light of this I believe the Council’s performance in keeping expenditure within budgets and achieving nearly 101% of income budgets demonstrates strong financial management and control.

14 Conclusion

14.1 It is pleasing to report that overall revenue expenditure was £294,400 below budget whilst income exceeded the budget by £331,700. Furthermore, the early identification of savings enabled new initiatives to be agreed in December such as support for the EU rural business grant programme, increasing capital funding for Disabled Facilities Grants and funding for the purchase of existing properties to support homeless families as well as providing funding to the Basing View Reserve.

14.2 Capital expenditure in 2015/16 was £5,664,000 which included significant investment in housing and improvements to the built environment.

Page 42 Appendix 1a

Variances on Monitored Budgets (i.e. excluding centrally controlled and statutory items) Reconciled to the Original Budget and presented in the Statement of Accounts Format

Centrally Monitored Restated Controlled Monitored Approved Monitored Variance Original Original Original Budget Latest Monitored (Under)/ Budget Budget Budget Virements Budget Actual Overspend

INCOME AND EXPENDITURE STATEMENT 2015/16 2015/16 2015/16 2015/16 2015/16 2015/16 2015/16 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Portfolios Leader 2,238 1,721 517 89 606 622 16 Housing and Regeneration 4,397 4,175 222 230 452 347 (105) Communities,Service Delivery and Improvement 4,746 4,985 (239) 22 (217) (164) 53 Finance and Resources 2,566 1,520 1,046 863 1,909 1,911 2 Partnerships 5,035 2,076 2,959 (33) 2,926 2,865 (61) Planning and Infrastructure 6,696 6,701 (5) (233) (238) (623) (385) Regulatory Services and the Environment 9,801 5,848 3,953 (8) 3,945 3,887 (58) Portfolio Totals 35,479 27,026 8,453 930 9,383 8,845 (538)

Business Units 0 (21,888) 21,888 193 22,081 22,012 (69) Agency and Holding Accounts 0 (637) 637 (269) 368 221 (147) Cost of Services 35,479 4,501 30,978 854 31,832 31,078 (754)

Corporate Items Investment Property Trading Account (12,996) 1,779 (14,775) 273 (14,502) (14,412) 90 Interest and Investment Income (3,500) 0 (3,500) 350 (3,150) (3,081) 69 Pension Fund Return on Assets and Interest Costs 2,850 2,850 0 0 0 0 0 Income from Council Tax (6,637) 0 (6,637) 0 (6,637) (6,637) 0 Net Income from Business Rates (3,028) 0 (3,028) (365) (3,393) (3,393) 0 Net Loss on Disposal of Property, Plant and Equipment 0 0 0 0 0 3 3 Capital Grants Income (566) (566) 0 0 0 0 0 Non-Ringfenced Government Grants Income (7,815) 0 (7,815) (828) (8,643) (8,677) (34) Net (Surplus) / Deficit on the Provision of Services 3,787 8,564 (4,777) 284 (4,493) (5,119) (626)

Adjustments between accounting basis and regulation Revenue Funding of Capital Expenditure 8,093 8,093 0 0 0 0 0 Pension Fund Reserve (2,850) (2,850) 0 0 0 0 0 Capital Charges (6,802) (6,802) 0 0 0 0 0 Net (Surplus) / Deficit before Reserve Movements 2,228 7,005 (4,777) 284 (4,493) (5,119) (626)

Financing of Capital from Revenue Reserves Revenue Reserve for Capital Purposes (General) (4,505) (4,505) 0 0 0 0 0 Local Infrastructure Fund Reserve (1,000) (1,000) 0 0 0 0 0 Strategic Infrastructure Reserve (1,600) (1,600) 0 0 0 0 0

Contributions to/(from) Earmarked Reserves Revenue Reserve for Capital Purposes 94 0 94 588 682 576 (106) Local Infrastructure Fund (LIF) Reserve 1,876 0 1,876 (41) 1,835 1,835 0 Strategic Infrastructure Reserve 1,877 0 1,877 0 1,877 1,877 0 Green Investment Reserve (50) 0 (50) 0 (50) (50) 0 Rent Risk Reserve 587 0 587 0 587 587 0 Interest Risk Reserve 925 0 925 (350) 575 900 325 Corporate Bond Reserve (500) 0 (500) 0 (500) (500) 0 Stability and Resilience Risk Reserve 116 0 116 0 116 116 0 Business Rate Risk Reserve 466 0 466 365 831 831 0 Economic Development & Capital Priorities Reserve 867 0 867 (71) 796 796 0 Invest to Save Reserve 0 0 0 0 0 0 0 Invest to Grow Reserve 0 0 0 (90) (90) (90) 0 Basing View Reserve 0 0 0 89 89 89 0 Manydown Reserve (665) 0 (665) (403) (1,068) (1,068) 0

Efficiency, Transformation and Digital Reserve (17) 0 (17) 0 (17) 51 68 Local Plan Reserve (22) 0 (22) 0 (22) (22) 0 Trees Maintenance Reserve (100) 0 (100) 0 (100) (100) 0 Operational Asset Maintenance Reserve (167) 0 (167) (100) (267) (335) (68) Transport Reserve (101) 0 (101) 0 (101) (101) 0 Climate Change Reserve (20) 0 (20) 0 (20) (20) 0 Budget Carry Forward Reserve (389) 0 (389) (271) (660) (522) 138 Budget Carry Forward Reserve (Additional Budget Requests) 0 0 0 0 0 269 269 Commuted Sums Reserve 100 100 0 0 0 0 0 Total Contributions to/(from) Reserves (2,228) (7,005) 4,777 (284) 4,493 5,119 626 Net (Surplus) / Deficit after Reserve Movements 0 0 0 0 0 0 0

Page 43 This page is intentionally left blank Appendix 1b Reconciliation Between Monitored Actuals and Actuals Reported in the Statement of Accounts

Capital Other Pension Accounting Support Statutory Statement Monitored Adjust- Adjust- Services Adjust- of Accounts Actual ments ments Recharges ments Actual INCOME AND EXPENDITURE STATEMENT 2015/16 2015/16 2015/16 2015/16 2015/16 2015/16 £'000 £'000 £'000 £'000 £'000 £'000

Portfolios Leader 622 75 1,777 2,474 Housing and Regeneration 347 1,399 3,091 4,837 Communities,Service Delivery and Improvement (164) 900 2,175 2,911 Finance and Resources 1,911 (1,478) 1,592 2,025 Partnerships 2,865 (439) 990 3,416 Planning and Infrastructure (623) 160 6,902 6,439 Regulatory Services and the Environment 3,887 3 91 6,132 10,113 Portfolio Totals 8,845 (1,475) 2,186 22,659 0 32,215

Business Units 22,012 1,455 5 (23,437) (35) 0 Agency and Holding Accounts 221 1,081 (1,302) 0 Cost of Services 31,078 (20) 3,272 (2,080) (35) 32,215

Other Operating Expenditure Payments to Parishes 0 1,128 1,128

Financing and Investment Income and Expenditure Investment Property Trading Account (14,412) (5,738) 2,080 (18,070) Interest and Investment Income (3,081) 14 (3,067) Net Interest on Pension Liability 0 2,360 2,360 Net Gain on Disposal of PPE Assets 3 7 10 Taxation and Non-Specific Grant Income Council Tax Income (6,637) (1,085) (7,722) Net Business Rates Income (3,393) 524 (2,869) Capital Grants and Contributions 0 (670) (670) Non-Ringfenced Government Grants (8,677) (8,677)

Net (Surplus) / Deficit on the Provision of Services (5,119) 2,340 (3,115) 0 532 (5,362)

Adjustments between accounting basis and regulation Pension Fund Reserve 0 (2,340) (2,340) Collection Fund Adjustment Account 0 (567) (567) Paid Absences Adjustment Account 0 35 35 Revenue Funding of Capital Expenditure 0 1,897 1,897 Capital Grants and Contributions Unapplied 0 104 104 Revaluation of Investment Property 0 5,738 5,738 Disposal of Investment Property 0 0 Disposal of Property, Plant and Equipment 0 (7) (7) Investment Premiums 0 (14) (14) Capital Charges 0 (3,937) (3,937)

Net (Surplus) / Deficit before reserve movements (5,119) 0 666 0 0 (4,453)

Financing of Capital from Revenue Reserves Revenue Reserve for Capital Purposes (General) 0 (110) (110) Revenue Reserve for Capital Purposes (Green Investment) (69) (69) Affordable Housing Reserve 0 0 Strategic Infrastructure Reserve 0 0 Community Infrastructure Reserve 0 (520) (520) Contributions to/(from) Earmarked Reserves Commuted Sums Reserve 0 33 33 Previously Approved Contributions to Reserves 4,493 4,493

Proposed Contributions to Reserves (see appendix 1a) 626 626 Movement in General Fund Balance 0 0 0 0 0 0

Page 45 This page is intentionally left blank APPENDIX 2

Explanations of Outturn Variances by Portfolio

(Note in the following tables, favourable variations are shown as negative figures and unfavourable variances are shown as positive figures)

Communities, Service Delivery & Improvement Portfolio – £53,700 unfavourable variance

Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Car Parking (1,720,500) (1,671,849) 48,651 Community Safety 232,700 225,000 (7,700) Community Support And Development 739,400 726,518 (12,882) Core Funding to Community Groups 12,100 10,855 (1,245) General Parish Grants 112,200 112,037 (163) Highways Maintenance And Improvement 175,600 201,147 25,547 Public Conveniences 26,200 27,709 1,509 General Grants Bequests & Donations 204,800 204,780 (20) Grand Total (217,500) (163,803) 53,697

Explanations for variations over £10,000

Car Parking - £48,700 unfavourable variation

Mainly due to additional expenditure, in line with forecasts, for resurfacing works, gritting, and line marking the Alencon Link car park partially offset by additional income from season tickets sales.

Community Support & Development - £12,800 favourable variation

This variation is due to:

 Additional expenditure of £2,600 in respect of the council’s liability for payment of business rates for Winklebury Community Centre

 Reduced insurance commission income of £3,200 due to the lower insurance premiums paid by the council following a change in the councils insurance provider.

This is offset by one-off income due to the recharge of prior-year running costs for community centres to the occupiers.

Highways Maintenance & Improvement - £25,500 unfavourable variation

This is mainly due to the payment to Hampshire County Council for 2014/15 street lighting energy and maintenance being higher than the amount accrued for in the council's 2014/15 accounts. Additional expenditure for traffic management was also incurred.

Page 47 APPENDIX 2

Finance & Resources Portfolio- £1,700 unfavourable variance

Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Council Tax Support Scheme 0 (35,071) (35,071) Local Tax Collection (296,600) (245,022) 51,578 Markets 10,500 2,374 (8,126) Non Distributed Costs 1,482,200 1,477,699 (4,501) Other Council Property (106,900) (109,038) (2,138) CLG Studies 820,000 820,000 (0) Grand Total 1,909,200 1,910,942 1,742

Explanations for variations over £10,000

Council Tax Support Scheme - £35,100 favourable variation

The council tax benefit scheme ended in March 2013 and was replaced by the locally agreed council tax support scheme, which is accounted for separately as part of the Collection Fund. This variance arises from technical adjustments relating to the old scheme & comprises a £4,400 reduction in the allowance for doubtful debts, overpayment invoices raised for £2,000 and a £28,600 adjustment for prior year overpayments/underpayments.

Local Tax Collection - £51,600 unfavourable variation

New computer software was purchased at a cost of £20,000 which enabled customers to manage their accounts online as the existing software was no longer fit-for-purpose.

Court fees income was lower by £36,700 and this is due to less court action being required for the recovery of debt.

Page 48 APPENDIX 2

Housing & Regeneration Portfolio - £105,000 favourable variance

Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Enabling Affordable Housing 15,000 14,860 (140) Homelessness 218,700 159,735 (58,965) Housing Benefits (55,100) (66,886) (11,786) Housing Needs And Advice 15,200 18,334 3,134 Housing Strategy 60,700 30,148 (30,552) Private Sector Housing Renewal 0 401 401 Private Sector Housing Standards Enforcement 700 (5,077) (5,777) Top Of The Town 196,400 195,109 (1,291) Grand Total 451,600 346,624 (104,976)

Explanations for variations over £10,000

Homelessness - £59,000 favourable variation

Funding was earmarked during 2015/16 to provide initiatives which support implementation of the newly devolved supporting people commissioning arrangement. The initiatives will be “one off” and include rolling out essential bespoke staff and partner training, facilitation of crowd fund raising platform and initiation of Making Every Adult Matters (MEAM) approach. These services have been commissioned but completed delivery will not take place until Quarters 1 and 2 of 2016/17, and therefore there is an underspend of £31,000, which is requested to be carried forward to 2016/17.

Of the remaining favourable variance £3,800 is due to a reduction in the provision for doubtful debts and £24,200 being additional income due to a higher level of invoicing for rent and deposit loans. It is however difficulty to predict the recovery rate for these debts, so future bad debt provision adjustments may be required.

Housing Benefits - £11,800 favourable variation

Rent Allowances

The overall increase in net costs compared to budget (£13.8k for the year is due to an increase in eligible overpayments, including particularly the continuing roll-out of the first-time RTI. These adjustments cause loss of subsidy/income prior to the overpayments being recovered. The increase in overpayments compared to estimates has however been largely offset by additional recovery of overpaid benefit from on-going benefits and invoiced debt. The original estimates were prepared before RTI had been rolled out.

Rent Rebates

There is an overall reduction in net costs compared to budget (-£32.7k) is due to a significant reduction in the use of bed and breakfast accommodation in 2015/16. This is mainly as a result of the impact of ESP properties (providing family sized accommodation).

The remaining unfavourable variance is due to additional costs of £5,200 in supplies and

Page 49 APPENDIX 2

services, which is funded by additional income which is held in another area of the council’s accounts.

Housing Strategy - £30,500 favourable variation

Funding was earmarked during 2015/16 to support the review, consultation, development and implementation for a revised housing strategy. This has been an express requirement by Cabinet / SMB following significant and sustained acceleration of central government policy regarding planning and affordable housing delivery.

The funding also supports the investigation, feasibility and analysis of windfall opportunities for potentially high profile and innovative initiatives becoming available which support delivery of the Council’s revised Housing and Homelessness Strategy.

Whilst the Council has committed to pursuing work on both these areas and has already commenced, full and completed delivery will not take place until 2016/17, and therefore there is an underspend of £30,500, and a carry forward request has been made for £30,000.

Page 50 APPENDIX 2

Leader Portfolio - £15,900 unfavourable variance

Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Corporate Management 288,700 294,624 5,924 Economic Development 279,900 296,038 16,138 Emergency Planning 23,200 22,051 (1,149) Strategic Partnerships 1,400 792 (608) Tourism 13,300 8,845 (4,455) Grand Total 606,500 622,351 15,851

Explanations for variations over £10,000

Economic Development - £16,100 unfavourable variation

Overspend represents a grant to Destination Basingstoke which has been offset by grant savings in other portfolios. Budget provision has been made for 2016/17.

Page 51 APPENDIX 2

Partnerships Portfolio – £61,300 favourable variance

Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Arts & Heritage 1,448,600 1,439,839 (8,761) Events & Public Entertainment 193,900 192,054 (1,846) Health Improvement 8,900 8,445 (455) Public Transport Support To Operators 534,500 530,481 (4,019) Sport And Recreation Participation And Development 137,900 134,065 (3,835) Sports And Recreation 598,100 558,794 (39,306) Transportation Policy & Strategy 4,400 1,322 (3,079) Grand Total 2,926,300 2,865,000 (61,300)

Explanations for variations over £10,000

Sports & Recreation - £39,300 favourable variation

This is due to an on-going saving of £28,000 in respect of insurance premiums payable for leisure facilities due to a change in the council's insurance provider, partly offset by a £5,900 reduction in insurance commission income.

In addition there is a reduction in the management fee at Aquadrome and Tadley Pool as a result of utility costs being lower than anticipated.

Page 52 APPENDIX 2

Planning & Infrastructure Portfolio – £384,700 favourable variance

Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Building Control (427,800) (462,638) (34,838) Land Drainage 31,700 31,180 (520) Local Land Searches (273,500) (262,289) 11,211 Parks & Open Spaces 1,202,200 1,139,458 (62,742) Planning Development (1,006,400) (1,324,057) (317,657) Planning Policy 235,900 255,791 19,891 Grand Total (237,900) (622,554) (384,654)

Explanations for variations over £10,000

Building Control - £34,800 favourable variation

The most significant impact has been from additional income received above the budget and this relates mainly to an increase in the number of applications received.

Local Land Searches - £11,200 unfavourable variation

There is a slight reduction in income compared to budget which relates to a downturn in the number of search requests. It is unclear whether this relates to any specific market trends in the property market. There are some additional supplies and service costs which largely relate to a necessary audit of the case management system from the service provider in preparation for the proposed Land Registry takeover of the Land Charges function.

Parks & Open Spaces - £62,700 favourable variation

A one off refund due, following an investigation of water charges, paid by the council.

Planning Development - £317,700 favourable variation

Additional income of £278,500 has been received for a number of large developments throughout the year. This includes the Critical Care Unit at Ganderdown Copse which incurred a fee of approximately £94,000. In addition there have been a significant number of planning applications for residential development in light of the council’s 5 year housing land supply position during the 15/16 period together with a number of large scale reserved matters applications for residential developments that have previously received outline planning permission eg. Razors Farm, Kennel Farm, Chapel Hill. As has been reported previously following some analysis of the timescales associated with these types of development it is difficult to predict when they are likely to be submitted as they do not all relate to the timing of any pre-application and in some instances are not subject to pre-application engagement at all. The position will however be monitored closely on a monthly basis through the budget monitoring process.

The cost of defending planning appeals was £31,400 less than expected, and there were also supplies and services savings of £7,800.

Page 53 APPENDIX 2

Planning Policy - £19,900 unfavourable variation

In quarter 3, a saving of £40,000 was identified against the budget and was given up. This was based on assumed consultancy, legal fees and planning inspectorate costs. However, the planning inspectorate costs/hours have now been confirmed as part of the outturn and there will now be an overspend on the planning policy service area.

Page 54 APPENDIX 2

Regulatory Services & the Environment Portfolio - £58,400 favourable variance

Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Cemeteries (76,000) (110,911) (34,911) Commercial Waste Collection 0 (5,718) (5,718) Democratic Representation 705,600 702,408 (3,192) Elections 289,100 275,523 (13,577) Environmental Health Initiatives 25,300 18,187 (7,113) Environmental Health Licensing (177,100) (173,678) 3,422 Environmental Protection 12,100 (413) (12,513) Food Safety (9,800) (5,822) 3,978 Household Residual Waste 2,117,800 2,111,088 (6,712) Kerbside Recycling & Bring Bank Sites 984,100 1,040,372 56,272 Pest Control 41,400 34,121 (7,279) Private Hire & Hackney Carriages (144,000) (152,021) (8,021) Public Health 24,900 16,995 (7,905) Street Cleansing 113,400 96,643 (16,757) Sustainable Development Strategies 38,300 39,647 1,347 Trees & Forestry Policy (100) 163 263 Grand Total 3,945,000 3,886,584 (58,416) Explanations for variations over £10,000

Cemeteries - £34,900 favourable variation

Additional income, as a result of higher number of burials during 15/16 particularly in relation to pre-purchases and income recovered for public burials.

Elections - £13,600 favourable variation

Net savings of £7,000 on local elections across a number of budget heads and £6,000 on electoral registration being unspent grant receipts.

Environmental Protection - £12,500 favourable variation

This is largely attributable to additional income of £10,300 arising from recharges for sampling and analysis charges associated with private water supplies.

Kerbside Recycling & Bring Bank Sites - £56,300 unfavourable variations

There is additional spend of £26,000 in respect of replacement bins which are issued free of charge in accordance with council policies. In addition recycling credit received from HCC was £32,000 less than budgeted for.

Street Cleansing - £16,800 favourable variation

A £7,000 underspend for parish litter grants has been identified and the budget has been adjusted for 2016/17.

Page 55 APPENDIX 2

In addition to this, extra income has been received from owners paying to recover vehicles (collection, storage and delivery costs) after they have been removed by the council.

Page 56 APPENDIX 2

Analysis of Outturn Variances for Trading Accounts - £89,700 unfavourable variance

Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Basing View Regeneration 199,200 199,234 34 Festival Place (686,000) (571,549) 114,451 Industrial And Commercial (12,258,700) (12,348,458) (89,758) Leisure Park (290,700) (290,981) (281) Manydown Development 739,700 739,624 (76) The Malls (2,141,300) (2,071,752) 69,548 CLG Studies 0 0 0 Manydown Operations (64,500) (68,711) (4,211) Grand Total (14,502,300) (14,412,593) 89,707 Explanations for variations over £10,000

Festival Place - £114,500 unfavourable variation

A one-off budget virement was processed after notification was received from the lessee of Festival Place in October 2015 that an amount of £166,000 was due to the council following completion of the final accounts for 2013/14 and 2014/15.

The council was subsequently advised in December 2015 that the amount due was only £56,800. This has resulted in a budget variance of £109,200. In addition, one-off fees payable to the council for landlord's consent in respect of occupation changes etc were £5,000 lower than budgeted.

Industrial & Commercial - £89,800 favourable variation

This is mainly due to:

(i) additional on-going rental income of £57,700 which was achieved through the net impact of rent reviews at various sites and higher than budgeted occupancy levels at the council's multi-let sites such as Bear, Eagle & Lion Court. This reflects successful action by Property Services in respect of agreeing new leases, achieving lettings of vacant units and settling rent reviews

(ii) a one-off favourable adjustment of £49,700 to the council's bad debt provision.

(iii) reduced income of £46,000 as the lower insurance premiums paid by the council following a change in the councils insurance provider reduced the amount to be recovered from tenants.

The Malls - £69,500 unfavourable variation

Mainly due to planned maintenance expenditure of £15,300 which cannot be recovered from tenants and reduced income of £54,200 which is due to an adjustment to the councils bad debt

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provision of £47,500 and the impact of various occupation changes and rent reviews which has resulted in reduced net income of £6,700.

Page 58 APPENDIX 2

Analysis of Outturn Variances for Holding & Agency Accounts

Holding Accounts - £38,900 favourable variation

Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Council Offices 1,191,600 1,178,687 (12,913) IT Hardware And Software Maintenance Costs 868,500 870,354 1,854 Other Holding Accounts 0 0 0 Vehicles 614,500 586,678 (27,822) Grand Total 2,674,600 2,635,720 (38,880)

Explanations for variations over £10,000

Council Offices - £12,900 favourable variation

The under-spend is mainly due to the planned replacement of I.T. equipment being put on hold until a review of future requirements has been completed by the I.T. team.

Vehicles - £27,800 favourable variation

A saving on fuel costs across the operation team fleet, were partially offset by purchase of hedge/brush cutters plus hire of sweeper for leaf clearing at Hart.

Page 59 APPENDIX 2

Agency Accounts - £107,500 favourable variance

Final Outturn Latest Final Outturn Variation to Budget Book Service Area Budget £ Latest Budget £ £ Agency - BDBC Parking Control (134,400) (140,820) (6,420) Agency - BEST Schemes 0 (31) (31) Agency - Central Government Elections And Referenda 0 0 0 Agency - Hart Customer Services (168,400) (230,902) (62,502) Agency - Hart Economic Development (54,200) (31,773) 22,427 Agency - Hart Grounds Maintenance (409,600) (435,961) (26,361) Agency - Hart Legal Services (267,000) (267,000) 0 Agency - Hart Licensing (133,100) (124,060) 9,040 Agency - Hart Street Cleansing (534,300) (562,325) (28,025) Agency - Highways (582,200) (594,817) (12,617) Agency - Hart Internal Audit (24,500) (24,500) 0 Agency - County Council Elections 0 0 0 Agency - Hart Telephony 0 (3,000) (3,000) Grand Total (2,307,700) (2,415,188) (107,488)

Explanations for variations over £10,000

Hart Customer Services - £62,500 favourable variation

Implementation costs for the contact centre shared service were incurred in the previous year and then recharged during 15/16. This has resulted in a saving for 15/16.

Hart Economic Development - £22,400 unfavourable variation

This is due to the post becoming vacant in October and it was agreed with Hart not to recruit a replacement. This resulted in reduced income and the unfavourable variance is offset by a favourable variance in the business unit accounts.

Hart Grounds Maintenance - £26,400 favourable variation

This is due to extra income from Hart for additional works, including the first flourish and weed control of HCC areas.

Hart Street Cleansing - £28,000 favourable variation

Additional income from Hart for additional leaf clearing works and increased pension costs

Highways - £12,600 favourable variation

Primarily as a result of the reduced cost of the weed control contract

Page 60 APPENDIX 3

Business Units Outturn 2015/16 - £69,100 favourable variance

Latest Actuals To Outturn Budget Date Variation Subjective Heading £ £ £ Employees 21,300,800 21,067,800 (233,000) Supplies & Services 993,100 1,099,300 106,200 Income (212,900) (155,200) 57,700 Grand Total 22,081,000 22,011,900 (69,100)

Explanations for variations over £10,000

Employees – £233,000 favourable variation

The following table shows the main categories of budget variations:

Description Variation Comments £ Net vacant post savings after meeting savings targets and one-off employee costs Payroll costs (272,900) incl agency staff, redundancy/retirement costs/car users allowance.

Staff Advertising 93,800 Costs of staff advertising & recruitment.

Increased expenditure on the corporate Staff training 7,100 training programme

Supplies & Services - £106,200 unfavourable variation

This variation is mainly due to additional expenditure on external advice and professional services to provide support to teams such as electoral services where key officer posts were vacant.

Income - £57,700 unfavourable variation

This is mainly due to less than planned chargeable capital work being undertaken by Property Services (£43,500) and Community Design & Regeneration (£10,100) staff resulting in reduced charge to the capital programme.

Page 61 This page is intentionally left blank APPENDIX 4

Carry Forward requests 2015/16

Homelessness – £31,000

This funding was earmarked during 2015/16 to provide initiatives which support implementation of the newly devolved supporting people commissioning arrangement. The initiatives will be “one off” and include rolling out essential bespoke staff and partner training, facilitation of crowd fund raising platform and initiation of Making Every Adult Matters (MEAM) approach. These services have been commissioned but completed delivery will not take place until Quarters 1 and 2 of 2016/17. If funding were to be drawn down from 2016/17 budgets it would have to be taken out of front line service commissioning. The resulting loss of services commissioned would reduce the level of support available for vulnerable residents and could lead to increases in homelessness

Housing Strategy - £30,000

Funding was earmarked during 2015/16 to support the review, consultation, development and implementation for a revised housing strategy. This has been an express requirement by Cabinet / SMB following significant and sustained acceleration of central government policy regarding planning and affordable housing delivery. The funding also supports the investigation, feasibility and analysis of windfall opportunities for potentially high profile and innovative initiatives becoming available which support delivery of the Council’s revised Housing and Homelessness Strategy. Whilst the Council has committed to pursuing work on both these areas and has already commenced, full and completed delivery will not take place until 2016/17. There is no on-going funding identified to otherwise support these strategically significant and mandated pieces of work.

Planting in Town Centre areas - £64,000

Approval for a carry forward of £64,000 to complete landscaping works outside of the railway station and along part of Churchill Way central reserve is requested. There have been unforeseen delays in implementing the scheme and in addition more detailed costs have been established which have significantly increased the overall cost of the scheme.

Funding of £45,000 was secured from a forecast corporate underspend in 2015/16 to replant the landscaped areas in question. The purpose of this was to improve the appearance of the public realm at these two key locations, to complement other works carried out within the town (e.g. Top of the Town, Basing View), and to replace landscaped areas where planting had become over-mature and towards the end of its life. I am advised that the original works proposed were estimated to have cost in the region of £90,000 and that the scheme was reduced in scale in order to meet the lower budget of £45,000.

The intention had been to undertake this work during the 2015/16 period, and officers had been liaising with Hampshire County Council (who are responsible for much of the land in question) on the details of the planting and a timeframe for the completion of the work.

However, due to on-going road works elsewhere in the town (specifically Black Dam Roundabout and at the A33/A339 junction) HCC has only recently agreed to reserve the

Page 63 APPENDIX 4 road space to allow these planting projects to happen. This means that the works in question have been delayed and cannot be undertaken until April, in the new 2016/17 financial year.

Additionally, in developing the proposals it has become apparent that the costs for the works have increased. This is primarily due to the need for more extensive traffic management than was originally anticipated but also due to the works being priced according to more detailed tendered rates within the Landscape Framework Contract which have provided a greater certainty over costs.

Youth Hub Feasibility works- £12,800

Phase 1 of this feasibility has been completed however if the decision is made to progress to the next phase (Identification of premises and business case) a carry forward will be required.

Page 64 APPENDIX 5

Additional Budget Requests 2016/17

Manydown & Corporate Governance Assurance Contingency - £159,300

There are potential cost pressures resulting from additional archaeological survey work that may be required ahead of the submission of the outline planning permission for Manydown. Additional contingency budget is also required for specialist third party advice to provide appropriate corporate assurance associated with strategic projects which are complex, large scale and require innovative solutions and careful risk management.

Leisure Park Fees - £90,000 Additional budget is required for additional work on viability which will require additional input from external consultants and for a S123 valuation of the final terms by an independent valuer.

In the event a Development Agreement is completed with New River Retail, the council will receive £100,000 towards its incurred costs of the agreement. (Abortive fees are not covered)

Basing View - Breaking Barriers - £20,000 Funding is required to appoint consultants to determine whether Basingstoke is a suitable location for a public sector service hub and attract government departments that are de-centralising from London. The consultants are uniquely positioned to undertake this specialist study.

Page 65 This page is intentionally left blank 2015/16 CAPITAL PROGRAMME MONITORING REPORT Appendix 6

ANALYSIS BY PORTFOLIO

Spend as at 31st March 2016

Final Outturn % of Variation Latest Latest Budget Final Outturn Portfolio against Latest Budget Budget Spent

£000s £000s £000s %

Communities, Service Delivery & Improvement 1,182 1,065.7 (116.3) 90% Page 67 Page Planning & Infrastructure 233 249.6 16.6 107%

Regulatory Services & The Environment 796 734.4 (61.6) 92%

Housing & Regeneration 2,297 1,726.4 (570.6) 75%

Partnerships 454 358.7 (95.3) 79%

Leader 0 0.0 0.0 0%

Finance & Resources 2,037 1,529.6 (507.4) 75%

TOTAL 6,999 5,664.4 (1,334.6) 81%

APPENDIX 6 APPENDIX This page is intentionally left blank APPENDIX 7

Explanations of Capital Variations over £20,000

Communities, Service Delivery & Improvement Portfolio - £116,300 favourable variation

Final Outturn Capital Scheme Title Latest Budget Final Outturn Variation to (per Capital Programme) £000's £000's Latest Budget £000's Beggarwood Community Facility 22.0 22.8 0.8 CCTV 115.0 57.5 (57.5) Developers Contributions for 116.0 114.2 (1.8) EastropReplacement/Refurbishment Community Facility of Community 45.0 25.1 (19.9) Leisure Facilities and Community Buildings 62.0 61.6 (0.4) Grants Local Infrastructure Fund 522.0 520.5 (1.5) Parking And Access Schemes 300.0 263.9 (36.1) Grand Total 1,182.0 1,065.7 (116.3)

CCTV - £57,500 delayed spend

There have been some delays to the upgrade due to some issues with compatibility of the cameras originally proposed as well as a number of blockages and damage to the existing cable ducts, which needed to be repaired. This work has now been completed, replacement cameras have been purchased and new fibre has been installed to each of the camera sites. We are currently waiting on confirmation of a licence to replace the cable running through Festival Place to the control room, at which stage these cameras will be replaced.

Eastrop Community Facility - £19,900 delayed spend/saving

There were delays in replacing the internal doors due to contractor availability and the lead in time to manufacture the doors. These works are scheduled to be completed before the end of May ‘16. There was also a saving on the scheme however this was funded from S106 monies therefore options for enhancement s to the building are currently being investigated in line with the S106 agreement.

Parking & Access Schemes - £36,100 delayed spend

This variance is as a result of delays on two schemes;

• Landscaping works at Buckskin originally planned to for the final quarter of the financial year were unable to be completed. • Although works have commenced at Sunnymead in Oakley they were unable to be fully completed by the 31 March 2016.

Page 69 APPENDIX 7

Finance & Resources Portfolio - £507,400 favourable variation

Final Outturn Capital Scheme Title Latest Budget Final Outturn Variation to (per Capital Programme) £000's £000's Latest Budget £000's AMP Works (various sites) 250.0 147.7 (102.3) AMP: Parks - Down Grange Irrigation Work 3.0 2.5 (0.5) Basing View - Infrastructure & Public Realm 529.0 390.7 (138.3) Basing View Pedestrian Bridge 0.0 70.5 70.5 Estates Management System 38.0 0.0 (38.0) ICT Replacement Programme 427.0 199.6 (227.4) Invest to Grow - Bear, Eagle, Lion Court and 0.0 3.5 3.5 PaddockFormer Oil Road Depot Medical Site Centre 32.0 10.8 (21.2) Photovoltaic Panels: Pilot Project 0.0 -1.0 (1.0) Re-Letting Works - Investment Property 140.0 146.2 6.2 Replacement of Council Owned Vehicles 530.0 510.2 (19.8) Replacement of Council Owned Vehicles - Hart 51.0 45.8 (5.2) The Malls: Re-letting Works 37.0 3.2 (33.9) Grand Total 2,037.0 1,529.6 (507.4)

AMP Works (various sites) - £102,300 delayed spend

The budget of £250k covers essential maintenance work at various properties. The variance is due to the following delayed work:

 £80k in respect of the replacement roof covering for Westside Community Centre. Changes to the specification were required to reflect future use of the building and this delayed commencement of the tender process.

 £22.3k in respect of the upgrade of the electrical distribution boards and sub-meters at Beresford Centre. The scheme was delayed as the scope of the work and its funding required review due to the new smart meters costing more than anticipated. As the work requires the shutdown of the power supply to the building, the exact timing for completion of the work needs to be agreed with tenants.

These budgets will be re-phased to 2016/17.

Basing View – Infrastructure & Public Realm - £138,300 saving

£82k needs to be transferred back to the Basing View reserve as this is no longer required for the Public realm capital project, due to project savings and not using contingency amounts.

Delayed spend of £56.3k will be re-phased into 2016/17 to cover works not initiated or completed in 2015/16. These mainly relate to additional or supplementary works associated with the creation of the public realm, namely re-grassing of some of the verges, improvements and new signage at Loddon Parade shops, and the replacement of new lighting heads on the public road element of the Network rail campus.

Page 70 APPENDIX 7

Estates Management System - £38,500 delayed spend

The 2015/16 cost of the dedicated project manager was funded from the business unit staffing budget rather than the capital budget as anticipated.

The budget will be re-phased to 2016/17 and used towards the overall cost of the project.

ICT Replacement Programme - £227,400 saving

Moving the majority of the council’s server environment to a virtualised one has significantly reduced the cost of replacement servers and a number of printers were procured at a lower cost than anticipated. Officers are requesting that this saving be re-phased into future years to minimise future new capital budget requests.

Whilst the saving is good news, officers will undertake a review of the basis used for setting the IT capital programme to improve the accuracy of budget allocations.

Basing View Pedestrian Bridge - £70,500 additional spend

Expenditure increased created as a result of prior year netting off of a capital receipt. This expenditure is therefore fully funded by a forecast capital receipt for works completed and paid for by BDBC on behalf of Network Rail.

Paddock Road Medical Centre - £21,200 delayed spend

The demolition of the building was delayed as planning permission was required. Demolition works are now in progress and the budget will be re-phased to 2016/17.

Replacement of Council Owned Vehicles - £19,800 saving

During 2015/16 our fleet of mowers were replaced. Purchasing them all at the same time enabled an overall procurement saving to be made.

The Malls Re-Letting Works - £33,900 delayed spend

This budget was available to fund any work required to units due to changes in occupation as needs and/or opportunities arose.

It was anticipated that the 2015/16 budget would be used to achieve a letting for the vacant unit in Loddon Mall but negotiations with the potential tenant were not completed by 31st March. The budget will be re-phased to 2016/17.

Page 71 APPENDIX 7

Housing & Regeneration Portfolio – £570,600 favourable variance

Final Outturn Capital Scheme Title Latest Budget Final Outturn Variation to (per Capital Programme) £000's £000's Latest Budget £000's Community Heritage and Environment Fund 44.0 40.4 (3.6) Discretionary Housing Grants 175.0 159.8 (15.2) Environmental Renewal Schemes 10.0 13.9 3.9 Existing Satisfactory Purchases 626.0 262.5 (363.5) Home Repair Grants 0.0 2.4 2.4 Mandatory Disabled Facilities Grants 1,300.0 1,179.5 (120.5) Town Centre Improvements 142.0 67.8 (74.2) Grand Total 2,297.0 1,726.4 (570.6) Housing Renewal Grants - (Discretionary Housing Grants - £15,200 delayed spend & Mandatory Disabled Facilities Grants - £120,500 delayed spend)

The original budget for disabled facilities grants (DFGs) of £850,000 for 2015/16, consisted of £800,000 for mandatory and £50,000 for discretionary grants.

In light of increasing demand, the budget was increased during the year through capital monitoring process to £1,440,000 (£140,000 of this being for discretionary grants).

202 Mandatory Disabled Facilities Grants were approved in 2015-16, compared with 225 in the previous year. This slight reduction in demand is likely to be as a result of changes to Hampshire County Council’s Occupational Therapist service which affected the number of OT assessments that were being carried out and led to a reduction in the number of referrals during the year.

At the end of the financial year there was an underspend against the discretionary grant budget of £15,200. This relates to works which were underway but not completed before 31 March 2016. This budget will be re-phased into the 2016-17 budget.

For the reasons highlighted above there was an underspend against the mandatory budget of £120,500. It is proposed to use £13,800 of this underspend to be re-phased into the discretionary disabled facilitates grants, but given the council has already committed significant levels of capital investment in the DFG grant programme from 2016-17 the remaining money is not required and can be put back into the capital programme for other priorities.

Existing Satisfactory Purchases - £363,500 delayed spend

This scheme provides grants to Sentinel towards the purchase of existing properties for letting as affordable housing. Funding of £262,500 was used as an investment to assist Sentinel Housing Association to secure 7 units of accommodation under an ESP (Existing Satisfactory Purchase) scheme. The properties enabled the Council to ensure a significant decrease in the use of bed and breakfast for accepted homeless households.

The remainder of the budget is allocated for 8 units with two of the properties due to for completion in April 2016/17. The remaining 6 properties were delayed due to Sentinel finding it difficult to find suitably priced properties to purchase, as asking prices have been too high.

Page 72 APPENDIX 7

Town Centre Improvements - £74,200 delayed spend/savings

This favourable variation is made up of delayed spend of £52.7k and savings of £21.5k.

The delayed spend relates to shop front grants applied for and awarded but not recovered £33.9k, Landscaping of Toilet block site New Road, £5.4k Town Centre signage £7.0k and Planting and installation of new bins £6.3k. All have been committed to under purchase order but works had not commenced before the year end.

The release of £21.5K is genuine savings on demolition of toilets £9.9k, alley way refresh £7.9k, signage and landscaping £3.7k.

Page 73 APPENDIX 7

Partnerships Portfolio - £95,300 favourable variation

Final Outturn Capital Scheme Title Latest Budget Final Outturn Variation to (per Capital Programme) £000's £000's Latest Budget £000's Bramley Recreation Facilities 55.0 38.9 (16.1) Down Grange - Sports Complex 25.0 10.3 (14.7) Down Grange Track and Pitch 0.0 -3.1 (3.1) Play Area Improvements (S106) 237.0 173.7 (63.3) Play Areas - Borough Risk Areas 52.0 51.5 (0.5) Sport & Rec Improvements (S106) 85.0 87.3 2.3 Grand Total 454.0 358.7 (95.3)

Play Area Improvements - £63,300 delayed spend

This variance relates to a delay on works at Rooksdown Park, where remedial works are awaited. In addition to this works to the wet play splash pad at Chineham Park, Popley have started but are not due to be complete until the end of May 2016.

Page 74 APPENDIX 7

Planning & Infrastructure Portfolio - £16,600 unfavourable variation

Final Outturn Capital Scheme Title Latest Budget Final Outturn Variation to (per Capital Programme) £000's £000's Latest Budget £000's Allotment Improvements 105.0 128.4 23.4 Open Space Improvements (S106) 53.0 46.3 (6.7) Rural Broadband (Match Funded) 75.0 75.0 0.0 Grand Total 233.0 249.6 16.6 Allotment Improvements - £23,400 advanced spend

Works at South view allotments that were originally scheduled for 2016/17 were able to be completed ahead of schedule.

Page 75 APPENDIX 7

Regulatory Services and the Environment Portfolio - £61,600 favourable variation

Final Outturn Capital Scheme Title Latest Budget Final Outturn Variation to (per Capital Programme) £000's £000's Latest Budget £000's Council Offices 248.0 181.6 (66.4) Future Cemetery Provision 496.0 481.3 (14.7) Green Initiatives 50.0 67.7 17.7 Invest to Grow - Solar PV's 0.0 1.4 1.4 Website Content Management System 2.0 2.5 0.5 Grand Total 796.0 734.4 (61.6) Council Offices - £66,400 delayed spend

This budget includes funding for the re-surfacing of the upper deck of Parklands' car park which has been delayed to 2016/17. Whilst the layout for the car park has been provisionally agreed and the work has been procured under an existing framework contract, the work cannot commence until planning permission has been granted for the new bicycle shed required by the police. The budget will be re-phased to 2016/17.

Page 76 APPENDIX 8

Appendix 8

CAPITAL PROGRAMME 2015/16 to 2019/20

PRIOR YEARS TOTAL TOTAL CAPITAL PROGRAMME BY PORTFOLIO TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

LEADER 0 0 300 1,300 0 0 1,600 1,600 COMMUNITIES AND COMMUNITY SAFETY 16,133 903 1,593 1,585 1,159 773 6,013 22,146 REGULATORY SERVICES AND THE ENVIRONMENT 140 735 308 400 0 0 1,443 1,583 HOUSING AND REGENERATION 27,563 1,726 3,255 1,555 1,550 1,550 9,636 37,199 FINANCE, SERVICE DELIVERY AND IMPROVEMENT 9,348 1,277 923 935 745 1,089 4,969 14,317 PROPERTY AND DEVELOPMENT 6,891 774 1,078 642 285 0 2,779 9,670 PLANNING AND INFRASTRUCTURE 1,077 249 400 189 42 118 998 2,075 CAPITAL PROGRAMME PROVISIONS 0 0 5,334 5,374 3,640 4,118 18,466 18,466

TOTAL CAPITAL PROGRAMME 61,152 5,664 13,191 11,980 7,421 7,648 45,904 107,056

LEADER PORTFOLIO

PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

TRANSPORT INFRASTRUCTURE SCHEMES New Transport Infrastructure ² 300 1,300 1,600 1,600

TOTAL TRANSPORT INFRASTRUCTURE SCHEMES 0 0 300 1,300 0 0 1,600 1,600

GRAND TOTAL 0 0 300 1,300 0 0 1,600 1,600

Notes: 2 Includes funding from specific external grants, contributions or capital receipts.

Page 77 APPENDIX 8

COMMUNITIES AND COMMUNITY SAFETY PORTFOLIO

PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

COMMUNITY FACILITIES Beggarwood Community Facilities ¹ 4 23 393 101 517 521 Developers Contributions - Replacement / Refurbishment of Community Facilities ¹ 1,120 114 224 287 427 21 1,073 2,193 Eastrop Community Facility ¹ 261 25 20 45 306 TOTAL COMMUNITY FACILITIES 1,385 162 637 388 427 21 1,635 3,020

PLAY AREAS AND YOUTH PROVISION Play Area Improvements ¹ ² 5,067 225 384 256 223 156 1,244 6,311 TOTAL PLAY AREAS AND YOUTH PROVISION 5,067 225 384 256 223 156 1,244 6,311

SPORTS FACILITIES Bramley Recreation Facilities ¹ 49 39 16 55 104 Down Grange - Sports Complex 10 15 25 25 Down Grange - Track and Pitch 700 (3) (3) 697 Sport and Recreation Improvements (S106) ¹ 54 87 144 231 170 276 908 962 The Vyne School AGP (S106) ¹ 367 367 367 TOTAL SPORTS FACILITIES 803 133 175 598 170 276 1,352 2,155

COMMUNITY SAFETY CCTV 57 58 115 115 TOTAL COMMUNITY SAFETY 0 57 58 0 0 0 115 115

LEISURE FACILITIES AND COMMUNITY BUILDINGS

Leisure Facilities and Community Buildings Grants 988 62 39 0 0 0 101 1,089 TOTAL LEISURE FACILITIES AND COMMUNITY BUILDINGS 988 62 39 0 0 0 101 1,089

TRAFFIC AND TRANSPORT Parking and Access Schemes ¹ ² 7,890 264 300 343 339 320 1,566 9,456 TOTAL TRAFFIC AND TRANSPORT 7,890 264 300 343 339 320 1,566 9,456

GRAND TOTAL 16,133 903 1,593 1,585 1,159 773 6,013 22,146

Notes: 1 Includes funding from S106 developer contributions 2 Includes funding from specific external grants, contributions or capital receipts.

Page 78 APPENDIX 8

REGULATORY SERVICES AND THE ENVIRONMENT PORTFOLIO

PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

OPERATIONAL LAND AND BUILDINGS Asset Management Plan Council Offices Council Offices 99 182 84 266 365 TOTAL OPERATIONAL LAND AND BUILDINGS 99 182 84 0 0 0 266 365

OPERATIONAL EQUIPMENT Website Development Website Content Management System 27 2 3 5 32 TOTAL OPERATIONAL EQUIPMENT 27 2 3 0 0 0 5 32

CEMETERIES Future Cemetery Provision 14 481 50 531 545 TOTAL CEMETERIES 14 481 50 0 0 0 531 545

GREEN INITIATIVES Green Initiatives 70 171 400 641 641 TOTAL GREEN INITIATIVES 0 70 171 400 0 0 641 641

GRAND TOTAL 140 735 308 400 0 0 1,443 1,583

Page 79 APPENDIX 8

HOUSING AND REGENERATION PORTFOLIO

PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

HOUSING AND RENEWAL Discretionary Housing Grants 1,679 162 129 100 100 100 591 2,270 Mandatory Disabled Facilities Grants ² 15,571 1,180 1,355 1,350 1,350 1,350 6,585 22,156 Community Heritage and Environment Fund 3,526 40 0 0 0 0 40 3,566 Environmental Renewal Schemes ² 5,644 14 92 100 100 100 406 6,050 TOTAL HOUSING AND RENEWAL 26,420 1,396 1,576 1,550 1,550 1,550 7,622 34,042

AFFORDABLE HOUSING Existing Satisfactory Purchases 921 263 1,363 1,626 2,547 TOTAL AFFORDABLE HOUSING 921 263 1,363 0 0 0 1,626 2,547

TOWN CENTRE IMPROVEMENTS Town Centre Improvements 174 67 310 377 551 TOTAL TOWN CENTRE IMPROVEMENTS 174 67 310 0 0 0 377 551

ARTS AND HERITAGE Per Cent For Art Projects (S106) ¹ 48 6 5 11 59 TOTAL ARTS AND HERITAGE 48 0 6 5 0 0 11 59

GRAND TOTAL 27,563 1,726 3,255 1,555 1,550 1,550 9,636 37,199

Notes: 1 Includes funding from S106 developer contributions 2 Includes funding from specific external grants, contributions or capital receipts.

Page 80 APPENDIX 8

FINANCE, SERVICE DELIVERY AND IMPROVEMENT PORTFOLIO

PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

OPERATIONAL VEHICLES, PLANT AND EQUIPMENT ICT Replacement Programme ICT Replacement Programme 5,773 200 346 490 490 579 2,105 7,878 Replacement Of Council Owned Vehicles Replacement of Council Owned Vehicles ² 3,019 510 472 335 145 400 1,862 4,881 Replacement of Council Owned Vehicles - Hart 471 46 14 60 531 Depot Equipment Wade Road - Red Diesel Tank 15 15 15 TOTAL OPERATIONAL VEHICLES, PLANT AND EQUIPMENT 9,263 756 847 825 635 979 4,042 13,305

LOCAL INFRASTRUCTURE FUND Local Infrastructure Fund ² 85 521 76 110 110 110 927 1,012 TOTAL LOCAL INFRASTRUCTURE FUND 85 521 76 110 110 110 927 1,012

GRAND TOTAL 9,348 1,277 923 935 745 1,089 4,969 14,317

Notes: 2 Includes funding from specific external grants, contributions or capital receipts.

Page 81 APPENDIX 8

PROPERTY AND DEVELOPMENT PORTFOLIO

PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

OPERATIONAL LAND AND BUILDINGS Asset Management Plan AMP Works (various sites) ¹ 17 148 477 535 285 1,445 1,462 Down Grange - Irrigation Works 67 2 2 69 Photovoltaic Panels: Pilot Project 52 (1) (1) 51 Chineham House Chineham House 102 102 102 TOTAL OPERATIONAL LAND AND BUILDINGS 136 149 579 535 285 0 1,548 1,684

OPERATIONAL EQUIPMENT Estates Management IT System Estates Management IT System 250 250 250

TOTAL OPERATIONAL EQUIPMENT 0 0 250 0 0 0 250 250

INVESTMENT PROPERTY Asset Management Plan Industrial and Commercial Bear, Eagle and Lion Court ² 1,363 22 22 1,385 Paddock Road Medical Centre 11 21 32 32 Re-Letting Works - Investment Property 72 146 50 196 268 Town Centre Re-Letting Works - The Malls ² 389 3 50 53 442 TOTAL INVESTMENT PROPERTY 1,824 160 143 0 0 0 303 2,127

BASING VIEW REGENERATION SCHEMES Basing View - Public Realm ² 2,758 391 56 447 3,205 Basing View - Pedestrian Bridge ² 1,548 71 71 1,619 TOTAL BASING VIEW REGENERATION SCHEMES 4,306 462 56 0 0 0 518 4,824

ALTERNATIVE INVESTMENT / INVEST TO GROW SCHEMES

Bear, Eagle, Lion Court and Former Oil Depot Site ² 625 3 50 107 160 785 TOTAL ALTERNATIVE INVESTMENT / INVEST TO GROW SCHEMES 625 3 50 107 0 0 160 785

GRAND TOTAL 6,891 774 1,078 642 285 0 2,779 9,670

Notes: 1 Includes funding from S106 developer contributions 2 Includes funding from specific external grants, contributions or capital receipts.

Page 82 APPENDIX 8

PLANNING AND INFRASTRUCTURE PORTFOLIO

PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

COMMUNICATION IMPROVEMENT AND TECHNOLOGY INFRASTRUCTURE Rural Broadband 150 75 75 225 Communication Improvement and Technology Infrastructure (Pilot) 175 175 175 TOTAL COMMUNICATION IMPROVEMENT AND TECHNOLOGY INFRASTRUCTURE SCHEMES 150 75 175 0 0 0 250 400

PARKS AND OPEN SPACES Allotment Improvements ¹ ² 22 128 57 143 328 350 Open Spaces (S106) ¹ 905 46 168 46 42 118 420 1,325 TOTAL PARKS AND OPEN SPACES 927 174 225 189 42 118 748 1,675

GRAND TOTAL 1,077 249 400 189 42 118 998 2,075

Notes: 1 Includes funding from S106 developer contributions 2 Includes funding from specific external grants, contributions or capital receipts.

Page 83 APPENDIX 8

CAPITAL PROGRAMME PROVISIONS

PRIOR YEARS TOTAL CAPITAL SCHEME TO ACTUAL BUDGET BUDGET BUDGET BUDGET SCHEME 31/03/15 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL COST 1 2 3 4 5 6 7 8 (Cols 2 to 6) (Col 1 + 7) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 CAPITAL PROGRAMME PROVISIONS

OPERATIONAL LAND AND BUILDINGS

Council Offices 2,115 2,115 2,115 TOTAL OPERATIONAL LAND AND BUILDINGS 0 0 0 2,115 0 0 2,115 2,115

OPERATIONAL EQUIPMENT

Replacement Financial System 50 300 350 350 TOTAL OPERATIONAL EQUIPMENT 0 0 50 300 0 0 350 350

INVESTMENT PROPERTY

Industrial and Commercial Re-Letting Works - Investment Property 50 50 44 144 144 Town Centre Re-letting Works - The Malls ² 50 50 50 49 199 199 TOTAL INVESTMENT PROPERTY 0 0 50 100 100 93 343 343

BASING VIEW REGERATION SCHEMES

Basing View Regeneration 1,500 1,500 1,500 TOTAL BASING VIEW REGENERATION SCHEMES 0 0 1,500 0 0 0 1,500 1,500

ALTERNATIVE INVESTMENT SCHEMES Alternative Investment Strategy (formerly Invest To Grow Schemes) ² 1,450 1,500 2,500 2,800 8,250 8,250 Green Initiatives 259 259 259

TOTAL ALTERNATIVE INVESTMENT SCHEMES 0 0 1,450 1,759 2,500 2,800 8,509 8,509

FUTURE CEMETERY PROVISION

Future Cemetery Provision 65 100 40 225 430 430 TOTAL FUTURE CEMETERY PROVISION 0 0 65 100 40 225 430 430

LOCAL INFRASTRUCTURE FUND

Local Infrastructure Fund ² 2,128 1,000 1,000 1,000 5,128 5,128 TOTAL LOCAL INFRASTRUCTURE FUND 0 0 2,128 1,000 1,000 1,000 5,128 5,128

TOTAL CAPITAL PROGRAMME PROVISIONS 0 0 5,243 5,374 3,640 4,118 18,375 18,375

CAPITAL RISK CONTINGENCY

Capital Risk Contingency (Tender Returns) 91 91 91 TOTAL CAPITAL RISK CONTINGENCY 0 0 91 0 0 0 91 91

GRAND TOTAL 0 0 5,334 5,374 3,640 4,118 18,466 18,466

Notes: 2 Includes funding from specific external grants, contributions or capital receipts.

Page 84 APPENDIX 9

CAPITAL PROGRAMME 2015/16 - 2019/20 (excl Capital Programme Provisions) Capital Programme Changes - All Portfolios 2015/16 2016/17 2017/18 2018/19 2019/20 TOTAL £'000 £'000 £'000 £'000 £'000 £'000 DETAILED CHANGES FOR ALL PORTFOLIOS Latest Approved Programme excl Capital Programme Provisions (March 2016) 6,999 6,904 6,481 3,691 3,455 27,530

2015/16 Advance Spend Allotment Improvements 23 (23) 0 Green Initiatives 18 (18) 0 41 (41) 0 0 0 0 2015/16 Delayed Spend Future Cemetery Provision (15) 15 0 Existing Satisfactory Purchases (363) 363 0 Play Areas (64) 64 0 Replacement CCTV (58) 58 0 Mandatory Disabled Facilities Grants (14) 14 0 Discretionary Housing Grants (15) 15 0 Eastrop Community Facility (20) 20 0 Bramley Recreation Facilities (16) 16 0 Down Grange Complex (15) 15 0 Parking and Access Schemes (36) 36 0 Council Offices (84) 84 0 AMP Works (various sites) (102) 102 0 AMP Works - Paddock Road Medical Centre (21) 21 0 Estates Management IT System (38) 38 0 Re-Letting Works - The Malls (34) 34 0 Basing View - Regeneration Works (56) 56 0 Town Centre Improvements (55) 55 0 Other Small Scheme Delayed Spend (18) 17 1 0 (1,024) 1,023 1 0 0 0 Scheme Savings Mandatory Disabled Facilities Grants (106) (106) ICT Replacement Programme (227) 93 78 47 9 0 Replacement Vehicles (20) 20 0 Basing View - Regeneration Works (82) (82) Town Centre Improvements (20) (20) Other Small Scheme Savings (6) 3 (3) (461) 96 78 67 9 (211) Scheme Additional Costs Basing View Pedestrian Bridge 71 71 Council Offices 18 (18) 0 Other Small Scheme Additional Costs 20 (15) (3) 2 109 (33) (3) 0 0 73 Scheme Virements (from capital programme provisions) Future Cemetery Provision 35 (225) (190) Council Offices 18 18 Re-Letting Works - The Malls 16 16 Provisions - Re-Letting Works - Investment Property 56 56 0 125 0 0 (225) (100) Other Scheme Rephasings Beggarwood Community Facilities (100) 100 0 Developers Contributions For Replacement/Refurbishment Of Community Facilities 1 30 (31) 0 Sport and Recreation Improvements (S106 Monies) (12) (7) 19 0 Parking and Access Schemes (36) 18 18 0 Red Diesel Tank 15 (15) 0 ICT Replacement Programme (162) (8) 17 153 0 AMP: Bear, Eagle Lion Court 22 (22) 0 Invest To Grow - Bear, Eagle Lion Court and Former Oil Depot Site 50 (50) 0 0 (222) 46 23 153 0 Additions Funded From S106 Developer Contributions Open Space Improvements (S106) 56 56 Beggarwood Community Facility 2 2 Developers Contributions For Replacement/Refurbishment Of Community Facilities (4) 21 17 Play Areas 12 12 Sport and Recreation (S106) 5 49 54 0 0 3 0 138 141 Additions Funded From New External Funding Discretionary Housing Grants 5 5 0 5 0 0 0 5

Latest Approved Programme excl Capital Programme Provisions (June 2016) 5,664 7,857 6,606 3,781 3,530 27,438

Page 85 This page is intentionally left blank APPENDIX 10

Joint Manydown Committee – Final outturn position

Page 87 This page is intentionally left blank Agenda Item 7

Report to Cabinet 28 June 2016 Portfolio Holder Presenting: Portfolio Holder for Property and Development and Portfolio Holder for Finance, Service Delivery and Improvement

Property and Alternative Investment Strategy – Invest to Subject: Grow fund

Status: Open Report ref: Ward(s): All Key Decision: Yes

Key Decision / Ref: Portfolio Holder for Property and Development Report of: Portfolio Holder for Finance, Service Delivery and Improvement

Kevin Jaquest, Executive Director of Finance and Resources Contact officer: Telephone: 01256 845513 Email: [email protected]

Appendix 1 – Full final CBRE feasibility report Appendix 2 – Invest to Grow Fund Investment Strategy Appendices: Confidential Appendix 3 – Investment Pipeline Examples (confidential as of paragraph 3 of schedule 12a of the Local Government Act) Appendix 4 – Residual Risk Assessment Summary Papers relied on to Cabinet Report 15 march 2016 - Property and Alternative produce this report: Investment Fund Feasibility

1 Executive Summary

1.1 The report proposes the establishment of a Council based Invest to Grow Fund with the overarching objective to stimulate job creation, deliver new homes, and attract significant inward investment into the Borough.

1.2 This report outlines the outcome of the detailed feasibility and fund design work undertaken, following the Cabinet decision on 15 March 2016, on the establishment of an invest to grow fund in support of the council’s approved Property and Alternative Investment Strategy to assist delivery of its socio- economic and financial objectives.

1.3 The report also highlights key areas for consideration and proposes appropriate governance and monitoring arrangements.

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2 Recommendation

2.1 It is recommended that Cabinet :

2.1.1 Approve the establishment of an Invest to Grow fund as detailed in this report and endorse the fund vision and principles.

2.1.2 Delegate the detailed fund setup to the Executive Director of Finance and Resources, funded from the Strategic projects revenue budget, in consultation with the Portfolio Holder for Property and Development and the Portfolio Holder for Finance, Service Delivery and Improvement.

2.1.3 Approve the proposed scheme of delegation to the Executive Director of Finance and Resources for the administration of the fund (set out in section 7) noting that this will operate within the Council approved Invest to Grow Fund Investment Strategy.

2.1.4 Note that the ‘primary purpose’ of establishing the Invest to Grow Fund is to support the council in meeting its socio economic duties and objectives.

2.1.5 Note the financial implications, s151 officer comments and risk assessment

2.1.6 Recommend Council to approve:

2.1.6.1 the Invest to Grow Fund Investment Strategy.

2.1.6.2 allocation of the earmarked Alternative Investment Strategy funding of £25m to the Invest to Grow Fund.

PRIORITIES, IMPACTS AND RISKS Contribution to Council Priorities This report accords with the council’s Budget and Policy Framework and directly supports the Council Plan priority/priorities of improving economic vitality and supports the development of an effective and efficient council.

GLOSSARY OF TERMS Term Definition FCA Financial Conduct Authority

MAIN CONSIDERATIONS

3 Background

3.1 Full Council has agreed a Property and Alternative Investment Strategy and earmarked funding of £25m of long term invested funds to support its implementation.

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3.2 The objective of the strategy is to support the Council's socio-economic objectives; to stimulate local commerce and investment to support local economic growth; and to improve the Council’s medium term financial position and financial resilience to support the Council’s functions and service delivery.

3.3 The primary purpose of the Invest to Grow Fund would therefore be to help stimulate local commerce and investment to support local economic growth in line with the Council Plan priority of preparing for controlled and sustainable growth. Returns generated by the Fund would be recycled (after meeting funding costs) and be used to support Council plan priorities including economic development and wider service delivery.

3.4 In March 2016 Cabinet considered a report on the Property and Alternative Investment Fund feasibility work undertaken to date and approved that officer’s progress with the detailed fund design work supported by external specialist consultants.

3.5 This report provides Cabinet with the outcome of the further detailed fund design work and proposes appropriate governance arrangements.

4 Summary of findings of the final feasibility report

4.1 The final feasibility and fund design report is attached as Appendix 1. This covers the following areas;

4.1.1 Objectives – summarises the Council’s overarching objectives for allocating £25m of capital resources within the evolving local economic and political landscape.

4.1.2 Context – an overview of the local economic and political environment in which a potential fund will operate.

4.1.3 Identification of investment options – a review of different approaches to deploying the £25m of allocated capital and the extent to which they meet the Council’s objectives.

4.1.4 Recommended approach – based on the above findings sets out the optimum delivery structure for investing locally. This section also sets out the role of the Fund, types of intervention, investment strategy, project appraisal process and overall governance proposals.

4.1.5 Indicative project pipeline, fund model and output forecasts – analysis of potential investment opportunities identifying potential ‘early wins’.

4.1.6 Preliminary financial analysis in the form of an indicative fund model, identifying potential overall fund level returns.

4.1.7 Key considerations and next steps – concluding the work of the study, setting out the key risk considerations, proposed marketing and engagement strategy and next steps towards implementation.

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5 The Proposal

5.1 The Government’s localism and devolution agenda is creating a shift of control, financial autonomy and responsibility away from central to local government. Increasingly, local authorities are being incentivised to drive forward their local economies and being granted greater fiscal and legal powers to do so. Changes to the local government finance system will see local government funded from business rates income from 2020.

5.2 This Council is in a strong position to capitalise on these current themes and has been exploring innovative mechanisms to attract inward local investment whilst delivering risk assessed market returns.

5.3 Therefore following review of the detailed fund design report from the external specialists it is proposed that the council establishes an Invest to Grow Fund to support delivery of the Council Plan objective of preparing for controlled and sustainable growth and to help meet the objectives of the economic master plan through securing inward investment and leveraging additional funds whilst generating risk based returns for the Council to support the delivery of Council services and promote local economic growth.

5.4 The fund would be established utilising the Alternative Investment Strategy £25m earmarked resources and would be a ‘block of finance’ council fund and not a separate company structure. It would be operated in accordance with a Council agreed Invest to Grow Investment Strategy by external specialist fund managers.

5.5 The result of the investment options review is that the fund would consider investment by way of debt (loans) or equity. This would provide property backed loans or direct equity participation in projects, where Council intervention may support the case for regeneration and local economic growth.

5.6 Fund Vision

5.6.1 ‘to provide capital to stimulate local development activity and leverage private sector investment in support of local socio-economic growth’

5.6.2 The overarching objective of the Fund is to stimulate job creation, delivery of new homes and attract significant inward investment into the Borough. In order to achieve this vision, the Fund will target key investment areas, aligned with the Property and Alternative Investment Strategy.

5.7 Key Principles

5.7.1 The proposed key principles of the fund are;

 The Fund to be set up as a council ring-fenced fund block of finance (not a separate corporate structure) managed by external FCA regulated fund managers.

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 Investments made into viable projects either directly or as loans or equity

 The fund will not provide grants

 All investments subject to appropriate risk, business case assessment and due diligence

 State Aid compliant investment at rates equal or above councils risk adjusted ‘cost of capital’ with financing costs returned to the general fund

 Returns above cost of capital and the repayment of capital to be recycled through the fund

5.8 Pipeline Opportunities

5.8.1 Appendix 3 provides some examples of investment opportunities that could be covered by the fund. These cover short and medium term opportunities both within the council owned estate and third party schemes. There could also be longer term early stage infrastructure opportunities on Manydown and renewable investment opportunities.

5.8.2 Discussions with key local stakeholders are on-going and the external specialists are confident additional opportunities will be identified prior to any formal ‘fund launch’ as the development pipeline is progressed.

6 Investment Strategy

6.1 The purpose of the Investment Strategy is for the Council to set out the vision and objectives of the fund along with key investment criteria to provide a tool for the Fund Manager to assess projects and administer the fund.

6.2 The proposed investment strategy is detailed in appendix 2 which has a fund vision ‘to provide capital to stimulate local development activity and leverage private sector investment in support of local socio-economic growth’

6.3 It is proposed that this is recommended for approval by Full Council and will be subject to appropriate review as the fund is established and develops.

6.4 The following proposed investment criteria are part of the Investment Strategy and would form the basis of selection for investments by the Fund:

 Project selection is focussed on producing the maximum possible impact on development and regeneration opportunities, whilst at the same time delivering market level commercial returns.

 Investments are to be made either directly, in partnership with the private sector as equity, or project based loans.

 Investments are to be made in line the Council’s Property & Alternative Investment Strategy and could include investments in the Council’s existing property portfolio, commercial property, housing and regeneration and renewable energy schemes.

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 Investments are to be within the Borough as a priority although the Fund could exceptionally consider investment options within Hampshire and wider South East where ‘additive’ to the Borough.

 The underlying principles are: project is viable; carries appropriate risk; and the terms are equal to or above the Council’s risk assessed opportunity cost of capital.

 Investments must be State Aid compliant and meet commercial market returns.

 Limited appetite for risk exposure. However a variety of risk positions may be considered but will be subject to risk mitigation measures being put in place by the Fund manager on a case by case basis.

 Investments will be considered in context of the portfolio level risk criteria not to exceed 70% loan to cost and 60% loan to value. Investments outside of these risk covenants will be assessed on a case by case basis

 No more than 30% of the total Fund capital in each project (e.g. based on a Fund size of £25m, the maximum loan size would be £7.5m)

 No more than 40% of the Fund lent to one borrow or group of borrowers (e.g.based on a Fund size of £25m, the maximum loan size would be £10m).

 Investment minimum size to be £1m. Target maximum 3 year finance period.

6.5 All investments will be subject to appropriate risk, business case assessments and due diligence by an appointed Fund Manager and must fulfil the requirements of this Investment Strategy.

7 Governance Arrangements

7.1 The governance structure of the block of finance fund is critical to the success of the proposal and to secure market confidence in the fund. The fund will need to operate flexibly and efficiently within the Member agreed Investment Strategy to encourage socio-economic development within the borough. Externally the market will look to see that there is a clear delegated decision making process that can respond in a timely way.

7.2 A number of options have been considered (detailed in Appendix 1) during the feasibility work ranging from full in house management and delivery to complete third party delegated management.

7.3 Following the option appraisal the proposed governance approach is as follows:

 The vision and principles of the fund to be agreed by full Council via approval of the Invest to Grow Fund Investment Strategy.

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 Cabinet to approve an annual Invest to Grow Fund business plan to support delivery of the Council approved Invest to Grow Investment Strategy.

 Individual investment decisions (which must be within the Investment Strategy parameters) delegated by Cabinet to the Executive Director of Finance and Resources, acting as ‘Investment Manager’ in consultation with the Portfolio Holder for Property and Development and Portfolio Holder for Finance, Service Delivery and Improvement.

 An external FCA regulated fund manager with an advisory mandate to be procured to manage the day to day activities of the fund and to provide investment advice, source opportunities, carry out due diligence, make recommendations to the ‘Investment Manager’ and implement agreed decisions.

 Regular Fund monitoring reports to be provided to Cabinet and the Audit and Accounts Committee.

7.4 The fund manager would make recommendations to the Investment Manager based upon their analysis and project appraisal and would confirm that the investment opportunity satisfies the Invest to Grow Fund Investment Strategy.

7.5 There will also be a ‘double lock’ in that the Investment Manager decisions must be based on recommendations from the fund manager and fund manager implementation requires Investment Manager approval.

8 Performance Monitoring of the Fund

8.1 In accordance with standard fund management practice, it will be important to ensure the performance of the Fund is monitored on a regular basis. In view of the Fund objectives, this will comprise both economic and financial performance monitoring.

8.2 Economic Output Measures are likely to include measures such as third party inward investment attracted and business rates generated.

8.3 Financial Performance Monitoring will include areas such as loan to value, sector weighting, capital recycled, annual financial return and capital recycled.

8.4 Regular monitoring reports will be provided to Cabinet and the Audit and Accounts Committee.

9 Options Analysis

9.1 In light of the feasibility work undertaken (which has included specific investment and fund option appraisal) the high level options for Cabinet are:

9.1.1 Option A – no further development of the concept of an Invest to Grow Fund as outlined in this report. Cabinet could determine that following the feasibility work undertaken and proposals in this report it does not wish to pursue the fund concept as detailed further. This option would mean that further development of delivery of the alternative investment strategy would need to

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be undertaken in house with a view to producing a direct standing investment or alternative approach.

9.1.2 Option B –approve the establishment of an Invest to Grow fund as proposed. This will require Council approval of the Investment Strategy, appointment of fund managers to establish and ultimately run the fund including the necessary fund marketing and identification of suitable pipeline opportunities.

9.2 It is proposed that option B is pursued to enable implementation of the ‘invest to grow fund’.

10 Corporate Implications

10.1 Financial Implications

10.1.1 As agreed by Council as part of the annual budget report and the Property and Alternative Investment Strategy, there is budget of £25 million for the Invest to Grow Fund. This will be funded by a transfer of strategic, long term cash balances from the council’s Treasury Management Strategy to the Invest to Grow Fund, as new investments are made.

10.1.2 Based upon current market conditions, strategic cash balances are expected to yield approximately 2.5%. In comparison, the anticipated return from the Invest to Grow Fund is in the region of 3.5% net of fees. Once £25 million is fully invested through the Invest to Grow Fund (after approximately 3 years), this 1% improvement in return would result in additional annual income of £250,000. In accordance with the proposed Invest to Grow Strategy any return achieved in excess of the council’s risk adjusted cost of capital will be reinvested in the fund.

10.1.3 The higher return from the fund, compared to long term cash investment, reflects a higher level of risk and reduced liquidity. The fund’s investments will typically be for a period of 2 – 3 years and the fund is expected to operate for a period of 10 years in order to become established and to justify the initial set-up costs.

10.1.4 The council will incur fund management fees which are expected to consist of a fixed element to cover the core work and a variable element depending on the new investments undertaken. The fees for managing the fund are expected to be in the region of 0.5% to 1% of the fund value i.e. £125,000 to £250,000 per annum. Initially it is proposed to appoint CBRE as fund manager to set up the fund. After an initial implementation period of no longer than 6 months, the long term management of the fund will then be subject to a competitive tendering process.

10.1.5 The on-going cost of the annual fund management fees will be funded from the returns achieved by the fund and from arrangement fees charged to borrowers. The initial costs of setting up and launching the fund will be met from the budget agreed by Council as part of the Property and Alternative Investment Strategy and the 2016/17 annual budget.

10.1.6 Investments made by the Invest to Grow Fund will be subject to a risk analysis, business case and due diligence. Any investments that are approved will be capital expenditure and will therefore appear in the council’s capital

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programme and balance sheet. Interest on loans or dividends from any equity investment will be revenue income and the repayment of investments will be a capital receipt.

10.1.7 Monitoring of the performance of the fund will be reported regularly, alongside the Treasury Management Strategy, to the Cabinet and the Audit and Accounts Committee. This report will cover the socio-economic benefits resulting from investments and the direct and indirect financial returns. The indirect financial returns will include additional business rates income generated by investments.

10.2 s151 Officer Comments

10.2.1 The primary objective of a Fund would be to support delivery of the council’s socio-economic objectives in line with the Council Plan priority of preparing for controlled and sustainable growth.

10.2.2 The fund will provide loans/equity to viable schemes at commercial market rates. Returns (net of fees) generated by the Fund would be used to support Council plan priorities and service delivery and/or recycled into the fund.

10.2.3 The feasibility report identifies that potential returns above money market rates and inflation could be obtained but that this will be flexible depending on the nature and risk profile of the investment.

10.2.4 Cabinet will need to consider the increased risk profile of this proposal and ensure that full due and proper consideration is given to the balance achieved between risk and reward and the underlying security of the investments in the fund design to ensure that the financial standing of the council is protected.

10.3 Risk Issues

10.3.1 A risk assessment has been carried out in accordance with the Councils risk management policy and a summary of the main medium and high residual risks that cannot be fully minimised by the fund design and governance structure are summarised in Appendix 4.

10.3.2 The main risks are reputational concerning the perception of the fund, financial relating to possible loan default and project exit timing and property based linked to the impact of future market conditions and project based costs and valuations.

10.3.3 These risks will be managed at a fund level through the proposed fund design and the criteria and limits included in the Investment Strategy and at a project level by the fund manager including through the loan agreements and via robust loan monitoring.

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10.4 Legal Implications

10.4.1 Vires Considerations

10.4.2 The Council has the ability to establish and participate in an ‘Invest to Grow’ fund under the following powers:

 Section 1 of the Localism Act 2011 - general power of competence

 Section 12 of the Local Government Act 2003 – power to invest

 Section 111 of the Local Government Act 1972 ("Incidental Power") – provides that a local authority shall have power to do anything (whether or not involving the expenditure, borrowing or lending of money) which is calculated to facilitate, or is conductive or incidental to, the discharge of any of their functions.

 Section 1 of the Local Government Act 2003 – provides local authorities a power to borrow for any purpose relevant to their functions under any enactment or for the purpose of the prudent management of its financial affairs

10.4.3 The Fund needs to be a public sector fund with no private sector investment made directly into it. However, parallel private sector funding may be directly invested into individual projects or via a subsidiary public private joint venture.

10.4.4 It is important to note that the ‘invest to grow’ fund proposal is that the ‘primary purpose’ is for the council to act to support its socio economic duties and objectives and not for the Council to act for a commercial purpose

10.4.5 State Aid

10.4.6 The investment which the Fund offered would need to be on market terms to ensure state aid compliance.

10.5 Equalities

10.6 An equalities impact assessment (EQIA) screening has been completed in accordance with the Council’s EQIA methodology and this concluded that the proposal will have no differential impact on any of the protected characteristics groups; therefore a full EQIA has not been carried out.

11 Communication and Consultation

11.1 The Property and Alternative Investment MAP has received updates on the ‘invest to grow’ fund proposals and the detailed fund design and governance proposals were considered by the Audit and Accounts Committee on 27 June 2016.

12 Portfolio Holder Comment

12.1 It is important that we continue as a council to seek out alternative ways to invest council resources for the benefit of our residents. This Invest to Grow fund will enable us to make investments through debt and equity directly into

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the borough. It is right that this council should be innovative and seek to act as a catalyst for new investment, together with the private sector, in bringing new jobs, homes and infrastructure to the borough.

12.2 It is entirely consistent with and supportive of our Council Plan and our priorities for residents. Considerable preparatory work has been done in establishing the principles and governance of the fund and I look forward to its successful launch

13 Conclusion

13.1 Work on the detailed feasibility of the council establishing an ‘invest to grow’ fund has been concluded and a proposal produced. A Cabinet decision on whether or not to set up the ‘invest to grow fund’ is now sought.

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BASINGSTOKE INVEST TO GROW FUND FINAL REPORT JUNE 2016 Note to reader: Certain commercially sensitive data has been removed 1 from this report CONFIDENTIAL & COMMERCIALLY SENSITIVE CONTENTS

01 Introduction 3

02 Objectives 4

03 Context 5

04 Investment Options 6

05 Recommended Approach 9

06 Examples of Investments & Fund in Practice 12 Page 102 Page

07 Investment Strategy 18

08 Governance and Operational Model 19

09 Project Appraisal Process 21

10 Project Prioritisation & Performance Monitoring 23

11 Marketing & Engagement Strategy 25

12 Risk Considerations 27

13 Next Steps to Implementation 29

2 INTRODUCTION

Basingstoke & Deane Borough Council (“BDBC” or the “Council”) has allocated £25m of funding to invest into property and alternative investment opportunities within the Borough. CBRE Capital Advisors have been appointed to review how best to deploy this capital in line with the Council’s socio-economic and financial objectives. This report explores the opportunity for an arm’s length managed investment platform, drawing together public and private investment to promote significant inward investment into the Borough in support of local socio-economic growth. The intention is for this document to provide the framework for Fund set-up, Fund Manager appointment, implementation and the operation of the ‘Invest to Grow Fund’.

TERMS OF REFERENCE REPORT STRUCTURE In summary the broad terms of reference and objectives of this report are to: In addressing the Terms of Reference, the report contains the following sections:

Page 103 Page . Review the landscape in which a fund will operate, having regard to . Objectives – summarises the Council’s overarching objectives for deploying macro/micro factors and the Council’s identified Property & Alternative £25m capital within the evolving local economic and political landscape. Investment Strategy. . Context – an overview of the local economic and political environment in . Consider the range of investment options by which the capital can be which a potential fund will operate. deployed and the extent these different approaches meet the Council’s . Identification of investment options – a review of different approaches to overall objectives. deploying the £25m of allocated capital and the extent they meet the . Provide recommendations for the most suitable operational model and Council’s objectives. proposed investment strategy for a fund. . Recommended approach – based on the above findings set out what is the . Define a project appraisal methodology, prioritisation, and performance optimum delivery structure for investing locally. This section also sets out the monitoring process to include examples of indicative pipeline projects. role of the Fund, types of intervention, investment strategy, project appraisal . Define a potential socio-economic output criteria for a Fund to include jobs, process and overall governance proposals. number of homes, brownfield land regenerated and private sector . Indicative project pipeline, fund model and output forecasts – analysis of investment. potential investment opportunities identifying potential ‘early wins’. . Consider risks and mitigations associated with a fund. Preliminary financial analysis in the form of an indicative fund model, identifying potential overall fund level returns. . Outline a recommended marketing and engagement strategy for a fund. . Key considerations and next steps – concluding the work of the study, setting Opposite is a summary of the report structure to illustrate where these objectives out the key risk considerations, proposed marketing and engagement are covered. strategy and next steps towards implementation.

3 OBJECTIVES

The Government’s localism and devolution agenda is creating a shift of control, financial autonomy and responsibility away from central to local government. Increasingly, local authorities are being incentivised to drive forward their local economies and being granted greater fiscal and legal powers to do so. The Council is in a strong position to capitalise on these current themes and is seeking to explore innovative mechanisms to attract inward local investment whilst delivering risk assessed market returns. This section summarises the Council’s overarching objectives for deploying its £25m capital in the context of an evolving local economic and political landscape.

COUNCIL OBJECTIVES PROPERTY & ALTERNATIVE INVESTMENT STRATEGY A series of workshops were carried out with Council officers during early 2016. The Council’s established ‘Property & Alternative Investment Strategy’ identifies four The following primary objectives were identified. key areas for investment. Page 104 Page . Establish a strategy to leverage additional public and private inward 1. Council’s existing property portfolio investment into the Borough with the aim of driving future socio-economic 2. Commercial property investment growth. 3. Housing, regeneration and alternative investment . Invest in a range of activities under the four identified strands of the Council’s ‘Property & Alternative Investment Strategy’. 4. Renewable (green) alternative investment . Ensure all investments are equal to or above the Council’s opportunity cost The above target investment areas are to be the core focus areas in the context of of capital. establishing an overall investment strategy for a fund. The broader objectives are to create a platform that will: Further reference has been made to the Council’s ‘Economic Masterplan for . Offer a credible response to the Government’s localism and devolution Basingstoke’. The document outlines how it will plan for future prosperity, secure agenda. investment and ensure that residents benefit from economic growth and improved employment opportunities and enhanced infrastructure. The masterplan and soon to . Provide a platform and brokerage service to connect private sector interest be adopted Local Plan set the following output targets: with a future pipeline of public and private schemes across the Borough. . 4,000 new jobs (the Local Plan identifies 450 to 700 new jobs per annum) . Provide the Council with specialist advice to ensure investments are made on a commercial and appropriately risk assessed basis. . £233m Gross Value Added per annum The overall aim was further refined to establish an actively marketed fund, . 13,400 new homes (the Local Plan identifies 850 per annum) known as the “Invest to Grow Fund” to act as a ‘front door’ for investors and These targets, along with the Council’s recent Local Plan objectives are a key developers contemplating doing business in Basingstoke. consideration in the context of the Council’s overarching ambitions for local socio- economic growth.

4 CONTEXT

Local authorities are no longer being seen as solely enablers but are being empowered as leaders and innovators in driving local economic growth. The changing attitude of investors into the UK regions, alongside leadership roles that local authorities are adopting provides the ideal environment for growth in Basingstoke.

LOCAL AUTHORITIES DRIVING GROWTH MARKET CONTEXT There has been a marked change in local authorities taking investment Basingstoke has excellent infrastructure in place with transport links to London positions on projects to encourage investment into their area and drive (45 minutes by train to London Waterloo) and the South East (off junction 6 on economic growth. This change is occurring in line with the devolution of powers the M3 between London and Southampton). from central to local government. Basingstoke is in position to capitalise on It also has a very educated and growing population, the primary catchment these current economic and political themes. including a relatively high proportion of adults aged 25-44 and an The Government’s localism agenda is enabling local authorities to have more unemployment rate that is roughly half the national average. It is an affordable autonomy in their decision making and presents opportunities for: place to live comparative to the South East, with median income higher and Page 105 Page . More innovation – with scope for a variety of solutions to challenges faced by average house prices lower, than the surrounding region. authorities across the country. The retail and shopping offer is very strong in Basingstoke, with Festival Place . Stronger focus on local economies – with authorities already able to keep located at the town centre and the largest co-located Waitrose and John Lewis 50% of additional rates generated it has also been proposed that authorities (the UK’s leading supermarket and department store) in Basing View. The town will be able to keep the equivalent of 100% of rates income in the future. is also home to national and international occupiers such as; Barclays, The AA, Sony, Tech Data, Virgin Media, Axa Sun Life, Sarco Group and Motorola. . Improved value for money – as authorities have a greater understanding of their services and can find greater cost savings through partnering and However, the town is facing a challenge. Competing locations such as Reading taking increasingly managed risk positions. continue to grow, attracting new occupiers and investing in infrastructure. At the same time, Basingstoke faces an oversupply of poor quality office Within Basingstoke, budgetary pressure has occurred not solely because of accommodation and a lack of Grade A space. The town has not seen government funding cuts but also due to increasing costs associated with speculative office development for over 8 years. delivering services and fluctuating or declining rent and interest income. As with the office market, the industrial market in Basingstoke has no space The Council is therefore considering new and innovative ways to drive the local currently under construction, therefore unable to meet the estimated demand of economy whilst creating new opportunities for long term funding streams in c. 300k sq ft per annum. There is also a lack of residential supply in the town order to reduce reliance on more traditional funding sources from central centre both for sale and to rent with high levels of demand for apartments in the government and its existing asset base. town centre with good access to the rail station and amenities in town. This includes the potential to invest directly or co-invest in development and Across the majority of sectors in Basingstoke there is a lack of development and working on other forms of investment and partnerships across the borough to investment occurring, despite improved take up and low vacancy levels. help fulfil its financial and broader socio-economic objectives.

5 INVESTMENT OPTIONS

Access to real estate investment can be via a range of methods. Each with varying risk and return profiles. This section considers the range of approaches to the deployment of capital and the extent they meet the Council’s objectives.

INVESTMENT OPTIONS The table below compares the range of different investment options and the extent they meet the Council’s agreed objectives. In considering the different methods of investment, the Council’s options include whether to invest in direct or indirect activities. The difference between each of Potential Local Economic Inward Investment these options is summarised below. Returns Outputs Potential Leveraged . Direct – relates to investment in property whether it is the purchase of the Direct High Limited Limited whole or purchase of part of an existing real estate asset i.e. often when there is ‘direct’ ownership of property. Indirect High None or Limited None . Indirect – defined as investing in a product that invests in property i.e. not investing directly in the real estate itself. Indirect investment activities include: Page 106 Page Debt Medium High (Development Debt) High (Development Debt) private real estate funds; Real Estate Investment Trusts; or actively managed to High Low (Investment Debt) Low (Investment Debt) specialist funds. Equity High High High Beyond whether to invest on a direct or indirect basis, it is also necessary to consider the balance of exposure between equity and debt. . Equity – is where the investor is a shareholder in a specific property, with INVESTMENT OR DEVELOPMENT? their stake proportionate to the amount invested. Returns can be realised in different ways e.g. share of rental income, appreciation of value or All of the above options can relate to either investment or development development profit – depending on the nature of the investment. Equity activities. Typically investing in development commands greater returns due to investments offer greatest levels of return although at the same time are the associated construction, sales, letting risks. higher risk with equity investors typically first in line to suffer from poor Both equity and debt investors require specialist underwriting to ensure that performance. investments are provided on the right type of property and on the right terms, . Debt – is where the investor acts as a lender to the property owner or deal thus ensuring that risks are understood and controlled. ‘sponsor’. Investors receive a fixed rate of return determined by the interest All investments (whether direct or indirect) can be made in isolation or in rate on the loan and the amount invested. The loan is typically secured by partnership with wider investment partners. the property itself. Debt traditionally provides a lower risk compared to Following a series of workshops with Council officers, and given the limited equity investing and a more stable return profile. The debt investor is initial capital allocation i.e. £25m, it was agreed the Council should focus on typically at the bottom of the capital stack which means they are less at risk direct property development activities by way of debt or equity investment in the in the event of poor performance of the real estate asset. pursuit of local economic growth. The appetite for development debt or equity is considered in further detail overleaf.

6 MARKET APPETITE FOR DEVELOPMENT DEBT & EQUITY

Following completion of the investment options review, it was agreed to further consider investment by way of debt or equity as the Council’s preferred method of deployment. In short, this is to provide property backed loans or direct equity participation in projects, where Council intervention may support the case for regeneration and local economic growth.

DEVELOPMENT DEBT MARKET CONTEXT Some of the forms of direct investment for the Fund to participate in will include:

Typical Criteria Senior Development Higher leverage Senior Mezzanine The last year has seen a number of new entrants to the lending market. This Equity has led to downward pressure on the interest rates being provided by lenders, Loan Development Loan Development Loan although leverage levels (Loan to Value or Cost) in the senior debt market Type Lower return, low risk Medium returns for Intermediate finance, First loss equity. increased risk by Highest returns have remained restrained. However, the appetite from private institutions and funding. subordinated to offering “whole loans” senior debt, but banks to provide development debt is still limited to prime and core locations that are senior but ranks ahead of such as London and key regional cities (e.g. Manchester and Birmingham). provide developers with equity. Potential for greater leverage

Page 107 Page high returns The market for development finance in areas such as Basingstoke remains Examples of Lloyds, Santander, Pramerica, Pramerica The developer challenging, for commercial uses in particular. Borrowers face a challenge in Typical Private HSBC, Barclays, RBS, Guggenheim, LaSalle IM community active evidencing occupier demand. Typically only the strongest schemes by the most Finance Wells Fargo, PBB Daiwa Investec in the South West credit-worthy sponsors can attract forms of finance and often not enough to Typical return % 4% – 6% 5% - 10% 7% – 12% Development fully fund the development. Credible schemes can encounter difficulties in on investment upside, typically securing finance. Lenders remain particularly selective regarding which profit share Typically, optimal First loss schemes and developers will be funded. Security and Typically, optimal Weaker. Second Protections security: first charge security: first charge charge / lower over the asset and In 2015 for example, Bank allocations for development finance were less than over the asset and ranking security contracts contracts half the historical peak. At present, Bank lending is adverse to speculative 1 – 4 years Until exit development in all but the most prime locations, often demanding significant Time frame 1 – 4 years 2 – 8 years pre-sales schedules for residential and meaningful pre-letting for commercial. Financial Up to 40% LTV on Up to 60% LTV on 50% – 85% LTV n/a Leverage completion completion 70% - 90% LTC BASINGSTOKE MARKET APPETITE FOR FINANCE 50 - 70% LTC during 60 - 80% LTC during during development development development

A number of local agent and investor consultations have taken place as part Exit Refinanced post- Refinanced post- Disposal proceeds, Typically on of the study analysis. It is evident from these discussions, the financing for (repayment of completion completion usually only after disposal or Conversion to refinancing to development schemes is particularly challenging locally with only the fully let loan) Conversion to repayment of all investment facility investment facility other loans release equity schemes or corporate loan facilities already in place enabling development to occur. In line with the Council’s objectives, the recommendation is for the Risks Development risk First charge security, First loss (after Absolute first fund to be able to provide a range of financial instruments to unlock mitigated by security with risks dependent equity). Ranks after loss, with security on asset and low LTC upon the amount of senior debt in favour of any development opportunities and ultimately local growth. equity. lenders

7 LOCAL DEBT INVESTMENT VEHICLES

Having demonstrated the demand, this section considers the positives and negatives of pursuing development debt investment activities. The commentary serves to support the case for establishing a local authority led debt investment vehicle.

WHY LOCAL AUTHORITY LED DEBT FUNDING? Greater Manchester and the North West has been particularly successful through the North West Evergreen Fund, though many other city regions such As noted in the previous section, securing financing for schemes remains as Sheffield, Liverpool, Glasgow, Newcastle and Leeds are also benefiting challenging, with traditional funding sources comfortable only with prime from access to a similar product. developments with a high degree of pre-let, and even then a relatively low loan to cost level. Importantly, public sector financing also helps align objectives and improving visibility between the public and private sector. Developers have more Speculative development is returning, but many of these schemes have been confidence in a scheme when they know that the Council is committing a partly funded or otherwise supported by the public sector and often only substantial amount of capital and investing its fund manager’s time in speculative in the very best of locations. While developers and their equity Page 108 Page structuring an appropriate investment – it keeps the scheme on the Council’s have an appetite for speculative development, they are short of the senior agenda and gives them a tangible stake in its success. and/or mezzanine debt necessary to fully finance schemes. Public sector development debt funding has become increasingly important in Set out below are the key positive and negatives associated with making debt providing the supply of business employment space and housing that is much investments. When investing in real estate debt, the investor i.e. the Council is needed. Such funding is not providing cheap debt to undercut banks, nor are acting as a lender to the property owner or the deal sponsor. The loan is they grants; they are providing debt in the absence of banks. They typically do secured by the property itself and the Council receives a fixed rate of return so at market rates to viable, good quality schemes which would not otherwise determined by the interest rate on the loan and how much they have happen without significant pre-letting. invested.

POSITIVES NEGATIVES . Generally lower risk compared to direct equity investments. Loan is . Limited ‘capped’ returns defined by interest rate on the loan. secured by the property, which acts as ‘insurance’ against repayment. . Specialist and requires relevant skills, resources and experience. . Council in position to control their desired risk / return profile. . Requires access to suitable opportunities. . Steady income stream due to predictable amount and frequency of . Complexity and technical aspects specific to certain asset classes returns typically paid on a monthly or quarterly basis. require specialist understanding and risk mitigation. . Shorter hold time, typically 12-36 months for development debt enabling . Ongoing monitoring and loan management requires appropriate cash to be recycled into other projects. monitoring infrastructure to be in place. . Scalability enables investments to be built up into a portfolio over time. . Key opportunity to drive forward regeneration and economic growth. . Leverage private sector investment into the area.

8 RECOMMENDED APPROACH

We set out below our recommended approach to deployment of capital into property and alternative investment activities. This is based on past work we have undertaken and ‘accepted good practice’ on local authority led debt investment funds. It also reflects BDBC’s objectives to invest in line with its Property & Alternative Investment Strategy. The proposed approach also ensures the forecast revenue within the General Fund is retained in accordance with the Council’s existing treasury management policy.

KEY PRINCIPLES The diagram opposite sets out the broad structure of the proposed ‘Invest to Grow Fund’. The purpose of the Fund is: to provide capital General Fund Capital Allocation Benchmark to stimulate local development activity and leverage private investment Revenue in support of local socio-economic growth. Return

Page 109 Page The proposed approach assumes a capital allocation (in this case £25m) is made via the Council’s General Fund. The key principles of the proposed model are as follows: Invest to Grow Fund . Funds are drawn down as required directly into projects in accordance with the agreed Investment Strategy. Investment Strategy . Investments are made either directly or in partnership with the private sector as equity or project based loans. Debt or . All investments are subject to appropriate risk, business case Equity assessment and due diligence in accordance with standard market Funding Commercial practice. recycled Returns Property & Alternative . Investments must be State Aid compliant and on terms equal to or Investments above the Council’s opportunity cost of capital or ‘benchmark revenue return’ (as identified on the diagram). . Benchmark revenue returns are returned to the General Fund on A B C an agreed basis having regard to the quantum and profile of capital drawn down. . Surplus profits as well as initial capital funding are recycled into future projects.

9 DEBT VS EQUITY INVESTMENTS

It is proposed the Fund could make investments by way of Debt or Equity. Financial returns are therefore either through fixed rate interest on debt investments and/or profit share on equity investments. Examples of such interventions are set out below.

DEBT INVESTMENT EQUITY PARTICIPATION . Council acts as a lender to the property owner or deal sponsor. . Council enters into project level joint venture partnership via a Special . Loan is secured against the real estate and underwritten in a Purpose Vehicle (SPV). commercial loan agreement. . Council commits equity to project(s) in accordance with Participation . Council receives a fixed rate of return determined by the interest Agreement. rate on the loan and how much they have invested. . Council receives fixed rate of return (coupon) and/or profit share . Loan is repaid in accordance with the terms of the loan agreement, determined by how much they have invested and wider role in the project. Page 110 Page typically at practical completion or when the scheme is partially or . Equity is repaid at point of exit or when scheme is refinanced. fully let.

Invest to Grow Invest to Grow

Equity Coupon Loan Loan Participation plus Profit Security Interest Participation Agreement Agreement Share

Developer SPV / JV

10 INFRASTRUCTURE INVESTMENT

The Fund could also make a debt or equity investment in a piece of infrastructure that releases development potential on a site (or number of sites). Returns can be captured through land value uplift through onward sale of serviced sites, or a contractual relationship with a joint venture partner.

General KEY PRINCIPLES Invest to Grow Fund Capital . Council enters into project level joint venture partnership via Fund Allocation a Special Purpose Vehicle (SPV). . Council commits debt or equity funding depending on Investment Return nature of partnership arrangement and risk profile of investment.

Page 111 Page . SPV procures infrastructure provider / contractor to deliver SPV / JV works. . Council receives fixed rate of return and/or profit share determined by nature and quantum of investment and Infrastructure wider role in the project. Returns through plot Contractor . Debt or equity is repaid with interest in accordance with sales and/or land loan or equity participation agreement i.e. at point of exit or value uplift when scheme is refinanced. . Typically the investment horizon for an equity investment is likely to be longer than that of a loan.

Infrastructure / Enabling Works

11 EXAMPLES OF INVESTMENTS IN PRACTICE

The role of the Fund should be to ‘place’ its investments in projects in such a manner that they complement existing funding and mitigate key risks that are preventing project progress. The Fund could make investments with a view to capturing both financial and socio-economic returns through a number of different mechanisms. Examples of such interventions that have occurred elsewhere are set out below.

INFRASTRUCTURE LOAN, MANCHESTER SCHEME PLAN CAPITAL STACK . Senior loan of £5.00 million provided to the developer to undertake the enabling works and infrastructure to enable the development of a Total Development Cost wider mixed use development site in the City Centre. (enabling works and infrastructure) . Borrower with an established track record and relevant guarantees provided to de-risk the Fund position. Capital Stack Security Page 112 Page . The Fund position de-risked by a low leverage position and security over two development plots with outline planning permission in place. . The wider development once complete (anticipated to be in 2023) will Developer Equity deliver a total of 2.3 million sq ft of accommodation consisting of 1.25 million sq ft of commercial, 62,000 sq ft of retail and 1 million sq ft of residential space. . A strategically important site, the overall scheme can deliver up to 11,000 additional jobs to the City. Senior Loan . Investment has funded upfront infrastructure in order to unlock the value of the scheme and to make the whole site immediately available. . Loan is repaid following the earlier of plot sales or refinance in accordance with loan agreement.

12 EXAMPLES OF INVESTMENTS IN PRACTICE CONT’D

The below example highlights the role the Fund can play in recycling capital and leveraging private sector investment to drive local economic growth.

DEVELOPMENT LOAN, BARNSLEY FACILITY A – PHASE 1 FACILITY B – PHASE 2 Barnsley Metropolitan Borough Council faced similar problems to Total Development Cost - £6.00m Basingstoke with limited industrial employment land being brought Total Development Cost - £4.00m forward for development. Developers found it difficult to source funding Capital Stack Security from banks and private institutions in large part due to limited evidence of Capital Stack Security occupational demand and take-up. However, the developer had significant experience in the local market and Equity Equity believed there was demand for industrial accommodation through discussions with the occupier community. The project was challenging

Page 113 Page from a funding perspective, due to the fully speculative nature of the proposed development. Fund Loan Fund Loan Working with Barnsley Council (who significantly de-risked the position of the lender by entering into an agreement for lease with the developer) the Local Debt Fund (administered by Sheffield City Council) provided a £4.90 million senior loan. The loan was drawn down and development completed within 12 months of the loan being granted. On completion of the unit there was significant occupier demand to sublet from Barnsley Council and this led the developer to re-finance with a revolving credit facility. The developer has subsequently decided bring forward a second phase (Phase 2) speculatively which the Sheffield City Region Fund is financing.

13 EXAMPLES OF INVESTMENTS IN PRACTICE CONT’D

The below example outlines a highly structured capital stack that has been deployed to enable the development of Grade A office accommodation in Sheffield City centre. The fund provided a mezzanine loan along with three other sources of funding to deliver the speculative office.

DEVELOPMENT LOAN (OFFICE), SHEFFIELD Sheffield has a distinct lack of Grade A office accommodation. The developer in this case had secured a bank loan (however this was limited to only 42% of the total costs). In addition to limited equity the developer faced a shortfall in completing the capital stack. The fund provided a mezzanine loan with a significant element of grant funding also being provided to complete the fund stack and enable delivery of the development. . Mezzanine Loan from the Local Authority funding the gap between equity / grant and debt. . Fund loan protected by: − Corporate security provided by the ultimate parent company.

Page 114 Page − Strong inter-creditor negotiated with the Bank. − Equity and Grant to be invested into the scheme prior to any fund drawdowns. − Relatively low loan-to cost for a mezzanine / junior loan.

SCHEME DESIGN CAPITAL STACK

Total Development Cost

Capital Stack Security

Developer Equity

Grant

Fund Loan

Bank Loan

14 EXAMPLES OF INVESTMENTS IN PRACTICE CONT’D

The Fund will aim to enable development and investment in Basingstoke. There are examples across the UK of government backed regeneration funds working alongside local authorities to de-risk and therefore drive forward speculative development. A good example of which is profiled below: DEVELOPMENT LOAN (OFFICE), CHESTER The distinct lack of Grade A accommodation in Chester meant occupiers could not find suitable accommodation and were leaving the city. The difficulty for Chester was not only proving occupier demand but developers securing funding as a result of risk averse banks. The Council sought to de-risk the project and the Evergreen Fund (owned by various local authorities) provided loan funding to help bring forward a speculative Grade A mixed-use office and retail development that recently reached practical completion. CBRE was actively involved in helping to manage the Fund loan to secure additional LEP Grant Funding enabling the development to come forward. The development transaction details are outlined below: . Viability issues meant a structured and joint approach amongst all stakeholders was required to bring this scheme forward. . Senior Evergreen debt funding in the absence of bank appetite de-risked by low leverage and first charge security. Page 115 Page . Cheshire West and Chester agreed to a purchase of last resort buy-out to effectively underwrite the transaction at below development cost and de-risk it. . Muse Developments as sponsor committed significant equity.

SCHEME DESIGN CAPITAL STACK

Total Development Cost

Capital Stack Security

ERDF Grant

Local Authority Buy Out Position Developer Equity

Evergreen Senior Loan

15 EXAMPLE OF THE FUND IN PRACTICE

A key benefit of the Fund is the ability to recycle investment into future projects. The diagram below sets out the revolving nature of the Fund that recycles an initial investment through a series of funding rounds. This maximises the ability to leverage private sector inward investment and socio-economic outputs. Each of the phases assumes a 3 year financing period.

Phase One Phase Two Phase Three

General Fund General Fund General Fund Page 116 Page Capital Revenue Capital Revenue Capital Revenue Net Return Net Return Allocation Return Allocation Return Allocation Return Reinvested Reinvested

Invest to Grow Invest to Grow Invest to Grow

£3m return £8.7m return £5.3m return £4.5m loan £2m equity (incl. profit £7m loan (incl. interest) (incl. interest) 6% interest share) 8% interest

Commercial Enabling Development Works / Renewables Opportunity Infrastructure

Economic Outputs e.g. jobs, new homes, brownfield land regenerated etc.

16 INVESTMENT STRATEGY This section summarises the key principles for the Fund’s overarching Investment Strategy. The purpose of the ‘strategy’ and integrated investment criteria is to provide a tool for the Fund Manager to assess projects. It will also be used when making recommendations for investments and as a reference document for approving those investments. The strategy will inevitably evolve throughout the Fund life, as a better understanding of the type of projects in the area is garnered, the local priorities vary and as the public and private sector funding landscape changes overtime.

FUND VISION INVESTMENT CRITERIA The foundation of the Invest to Grow Fund is: The following proposed investment criteria form the basis of selection for “to provide capital to stimulate local development activity and leverage investments by the Fund: private sector investment in support of local socio-economic growth.” . Investments are to be made either directly, in partnership with the private sector The overarching objective of the Fund is to stimulate job creation, delivery as equity, or project based loans.

Page 117 Page of new homes, and attract significant inward investment into the Borough. . Investments are to be made in line the Council’s Property & Alternative Investment Strategy. KEY PRINCIPLES . Investments are to be within the Borough as a priority although the Fund will consider investment options within Hampshire and wider South East where The Fund is being set up as an instrument to support the delivery of the ‘additive’ to the Borough. Council’s economic priorities, by providing finance for certain projects . The underlying principles are: project is viable; carries appropriate risk; and the where bank funding is not available (referred to as “funding gap”, distinct terms are equal to or above the Council’s opportunity cost of capital. from “grant funding” where a scheme is not viable). . Investments must never supplant private finance, be State Aid compliant and The Fund can provide equity or debt, structured to meet the particular meet commercial market returns. needs of a project. All investments will be fully repayable and reinvested in further projects which meet the Fund’s investment criteria. The Fund will . Portfolio level risk criteria for debt investments 70% loan to cost and 60% loan not provide grants. to value, with no individual investment to exceed 80% loan to cost. This does not stop the Fund making a profit. However, the generation of . No more than 30% of the total Fund capital in each project (e.g. based on a profits is not the primary objective and all profits are to be retained by the Fund size of £25m, the maximum loan size would be £7.5m) Fund and re-invested pursuant to local socio-economic priorities. . No more than 40% of the Fund lent to one borrow or group of borrowers (e.g. based on a Fund size of £25m, the maximum loan size would be £10m). Based on our experience of managing similar funds across the country, the Investment minimum size to be £1m. Target maximum 3 year finance period. ‘strategy’ needs to be commercial, sufficiently flexible and actively managed to cater for a changing political and economic environment. All investments will be subject to appropriate risk, business case assessments and Therefore we would advise the Fund Investment Strategy is reviewed due diligence by an appointed Fund Manager and must fulfil the requirements of annually. this Investment Strategy.

17 INVESTMENT MANAGEMENT

As part of the workshop discussions, the full range of governance models have been explored. There are three widely recognised approaches to the management of a fund of this nature. These three options (Delegated, Advisory, In-house) can be summarised as having varying degrees of client involvement and oversight. The diagram below shows the variances between the three different approaches.

INVESTMENT MANAGEMENT OPTIONS The option offering the lowest level of on-going management input from BDBC would be the Delegated mandate. Under this arrangement the appointed manager would be delegated full discretion to implement the investment strategy without further

Page 118 Page reference to the client, periodically reporting results against the target benchmark, perhaps annually. This approach would enable the vehicle to be attractive to wider public or private sector investors at ‘Fund Level’ given the independent nature of investment decisions. By contrast, the option requiring the highest level of input from the Council would be the In-House route. Here BDBC would be responsible for all investment and investment management decisions, together with all oversight and reporting. The third alternative is that of the Advisory mandate. This option would ensure BDBC has full oversight and also retains key final decision making, based upon clear recommendations from its appointed independent professional investment advisor. We propose the Fund is formulated and driven with the support of a long term private sector partner who will act as Investment / Fund Advisor acting in an ‘Advisory’ function. The Fund Advisor will require the necessary skill set to appraise opportunities and make recommendations to the Investment Board/Manager.

18 GOVERNANCE AND OPERATIONAL MODEL

The diagram below provides an overview of the proposed operational and governance structure for the Invest to Grow Fund. Further detail is provided within Pinsent Masons fund governance proposals provided separately to this report.

General Fund Capital Allocation ‘Block of Finance’

Investment Invest to Grow Board/Manager Fund Page 119 Page FUND OBJECTIVES INVESTMENT STRATEGY Recommendation

Approval Fund Manager Projects from Project selection, underwriting and loan pricing Gateway

Loan SPV / JV Equity

Project Project Project Project

19 GOVERNANCE & DECISION MAKING

The diagram below sets out the proposed decision making mechanism. The intention is to provide a “Practical and balanced solution” with clear delegated authority whilst allowing for prompt decision making in line with the approved Investment Strategy.

Cabinet Decision ‘Exceptional Cases’ can be referred

Recommendation Approval

Page 120 Page Executive Director of Finance (in consultation with portfolio holder for Property and Development) Delegated Authority to Approve Investments Investment Strategy “Control” exercised through Council approved Investment Strategy and must be scheme Recommendation Approval recommended by Fund Manager

Fund Manager Project selection, underwriting and loan pricing

Project Project Robust investment monitoring procedures Monitoring reports to Audit Committee

20 PROJECT APPRAISAL PROCESS (1)

A clear project appraisal process is fundamental to establishing a fund that is efficient and successful, whilst making investments that are properly underwritten and risk assessed. This section sets out the proposed project appraisal process. The process commences from origination and early sighting of investment opportunities to final legal documentation and release of capital. In the first instance, opportunities are passed through an initial ‘gateway process’. This involves an initial review of the project (undertaken by the Fund Manager) against the Fund objectives and investment strategy. This is outlined below.

Introduction Page 121 Page Suitability

Source Due Diligence appropriate opportunity Assess if in line Financial with Fund Analysis Investment Strategy Evaluate scheme viability, business Issue Gateway plan and Recommendation investment structuring Evaluate if the potential returns are acceptable for the level of risk

21 PROJECT APPRAISAL PROCESS (2)

Once projects have passed the gateway for the Fund, a subsequent more detailed project appraisal process that will take the project to investment decision is undertaken. This process requires the Fund Manager to undertake detailed due diligence and underwriting, within a clear reporting format and governance structure to allow decision making to be implemented.

Negotiation of Stage 1 Legal documentation optimal funding Scheme viability Recommendation and negotiation, Approved Gateway structure and business plan inter-creditor Recommendation report, highlighting variation from initial agreements, report guarantees Terms & Page 122 Page Structure Due Diligence Stage 1 Report Ongoing borrower Loan management, reporting, board Docs oversight Stage 2 Report Capital Investment Deployment Exit & Return Management of Capital

Credit Committee, Clearing of pre- Governance, Board conditions for funding Approvals drawdown

22 PERFORMANCE MONITORING FOR THE FUND

In accordance with standard fund management practice, it will be important to ensure the performance of the Fund is monitored on a regular basis. In view of the Fund objectives, this will comprise both economic and financial performance monitoring. These are considered in further detail below.

ECONOMIC OUTPUT MEASURES FINANCIAL PERFORMANCE MONITORING Whilst the main investment strategy addresses the type of investments, it is The monitoring of the financial performance is critical to supporting the important to recognise the extent to which local value is created by smooth and effective running of the Fund. Financial performance investments in local assets. The contribution of projects should be defined monitoring should be undertaken in accordance with standard market against the Council's economic priorities and measured at Fund level. practice. Economic output measures will vary depending upon the specific The Fund manager will be responsible for ensuring investments underwritten importance of key indicators to the Council and will evolve in line with the meet the minimum return requirements for the Fund and monitor the Investment Strategy for the Fund. cumulative returns to the Council. Page 123 Page The intention of these output measures is to demonstrate the added value of There will be risk management and mitigation processes in place (see ‘Risk the Fund and socio-economic benefits to the Borough. Statistics could then Considerations’ section of the report) for the Fund to ensure investments be used to build the case for securing additional public funding for entered into enable the Council to meet the minimum financial return investment in the Fund. requirements. In preparing recommended economic output measures for the Fund we The financial performance metrics that will be monitored include: have had regard to the Council’s economic priorities (Basingstoke Economic . Weighted average Loan to value / Loan to cost ratios Masterplan 2033), the Council’s soon to be adopted Local Plan as well as wider regional economic priorities. . Weighting of the sectors of real estate In view of the above, we propose the following output measures for regular . Total capital available performance monitoring by the Fund: . Capital recycled . Jobs created (or safeguarded) by the provision of real estate . Capital employed . Homes delivered . Return on capital employed . Amount of Grade A or equivalent employment space provided (including . Net present value enabling works) . Average margin . % leverage of third party inward investment . Annual financial return . Brownfield land re-use . Energy performance and savings

23 PROJECT PRIORITISATION

The Fund output objectives can be used to drive a project prioritisation process. The matrix below shows how a prioritisation process can be used to select projects that offer the most in terms of outputs, but are still appropriate to the Fund. This shows the importance that outputs can be given in comparison to other factors that a Fund Manager may consider when pricing a loan. This matrix shows the key characteristics that will be analysed as part of the Stage 1 and 2 underwriting reports. Further detail on both outputs and financial criteria is provided within the Fund Investment Strategy.

Area Considerations (but not limited to) Employment and . Placemaking Regeneration (outputs) . Output numbers in specified areas (Grade A space, jobs etc) . Specific focus on support for local employment generation and community economic development Page 124 Page . Brownfield site regeneration . Delivery of new homes . Timing and ability to recycle loan into additional regeneration projects . Demonstration of contribution to skills training . Energy performance and savings Scheme Feasibility . Experience generally and specifically relating to the proposed project . Integrity of the borrower. . Resource capability, quality and commitment . How many other projects are being undertaken and what is the time line of these . Financial status and analysis of key balance sheet, P&L and cash ratios Construction & Market . Location – development being delivered into a liquid market with good tenant demand Characteristics . Building quality – suitability for end users, BREEAM rating etc . Project Team – Quality of the project team, including the main and sub contractors . Availabilities of warranties and duties of care for the team . Type of building contract being employed

Capital and Leverage . Quantum . Financial leverage . Additionality . Feasibility

24 MARKETING & ENGAGEMENT STRATEGY

The Fund launch is proposed to be Autumn 2016. However, the marketing and engagement strategy of the Fund will need to be clear prior to launch and will play a key role as the Fund sources projects to invest. Building a distinct brand for the Fund will be of critical importance to its success as has been demonstrated in the success of other Funds in the UK. This section of the report outlines the Marketing and Engagement Strategy proposed up to Fund launch and the process for continuing to identify projects for investment.

MARKETING STRATEGY LOCAL AUTHORITY PRIVATE SECTOR The marketing strategy for the Fund should be a two phase process. Prior to launch this will be to developers, private sector local stakeholders and the Council, to enable a pipeline of investments to be developed (as Determine Interrogate Local Agents / outlined in the graphic opposite). Once the Fund is launched and has a Local Plan Investors and Developers track record of established investments it will work to bring opportunities Page 125 Page forward with the project sponsor and potential third party funders at Identify Face to Face Strategic Consultations project level. Sites

Determine LOCAL AUTHORITY ENGAGEMENT Follow Up Site Workshops Engagement with the Council by way of meetings with key Council officers Ownerships has already begun. The aim of the engagement with the officers is to Engage Fund Launch understand which sites within the Borough are of strategic importance, Event and Land Associated either for housing, employment land and renewable energy. Once these Owners Press sites are outlined, the process will involve identifying the land owners and engaging them to determine the Fund’s role in bringing these forward.

PRIVATE SECTOR ENGAGEMENT The event will also be important to let the market know that the Council is open for business. The private sector engagement and project pipeline at launch and For the private sector a number of face to face meetings have already particularly through the first year of the Fund will be vital for credibility. Press occurred. Continuous market engagement will ensure the Fund meets the announcements around successful investment will also reinforce the Fund’s brand. needs of the investor market and can deliver the objectives of the Council. Building awareness and a clear brand for what the Fund has been created to It is proposed that the Fund hosts a launch event with advertisements in achieve will ensure that it enters the thought process of anyone investing in the the local and national press. The press coverage and a launch event will development or intending to deliver development in the area. Such an approach provide the Fund with a local, regional and national platform to attract will need to be continued through the various stages of the Fund’s lifecycle. investment into the Borough.

25 ATTRACTING WIDER SOURCES OF CAPITAL

During the initial phase the overarching fund will be capitalised by the Council’s own capital reserves. Once initial investments have been made, and depending on the nature and size of these investments, we understand the Council may consider the use of additional borrowing or seek to attract wider public sector investment to support the future growth of the Fund. Alternative sources of capital are also likely to emerge as the Fund expands over time. Wider funding sources are considered below.

PUBLIC SECTOR CAPITAL In the meantime, the Fund Manager should be encouraged to work with the Government policy has long reflected financial instruments such as that other public sector partners to attract additional recyclable fund capital for proposed are encouraged. The proposed governance arrangements are investment in the borough – or potentially the wider county area. This may such that the Fund is structured in such a way to enable the LEP and other include HCA, ERDF and/or Growing Places funds as a result of demonstrating public sector bodies to deploy their own capital at project level. robust governance and fund management procedures. Page 126 Page It should also be possible to encapsulate grant funding that becomes PRIVATE SECTOR CAPITAL available from central government and can be used either to bolster the Fund or individual projects on a case by case basis to de risk or make projects The Fund is unlikely to either be able to or wish to attract Fund level private viable. sector investment at this stage. We would however recommend the structure of the Fund is such that it is designed to be able to work alongside another investor, and so that project level investment is encouraged. RECAPITALISING THE FUND Once all or the majority of the initial £25m of capital has been deployed, the OTHER FUNDING STREAMS Fund Manager will be tasked to explore options to recapitalise the Fund to enable further local investments to be made. The Council may use the ‘Fund Platform’ as a channel when making bids for Central Government and/or EU Structural Funds. It may be that a sub Potential purchasers of the loan portfolio may include local or regional fund, or ring fenced fund needs to be created in order to protect any pension funds looking to create a balanced fund portfolio, whilst also holding additional capital, but a Fund Manager should be procured so that this is investments in support of local socio-economic growth. An increasing possible. number of local and regional pension funds are seeking opportunities and mechanisms to make local investments that align meet local economic It is also possible to subsequently create a wider fund under the Limited priorities. Partnership (LP) model to invest in schemes once the Fund is well established. For this reason, it is important the Fund is structured as an CBRE Capital Advisors (as Fund Manager for the North West Evergreen Fund) arm’s length vehicle to enable wider public funds to be invested in the area. is currently in discussion with Manchester Pension Fund in relation to recapitalisation of four loans within the fund portfolio creating circa £20m of capital to re-invest locally.

26 RISK CONSIDERATIONS (1)

We have identified the following risks. We would recommend that these risks are considered on an on-going basis as part of an annual review. Project level risks will be mitigated to a large extent through loan agreements and robust loan monitoring procedures.

RISK KEY CONSIDERATIONS Fund Risks Attracting sufficient private Consider investment at project level at a different risk reward points. Appoint a well-respected FCA regulated Fund Manager with sector interest in the Fund daily experience of raising capital. Competition for investment The current proposed funding allocation inherently means that on first use of this capital only a limited number of schemes can from the Invest to Grow Fund be funded. This creates a risk that the Invest to Grow Fund is oversubscribed and cannot fund otherwise eligible schemes. Property Risks Projects that are not viable Fund to work alongside other potential funding sources to make projects viable within the State Aid context. Alternative local authority intervention measures may also be considered. Page 127 Page Development risk: Delays Delays to the development programme, may impact the underlying scheme e.g. in terms of its feasibility in the property market Development risk: Cost- Cost-overruns can be an issue, where the development costs increases. Risk can be mitigated through effective loan underwriting overruns and monitoring procedures. Development risk: completion The risk that the borrower runs out of funding to complete the scheme may mean that the Fund has a charge over an incomplete asset, that may not have sufficient value to repay the loan and/or may require further funding to complete it. Planning risk Planning consent would typically be a condition of a loan. However, should planning not be achieved then any committed loans may not be drawn, meaning the allocated capital may need to be deployed elsewhere. Valuation risk If the value achieved by the built asset is below expectations this can erode the underlying security to the loan. All loans will be made subject to a formal 3rd party bank valuation as a condition to the loan. Variations to the scheme Often developments require variations to both the scheme and or funding package, due to alterations in the underlying design or other factors. This can impact on the overall scheme, with consequences for the underlying asset security, as well as potentially impacting eligibility. Sufficient development contingency allowance will be required as a condition to the loan. Letting risk For many property asset classes, ensuring an acceptable lettings profile id often crucial in creating significant value. This creates various risk points. Certain asset classes are highly specialised by their inherent nature (e.g. scientific properties) and can be harder to find appropriate tenants for. This risk is greater where the loan underwriting is more dependent on full or partially let value to derive enough value to facilitate a loan exit. VP value will be lower and offer less value by way of security. Developer / contractor risk If the developer or any of its key contractors should be inappropriate or undergo financial difficulties (e.g. bankruptcy) then the development may be at risk in terms of quality timing and actually completing.

27 RISK CONSIDERATIONS (2) RISK KEY CONSIDERATIONS Financial Risks Borrower / guarantor default risk Should the borrower and /or guarantor legal entities fail or breach their undertakings / legal commitments, then the loan could be at risk of default with implications for their ability to undertake their duties in relation to the development. Loan structure risk The financial structure of the loans themselves may carry inherent risk, for example the amount of leverage and loan to value or the interest charged may put the scheme under stress. Legal documentation risk If the loan documentation (including the facility agreement and others such as inter-creditor agreements) is not adequate then the loan may not operate as expected, with possible consequences for the security. Repayment and exit risk The Fund’s ability to be able to exit from the loan commitment at an appropriate point (e.g. final loan, maturity or earlier as appropriate) is vital. Such reasons may include project delays or lack of refinancing possibilities. Any factors that inhibit the Fund’s exit means that its capital may not returned as expected. Funding Risks Public funding risks Co-funding for scheme (e.g. grant or other public funding) may be contingent or subject to provisions that may prevent it from being drawn, thereby risking leaving schemes co-funded with the Invest to Grow Fund without sufficient capital Page 128 Page Private funding risk ( e.g. senior or The Fund could encounter schemes that have some third party capital sourced from the private sector, e.g. bank debt junior debt) (senior to the Fund’s capital) or junior debt (subordinated to the Fund’s capital). This carries risks to the security structure and can impact any enforcement action. For example, other forms of funding come with their own conditions and covenants, which can have impacts on the availability on such third-party funding. Borrower equity The ability for the borrower to invest its equity into the scheme, both the amounts agreed as its committed minimum at the outset of the transaction as well as its ability to fund cost overruns etc. can be a direct risk in the context of developer solvency and ability to complete the development. Public Sector Funding Risks Economic Output risks There is a risk that the expected regenerative / economic outputs are not delivered in the quantum expected by individual schemes. This could adversely impact the Fund-Level totals achieved by the Fund. Defrayment risk If the Fund must adhere to a set time period to deploy its funding, then any matters such as delays on-site on developments or construction delays, could adversely impact the Fund’s outputs. Reputational Risks Corporate and personal liability, These are key risks that BDBC need to consider. The governance structure is designed to alert BDBC through the Board of public perception of investments any risks. The Board will make the ultimate decisions. and responsible investing *Market, economic and political risks should also be considered throughout the life of the Fund. These risks cannot be mitigated to the full extent and it is these risks (alongside specific property risks) that is delivering an economic and financial return above that of a risk free investment. It is therefore important to have regular reviews of the strategy. **The above table excludes legal risks for the Fund. These risks are addressed separately under legal advice provided by Pinsent Masons.

28 NEXT STEPS TO IMPLEMENTATION

This report alongside the proposed Investment Strategy, has been prepared to provide the framework document for approval for Fund set-up, interim and long term Fund Manager appointments, implementation, operation and on- going fund management of the ‘Invest to Grow Fund’. We set out below key considerations in relation to next steps towards implementation.

DELIVERY & IMPLEMENTATION Fund Management Costs The following are typical activities will be required to be undertaken: Fund Manager Appointment Base Fund Management fees vary depending on the value of the Fund. Typically the management . Providing information to enable other funding Typical fund management mandates of this nature fee for a £25m fund would range from 0.5% - 1% parties (public and private) to assess scheme vary from 5 to 15 years depending on the pa of the Fund value depending on the overall viability anticipated life of the Fund and overarching scope of service and levels of transaction flow. investment strategy. For the Invest to Grow Fund, . Participation in calls and updates with other Additional costs also include fund administration, funders as necessary

Page 129 Page following the Fund launch, we would recommend a legal, accounting and audit, website hosting, minimum appointment of 5 years. . Briefing borrowers how a co-lending marketing and branding. The proposed timeframe enables the following arrangement would work in practice Interim Arrangements to Implementation efficiencies to be delivered as the Fund builds . Ensuring all other funder’s terms and conditions momentum in the market place: It will be important to gain early traction on projects are contained within the relevant terms and . Capital immediately available to the Fund to be to establish a track record to facilitate early negotiating these where appropriate discussions with the market and wider public sector deployed On-going Management stakeholders where additional investment may be . Create an established investment criteria sought. Once investments have been made, there will be a number of ‘post-investment’ work streams required . Develop a track record of investments The implementation of the initial investments will to safeguard the performance of the initial . Management structure and branding to mature require an interim Fund Advisory appointment to investment. These include: It is important to ensure a close working draw upon the analysis of potential ‘early wins’ and . arrangement between the Fund Manager and the prepare for the launch of the Fund. Investment and project monitoring Council’s existing external advisory appointment in Transaction Delivery . Financial reporting relation to the on-going asset management, and We would anticipate that other sources of public . Economic output analysis development of the Council’s Investment Portfolio. and private capital may be invested alongside the . Repayment, exit and recycling strategy There will be considerable benefits to the two Fund’s capital at project level. Should this be the parties working closely with one another to . Loan servicing on debt investments case, the Fund Advisor should be procured to maximise the future pipeline of investment satisfy the criteria needed to deploy this additional The long term Fund Manager should be procured opportunities. funding. to undertake the above additional activities.

29 Page 130 Page

This report is addressed to Basingstoke & Deane Borough Council.

The contents are commercially sensitive, provided on a confidential basis and are exempt from disclosure, in part or full, under the provisions set out in Section 41 and Section 43 of the Freedom of Information Act 2000 and should not be made available to any other party without prior agreement from CBRE. 34 INVEST TO GROW FUND

Basingstoke & Deane Borough Council Investment Strategy

June 2016

Page 131 CBRE | INVEST TO GROW FUND

Investment Strategy

Fund Vision The foundation of the Invest to Grow Fund is: “to provide capital to stimulate local development activity and leverage private sector investment in support of local socio -economic growth .” The overarching objective of the Fund is to stimulate job creation, delivery of new homes, and attract inward investment into the Borough. In order to achieve this vision, the Fund will target key investment areas, aligned with the following four identified strands of the Council’s ‘Property and Alternative Investment Strategy’. 1. Council’s existing property portfolio 2. Commercial property investment 3. Housing, regeneration and alternative investment 4. Renewable (green) alternative investment

Key Principles of the Fund The Fund is being set-up as an instrument to support the delivery of the Council’s socio- economic priorities, by providing finance for projects where bank funding is either limited or not available. Investments will be able to compete with private market finance. However

1 the focus will be to provide finance where there is limited appetite from private finance. Page Investments will be structured on a State Aid compliant basis providing commercial, risk

adjusted market returns. The Fund can provide equity or debt, structured to meet the particular needs of a project. All investments will be fully repayable and reinvested in further projects which meet the Fund’s investment criteria and risk adjusted returns. The Fund will not provide grants. This does not stop the Fund making a profit. However, the generation of profits is not the primary objective and all profits are to be retained by the Fund and re-invested pursuant to local socio-economic priorities.

Purpose of the Investment Strategy The purpose of the Investment Strategy (“the Strategy”) is to provide a tool for the Fund Manager to assess projects and to allow the Council’s Executive Director of Finance and Resources to make investment decisions in consultation with the Portfolio Holder for Property and Development within the parameters of the Strategy. The main considerations in selecting investments made by the Fund will be to: æ Determine how projects will assist in delivering one or more of the Council’s economic priorities, including a contribution to the overarching ambition of jobs, homes and investment. æ Ensure the scheme is viable with an appropriate risk vs return profile – where it is not viable to engage with the project sponsor to consider how it could be assisted outside of the Fund. æ Provide a comparison of the proposed investment against other potential investments by the Fund; including the schemes proposed contribution to the Council’s economic priorities per £ of investment; and the comparative risks of delivery and repayment.

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Investment Strategy

The Strategy will evolve throughout the life of the Fund, as a better understanding of the type of projects in the area is garnered, the local priorities vary and as the public and private sector funding landscape changes overtime. The Strategy is therefore prepared on the basis that it is commercial, sufficiently flexible and actively managed to cater for a changing political and economic environment. On the establishment of the Fund full Council shall: æ approve the Investment Strategy; æ confirm which areas of the Investment Strategy may be subject to an annual review; and æ delegate authority to the Council's s.151 Officer in consultation with the Portfolio Holder for Property and Development to approve the investments within the parameters of the Strategy. The Investment Strategy may be reviewed annually (or at such time deemed reasonably necessary by the Cabinet) with such review limited to those areas of review set out on the establishment of the Fund. The annual amendments shall be subject to approval by Cabinet. The Fund manager will make a recommendation each year on the Fund Strategy.

Economic Priorities The Council’s ‘Economic Masterplan for Basingstoke 2033’ and recently adopted ‘Local

2 Plan’ outlines how it will plan for future prosperity, secure investment and ensure that Page residents benefit from economic growth and improved employment opportunities and

enhanced infrastructure. The overarching ambitions for the Masterplan and Local Plan are to deliver: æ 4,000 new jobs (the Local Plan identifies 450 to 700 new jobs per annum) æ £233m Gross Value Added per annum æ 13,400 new homes (the Local Plan identifies 850 per annum) These output targets, along with the Council’s wider Local Plan objectives form the basis of the economic priorities for the Fund. In order to cater for future growth of the Fund, investment decisions will also give due consideration to the Local Enterprise Partnership (Enterprise M3) economic priorities.

TRANSPORT INNOVATION SKILLS HOUSING Improve & ENTERPRISE Develop skills Facilitate and connectivity better to suit the Creation of 200 accelerate the between needs of the new companies, delivery of ‘Growth and economy. 8,000 additional housing across Step-up Towns’, Achieve target of jobs and £2bn the region, and increase increasing of export address capacity and employment to markets from affordability gap unlock new businesses reach 80% housing and business sites

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Investment Strategy

Sourcing Projects The appointed Fund Manager, reporting to the Council's Executive Director for Finance and Resources, will be responsible for delivering the Investment Strategy. Full details of the proposed governance arrangements for the Fund are set out in the accompanying legal report. The Fund Manager will work closely with the local authority in identifying, appraising and delivering investment in projects through the life of the Fund. This will combine the commercial property and financial expertise of the Fund Manager with the local knowledge and regeneration experience of the local authority to form an effective partnership with the range of skills needed to deliver the Fund’s vision. The local authority will be active at project level, working with developers at the early stage of project development, identifying potential opportunities and referring projects to the Fund for appraisal. The Fund Manager will also be tasked with delivery of the agreed marketing and engagement strategy for the Fund. A project appraisal process will then be applied to determine only those projects which are most suitable for support, namely: æ Sites that are viable but unable to access commercial finance; æ Sites that meet the Council’s ‘Property and Alternative Investment Strategy’; æ Sites close to, or have the potential to provide, employment to areas of regeneration

3 priority; and Page

æ Sites that are sustainable in environmental and socio-economic terms. In the addition to the above, the approach to project selection is focussed on producing the maximum possible impact on development and regeneration opportunities, whilst at the same time delivering market level commercial returns. The approach therefore recognises the Fund is not just about the allocation of its initial budget, but the deployment of financing which is then recycled for the benefit of future socio-economic growth. The Fund’s approach is reflected on the basis of an initial 10 year lifespan. This enables both economic outputs and financial returns to be monitored and forecast. This approach is predicated on the basis that the critical drivers of success over 10 years are: æ The number of times that each £ the Fund has at its disposal on day one gets deployed; æ What each £ deployed delivers in terms of the outcomes the Fund is targeting; and æ What additional financing capacity the Fund secures through project returns that exceed the Fund’s cost of capital and/or by drawing in new financing capacity. A key attribute of the Fund, is that its focus is not simply on its financial success, but the additionality it delivers on the ground. The fact that the Invest to Grow Fund is a public sector Fund means that its primary interest is not to use the Fund’s scarce capacity to substitute for financing which projects could have secured elsewhere. Instead, through the application of a robust project appraisal process, the Fund will ensure the impact of the investment will maximise the net inward investment into the local area.

Investment Criteria The following criteria form the basis of selection for investments by the Fund:

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Investment Strategy

æ Investments are to be made either directly, in partnership with the private sector as equity, or project based loans. æ Investments are to be made in line the Council’s Property & Alternative Investment Strategy. æ Investments are to be within the Borough as a priority although the Fund will consider investment options within Hampshire and wider South East where ‘additive’ to the Borough. æ The underlying principles are: project is viable; carries appropriate balance of risk vs return; and the terms are equal to or above the Council’s risk adjusted opportunity cost of capital (at the time of each individual investment). æ Investments will be able to compete with private market finance however the focus will be to provide finance where there is limited appetite from private finance. Investments must be State Aid compliant with an appropriate risk adjusted return. æ Limited appetite for risk exposure. However a variety of risk positions may be considered but will be subject to risk mitigation measures being put in place by the Fund manager on a case by case basis. æ Risk criteria for debt investments is not to exceed 70% loan to cost and 60% loan to value at portfolio level, with no individual investment to exceed 80% loan to cost. Investments outside of these risk covenants will be assessed on a case by case basis.

4

æ No more than 30% of the total Fund capital in each project at any one time e.g. based

on a Fund size of £25m, the maximum loan size would be £7.5m. Page

æ No more than 40% of the Fund lent to one borrower or group of borrowers e.g. based on a Fund size of £25m, the maximum loan size would be £10m. æ Investment minimum size to be £1m. æ Target maximum 3 year finance period for debt investments. All investments will be subject to appropriate risk, business case assessments and due diligence by an appointed Fund Manager and must fulfil the requirements of this Investment Strategy.

Financial Criteria The Financial Criteria is a merit based method for assessing projects for potential support. The key financial considerations for Fund investments are: æ Coupon – allocated on a project by project basis, having regard to the EC Reference Rate methodology (2008/C 14/02) æ Draw down profile – to correspond with Fund headroom æ Payback period/exit arrangements – to enable funding to be recycled æ Loan security – to include external credit rating of prospective partners, schemes and collateralisation factors æ Risk profile and sensitivity analysis – related to the status of the development partner and scheme viability æ Quantum of loan – related to the Fund and scheme size

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Investment Strategy

æ Leverage – private sector capital released through the Fund intervention Providing deliverability and financial considerations are satisfied, investment will then be prioritised on the basis of: æ Comparative regenerative impact – measured against local economic priority outputs æ Sector distribution – according to the Council Property and Alternative Investment Strategy æ Nature of investment activity – managing the risk profile between equity and debt investments

Terms and conditions for on-lending The Fund will make loans or equity investments into regeneration projects. Loans will be provided on an interest bearing basis at the best rate reasonably attainable having regard to the State Aid guidance available from time to time. Equity investments will be made in accordance with a suitable coupon and/or profit share mechanism. Where feasible, given the structure of the project, the amount of the loan and collateral that may be available, the loan will be secured. Any security will be reflected in the applicable interest rate. In the event of EU State Aid rules permitting other forms of investment, the Fund may consider making alternative forms of investment in projects. The appointed Fund Manager will be responsible for the State Aid position with appropriate

5

support from its legal advisors, to ensure the Fund is always operated within State Aid

guidelines. The Fund Manager will also be tasked to ensure that all options are considered Page

in identifying the most appropriate form of investment in projects on behalf of the Fund.

Where Schemes have a Viability Gap The Fund will not fill viability gaps. However, the Fund Manager working in conjunction with the local authority may need to consider complementary methods of improving the viability. The Fund manager will therefore be expected to work with other sources of finances. These include but are not limited to: ERDF grant; Local Growth Fund; and Growing Places (and successors to those schemes) intervention.

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By virtue of paragraph(s) 3 of Part 1 of Schedule 12A of the Local Government Act 1972.

Document is Restricted

Page 137 This page is intentionally left blank Appendix 4 - High and Medium Residual Risks Summary

Mitigated Risk ansalysis Risk type Risk Details Likelihood Reputational Public perception of investments made Low

Reputational External negative market perception of fund Low

Borrowers default risk and associated loss of fund Financial Low capital

Financial Fund unable to exit investment at planned point Low

Fund unable to attract appropriate pipeline Service Provision Possible opportunities.

Regulatory legislative and policy changes Low

Inadequate availability of skilled personnel to People Low deliver funds objectives Development delays impacting on feasibility of Property Low projects Cost overruns increasing development cost of Property Low projects

Risk of value of the investment being less than Property Possible valuation at the start

Property Property Market 'crash' Possible

Page 141 Mitigated Risk ansalysis Impact Overall Score Mitigation/Comments Marginal Medium Risk Clear council agreed fund objectives Clear fund brand identity and robust fund Marginal Medium Risk management

Fund manager and due diligence processes and Critical Medium Risk analysis, appropriate use of guarantor, maximum loan values set in Investment Strategy etc

Critical Medium Risk Due diligence process and loan documentation

Fund manager appointed with finance raising and Marginal Medium Risk fund development experience, Investment strategy to allow a range of risk/return projects

Regular monitoring and annual review of Marginal Medium Risk investment strategy

Management and governance structure of the Marginal Medium Risk fund and individual project arrangements

Marginal Medium Risk Project selection and due diligence process

Effective loan underwriting and monitoring Critical Medium Risk procedures. Loan to value restrictions on the fund via the Critical Medium Risk Investment Strategy and third party valuations as part of due diligence. Monitoring of market conditions, fund manager Catastrphic High Risk risk management , mixed portfolio of investments and phased implementation.

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BASINGSTOKE & DEANE BOROUGH COUNCIL DRAFT DECISION NOTICE

SUBJECT KEY DECISION NUMBER Property and Alternative Investment Strategy – Invest to Grow fund

DECISION TYPE (please mark X as relevant) Key X Non Key Cabinet X Portfolio Holder Officer

WARDS AFFECTED: All Wards

THE DECISION IS THAT CABINET:

1. Approve the establishment of an Invest to Grow fund as detailed in this report and endorse the fund vision and principles.

2. Delegate the detailed fund setup to the Executive Director of Finance and Resources, funded from the Strategic projects revenue budget, in consultation with the Portfolio Holder for Property and Development and the Portfolio Holder for Finance, Service Delivery and Improvement.

3. Approve the proposed scheme of delegation to the Executive Director of Finance and Resources for the administration of the fund (set out in section 7) noting that this will operate within the Council approved Invest to Grow Fund Investment Strategy.

4. Note that the ‘primary purpose’ of establishing the Invest to Grow Fund is to support the council in meeting its socio economic duties and objectives.

5. Note the financial implications, s151 officer comments and risk assessment.

THE REASONS FOR THE DECISION ARE: The Council has agreed a Property and Alternative Investment Strategy and earmarked funding of £25m of long term invested funds to support its implementation. The objective of the strategy is to support the Council's socio-economic objectives; to stimulate local commerce and investment to support local economic growth; and to improve the Council’s medium term financial position and financial resilience to support the Council’s functions and service delivery.

Work on the feasibility of the council establishing an ‘invest to grow’ fund and the detailed fund design has been concluded. . A Cabinet decision on whether or not to set up the ‘invest to grow fund’ is now sought. Page 143

THE OPTIONS CONSIDERED AND REJECTED ARE: That no further development of the concept of an Invest to Grow council fund is undertaken. Cabinet could determine that following the feasibility work undertaken it does not wish to pursue the fund concept as designed further.

THE CONFLICTS OF INTEREST ARE:

STANDARDS COMMITTEE DISPENSATIONS ARE:

SIGNED DESIGNATION Cllr C Sanders Leader of the Council NAME DATE Councillor Clive Sanders 28th June 2016

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2 of 2 Agenda Item 8 Report to Cabinet 28 June 2016

Portfolio Holders presenting:-

Deputy Leader and Cabinet Member for Property and Development

Implementation of an Affordable Housing Scheme:- Subject: Land at Sandringham Court, South Ham, Basingstoke Status: Open Report Ref: Ward: South Ham Key Decision: No Deputy Leader and Cabinet Member for Property and Report of: Development

Jason Christou, Asset Management Surveyor 01256 845295 or ext 2295 [email protected] Contact: Tim Davis, Assistant Manager (Housing Supply) 01256 845760 or ext 2760 [email protected]

Appendix 1- Site and location Plan Appendix 2- Proposed Scheme Layout Plan Appendix 3- View of existing premises Appendices: Appendix 4- CONFIDENTIAL financial matters:- Not for publication by virtue of paragraph 3 of Schedule 12A of the Local Government Act 1972

Papers relied on to Planning Application reference 15/04427/FUL produce this report

EXECUTIVE SUMMARY

1 This Report

1.1 This report provides details of an affordable housing scheme to be undertaken by Affinity Sutton Housing Association. The report seeks authority for the revision of a council covenant on land owned by Affinity Sutton and which will help facilitate the implementation of the scheme, situated at Sandringham Court, South Ham, Basingstoke.

1.2 Affinity has requested that the council revise the covenant at nil value. This report provides details of the scheme, which is intended to comprise 14 affordable rented homes. It sets out how the implementation of the scheme would meet the council’s corporate objectives and priorities within the Page 145

1 of 11 Council’s Housing Strategy, and with reference to the Council Plan. The report accords with the council’s Disposal Procedure for Land and Property adopted by Full Council in December 2008.

2 Recommendation

2.1 It is recommended that Cabinet:

2.1.1 Note the contents of this report

2.1.2 Approves the revision of the council’s covenant at nil value, on land at Sandringham Court, South Ham, Basingstoke, to Affinity Sutton Housing Association, on the obtaining of planning permission for an affordable housing scheme.

2.1.3 Delegate the detailed terms and conditions associated with the covenant revision, to the Executive Director of Finance and Resources (S151 officer), in consultation with the Executive Director of Borough Services and the Head of Law and Governance.

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2 of 11

CONTRIBUTION TO COUNCIL PRIORITIES This report accords with the council’s Budget and Policy Framework and directly supports Council Plan priorities of supporting the provision of quality homes, affordable to all through growth and regeneration. It also accords with the objectives detailed within the council’s Housing and Homeless Strategy.

GLOSSARY OF TERMS Term Definition HCA Homes and Communities Agency ‘Affinity’ or ‘Affinity Sutton’ Affinity Sutton Housing Association Ltd

MAIN CONSIDERATIONS

3 Introduction and background to the proposals

3.1 This report provides Cabinet with details of an affordable housing scheme, proposed to be undertaken by Affinity Sutton Housing Association.

3.2 In 1992, the council sold Sandringham Court to Downland Housing Association, (now incorporated within Affinity Sutton) by way of a transfer deed. A covenant was included in the transfer, that the property could only be used as a hostel for single homeless women aged 18 years and over.

3.3 These forms of covenant were included in such land transfers to ensure that properties were used for the purposes for which they were being sold by the council, and to prevent purchasers from profiteering from selling on the site for more valuable uses without the council’s consent, thus ensuring the protection of the council’s long term property interests.

3.4 Prior to the current re-development plans being produced by Affinity Sutton, the site provided 23 units of shared supported accommodation for single homeless women. During 2014/15 a decision was taken by Affinity Sutton to close the scheme as a result of proposed reduction (and removal) of the revenue funding which effectively rendered the scheme unviable. All service users were rehoused and the site has since been earmarked for affordable housing development.

3.5 Site details

3.5.1 Sandringham Court is owned by Affinity Sutton on a freehold basis and comprises a two storey 1960s brick built building in an L-Shaped configuration. It is situated in an established residential area within South Ham, close to residential dwellings and garage blocks, and with a frontage to Paddock Road. It is understood that the property is of a compartmentalised design with communal areas, reflecting the previous use of the building. The property is now considered outdated and no longer fit for purpose. The site extends to about 0.15 ha (0.37 acre) and is shown coloured blue on the plan at Appendix 1. See view of existing premises at Appendix 3.

3.5.2 The council does not own any land in the vicinity of the property except for areas of highway land and public open space. These could not be realistically be incorporated within a wider site development. There are some garage blocks Page 147

3 of 11 in the vicinity of the site but it is understood that these are in other ownerships, and in any event are not required to facilitate the proposed development.

3.5.3 The building has been vacant since March 2015, and is currently boarded up.

3.6 Affordable housing proposal- Planning and Housing Matters

3.6.1 The site lies within the Settlement boundary where there is normally a presumption in favour of sustainable development, and which is supported by the National Planning Policy Framework. The area occupied by the building could be classed as brownfield land (currently or previously developed).

3.6.2 The land is considered suitable and available for development, and the proposed residential use should be compatible given its location within an existing residential area. The site is not within a Conservation Area and it is understood that there are no overriding policies that would prohibit the use of the site for a development of affordable dwellings for rent.

3.6.3 A planning application (reference 15/04427/FUL) was submitted to the Planning Authority in December 2015. This includes demolition of the current building and its replacement with 14 affordable dwellings, comprising 11 two bedroom houses and 3 one bedroom flats, over two storeys, and with a small three storey element within the scheme. A layout of the scheme is shown at Appendix 2, with full details of the scheme available on the council’s website.

3.6.4 The flats and houses will have frontages to Paddock Road and to the service road to the west. There will be about 18 off road car parking spaces available to the frontages of the properties, together with about 26 cycle spaces. The houses will be constructed with traditional brick elevations under pitched roofs with rear gardens and small front garden spaces. The development will have a linear presence within the street scene, not dissimilar from the general form of development locally. The flatted 3 storey elements are intended to have a more modernist design with light surface render finish and flat roof elevations. The new dwellings will achieve at least the equivalent of the former Code Level 3 of the Sustainable Homes Code, and will comply with HCA quality standards.

3.6.5 A decision on the application is expected shortly. Cabinet will be updated at the meeting on the status of the application and whether planning permission has been obtained. The covenant will only be revised if planning permission is obtained.

3.6.6 It should be noted that with the building being vacant, it may attract anti-social behaviour and trespass. The proposed development should prevent such issues in the future, as the housing development would effectively be outside of the public realm.

3.6.7 Having secured social housing grant funding from the Homes and Communities Agency, all of the properties are to be let as Affordable Rented units. It has been proposed that all of the homes will be prioritised for those with a local connection to the borough, with the Council securing nomination rights for 100% of first lettings and 75% of re-lets thereafter.

3.6.8 As the proposal falls below the Local Plan Policy requirement for affordable housing, nomination arrangements for all of the homes will need to be controlled through a legally binding nomination agreement and not a S106 Page 148

4 of 11 Planning agreement. The precise details of the wording of any nomination rights agreement are to be agreed with Affinity Sutton, the council’s enabling team and property services.

3.6.9 The proposal incorporates a mix of smaller dwelling types (flats and houses) which will address the significant need from singles, couples and small families, whilst making best use of the land available within the site.

3.6.10 Affinity have requested that the council’s covenant be revised to enable the delivery of affordable homes for rent. This would be on the basis that no financial consideration would be paid to the council given the scheme’s viability, and contribution to the council’s policies, and perceived benefits to the local area. The financial issues relating to this request fall within the auspices of the council’s disposals policy, and are dealt with in Part 6 of this report. Please also see Confidential Appendix 4.

3.6.11 It should be noted that in the event that Affinity do not obtain planning permission, the council will not revise the covenant. This has been acknowledged and accepted by Affinity.

4 Corporate implications and Council Policy

The Council Plan 4.1 This scheme accords with many council policies and corporate objectives, including those within the Council Plan. The Plan states that as a priority, the council supports the provision of quality homes, affordable to all through growth and regeneration. The Housing Strategy

4.2 The council’s Housing Strategy (2013-2018) and as confirmed by Cabinet, states that residents should be able to access good quality affordable housing. Currently there are in excess of 2000 people on the council’s Housing Register; and the target of the council’s Housing Strategy is that 300 affordable homes should be delivered annually. Affordable housing developments such as that proposed at Sandringham Court, are an important tool in helping to support the council’s affordable homes delivery target.

4.3 The Council was unable to prevent the loss of (albeit shared) supported housing units on the site as a result of the supporting people funding reductions by Hampshire County Council. Cabinet nonetheless was able to approve the implementation of an innovative new supporting people commissioning pilot since developed as a strategic response to mitigate the impact of those losses (Key Cabinet decision 928/HR refers). In the circumstances, the revised development proposals provide an optimum outcome for an otherwise redundant housing site, with the added advantage of securing 100% affordable housing. It should be noted that the existing building was no longer fit for purpose in its current state, and had become outdated and obsolete.

4.4 Further, the priorities for the current Strategy state that:-

Maximising supply:- ‘the council will, as a public body, be expected to use its own resources to help deliver affordable housing’

Shaping Supply:- ‘the council is also committed to supporting lower income households to access home ownership’ Page 149

5 of 11 Make best use of existing resources:- ‘to make best use of what we have…including assets such as land…’ and

Key Priority 1:- ‘pursue any windfall affordable housing development opportunities that arise within the Borough’.

The development of the site for affordable housing thus meets a number of the objectives and priorities set out within the Strategy. Officers have worked closely with Affinity Sutton in helping to pursue and facilitate the proposed scheme, which represents a windfall opportunity to add to the town’s affordable housing stock.

Central Government Housing Framework

4.5 Underpinning the council’s priorities for the provision of affordable housing is Central Government’s affordable housing framework, managed by the Department of Communities and Local Government (DCLG).

4.6 Importantly, given on-going reductions in grant funding, there is an expectation by Central Government that Local Authorities should consider what contribution they can make to affordable housing delivery by the use of their own land assets. The implications regarding the reduction of, or no HCA or other Government grant is that there could be a funding gap in schemes.

4.7 Unless the funding gap is filled by other means (such as the free transfer of Local Authority land, revision of council covenants to facilitate affordable housing, or indeed the provision of financial assistance from Local Authorities) it may compromise the number of affordable homes coming forward. This supports the argument that the proposed scheme at Sandringham Court should be supported with the assistance of a covenant revision for nil consideration, as detailed within this report. Further matters relating to financial viability are set out at Confidential Appendix 4.

4.8 It should be noted that, although HCA grant for general need rented housing has now been withdrawn, the Sandringham Court proposal has attracted HCA grant funding of approximately £455,000. This represents significant inward investment into the town, and without which the scheme would unlikely proceed. See financial viability considerations at Confidential Appendix 4.

5 Communication and Consultation

5.1 Housing Services have been consulted on the proposals and are supportive of the scheme, subject to agreement on the precise wording of any nominations rights agreement. These discussions are on-going with Affinity Sutton, but are likely to result in an agreement to the satisfaction of both parties.

5.2 A public consultation event was held previously and it is understood that there was overall support for the replacement of the vacant building with a scheme of affordable dwellings. Further public consultation has been undertaken as part of the planning application process. It is understood that there have been few objections to the proposal.

5.3 The ward members have been briefed on the emerging development proposal as the project has progressed, and have supported the concept as well as the principle of facilitating the scheme through the revision of the council’s covenant. Page 150

6 of 11 6 Financial Issues around covenant revision and Land Transfer

6.1 In order to build out this affordable housing scheme, Affinity has requested that the council revise its covenant which applies to this land.

6.2 Due to the financial viability of previous affordable schemes, council covenants were revised at nil value to support affordable housing and regeneration projects, and given the significant benefit of those schemes. Affinity have indicated that due to scheme viability, a similar approach is required to facilitate this proposed affordable development.

6.3 Nonetheless, there are a number of considerations that need to be taken into account concerning the covenant revision, in this case with an anticipation of revision of covenant at nil value, as detailed at 6.4 below.

6.4 The council’s Disposal Procedure

6.4.1 The council’s adopted Disposal Procedure for Land and Property, refers to the need to obtain best value under S123 of the Local Government Act 1972.

6.4.2 Any revision of a covenant, (where any such revision might be at less than market value) must be referred to Cabinet. The council’s Standing Orders: - ‘Disposal of Land’ are relevant as they apply to negotiations with one party and may be justified where:

a) the land is small in size/value

b) is an adjoining/closely located landowner and only likely purchaser

c) the nature of the council’s land ownership is such that the land must be sold to adjoining or surrounding land owners if best consideration is to be obtained

d) where there is a special purchaser for whom the land has a higher value than anyone else e.g. ransom strips, or where there is marriage value

e) where council objectives would be best met by undertaking private treaty negotiations with a single party who would bring social environmental or economic benefit

f) where the proposed transaction involves a party who already has a property interest in the land in question.

6.4.3 Officers consider that the negotiation of the covenant revision direct with Affinity Sutton, in the context of the Standing Orders described above, satisfies grounds (b) and (e), in whole or in part. In respect of the covenant revision, the additional ground (f) is appropriate, since Affinity already own land within the development site boundaries. However, any covenant revision would still need to satisfy other parts of the disposal procedure where it is anticipated that less than full market value might be obtained, as detailed below.

6.4.4 The disposal procedure also states that “the council will consider the contribution of a disposal (in this case the covenant revision) to the furtherance of council priorities or the promotion or improvement of the economic, social or environmental well-being of the area”, and the council’s Standing Orders - Disposal of Land state that – Page 151

7 of 11 “In certain circumstances, the council may dispose of land for less than the full market value. Those circumstances are clearly defined by law and in any other case specific consent is needed from the Secretary of State. General Disposal Consents have been given by the Secretary of State for certain transactions.”

6.4.5 This General Disposal Consent makes provision for the council to dispose at less than full market value. Specified circumstances must apply as follows:-

. The council considers that the purpose for which the land is to be disposed of is likely to contribute to the promotion or improvement of the economic, social or environmental wellbeing of the whole or part of its area, or any person resident or present in its area.

. The difference between the unrestricted or market value of the land to be disposed of and the consideration for the disposal does not exceed £2million.

The proposed revision of the covenant to support the proposals by Affinity, which will have economic, environmental and social benefits, fall within the terms of that Consent.

6.4.6 Thus, to satisfy the disposal procedures and the standing orders detailed above, and to support any covenant revision, the council must be satisfied that the proposed scheme is not financially viable without a revision of its covenant at nil value, and satisfies a wider range of economic, social and environmental council objectives and priorities. As detailed at (4) within this report, the proposed scheme satisfies the objectives contained within the Housing Strategy, and the Council Plan.

6.5 Valuation appraisal and financial viability issues

6.5.1 Affinity’s financial appraisal demonstrates that the scheme has only marginal financial viability, based on affordable rented housing scheme. They are providing their own additional funding to the scheme over and above what they would normally expect to provide to cover build and infrastructure costs as well as all costs associated with securing planning consent. The scheme is partly dependent on the allocation to the scheme, of £455,000 of HCA grant.

6.5.2 Affinity could for example provide shared ownership units within the scheme to increase financial viability. However given the small scale nature of this development, and that the windfall benefit of HCA grant funding for rent has already been secured, it is felt that the opportunity to secure 14 homes for rent on this site should be prioritised. Furthermore, affordable rented housing achieved with the contribution of HCA subsidy, will make a valuable contribution towards the council’s affordable housing objectives.

6.5.3 There are no financial implications for the council in revising the covenant, as the covenant in itself does not constitute the transfer of property. The covenant would be revised to allow for the provision of affordable rented housing only, (subject to ensuring that Affinity can meet its own regulations and lending criteria). Thus, in the event that planning permission was obtained for market housing in the future, any request for a further revision of the covenant to allow such market housing would enable the council to negotiate an appropriate financial sum to be paid.

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8 of 11 6.5.4 The council could choose to request Affinity to undertake a market led development or to sell the site to a developer for this purpose. Affinity, however, are under no obligation to undertake any form of development to enable a financial return for the council. They could keep the property in its current use, although that may result in the property remaining vacant. Although the council could request a financial sum for the revision of the covenant to enable Affinity to develop an affordable housing scheme, given the viability issues this may compromise an affordable scheme coming forward. It would also compromise the council’s objectives in supporting and helping to facilitate affordable housing development, as detailed within this report. It should be noted that the council are not committing any funding for the scheme and the entire cost is being borne by Affinity Sutton, (but with the assistance of HCA grant); and with no direct cost to the council.

6.5.5 The council has only small areas of highway and open space ownership in the vicinity of the site, and none of these areas will be affected by the proposed development. The development will enhance the public realm, by replacing a vacant building of low aesthetic quality.

7 Financial Implications

7.1 There would be no loss of income from the proposed revision of the council’s covenant, as it does not involve the disposal of council owned property, and the covenant in itself generates no rental income.

7.2 As explained above, any revision of the covenant wording will be to permit only the form of affordable tenure proposed by Affinity, so the council will not be prejudicing any future entitlement to seek potential payments for any future change of use of the property, (i.e to market housing).

7.3 The council would receive no capital receipt from the covenant revision, which would be assigned a nil value within the council’s accounts. The council will not be contributing any revenue or grant to the scheme.

7.4 There will be no VAT or stamp duty costs associated with the revision of the covenant, as the covenant is being revised at nil value. The council’s legal costs associated with the documentation for the covenant revision, will be paid by Affinity Sutton.

8 Equalities

8.1 The impact of the proposed affordable housing development at Sandringham Court on the protected characteristics and other vulnerable groups, and the implications for the Public Sector Equality Duty (Equality Act 2010), has been considered in an Equality Impact Assessment. It has been considered that there will not be any negative impact identified for any group.

8.2 The property was previously used as a women’s refuge but was closed and the occupants re-housed. The property has been vacant for a considerable period due to the change in available funding. Given that the building is to be replaced with an affordable housing development, the property will not be returned to its previous use.

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9 of 11 8.3 It was acknowledged that the proposed affordable housing scheme met a number of Council Plan, Housing Strategy and Corporate objectives. It was noted that the council was not disposing of any land which might be used for another valuable purpose, and was only modifying an existing covenant.

8.4 Revision of the covenant would assist in the facilitation and delivery of much needed affordable rented housing. This would have a positive impact on all borough residents, in particular single persons and couples/those starting a family and those not normally able to afford private market housing. Affordable housing is generally beneficial for people on a low income and/or in receipt of benefits. It was noted that the proposed housing development was situated in an established residential area.

9 Risks Identified

9.1 There is a possibility that planning permission may not be granted (Cabinet will be updated at their June meeting) in which case the council would not revise the covenant. In that event, the scheme would not proceed and thus there would be no addition to the town’s affordable housing stock from this site.

10 Legal Issues

10.1 Under the council’s scheme of delegation, only Cabinet may approve the restructuring of restrictive covenants on land previously disposed of by the Council, where the covenant is being revised at potentially less than open market value.

10.2 Importantly, the covenant revision will be conditional upon the receipt of a satisfactory planning permission. Thus, if planning permission is not obtained, the covenant revision will not take place. This position has been accepted by Affinity.

10.3 If Cabinet agrees the delegation, the council’s Head of Law and Governance (as in the cases with previous affordable schemes) will ensure appropriate wording within the deed revising the covenant, that provide the council with the security that the land is utilised in connection with an agreed scheme for affordable housing in the future.

10.4 It is proposed that Cabinet be requested to approve the revision of the covenant to enable facilitation of the proposed development, and to delegate authority to the Executive Director of Finance and Resources, (Section 151 Officer) in consultation with the Executive Director of Borough Services and Head of Law and Governance, to decide the detailed terms and conditions to be included in the covenant revision.

11 Conclusion

11.1 The proposed revision of the covenant will enable Affinity Sutton to progress the development scheme detailed within this report, for the provision of much needed affordable rented housing, which will contribute towards council objectives detailed in the Council Plan and Housing Strategy.

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10 of 11 11.2 Cabinet will receive any updates on the details contained within this report on 28 June, given that the planning application has been submitted, and with an expectation that a decision may be forthcoming in June 2016. The revision of the council covenant will be dependent on Affinity Sutton being granted a satisfactory planning permission for the proposed development.

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11 of 11 This page is intentionally left blank Appendix 1 Site and Location Plan Page 157 Page

April 26, 2016 1:1,250 0 0.01 0.02 0.04 mi OS Lines 0 0.015 0.03 0.06 km ICT

© Crown copyright and database rights 2015 Ordnance Survey LA100019356 This page is intentionally left blank Page 159 This page is intentionally left blank APPENDIX 3:- VIEW OF EXISTING PREMISES

SANDRINGHAM COURT, SOUTH HAM, BASINGSTOKE

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Document is Restricted

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BASINGSTOKE & DEANE BOROUGH COUNCIL DECISION NOTICE

SUBJECT KEY DECISION NUMBER Implementation of an affordable housing scheme:-

Land at Sandringham Court, South Ham, Basingstoke

DECISION TYPE (please mark X as relevant) Key Non Key X

Cabinet X Portfolio Holder Officer

WARDS AFFECTED:

South Ham

THE DECISION IS THAT:

It that Cabinet:

Note e -Approves the revision of a council covenant at nil value, on land at Sandringham Court, South Ham, Basingstoke, to Affinity Sutton Housing Association Limited, on the obtaining of planning permission for the delivery of an affordable housing scheme.

-Delegate the detailed terms and conditions associated with the covenant revision, to the Executive Director of Finance and Resources (S151 officer), in consultation with the Executive Director of Borough Services and the Head of Law and Governance.

THE REASONS FOR THE DECISION ARE:

The recommendation to proceed with the revision of the council’s covenant will enable Affinity Sutton to proceed with this affordable housing development to satisfy housing and corporate council objectives as detailed in the report.

THE OPTIONS CONSIDERED AND REJECTED ARE: -Not to revise the council’s covenant

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THE CONFLICTS OF INTEREST ARE: None

STANDARDS COMMITTEE DISPENSATIONS ARE: None

SIGNED DESIGNATION Leader of the Council Cllr C Sanders

NAME DATE

Councillor Clive Sanders 28th June 2016

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Agenda Item 9

Report to Cabinet 28 June 2016 Portfolio Holders presenting:- Deputy Leader and Cabinet Member for Property and Development

-Disposal of the former Paddock Road Surgery site Subject: -Adelphi House Deputy Leader and Cabinet Member for Report of: Property and Development

Jason Christou, ext 2295 or 01256 845295 [email protected]

Contact: Kate Randall, ext 2392 or 01256 845392 [email protected]

Key decision: Yes Status: Open

1. Site Plan of Paddock Road Surgery 2a. Paddock Road Affordable housing Indicative layout 2b. Paddock Road Indicative street scene Appendices: 3. Site plan of Adelphi House 4. Disposal procedure 5. CONFIDENTIAL:- Financial Summary of Heads of Terms; Financial Information and Not for publication by virtue of paragraph 3 of Schedule 12A of the Local Government Act 1972 Background papers and relevant web None links

1 This Report

1.1 The purpose of this report is to seek authority to the entering into of a conditional contract for the potential sale of a council owned property, the former Paddock Road Surgery, South Ham, Basingstoke. The entering into of a conditional contract will enable the proposed purchaser, Sovereign Housing Association Ltd, to progress a planning application for an affordable housing

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1 of 15 scheme on the site, with completion of the sale occurring on the grant of a satisfactory planning permission.

1.2 This report sets out how the proposed affordable housing scheme will help support the council’s housing objectives as set out in the council’s Housing Strategy, and with reference to the Council Plan. The report provides details of the scheme, which is intended to provide a development for shared ownership, comprising not less than 4 houses.

1.3 This report also provides details of a property owned by Sovereign Housing Association, known as Adelphi House, Church Square, Basingstoke, and which Sovereign wish to dispose. Adelphi House represents arguably a unique opportunity given its central location and which could potentially, enable the council to acquire a property to meet a currently unspecified range of objectives and accommodation requirements into the future.

1.4 Given their proposals and desire to purchase the Paddock Road site, and their wish to dispose of Adelphi House, Sovereign have agreed that the council could be granted a legal interest in Adelphi House, by exchanging contracts on the property. An exchange would not obligate the council to purchase the property, but enable the council a sufficient timescale to assess whether Adelphi could support the delivery of any strategic objectives.

1.5 High level details of the affordable housing scheme proposed by Sovereign at Paddock Road are provided within this report, and also the heads of terms associated with the disposal of this property. The report also provides details of the Adelphi site, and the heads of terms associated with the council obtaining a legal interest upon exchange of contracts. The full details of the Heads of Terms are provided within Confidential Appendix 5.

1.6 This report accords with the council’s disposal procedure for Land and Property adopted by Full Council in December 2008, and the relevant acquisition and disposal references within the council’s constitution.

2 Recommendation

It is recommended that Cabinet:

2.1 Note the contents of this report

2.2 Approves:

2.2.1 The council entering into an exchange of contracts, for the disposal of the Former Paddock Road Surgery site to Sovereign Housing Association at less than best consideration given the social, economic and environmental objectives that will be met by the proposed development scheme, on the basis of the financial terms detailed within this report and within the Confidential Appendix 5

2.2.2 Completion of the sale of this property to Sovereign HA upon a grant of a planning permission satisfactory to Sovereign, for a scheme of affordable housing

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2 of 15 2.2.3 The council entering into an exchange of contracts for the Adelphi House site, on the basis of the financial terms detailed within this report and within the Confidential Appendix 5

2.2.4 Delegates the finalisation of the detailed terms and conditions associated with the proposed heads of terms for the entering into of conditional contracts for The Paddock Road Surgery and Adelphi House to the Executive Director of Finance and Resources (S151 officer) in consultation with the Head of Law and Governance

2.3 Notes that a further report will be brought back to Cabinet, with regard to the possible uses for the Adelphi House site, with a recommendation as to whether officers should proceed with further work in relation to any proposed use; and whether the council should proceed with a planning application in respect of any use.

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3 of 15

CONTRIBUTION TO COUNCIL PRIORITIES This report accords with the council’s Budget and Policy Framework and directly supports the Council Plan to facilitate the provision of quality homes, affordable to all through growth and regeneration, making the most of partnership opportunities, and creating opportunities for long term growth. In respect of Paddock Road, it also accords with objectives detailed within the council’s Housing and Homeless Strategy.

GLOSSARY OF TERMS Term Definition ‘SHA’ or ‘Sovereign’ Sovereign Housing Association Limited ‘The surgery’ or ‘Paddock Road’ The former Paddock Road surgery site ‘Adelphi’ or ‘Adelphi House’ The Adelphi House site

MAIN CONSIDERATIONS

3 Introduction and background to the proposals

3.1 This report provides details of a proposal to deliver a small scale affordable housing scheme on the site of the former Paddock Road surgery in South Ham. The site is owned by the council, and would involve the disposal of the site to Sovereign Housing Association, who would then implement the scheme.

3.2 The report also provides Cabinet with details of an opportunity for the council to acquire a legal interest in a property known as Adelphi House, located on the western edge of the town centre. This property is owned by Sovereign Housing Association.

3.3 Included within this report are the details of the connectivity between the two sites, which involve the council negotiating with one party, Sovereign HA. The legal and financial considerations concerning such arrangements are included within this report, and at Appendix 4 and Confidential Appendix 5.

4 The former Paddock Road Surgery

4.1 The Site

4.1.1 The former surgery site is owned freehold by the council and is now vacant, the surgery having been relocated locally to more suitable premises. The property was previously marketed and an offer accepted for the site on the basis of a nursery use, however this did not proceed as planning permission was refused. The site extends to about 0.11ha (0.27acre) and is shown outlined red at Appendix 1.

4.1.2 The surgery building has since been demolished in anticipation of the site being used for residential development, and to ensure that it has no further rating liability. The property is not required or considered suitable for community re-use.

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4 of 15 4.2 Background to the proposal

4.2.1 The site is considered unsuitable for non-residential uses, following the refusal of a previous planning application for a community based use. It is situated in an established residential area, which also includes a substantial number of Sovereign owned dwellings in the vicinity of the site.

4.2.2 It was recognised that the site had the potential to provide a small scale residential development, either for market or affordable housing. The provision of an affordable housing scheme on the site would however satisfy a wide range of affordable housing objectives, as well as objectives set out within the council plan.

4.2.3 The council does have the ability to sell land off market direct to one party and below market value (in this instance a disposal to Sovereign for delivery of affordable housing) and the legal framework and disposal policy considerations with regard to such proposals, are dealt with at Appendix 4.

4.2.4 Sovereign have previously expressed their interest in the Paddock Road Surgery site for delivery of affordable housing. Together with this property being available for disposal as well as the availability of the Adelphi House site being owned by Sovereign (see 5.0), a unique opportunity is thus presented, involving land transactions with Sovereign which includes both properties.

4.3 Proposed affordable housing development

4.3.1 The proposal by Sovereign would be to provide 4 or 5 affordable homes for shared ownership with an indicative layout and street scene shown at Appendix 2a and 2b. These will comprise two storey houses in a traditional design and with two or three bedrooms, with allocated surface parking.

4.3.2 Sovereign have submitted a pre-application, in furtherance to the submission of a planning application. The Planning Authority has previously confirmed that the principle of housing development on the site should be acceptable, given that the property lies within the settlement policy boundary and is situated in a residential area; but subject to the consideration of detailed design aspects. It is also classed as a ‘brownfield site’ (previously developed land).

4.3.3 The submission of a planning application will take place following approval by Cabinet, and following exchange of contracts with Sovereign, thus providing Sovereign with the security that they can commit resources to the project without risk; given that the council could otherwise sell the property to another party whilst planning permission is being sought.

4.3.4 Whilst the completed units are intended to be made available on the basis of shared ownership, officers within the housing enabling team and property services will seek to agree appropriate nomination rights with Sovereign and those with a ‘local connection’ to Basingstoke.

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4.4 Corporate Implications

The Council Plan 4.4.1 The provision of affordable housing on the site would accord with many council policies and corporate objectives, including those within the Council Plan. The Plan, (2016-2020) states that the council supports the provision of quality housing, affordable to all through growth and regeneration. The Council Plan recognises the importance of working with Housing Association partners to advance regeneration opportunities, including any opportunities within South Ham, where the site is situated. The Housing Strategy

4.4.2 The council’s Housing Strategy (2013-2018) and as confirmed by Cabinet, states that residents should be able to access good quality affordable housing. Currently there are in excess of 2000 people on the council’s Housing Register; and the target of the council’s Housing Strategy is that 300 affordable homes should be delivered annually. Affordable developments such as that proposed at Paddock Road, are an important component in helping to support the council’s affordable homes delivery target, given that the number of affordable homes which would typically be delivered through the S106 mechanism, may fall in the foreseeable future.

Further, the priorities for the Strategy state that:-

Maximising supply:- ‘the council will, as a public body, be expected to use its own resources to help deliver affordable housing’

Shaping Supply:- ‘the council is also committed to supporting lower income households to access home ownership’

Make best use of existing resources:- ‘to make best use of what we have…including assets such as land…’ and

Key Priority 1:- ‘pursue any windfall affordable housing development opportunities that arise within the Borough’.

The development of the site for affordable housing thus meets a number of the objectives and priorities set out within the Strategy.

Central Government Housing Framework

4.4.3 Underpinning the council’s priorities for the provision of affordable housing is Central Government’s affordable housing framework, and managed by the Department of Communities and Local Government (DCLG). Importantly, there is an expectation by Central Government that Local Authorities should consider what contribution they can make to affordable housing delivery by the use of their own land assets. The delivery of affordable housing on the Paddock surgery site thus meets with the framework criteria set out by Government.

4.4.4 In summary, a disposal of the site to Sovereign would enable the council to fulfil corporate and housing objectives from the development of the site for affordable housing for shared ownership, and will also enable the council to Page 174

6 of 15 realise a capital receipt. The financial and legal implications of the proposed disposal are dealt with at Parts 6 and 7 of this report and within Confidential Appendix 5.

5 Adelphi House

5.1 Adelphi House is owned by Sovereign HA, and is held by them as a commercial investment. It is subject to a short term lease to an NHS Trust. SHA have previously marketed the property, and wish to dispose of the property as part of their investment strategy going forward. They have no desire to retain it for operational reasons.

5.2 Adelphi is a two storey 1970’s detached building on a site of about 0.15ha/0.38 acre (see Site Plan at Appendix 3). It is situated in a convenient location on the western edge of the town centre and within a residential street. Originally constructed as a medical practice, the property includes grassed and hard surface areas and parking facilities. The gross internal area of the building extends to about 424.33 sq.m (4,567 sq ft).

5.3 The potential opportunities presented by the availability of the Adelphi site, were recognised by officers within Housing and Property Services, given SHA’s intention to sell. The site potentially, represents a unique opportunity to acquire a site close to the town centre and in a sustainable location. This opportunity has coincided with the availability of the Paddock Road surgery site (see 4) and SHA’s wish to acquire that site, which would then form part of a wider transaction to include both properties.

5.4 The property is considered to have the potential to include a range of uses, given its size and location. This might for example include a community based use or housing accommodation. Other longer term and strategic considerations for the site, might have reference to the on-going work associated with the regeneration of the top of town, and any proposal aimed at supporting the town centre and community provision. The possible acquisition of the property by the council, would be a prudent move and provides the opportunity for the council to include the property in any reshaping of council services and vision for the town, into the longer term.

5.5 At this time, insufficient work has been undertaken to ascertain the most likely uses that could be accommodated on the site. The undertaking of any further assessment work and commitment of officer time and resource would therefore be at risk, since the council currently has no legal interest in the site, and SHA could choose to dispose of the property to another party.

5.6 Thus, officers have agreed with Sovereign in principle, that the council can acquire a legal interest in the site, by exchanging contracts for the sale. This would provide the council with a certain period within which to undertake appropriate research given the site’s opportunities and constraints, and identify any appropriate use or uses for the site.

5.7 At the end of the contractual period, the council could either complete the sale of the property (on the assumption that any appropriate use has been identified and if required, planning permission granted), or withdraw from the contract. The council would not however be obliged to purchase the property even if a suitable use was identified, nor would there be any financial penalty for the

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7 of 15 council if it decided not to complete the sale. These matters are addressed at Part 6 within this report.

5.8 It should be noted that the property is already let, but subject to a contracted out lease that could be terminated after 1 year with a three month rolling break. This will ensure the council could take vacant possession when it wished to commence an appropriate scheme of development. Thus, the council could potentially acquire a property which is currently producing an income, and hold the property to yield an investment return until it developed the property.

5.9 It should be noted that it is only intended to secure a legal interest in the property at this stage while further investigative work is undertaken. The identification of any use for the property, and further work for example associated with seeking any planning consent, would be the subject of a future Cabinet report.

6 Financial Implications

6.1 The Paddock Road Surgery

6.1.1 Matters relating to the council’s disposal procedure are detailed at Appendix 4, given that the proposed sale of the property to Sovereign HA would constitute an off market disposal to one party, and potentially at below full market value.

6.1.2 The property is vacant and yields no investment income to the council, and keeping the site unoccupied creates a management liability.

6.1.3 The disposal of the site to Sovereign would enable the council to obtain a receipt from the sale upon the grant of planning permission, and which could be invested to produce an income.

6.1.4 The council would exchange contracts with Sovereign on the basis of a NIL payment upon exchange. Accordingly, the council would not be paying any deposit sum to Sovereign on the entering into of conditional contracts for Adelphi House (see 6.2).

6.1.5 The price payable by Sovereign on completion of the sale is provided at Confidential Appendix 5, although in accordance with the terms of the contract, Sovereign could elect not to proceed with the purchase even if planning permission were obtained.

6.1.6 It should be noted that, in the event that the council sold the Paddock Road Surgery but did not proceed with the purchase of Adelphi House, the council would realise a capital receipt without any corresponding acquisition cost for Adelphi House (see 6.2).

6.1.7 There will be legal and surveyor’s costs associated with the preparation and entering into of conditional contracts and finalisation of terms, although it is anticipated that a proportion of the work could be undertaken in-house. Each party would be responsible for their own legal and surveyors costs. Sovereign would be responsible for all costs associated with a planning application and obtaining planning permission.

6.1.8 The heads of terms associated with the sale of the property to Sovereign, are set out at Confidential Appendix 5. Page 176

8 of 15 6.2 Adelphi House

6.2.1 There are no financial implications to the council in exchanging contracts with Sovereign, as no deposit is payable at the point of exchange. The council could choose not to proceed with completion of the sale, and there would be no financial penalty if it elected not to proceed to completion.

6.2.2 If the council decided to complete the acquisition, (sale from Sovereign), there would be an acquisition cost, and the heads of terms relating to the land acquisition and price, are dealt with at Confidential Appendix 5.

6.2.3 Going forward, there would be a cost implication associated with undertaking any detailed work, for example associated with any planning application for any identified use, and the work required to support an application. In the event that an appropriate use is identified, the details of any costs associated with further investigations, will be included in a future Cabinet report.

6.2.4 It should be noted that if the Council decided to purchase Adelphi House, it could represent a long term financial asset and which could potentially be developed for other valuable uses into the longer term, for example if any service provided at the site were to discontinue or be relocated to another site.

6.2.5 Each party will be responsible for their own legal and surveyor’s costs associated with the preparation and entering into of conditional contracts and finalisation of terms. It is anticipated that a proportion of the work could be undertaken in-house by the council’s Legal Services. The costs of any future investigative work, which might include the submission of a planning application, would be the responsibility of the council. The details of such costs will be included within a future Cabinet report.

6.2.6 The council has no legal interest in the site at present. Exchange of contracts with Sovereign HA will enable the council to undertake further work without the risk of the landowner (Sovereign) selling the site to another party. Legal and contract considerations, and the connectivity of this property with the disposal of the Paddock Road Surgery, are considered at (7) within this report.

6.3 A further report will be brought back to Cabinet regarding the detailed financial matters relating to Adelphi House, once officers have undertaken further feasibility work on identifying any intended use, and the costs associated with taking any proposal forward.

7 Legal considerations and contract matters

7.1 It is understood that there are no matters on the council’s title that would prevent Sovereign from undertaking an affordable housing development on the Paddock Road site. It is also understood that there are no restrictions on the Adelphi House title which would prevent the council from using the site for any identified purpose.

7.2 Currently, Sovereign have no legal interest in the Paddock Road site, nor does the council have any legal interest in the Adelphi site. Therefore, in the absence of any contract, any further research and investigative work would be undertaken at risk by both parties.

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9 of 15 At present, either party are free to sell their respective property interests, regardless of any work that has been undertaken by either party to date.

7.3 Therefore, it is recommended that both parties would exchange contracts for each property, but with exchange occurring simultaneously on both contracts so that both parties acquire a legal interest in the other’s property at the same time. In effect, this would ‘lock in’ both SHA and the council, so that SHA could proceed with a planning application for Paddock Road, and the council could continue with its assessment work for the Adelphi site.

Contract terms

7.4 Each contract would be on the basis of a freehold disposal, with completion occurring on the grant of a satisfactory planning permission. It is intended that each party would be given a period of 12 months in which to obtain the necessary permissions, with a possible extension for appeal, or the awaiting of a decision by a confirmed date. Other relevant conditions relating to each transaction are detailed at Confidential Appendix 5.

7.5 In the event that SHA obtained planning permission for residential development on the Paddock Road Surgery, SHA would pay an agreed sum for the acquisition of the site from the council, as detailed at Confidential Appendix 5. An independent valuation has been obtained for both sites for the purposes of S123 of the Local Government Act 1972, and a summation of the values applying to each site (in effect the disposal/acquisition prices for each property) are provided within Confidential Appendix 5.

7.6 In the event that the council identified an appropriate use for the Adelphi site, and on the assumption that any planning consent was obtained, the council could then elect to complete the purchase of the site. The price to be paid for the site is detailed within Confidential Appendix 5. Any recommendation to complete the sale and the pay the acquisition price set out at Confidential Appendix 5 would be included within a future Cabinet report, as well as the details of any costs associated with the delivery of any future proposal and likely funding sources.

7.7 If the Paddock Surgery site sale completes before Adelphi, (the most likely scenario) the Adelphi contract would continue to run until such time as the council elected to complete the sale, for example on the obtaining of planning permission for any identified use or in response to an accommodation requirement. This is subject to the timescales set out at Confidential Appendix 5.

7.8 It should be noted that neither party would be obliged to complete their sale even if planning permission is obtained. This allows both organisations flexibility, should there be a change in their financial position or in their statutory undertakings. There would be no financial penalty if either party chose not to complete their respective sale.

7.9 It is intended that the contract and transfer documents for each site will include a covenant for a fixed period of 5 years following sale completion, that the respective sites are used for the purposes for which they are being acquired (ie Paddock Road for the delivery of affordable housing, and Adelphi for the delivery of an identified council service).

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10 of 15 This will ensure that if either the council’s or SHA’s responsibilities and duties change in the future (ie after the 5 year period) they may use the site for an alternative purpose.

7.10 The council will offer Sovereign vacant possession of the surgery site on completion of sale. In the event that the council decided to complete the purchase of Adelphi, Sovereign would offer the council the freehold of the site subject to a short term lease. The lease includes terms which enables the council to terminate the lease at short notice and secure vacant possession once it is in a position to deliver a suitable scheme of development. Further details are set out at Confidential Appendix 5.

7.11 The council would require appropriate legal resources to prepare and consider contract documentation, although it is anticipated this would be undertaken using the council’s existing in-house resources where possible. Both Sovereign and the council would be responsible for their own legal and surveyors costs involved on both transactions.

7.12 Matters relating to the financial implications and how the acquisition might be funded if the council decided to complete the purchase of Adelphi House will be set out in a future Cabinet report, as well as details of the costs of taking any proposal forward, for example the costs associated with obtaining planning permission.

7.13 Given that both transactions are effectively ‘off- market’ disposals, any disposal/acquisition will need to comply with the council’s adopted Disposal Procedure for Land and Property, standing orders, the council’s constitution and the need to obtain best value under S123 of the Local Government Act 1972. Matters relating to these procedures in the context of acquisition and disposal of property are provided at Appendix 4 and Confidential Appendix 5.

8 Communication and Consultation

8.1 The Paddock Road Surgery site

8.1.1 There has been no public or residents consultation on this proposal to date, although residents would be consulted as part of the planning application process. Officers within Housing Services and other relevant disciplines have been consulted, and support the disposal of the site to Sovereign HA, given that an affordable housing development would satisfy a number of corporate and strategic objectives, as well as securing a capital receipt from the sale. Relevant officers within community development have confirmed they have no requirement for the community reuse of the property. It was noted that the proposed development could act as an exemplar for future development or regeneration in the South Ham area.

8.1.2 The Ward Members for South Ham are acceptable to the principle of the site being sold to Sovereign HA, on the basis that Sovereign will deliver an affordable housing scheme. They have made suggestions as to the form and style of development that might be suitable for the site, and are satisfied that Sovereign’s proposals for a ‘houses led’ development of 4 or 5 two storey houses, is in keeping with the style of housing development locally. The ward members wish to see the development undertaken at the earliest opportunity, given housing need.

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11 of 15 8.2 Adelphi House

8.2.1 Officers within the Housing, Property Services and Borough Development Teams have undertaken initial scoping work as part of a multi-disciplinary approach to future service provision and strategic requirements in the locality. These discussions will continue to ensure that, if the Adelphi House site is considered as potentially suitable, any service or services offered from the property would meet the widest range of council objectives into the long term. Other external stakeholders will be included within these discussions, as opportunities for delivery of any service are identified.

8.2.2 Details of the further investigations undertaken by officers and any subsequent recommendations as to the proposed use or uses, will be brought back to Cabinet, as part of the evidence base for Cabinet to assess whether further work should be undertaken regarding any identified use or uses, for example the undertaking of any further work associated with the submission of any planning application.

8.2.3 Officers have met with the ward members for Eastrop, and advised of the rationale for the council entering into a conditional contract in order to secure a legal interest in the site. This was to ensure that the council could carry out further investigations without risk. The members were advised that the council would not be obligated to purchase the site or deliver any proposal, even if planning permission is obtained.

8.2.4 It was agreed that the ward members would be kept fully informed as officers progressed with the potential to explore an initiative on the site, in consultation with the Deputy Leader and the Portfolio Holder for Property and Development. This would include the nature of any public consultation that was to be carried out and the timing of such.

9 Equalities

9.1 The former Paddock Road Surgery

9.1.1 This property is owned by the council but is to be sold to Sovereign Housing Association to provide affordable housing for shared ownership. The impact of the proposed affordable housing development on the protected characteristics and other vulnerable groups, and the implications for the Public Sector Equality Duty (Equality Act 2010), has been considered in an equality impact assessment. However no negative impact has been identified for any group.

9.1.2 The property has been vacant for a considerable period and currently makes no contribution to any of the council objectives. The property was previously used as a medical centre, however it was not fit for purpose. Thus, a replacement and improved medical practice was built locally, and now provides the medical services to the area.

9.1.3 It was acknowledged that the proposed affordable housing scheme met a number of Council Plan, Housing Strategy and Corporate objectives, and will assist in the facilitation and delivery of much needed affordable housing for shared ownership.

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12 of 15 The proposed development would have a positive impact on all borough residents, in particular those not normally able to affordable private market housing. It is intended that the development will comprise houses suitable for families and those intending to start a family. Affordable housing for shared ownership is generally beneficial for people on a lower income, who would not be able to afford private market housing. It was noted that the proposed housing scheme was in an established residential area.

9.2 Adelphi House

9.2.1 This property is not owned by the council and the purpose of this report is only to seek authority from cabinet to acquire a legal interest in the property, whilst officers consider possible uses for the site. Therefore, as no proposed use has yet been identified, it is not at this stage possible to determine the impact on the protected characteristics and other vulnerable groups, and the implications for the Public Sector Equality Duty (Equality Act 2010).

9.2.2 It is intended that a further report will be brought back to Cabinet with details of any proposed use, and upon which detailed consideration can be given to any use within any equality impact assessment.

10 Risks Identified

10.1 Until contracts are exchanged on both sites, either party may sell their respective properties to another party.

10.2 There is a risk that upon more detailed investigations for Adelphi House, the property may be unsuitable for any intended use. Nonetheless, since the council is not paying any deposit sum on exchange of contracts, there is minimal financial risk, and the council could simply withdraw from the contract.

10.3 There is a risk that planning permission may not be granted to Sovereign for an affordable housing development at the Paddock Road site, in which case Sovereign may not then complete its purchase of the site. In such circumstances the council would then investigate other disposal options for the property.

10.4 It should be noted that the heads of terms agreed with Sovereign are subject to their board approval. See also 12.5.

11 Moving Forward and Proposed Next Steps

11.1 Following Cabinet, officers will seek to finalise terms with Sovereign HA and exchange contracts simultaneously for Paddock Road (disposal by the council) and Adelphi House (acquisition by the council of a legal interest). The detailed terms and conditions to facilitate exchange of contracts will be delegated to the Executive Director of Finance and Resources (S151 officer) in consultation with the Head of Law and Governance.

11.2 Sovereign will submit a planning application for Paddock Road in accordance with the details provided within this report. For Adelphi House, officers will continue their investigations to assess the site’s suitability, in consultation with key stakeholders and service providers. These discussions will further Page 181

13 of 15 consider the site opportunities and constraints, cost implications, potential funding, and planning and legal aspects; which will form the evidence base for any recommendation to be included in a future Cabinet report.

11.3 The ward members for Eastrop will be kept updated as to the progress of officers investigations for Adelphi House and the consideration of any proposed use for the property. The ward members for South Ham will be kept updated in respect of the Paddock Road Surgery site, and the progress of the planning application. Officers will continue to work with Sovereign to support their planning application for affordable housing on the Paddock Surgery site.

11.4 The Deputy Leader and the Portfolio Holder for Property and Development will be kept fully updated and involved and their comments taken into account as both these projects progress.

11.5 A report will be brought back to Cabinet with details of the outcome of the investigations for Adelphi House, and the evidence base to support whether or not the council should pursue any particular use or uses for the property. This might include for example any recommendation as to whether a planning application should be submitted for any use identified. The report will provide details of any proposed project plan, and the nature and form of likely service provision. The details of any proposed planning application and supporting documents will also be included, as well as the likely project costs going forward.

12 Conclusion

12.1 This report seeks approval to the entering into of conditional contracts for the sale of the former Paddock Road Surgery site (with completion of the sale subject to the grant of planning permission), and for the council to acquire a legal interest in Adelphi House upon exchange of contracts. Both transactions are to be undertaken with one party, Sovereign Housing Association.

12.2 In the event that Sovereign obtain planning permission and complete the sale of the Paddock Road surgery, the provision of a much needed affordable housing scheme will be delivered, as well as securing a capital receipt for the council. The delivery of an affordable housing scheme would meet a wide range of corporate policies and strategies, and the objectives set out in the Council Plan.

12.3 The acquisition by the council of a legal interest in the Adelphi House site upon exchange of contracts, will enable the council to undertake additional work and research, to establish whether the property is suitable for any identified use, given the opportunities and constraints presented by the site.

12.4 Given that Sovereign and the council would each have a legal interest in the respective sites, further work can be undertaken without the risk of either property being sold to another party.

12.5 It should be noted that the heads of terms agreed with Sovereign are subject to their board approval. Cabinet will updated on 28 June, to confirm the decision of Sovereign’s Board and will be advised of any changes to the Heads of Terms and which might have a bearing on the recommendations contained within this report.

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14 of 15 12.6 As detailed at 11.5, a subsequent report will be brought back to Cabinet should a suitable use be identified for the Adelphi site.

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Financial Issues around an off market sale of the Paddock Road surgery site to Sovereign HA

Background

The Cabinet report provides details of the scheme proposed by SHA. It will comprise an affordable housing scheme on the basis of houses to be made available for shared ownership. This form of tenure will result in a land value lower than might otherwise be obtained for market housing. The disposal also constitutes an ‘off market’ sale given that the council will be selling the site to an identified party, without marketing the site openly. The disposal framework and procedures associated with such a transaction are covered within this Appendix.

The council’s Disposal Procedure

The council’s adopted Disposal Procedure for Land and Property, includes a general presumption that land disposals should follow competitive marketing, and the need to obtain best value under S123 of the Local Government Act 1972. A transfer of land to Sovereign would amount to a disposal by negotiation with one party, without any marketing.

However, the council’s Standing Orders: - ‘Disposal of Land’ state that negotiations with one party may be justified where:

a) the land is small in size/value

b) is an adjoining/closely located landowner & only likely purchaser

c) the nature of the council’s land ownership is such that the land must be sold to adjoining or surrounding land owners if best consideration is to be obtained

d) where there is a special purchaser for whom the land has a higher value than anyone else e.g. ransom strips, or where there is marriage value

e) where council objectives would be best met by undertaking private treaty negotiations with a single party who would bring social environmental or economic benefit

f) where the proposed transaction involves a party who already has a property interest in the land in question.

Officers consider that the principle of an off market land disposal of the land shown on the plan at Appendix 1 to Sovereign is justified in the context of the Standing Orders described above, satisfying grounds (a) and (e), in whole or in part. However, any disposal would still need to satisfy other parts of the

Page 193 disposal procedure where it is anticipated that less than full market value might be obtained, as detailed below.

The disposal procedure also states that “the council will consider the contribution of a disposal to the furtherance of council priorities or the promotion or improvement of the economic, social or environmental well- being of the area”, and the council’s Standing Orders - Disposal of Land state that –

“In certain circumstances, the council may dispose of land for less than the full market value. Those circumstances are clearly defined by law and in any other case specific consent is needed from the Secretary of State. General Disposal Consents have been given by the Secretary of State for certain transactions.”

This General Disposal Consent makes provision for the council to dispose of land at less than full market value. Specified circumstances must apply as follows:-

. The council considers that the purpose for which the land is to be disposed of is likely to contribute to the promotion or improvement of the economic, social or environmental wellbeing of the whole or part of its area, or any person resident or present in its area.

. The difference between the unrestricted or market value of the land to be disposed of and the consideration for the disposal does not exceed £2million.

The proposed disposal of the land to Sovereign, falls within the terms of that Consent.

Further, all disposals covered by the definition of these Standing Orders at less than best consideration must be referred to Cabinet for approval.

Thus, to satisfy the disposal procedures and the standing orders detailed above, and to support any disposal of land, the council must be satisfied that the proposed scheme satisfies a wider range of economic, social and environmental council objectives and priorities. The details of how the proposed scheme satisfies these objectives are provided within the Cabinet report; namely that this is an affordable housing scheme which meets the objectives set out in the council’s Housing Strategy and those within the Council Plan.

Independent valuation for the purposes of S123 of the Local Government Act 1972

An independent valuation of the property has been provided for the purposes of the above Act. A summary of the valuation is provided at Confidential Appendix 5.

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Proposed acquisition of the Adelphi House site by the council

Background

The details of the council’s interest in a possible scheme at this property, are provided within the Cabinet report.

It should be noted that at this stage the council has no firm proposals for any particular use of the property, and seeks to acquire an interest in the property upon exchange of contracts which will enable the council to undertake such further investigations. In accordance with the heads of terms, no payment or deposit will be made by the council on exchange of contracts with the sum payable on completion of contracts (as set out at Confidential Appendix 5) only payable by the council if it elects to complete the purchase of the site.

Approvals/delegation

The actual approval for any acquisition is to be given by Cabinet, and the relevant section of the constitution is the Cabinet Terms of Reference, section 2.8, para 14 which states the Cabinet will:-

“Authorise the acquisition of land, subject to the more specific delegations to Cabinet members and officers in Section 3 of this Scheme of Delegation and to authorise the disposal of land (etc)….” Para 14 makes a specific reference to disposals being made in accordance with the council’s Disposal Procedure, but does not refer to any acquisitions procedure or rules which must be followed.

The Council’s current constitution, section 3.11 (16) j) specifies the delegation to the Executive Director of Resources in respect of detailed terms of an acquisition.

There is no specific delegation to individual portfolio holders regarding land acquisition or approval.

The Executive Director of Resources may authorise the detail of an acquisition, following Cabinet approval as set out above.

In respect of this proposal, Cabinet approval is being sought in two stages:-

1) the approval being sought in this Cabinet report to enter into the conditional contract. The detailed terms of the contract will be delegated to the Executive Director of Finance and Resources in consultation with the Head of Law and Governance.

2) the future approval once planning has been granted which will seek authorisation for completion of the sale (acquisition by the council of the

Page 195 property) on the basis of the purchase price set out at Confidential Appendix 5.

Independent valuation for the purposes of S123 of the Local Government Act 1972

An independent valuation of the property has been provided for the purposes of the above Act. A summary of the valuation is provided at Confidential Appendix 5.

Other relevant information

It should be noted that the council and Sovereign HA intend to exchange contracts simultaneously for both properties in order that they may undertake additional work without risk (to include research and planning work).

Page 196 By virtue of paragraph(s) 3 of Part 1 of Schedule 12A of the Local Government Act 1972.

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BASINGSTOKE & DEANE BOROUGH COUNCIL DECISION NOTICE

SUBJECT KEY DECISION NUMBER -The former Paddock Road Surgery

- Adelphi House

DECISION TYPE (please mark X as relevant) Key X Non Key

Cabinet X Portfolio Holder Officer

WARDS AFFECTED:

-South Ham -Eastrop

THE DECISION IS THAT:

It that Cabinet approves:

2.2.1 -The council entering into an exchange of contracts, for the disposal of the Former Paddock Road Surgery site to Sovereign Housing Association at less than best consideration given the social, economic and environmental objectives that will be met by the proposed development scheme, on the basis of the financial terms detailed within this report and within the Confidential Appendix 5

2.2.2 -Completion of the sale of this property to Sovereign HA upon a grant of a planning permission satisfactory to Sovereign, for a scheme of affordable housing

2.2.3 -The council entering into an exchange of contracts for the Adelphi House site, on the basis of the financial terms detailed within this report and within the Confidential Appendix 5

2.2.4 -Delegates the finalisation of the detailed terms and conditions associated with the proposed heads of terms for the entering into of conditional contracts for The Paddock Road Surgery and Adelphi House to the Executive Director of Finance and Resources (S151 officer) in consultation with the Head of Law and Governance

2.3 -Notes that a further report will be brought back to Cabinet, with regard to the possible uses for the Adelphi House site, with a recommendation as to whether officers should proceed with further work in relation to any proposed use; and whether the council should proceed with a planning application in respect of any use.

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THE REASONS FOR THE DECISION ARE:

The former Paddock Road Surgery:

The recommendation to proceed with exchange of contracts and completion of the sale will enable Sovereign Housing Association to proceed with an affordable housing development to satisfy housing and corporate council objectives as detailed in the report, and deliver a capital receipt to the council

Adelphi House:

The recommendation to exchange contracts will enable the council secure a legal interest in the land, while it undertakes further investigative and research work into the property’s potential to support the delivery of any possible use or uses

THE OPTIONS CONSIDERED AND REJECTED ARE: -Not to exchange contracts leading to completion of the sale of the former Paddock Road Surgery upon planning permission being granted, and not to facilitate the delivery of an affordable housing scheme on the site -Not to exchange contracts to acquire a legal interest in Adelphi House and not to investigate further, the property’s suitability for any use or uses

THE CONFLICTS OF INTEREST ARE: None

STANDARDS COMMITTEE DISPENSATIONS ARE: None

SIGNED DESIGNATION Leader of the Council Cllr C Sanders

NAME DATE Councillor Clive Sanders 28th June 2016

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Agenda Item 10

Cabinet 28 June 2016

Subject: Adoption of Neighbourhood Plan for Overton. Status: Open Report Ref: Ward(s): Overton Key Decision: No Key Decision Ref: Cllr Mark Ruffell – Portfolio Holder for Planning and Report of: Infrastructure Jill Fisher – Planning Policy and Implementation Manager email: [email protected] tel: 01256 845318 or Ext 2318 Contact: Joanne Brombley – Planning Policy Team Leader email: [email protected] tel: 01256 845410 or Ext 2410 Appendices: Appendix 1: Overton Neighbourhood Plan (2016-2029)

Neighbourhood Planning Protocol - Updated (June 2014) Papers relied on to Localism Act 2011 produce this report The Neighbourhood Planning (General) Regulations 2012

1 Executive Summary

1.1 The Overton Neighbourhood Plan (ONP) has now reached an advance stage of production and a local referendum on the Plan is due to be take place on 23 June 2016. If more than 50% of the votes made at the referendum are in favour of the plan (i.e. it is supported by the local community) then the Plan should be ‘made’. Once a neighbourhood plan is ‘made’ it becomes part of the statutory development plan for that area and will be used, alongside local and national planning policy and guidance, to determine planning applications.

1.2 Due to reporting deadlines, this report has been written in advance of the referendum results being known A supplementary report will be taken to 28 June Cabinet to report the outcome of the referendum. If there is a majority yes vote, the report will go to Council on 21 July to enable the Plan to be ‘made’ as early as possible. If less than 50% of the votes made at the referendum are in favour of the plan (i.e. it is not supported by the local community) then the report will be withdrawn and the Plan will not be ‘made’.

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1 of 4 2. Recommendation

2.1 The supplementary report will include a recommendation to make the Plan, subject to the outcomes of the forthcoming referendum.

PRIORITIES, IMPACTS AND RISKS Contribution to Council Priorities This report accords with the council’s Budget and Policy Framework and directly supports the Council Plan priorities of:  Create jobs and opportunities by supporting new and existing businesses.  Support provision of quality homes, affordable to all through growth and regeneration.  Invest in our Infrastructure.  Maintain and enhance our built and natural environment.  Promote strong communities.

GLOSSARY OF TERMS Term Definition BDBC Basingstoke and Deane Borough Council DCLG Department for Communities and Local Government LPA Local Planning Authority NPG Neighbourhood Planning Group ONP Overton Neighbourhood Plan EIA Equalities Impact Assessment

MAIN CONSIDERATIONS

3 Background

3.1 The Localism Act 2011 introduced a mechanism for local communities to produce neighbourhood plans for their area. The production of a neighbourhood plan must follow a regulatory process and the Town and Country Planning Act 1990 as amended (by the Localism Act 2011) and Neighbourhood Planning (General) Regulations 2012 set out key stages in the preparation of such plans and the process for them becoming part of the development plan. The key stages are summarised below.

3.2 The Overton Neighbourhood Plan (ONP) is the second most advanced neighbourhood plan in the borough and has now reached stage f), which is highlighted in bold:

a) Designation of a neighbourhood area - The area covered by the neighbourhood plan needs to be agreed by the borough council. b) Preparation of a draft neighbourhood plan - The ‘qualifying body’1, then prepares the draft neighbourhood plan and evidence base.

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2 of 4 c) Pre-submission publicity and consultation - The Plan is submitted for Pre- submission publicity and consultation for a minimum of 6 weeks. d) Submission of the draft plan - The ‘qualifying body’ formally submits the neighbourhood plan to the local planning authority (LPA). The LPA checks whether the plan accords with the relevant legislation, publicises the Plan for 6 weeks and appoints an Independent Examiner. e) Independent Examination - The neighbourhood plan is examined by an Independent Examiner to assess whether the Plan meets the basic conditions. The Examiner then issues a report, if the report is positive and the borough council agrees with it, the Plan is then subject to referendum. f) Referendum - The borough council organises a referendum, and then publishes the results. g) Adoption – The Plan is ‘made’ by the borough council.

Overton Neighbourhood Plan

3.3 In July 2013 BDBC designated the Overton Neighbourhood Area for the purpose of preparing a Neighbourhood Plan. The plan area covers the parish of Overton and lies solely within the Basingstoke and Deane Local Planning Authority Area. Overton Parish Council, the qualifying body, submitted the draft Neighbourhood Plan and supporting documents to BDBC in August 2015. Consultation on the submission plan took place from September to October 2015.

3.4 Following the consultation, the Council, with the consent of Overton Parish Council, appointed an independent examiner to review the Plan. The Examiner’s Report recommended that, subject to a number of proposed modifications which were required to ensure that the Plan meets the basic conditions set out in the legislation, the Plan should proceed to referendum. A local referendum is due to be held in Overton on 23 June 2016.

3.5 Following the outcomes of the referendum, and in line with the relevant regulations, the Council will assess whether the plan, including its preparation, breaches or would be incompatible with any EU obligation or any of the Convention rights (within the meaning of the Human Rights Act 1998).

4 Options Analysis and Next Steps

4.1 Paragraph 38A(4)(a) of the Planning and Compulsory Purchase Act 2004 requires the Council to make a Neighbourhood Plan if more than half of those voting in a referendum have voted in favour of the Plan being used to help to decide planning applications in the area. If a positive outcome is received, the Neighbourhood Plan should be ‘made’ by the Council. The making of a Plan is a mandatory legal requirement following a positive outcome of a referendum (save for in narrow circumstances as set out in paragraph 3.5 of this report). As such, if a positive result was gained the LPA would be under a statutory duty to adopt and thus ‘make’ the plan.

5 Corporate Implications

5.1 Financial Implications

5.1.1 There are no significant financial implications arising from the report.

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3 of 4 5.2 Risk Issues

5.2.1 If the Plan is made it will be subject to a statutory period of time (six weeks) within which a legal challenge can be lodged.

5.3 HR Issues

5.3.1 There are no HR issues as a result of this report.

5.4 Equalities

5.4.1 The Examiner’s Report confirms that the plan has had regard to fundamental rights and freedoms guaranteed under the European Convention on Human Rights (ECHR) and comply with the Human Rights Act 1998.

5.4.2 When considering the Public Sector Equality Duty under the Equality Act 2010, the Neighbourhood Planning Group has also undertaken an Equalities Impact Assessment (EIA). This assessment concluded that the plan is generally positive for a range of protected interested groups. The subsequent BDBC EIA has confirmed this finding.

5.5 Legal Implications 5.5.1 This will be updated, depending on the outcome of the referendum.

6 Comment from Portfolio Holder

6.1 The Portfolio Holder awaits the outcome of the referendum but commends the local community on the work completed to date.

7 Communication and Consultation

7.1 This will be updated, depending on the outcome of the referendum.

8 Conclusion

8.1 The Overton Neighbourhood Plan (ONP) has now reached an advance stage of production and a local referendum on the Plan is due to be take place on 23 June 2016. If more than 50% of the votes made at the referendum are in favour of the plan (i.e. it is supported by the local community) then the Plan should be ‘made’. A supplementary report will be taken to 28 June Cabinet if a positive outcome is reached at the referendum.

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4 of 4 OVERTON

HAMPSHIRE

Photograph by permission of Sue Teagle

NEIGHBOURHOOD DEVELOPMENT PLAN 2016-2029

The Plan is designed to be read as a whole.

1 Page 209 CONTENTS

FOREWORD AND INTRODUCTION

SECTION 1: THE PROCESS Neighbourhood Plan area Page 4 Plan structure Page 6 Community Engagement: a summary Page 6 Preparing the Evidence Base Page 8 Sustainable development Page 8 Site selection process: a summary Page 9 Developer contributions Page 11 About Overton Page 11 Overton: Strengths and weaknesses Page 16

SECTION 2: OUR VISION FOR OVERTON Our vision for Overton Page 17 What is a village? Page 18

SECTION 3: OBJECTIVES AND POLICIES Landscape, the Built Environment and Local Distinctiveness Page 19 Housing Page 25 Working Page 29 Shops and services Page 30 Learning and skills Page 32 Getting around Page 33 Community services Page 37 Enjoyment and recreation Page 38

SECTION 4: THE ALLOCATED SITES Policies for all allocated sites Page 41 Allocated Site Plans and Site Specific Policies Page 42

SECTION 5: MONITORING AND REVIEW Monitoring and review Page 46

GLOSSARY Page 46 APPENDICES Page 48 REFERENCES Page 51

Photographs are by Richard Waldram unless otherwise stated.

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FOREWORD

From Overton Parish Council

This Plan has been produced by the Overton Neighbourhood Plan Group2 at the request of the Parish Council. They are all volunteers and we commend them for their hard work, commitment and persistence. We would also like to thank those landowners and developers who have been prepared to work with us within the Neighbourhood Plan to arrive at acceptable and workable solutions.

This is the first time we have had the opportunity to shape our own future and the village has grasped it with enthusiasm. As you will see, residents have been fully involved at every stage and their views have been fully and fairly represented.

The Plan sets out clearly what we want our village to be in fifteen years’ time and how it will achieve what the village wants and needs – a number of smaller developments with the least possible harm to the landscape we value so highly.

The process of selecting site has been rigorous and the Plan shows how the new housing required by the Borough will be delivered.

We commend the Plan to you.

INTRODUCTION

Welcome to the Overton Neighbourhood Plan, referred to here as ‘the Plan’ or ‘NP’. It is a revision of the Submission Plan issued in August 2015 to include the Examiner’s recommendations.

The Plan allocates sites for approximately 150 dwellings. This figure is reflective of information supporting the emerging Basingstoke and Deane Local Plan (2011-2029). This emerging Local Plan contains a policy (SS5) suggesting the allocation of approximately 150 homes in Overton.

Brian Elkins, Project Manager.

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SECTION 1: THE PROCESS

Neighbourhood Plan area

The plan area agreed with the Borough Council is Overton Civil Parish3,4

.

The Plan period runs from 2016 to 2029.

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OVERTON VILLAGE

The existing Overton settlement boundary in the Adopted Local Plan is enclosed by heavy continuous black lines. The principal routes are shown in red. The River Test is shown in blue.

Winchester Street

Photograph by permission of Overton Pictures

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Plan structure

Writing a Neighbourhood Plan must follow a logical process.

CONSULTATION WITH RESIDENTS AND STAKEHOLDERS

DESCRIPTION OF THE PARISH COMPILING THE EVIDENCE BASE

A VISION FOR OVERTON IN 15 YEARS’ TIME

OBJECTIVES FOR ACHIEVING THE VISION

POLICIES FOR DECISION MAKERS AND DEVELOPERS TO FOLLOW

The Plan will demonstrate that the vision and objectives have been derived from the consultations, the evidence base and the strengths and weaknesses of Overton as it is now. It must also show how the Plan will deliver economic, social and environmental benefits contributing to sustainable development.5

Summary of Community Engagement

Public consultations were undertaken for the Village Design Statement6 in 2002, confirmed by Overton Vision 2020 in 2010 7 and up-dated in ‘Overton Futures’, 20128. Whilst these remain valid, it was important to check that there had been no significant shifts in public opinion since.

In all communications, we have used plain English, free of jargon and technical words, so that residents can clearly understand the process involved, what a Neighbourhood Plan can and cannot do and what is being proposed.

Community engagement has been conducted in five phases.82

The initial public consultation lasted from 21st May-31st July, 2014. At a number of events, residents were asked for their views with three open questions.52 The things I value most and want to see conserved and enhanced are….. The things I would most like to see improved are…. Any other comments?…

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The questionnaire The results enabled the NP Group to construct a questionnaire11 which was sent to every household in the Parish on 30th June, 2014. 600 completed questionnaires were received.12 The opinions expressed were fully in line with previous consultations.6.7.8

Public consultation: November 1st –November 30th, 2014 From the responses, the NP Group was able to write a draft plan.1 A summary31 was sent to every household in the Parish and comments were invited. At two exhibitions, residents could see the sites available for housing, our proposed Vision and Objectives and the proposed strategic options for selecting sites for housing. They were asked to comment on these and to say which three of eight possible selection criteria were most important to them. Comments were also invited on individual sites. 248 people attended and all the proposals were strongly endorsed.14

January 24th, 2015. At a further public exhibition (illustrated below), 438 parishioners saw revised strategic options for housing sites and developers’ outline proposals. Residents were asked to choose between three scenarios or to propose an alternative.15

The Pre-submission Plan80 was published on February 16th 2015 and was followed by a six week period when residents could make comments. 236 did so and 205 (78%) ticked a box to indicate, ‘There is nothing I want you to change.’ There were 318 comments and 14 revisions were made to the policies and supporting text.

Full details of community engagement can be found in the supporting document entitled ‘Consultation Statement’.82

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Preparing the evidence base

Our Neighbourhood Plan is based on evidence from a variety of local, area and national sources including the results of research and consultations done by members of the Evidence Base Team with stakeholders.

Local knowledge was used to make contact with businesses including retailers, public houses, farmers, tradespeople and businesses advertising locally. Landowners were invited to individual meetings.

Information was gathered from the utility and public transport companies serving the parish. Housing information was obtained from estate agents, the 2011 census, Borough Housing Officers and the Community Survey.

Other sources include  Overton Parish Council documents including the Overton Village Design Statement6, Overton Community Plan (Overton Futures, 2020)8 and Overton Biodiversity Action Plan16.  Basingstoke & Deane Borough Council, especially the emerging Local Plan documents.17  Hampshire County Council18, including specific consultation with the Schools Policy Officer.19  Data from the Office of National Statistics.20  The Environment Agency,21 English Heritage22 and Natural England.23

The references at the end of this document constitute the evidence base.

Sustainable development

We have followed the National Planning Policy Framework (NPPF)24 and the Basingstoke & Deane Borough Council’s Neighbourhood Planning Protocol (updated, June, 2014).25 Whilst not ignoring any of the guidance, we have stressed the things that apply particularly to Overton and matter most to those who live and work here.

Sustainability is the key to the whole planning process and has guided our thinking from the start. Sustainability is the central theme of our vision statement, our objectives and policies. Our Plan describes how proposed developments will bring sustainable economic, social and environmental benefits to the whole community. Each policy is followed by a statement to show that the aim is to provide an economic, social or environmental benefit or any combination of these.

An independent Sustainability Appraisal (SA)83 has been carried out and is a supporting document to this plan. The SA has informed the revisions to the NP.

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The process of housing site selection: a summary

This Plan allocates land for approximately 150 homes. Having reviewed national and local policy and guidance, a methodology was agreed. Sites must be available, suitable, sustainable, viable and deliverable. For neighbourhood plans they must also be acceptable to residents. Two public consultations in November 2014 confirmed that residents placed the highest value on small sites and choosing sites with the least possible adverse impact on the landscape.

Following due process meant  Having regard to national policy and guidance and being in general conformity with the strategic policies of the Adopted Local Plan.  Searching for suitable sites in the parish and making a public call for sites to landowners.  Using a standard sustainability checklist to ensure that no relevant factors were missed on site visits.  Giving clear and justifiable reasons for rejecting sites.  More detailed consideration of the remaining sites to determine the ‘reasonable alternatives’ for inclusion in the Plan.

Determining the reasonable alternatives included the sustainability considerations. Many items in the site checklist applied equally to all the sites available in Overton and were therefore not useful in distinguishing one site from another. The most useful criteria were  Impact on Landscape Character.  Biodiversity impact and green space provision.  Impact on heritage assets.  Proximity of sustainable transport modes -the railway station and a Stagecoach bus stop.  Proximity of village centre amenities and the primary school.  Relationship to the settlement boundary.

Thus far, the analysis had only considered empty sites. There were then further discussions with landowners/developers to understand the viability and infrastructure issues. With this information, coupled with the sustainability assessments from the site checklists, it was possible to define the reasonable alternatives for inclusion in the NP and to nominate reserve sites in case of unforeseen circumstances.

In the event, it was not possible to satisfy the public preference for small sites entirely but it was possible to construct three alternative site combinations or ‘scenarios’ to deliver the 150 dwellings required. These were presented at a further public consultation in January 2015. The sites allocated reflected the public choice between the reasonable alternatives.

An independent Sustainability Appraisal (SA) was carried out by AECOM Ltd. The SA and responses to the Pre-submission Plan from the statutory and other consultees resulted in the removal of two small sites from the list of reasonable alternatives on sustainability grounds. Dwellings were added to another allocated site. The diagram on the next page shows why and when decisions were made. Full details of the process can be found in the supporting document.81

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ACTIVITY DECISION RESULT

DISCOVERY (June/July 2014)  SHLLA Sites LONG LIST OF 33 SITES  Google earth  Call for sites

DEFINITION (June/July 2014) 12 sites removed because the  Identify landowner landowner could not be identified REDUCED LIST OF 21  Willingness to develop? SITES or was not willing to develop.  Plot size

EVALUATION (Aug/Sept 2014) 4 sites removed because they  Site sustainability/ viability were obviously unsustainable- LIST OF 17 assessment checklist & on the flood plain or had ALTERNATIVE SITES photographs insuperable access problems. 

SELECTING FROM THE ALTERNATIVES (Sept/Oct 2014) In the event, site scores were  Developing a site scoring system not used to select or remove

 Determining the strategic options sites.  Sustainability scoping

PUBLIC CONSULTATION November 2014

Nov 2014-Dec 2014 Responding to 4 sites removed as they failed SHORT LIST OF 13 NEW INFORMATION to meet requirements further ALTERNATIVE SITES including developers’ to consultation and proposals assessment.

Two sites withdrawn THE REASONABLE Dec 2014-Jan 2015 following discussion with two ALTERNATIVES AND DISCUSSIONS WITH developers on grounds of RESERVES SITES LANDOWNERS/DEVELOPERS viability/deliverability/ sustainability.

Considering various ways of THREE SCENARIOS OF delivering 150 homes 7 SITES

PUBLIC CONSULTATION Scenario A selected. January 2015 PRE-SUBMISSION PLAN

PRE-SUBMISSION PLAN CONSULTATION Two 10small sites removed. Page 218 SUBMISSION PLAN Feb – March 2015 Reserve sites amended.

Developer Contributions and Infrastructure

‘Infrastructure’ can mean roads, sewers and other utilities, schools, health centres, green spaces, play areas, affordable housing and community facilities.

In the questionnaire6, residents expressed great concern that the infrastructure in Overton would not support more housing.

Development can provide opportunities to deliver infrastructure either through planning obligations or through the community infrastructure levy (CIL). At present, the Borough Council secures developer contributions towards infrastructure through planning obligations when new housing is built. A tariff-based approach has been applied to sites of more than 10 units, whereby developers are generally required to pay for the infrastructure needed to support it. In the future Basingstoke & Deane will be introducing a Community Infrastructure Levy to help fund infrastructure and this will largely replace planning obligations, especially on smaller sites. When this happens and if there is an adopted neighbourhood plan, 25% of the levy is handed over to the Parish Council. The Parish Council must then decide how the money will be spent, but it must be used to support the development of the local area.

The neighbourhood portion of the levy can be used to fund specific infrastructure projects and it can also be spent on a wider range of things, provided that it meets the requirement to ‘support the development of the area’. It will be for Overton Parish Council to propose projects to be supported by the levy at the appropriate time. There is a list of projects currently being considered in the Appendices and this is likely to be amended over time.

If there is no NP in place, the amount of levy received by the parish council will only be 15%, so this is one of the many advantages of having a Neighbourhood Plan.

About Overton

Location

Overton Parish lies in North Hampshire, 9 miles west of Basingstoke, 11 miles east of Andover, 19 miles north of Winchester and 14 miles south of Newbury. It is within the Borough of Basingstoke & Deane.

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Topography

The River Test is the defining feature of the village which lies within the valley, surrounded by rolling downland used mainly for arable farming. There are small outlying settlements at Southington, Quidhampton, Polhampton, Litchfield and Ashe which are rural and tranquil.

Southington Photograph by permission of Overton Pictures

History

There was a settlement in Overton in Anglo-Saxon times when the village was centred round St Mary’s Church, north of the river.

In about 1218, the Bishop of Winchester established seven new market towns across Hampshire and Overton was one of them. The new town was built south of the river and included the main highway between London and Exeter.29 The pattern of roads remains to this day. Winchester Street is a wide thoroughfare, designed for fairs and markets.

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The weirs and leats dating from Anglo-Saxon times gave sufficient fall of water for four historic mills. Those at Quidhampton, Town Mill and Southington survive and contribute to the character of the parish.

Until 1933, the Parish of Ashe was separate from Overton Parish with its own parish church. Historically, the Parish of Overton was divided into four manors or ‘tithings ’ indicating that in medieval times they were more or less equal in population. Overton Borough was the bishops’ new town. The tithing of Southington is a settlement along the river Test to the west and the manors of Quidhampton and Polhampton are in the valley to the east. These settlements retain their own distinctive characters to this day.

In 1587, Overton lost its charter as a town ‘through neglect’ and reverted to being a village.29 However, it still retains one characteristic of a small market town as it has many shops serving those from surrounding settlements. Overton was famous for the annual July sheep fair, held in Winchester Street, when thousands of animals changed hands.29 The ‘White Hart’, which existed in 1442, became an important coaching inn on the London – Exeter road until the coming of the railways30.

In 1724, a Huguenot refugee from France, Henri Portal, obtained the contract to make bank note paper for the Bank of England. In 1922, the main operation moved from Laverstoke Mill to Portal’s Overton Mill by the station, now owned by De la Rue, where bank note paper is still made for the Bank of England.

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The natural environment

The area north of the London-Exeter railway is part of the North Wessex Downs Area of Outstanding Natural Beauty32 (outlined in green on the map). The river Test rises in the Parish and flows to the west. The river and its banks are a Site of Special Scientific Interest (SSSI).33 Overton Conservation Area34 (outlined in blue) includes land within the Test Valley Environmentally Sensitive Area35 and the post-medieval core of the village. Some of the land near the river lies within the flood plain.36 There are many Sites of Importance for Nature Conservation (SINCs) in the Parish. Overton has an active Biodiversity Society37.

Flood Risk Map Flood Risk Zone 3 is shown in dark blue (1% chance per year). Flood risk Zone 2 is shown in pale blue (0.1% chance per year). Courtesy of Environment Agency

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Landscape

Because the village lies in a valley, landscape and views are of great importance. Landscape impact will therefore be a high priority in selecting sites for housing. More details about landscape character and the historic environment can be found in Section 3.

Demography

The population is ageing.38 To remain sustainable, Overton needs to attract people in the younger age groups which means we shall need homes that first-time buyers can afford and more primary school places. Given the ageing population, more homes to the ‘Lifetime Homes’ standard39 will also be needed, along with more smaller homes for ‘downsizers.’ The standard means they are adapted or adaptable to the needs of elderly people and others living with disabilities.

Infrastructure

Development is not sustainable if the infrastructure will not support it. The questionnaire revealed great concern about waste water/sewage disposal, as well as traffic and road safety in the village centre, parking and the capacity of the school and surgery. This Plan seeks to address these concerns wherever possible.

Deprivation and social inclusion

Multiple deprivation scores are very low. About 90% of areas with similar populations in England are more deprived.38 There are no particular streets or roads in the Parish in need of regeneration.

Shops and businesses

Overton is an economic hub, providing services both to residents and people from the surrounding area41. This includes shops, people working from home and businesses providing services, pubs, restaurants and takeaways. We need to sustain the retail/business sector.

Planned developments elsewhere

The planned new housing in Whitchurch42, Andover43 and west of Basingstoke44 and the Bombay Sapphire gin distillery and visitor centre at Laverstoke45 will generate more traffic on the B3400.

More details about the Parish are given in each of the Objectives sections below.

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Overton: Strengths and weaknesses

Key messages from the public consultations.12

The strengths are  Village setting in outstanding countryside  A long and valued heritage  A strong community spirit  Overton Recreation Centre  Good transport links  The range of shops and businesses  Good community facilities  An outstanding primary school  Low crime and deprivation.

The weaknesses are  Road system not designed for modern traffic and HGVs  Traffic and road safety in the village centre  Insufficient parking  Trains at full capacity  Inadequate sewerage system  Lack of housing that local people can afford  An increasingly ageing population. To remain sustainable, Overton needs to attract younger residents.

This Plan aims to build on the strengths and, wherever possible, address the weaknesses.

The National School (1867) is now the Community Centre, Library and a nursery school. Photograph by permission of Overton Pictures.

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SECTION 2: OUR VISION AND OBJECTIVES

The NP Group have distilled the responses to the questionnaire and previous consultations into a short statement of how residents want the quality of life to be improved over the next 15 years. This is followed by a set of objectives for achieving it. The vision and objectives statements are preceded by evidence from the questionnaire. The objectives also show how our plan contributes to sustainable development, including  Protecting the global environment.  Protecting and enhancing the local environment.  Maintaining the balance of young and old in the community.  Providing the infrastructure required to support new housing.

What people said about Overton  More than 90% valued Overton as a compact village set in countryside within the valley.  98% said Overton is a good place to live and want to keep it that way.  88% are concerned about more housing development. 30% fear that village character will be lost and 65% that the infrastructure will not support it.

OUR VISION FOR OVERTON  To conserve and enhance the things people value most about living in Overton.  To do all in our power to improve the quality of life in the Parish, not only for ourselves but for future generations as well. That means everything we plan to do must be sustainable.

V1 Above all, we want Overton to remain a village, set in its open landscape. We therefore want to ensure that new housing has the least possible adverse impact on the features we value most, whilst welcoming new residents to our community. V2 In 2029 we want Overton to continue to be a place where people of all ages and abilities can thrive, feel safe and be healthy, with opportunities to learn, work, be part of our community, take exercise, enjoy our rural landscape and heritage and lead fulfilling lives. V3 We want to enhance the village environment and play our part in protecting the global environment.

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What is a village?

If 98% said that living in a village is the thing they value most, we have to explain what it means. The word ‘village’ has no specific meaning in planning terms. The Borough Council refer to Overton as a ‘District Centre’.41

HOUSING A village is defined as ‘a compact settlement in rural surroundings with about 300-5000 HOUSING inhabitants which does not have a street market (which would make it a market town).46 HOUSING It is interesting that the new settlement of 1218 was laid out as a market town with a wide HOUSING street for fairs and markets. Nevertheless, it is clear from the questionnaire that residents perceive that they live in a village and place the highest value on its character/identity as a compact settlement within the valley and its relation with the surrounding countryside. Though the number of dwellings in the Parish has doubled since 197047 without apparent loss of these features, our Plan must respond to the fear that, with more housing COMMUNITY development, the village will lose its distinctive character. FACILITIES Our vision for Overton is about all aspects of village life.

LANDSCAPE, THE BUILT SHOPS & ENVIRONMENT, SERVICES LOCAL DISTINCTIVENESS GETTING AROUND LEARNING

WORKING ENJOYMENT & RECREATION

The objectives described in the next section support the vision and are grouped under these headings.

SECTION 3: THE OBJECTIVES AND POLICIES DERIVED FROM THE VISION

The objectives of the Neighbourhood Plan are followed by policies to deliver the vision for the future development of Overton. Policies are only necessary for developments requiring planning permission. Decision makers must apply all relevant policies when considering whether a proposal should be approved.

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LANDSCAPE, THE BUILT ENVIRONMENT AND LOCAL DISTINCTIVENESS

 The questionnaire12 revealed that residents not only have a very strong ‘sense of place and history’ but also a strong ‘pride of place’. Significantly, residents placed an even higher value on village character, the countryside, landscape and views than they did on village amenities.  Overton as a compact settlement connected to the surrounding countryside was highly valued by over 90% of respondents to the questionnaire.12  The questionnaire11 also revealed a widespread fear that further housing development will result in the loss of the features they value most.

The landscape  The main landscape feature of the parish is the valley of the River Test which runs from east to west across the central portion of the area. To the north of the valley, there is a distinct character area of open rolling chalk downland with large open arable fields which is part of the North Wessex Area of Outstanding Natural Beauty (AONB) covering approximately 40% of the area of the Parish. The southern boundary of the AONB is placed somewhat artificially at the railway line. To the south of the valley, the landscape is similar in the western part but to the east the fields are smaller with more hedgerow and woodland giving a more enclosed feel. This area contains a high proportion of ancient semi-natural woodland, some woods being classified as SINCs. Throughout the parish, the field patterns reveal the historic stages of field enclosures from the 16th to 19th centuries.16

Aerial view looking north towards Overton village showing areas of ancient semi-natural woodland. Photograph by permission of Overton Biodiversity Society.

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 The rural views from the village to the surrounding hills are highly valued especially the view of St Mary’s Church and the hills behind it to the north.6,12 Other cherished views are of the village from the surrounding hills and vice versa.6

The viewpoints are derived from residents’ responses to the questionnaire in July 2014.

St Mary’s Church from the Bridge Street Recreation Centre

Walking to school. View looking W from Kingsclere Road.

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River Test at Quidhampton Mill

Winchester Street looking north to St Mary’s Church

Great North Field from Little Meadow

W S o u t h S o Southington Lane Photograph by permission of Overton Pictures

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There are 10 green areas within the village

The built form  100 years ago, only three streets were built up on both sides; Winchester Street, the High Street and Bridge Street.48 In 1911, there were 360 dwellings in the parish housing 1,570 people.47 Overton now has three times more people and six times more houses as occupancy rates have fallen.49  Until recently, ‘estates’ of houses have been built in the ubiquitous style of the time without regard to local traditional themes. In the past ten years, however, architects have made more effort to respect the styles of the past.50  The new estates have occupied the higher slopes of the valley and some encroach upon the skyline51, especially Overton Hill, which residents consider to be visually intrusive.8  Overton has 42 buildings listed as being of historical importance, mainly from the 15th- 17th centuries. It is highly unusual that three of these at Berrydown Court are Grade I and five are grade II* (Church of St Mary, Court Farmhouse, Polhampton Farmhouse, the Barn at Litchfield Grange and the Norman Chapel at Quidhampton.)22 There are also 26 other listed structures, non-listed buildings of local importance, 6 scheduled monuments and one registered historic park and garden (Laverstoke Park), part of which lies in the parish.

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The boundary of the Conservation Area is shown in blue. There are other listed buildings elsewhere in the parish.

 Most of the houses in the centre of the village front directly on to the street with Georgian or Victorian facades with sash windows, often concealing a post-medieval timber-framed dwelling. Elsewhere, the traditional style is vernacular in brick and flint with porches and gables often with tile-hung walls on the upper floor.50

Southington High Street

High street

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The distinctive features of Overton Parish are  The village lying within the valley of the River Test.  The river and wild-life habitats and historic mills along its banks.  Winchester Street – a broad street for markets and fairs.  The traditional and historic buildings in the core of the village and elsewhere in the parish.  The separation of the village from St Mary’s Church which lies in more rural surroundings.  The beauty of the chalk downland beyond the Test valley within and beyond the AONB.  The outlying settlements of Southington, Quidhampton, Polhampton and Ashe which retain their distinctive characters and are tranquil and rural in nature.

Key issues for landscape and the built environment  To maintain Overton as a compact settlement connected to the surrounding countryside.  To conserve existing views within, to and from the village.  To respect the settings of listed buildings, especially the Grade I and II* buildings.  New developments must respond to the local context and distinctiveness in terms of design and location.

OBJECTIVES FOR LANDSCAPE, THE BUILT ENVIRONMENT AND LOCAL DISTINCTIVENESS  To conserve views within the village and to/from the open countryside.  New developments must fit into the context in terms of design and location, contributing to the character of the village.

Photograph by permission of www.overtonpictures .com.

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Policy LBE1: Development proposals should demonstrate, where appropriate, that they conserve or enhance the character of the landscape and built environment. Where possible, proposals should demonstrate how they have taken into account the Overton Village Design Statement6, the Overton Conservation Area Appraisal34 and the CABE Building for Life standards64. Applicants are strongly encouraged to engage with the community before and during the planning application process.

Conserving landscapes, views and local distinctiveness will contribute to sustainability, providing social environmental and economic benefits. This policy is strongly supported by public opinion expressed in the questionnaire. Views within the village and to the countryside beyond were highly valued by 85%.12

HOUSING: PEOPLE AND HOMES

 The Parish is home to 4,315 people in 1,885 dwellings with an average occupancy of 2.3 people per dwelling.49 There have been no major developments since the 2011 census. Adding 270 new homes will increase the number of dwellings by 14%.  Overton has a lower proportion of houses in Council Tax bands A, B, and C than the Borough average and a higher proportion in bands F, G and H.38  Sold prices for two bedroom terraced houses are 15% higher in Overton than in Basingstoke Town. A 3-bedroom terraced house is 27% more.53 This suggests that Overton is attractive to new residents and developers but it makes homes less affordable for local people.  There are 376 units of affordable housing. 69% of dwellings are owned by the occupier. Of the 506 rented properties, 315 are ‘social rents’ and 191 are privately rented.38  Overton has a higher proportion of people over 45 than the Borough average and a correspondingly lower proportion of people under 45.38  The predictions for the current population of Overton, Laverstoke & Steventon to 2019 are that the proportion of people over 65 will increase by 3.1% to 23.1%54. There are no predictions to 2029.  There were 95 people on the local council list in housing need in September 201455

HOUSING NEED – Affordable homes The only objective measure of housing need (as opposed to overall housing demand) is the Local Authority List of those in social housing need. Affordable homes are allocated according to BDBC policy based on a points system. Points are awarded to those with local connections. However, some affordable homes in Overton will be occupied by those with no local connection and some with local connections will be housed elsewhere.

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During the Plan period, 120 homes will be built on Overton Hill, 40% affordable (48). The NP will deliver 150 homes, 40% affordable (60). The total number of affordable homes will therefore be 108.

Current need. In September 2014, there were 95 applicants on the BDBC Housing List in ‘general need’. No new affordable homes have been built in Overton since 2008 so this figure represents the balance between those coming on to the list and those whose needs have been satisfied from the currently available stock. However, the figure of 95 applicants indicates that the planned number of affordable homes is broadly sufficient to meet current need without being excessive.

Future need. Calculating future housing need is very difficult. The small area population forecast for Overton, Laverstoke and Steventon Ward indicates a natural increase of 1.5% from 2013 to 2020. There are no forecasts to 2029. At the census of 2011, the total population of Overton Civil Parish stood at 4315. An increase of 1.5% would bring the figure to 4380. An additional 270 dwellings at an average occupancy rate of 2.3 will add about 620 persons, bringing the total to 5000, an overall increase of 16% up to 2029. It is possible to predict that the need for affordable homes will show a modest increase over the plan period. However, it cannot be known how many present and future occupants will move into market housing or move away from the Parish. Nor can it be known how many of the affordable homes to be built will be occupied by those with local connections.

Key issues for new housing  There is an assessed need for more housing for local people.55,12  The priority for deciding the mix of housing provided should be local need.17  The available evidence8,12,55,68 is that the majority of new homes (both market and affordable) should have two or three bedrooms. The expressed need for one-bedroom homes is small. There is little expressed desire for dwellings of four or more bedrooms.  Affordable homes should not all be of one and two bedrooms: some of those in housing need require larger properties. Reference should be made to the most recent housing needs survey.  The questionnaire revealed strongly held views deploring the fact that young people who have grown up in Overton have to look elsewhere when they want to form a household because house prices in Overton are high relative to Basingstoke and Andover.12  It would be very desirable to provide homes for ‘downsizers’ because it would free up larger properties and make better use of the existing housing stock. It is difficult to assess how large the need is. Those wishing to ‘downsize’ to two or three bedroom properties may be frustrated because such properties come on the market rarely and are bought very quickly. The need for one bedroom homes for the elderly may be low.68

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 Because of past experience of large developments built over a short period, there is a very strong public preference for small developments to provide a steady supply of affordable housing for Overton people.8,12  Because the population is ageing, opportunities should be taken to provide homes for the elderly and those living with disabilities to the Lifetime Homes standard39.  To be sustainable, new housing must efficiently conserve natural resources, reduce pollution and promote biodiversity. It is recognised that private gardens make an important contribution to biodiversity and wildlife corridors.  The infrastructure must be able to support the new homes built. There are particular concerns about the capacity of the sewers and flooding that need to be addressed. Much of the flow in the sewers is surface water run-off.  The infrastructure must be able to support the new homes built.

OBJECTIVES FOR HOUSING  New housing will respond to the needs of local residents.  New housing will be phased over the plan period.  New housing will be sustainable and efficiently conserve natural resources, restrict pollution and promote biodiversity.  Housing developments must be fully supported by adequate infrastructure.

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Objective. New housing will respond to the needs of local residents

Policy H1: Residential development within the existing built-up area of Overton and on the sites allocated in this Plan will be supported subject to: 1) The provision of 40% affordable homes in developments of 11 or more (6 or more in the AONB); 2) the provision of a mix of dwelling sizes; 3) demonstrating that, where affordable housing is provided, consideration has been given to local need; 4) demonstrating that consideration has been given to the guidelines set out in ‘Secured by Design’ (ACPO).71

Responding to local need will provide social and economic benefits.

Policy H2: This Plan allocates land for approximately 150 dwellings. Policies for all allocated sites are included later in the plan.

Objective: New housing will be sustainable and efficiently conserve natural resources, restrict pollution and promote biodiversity.

Policy H3: Applications for residential development should demonstrate how they have have taken account of best practice in energy efficiency and generation; and should demonstrate that landscaping responds positively to the character of the area, is well related to the design of the proposed development and, where possible, conserves or enhances biodiversity.

This policy aims to provide environmental economic and social benefits contributing to sustainability.

Objective: Housing developments must be fully supported by adequate infrastructure.

Policy H4: Grey water recycling and the utilization of sustainable drainage systems (SuDS) will be supported. Applicants are encouraged to maximise opportunities for grey water recycling and utilise SuDS wherever practical and viable.

New and improved utility infrastructure for water supply, surface water drainage and foul water will be encouraged and supported in order to meet the identified needs of the community.

This policy aims to provide environmental economic and social benefits contributing to sustainability.

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WORKING

 Overton, Laverstoke and Steventon is estimated to provide 2,500 jobs.38 Some of these are filled by people who live elsewhere.  In 2011, 2,049 people were in work of whom 327 were self-employed.49  Of those in work, 71% go by car or motorbike, 10% by public transport and 19% go on foot or by bicycle or work from home. Of the 1,447 who go by car, 91 are passengers.49  The major employers in the parish are De La Rue (430 employees, about 30 of whom live in the parish), small businesses, retail outlets, the primary school and farmers.  There are 10 light industrial units around the station and 6 at Quidhampton. There are 6 businesses operating at Ashe Warren Farm.  Overton has a thriving business sector. Overton Business Association has 62 members58 but not all businesses are members.  Overton is fortunate to have 27 shops selling goods and services. With the exception of the Co-op, they are all independent small businesses and more than half the proprietors live in the parish.59  There are also many pubs, restaurants and take-aways providing local employment. The White Hart in Overton has recently re-opened as a fully refurbished hotel/restaurant.

 As the population rises in Whitchurch, Overton and Oakley there is a considerable economic opportunity for retail and hospitality in Overton.

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Key issues for working  There is strong public support for more local jobs.12  Employment sites must be for uses and on a scale appropriate to the context of Overton.  There is potential and strong public support for encouraging visitors and tourism as a way of supporting local jobs.12,76  We recognise that many people now run small businesses from home or in small local premises76 and this is to be encouraged.

OBJECTIVES FOR WORKING  To support proposals leading to more local jobs for local people.  To support local employment by making the village more attractive to tourists and visitors.

SHOPS AND SERVICES

 Overton is fortunate to have 27 shops selling goods and services and the range of goods for sale has expanded in recent years. Some specialist shops attract customers from a very wide area. Overton now has a greengrocer, a butcher and a baker as well as two small supermarkets. With the exception of the Co-op, all the shops are independent small businesses and more than half the proprietors live in the parish.59  Unlike some town centres where many shops stand empty, Overton has only two shops unoccupied at the time of writing.  There is a Home Producers Market once a week.  It is not necessary to travel beyond the village for basic needs. Overton has a greater proportion of elderly residents than the borough average and many of them are more dependent on local shops than younger people to satisfy their needs.  The more shops and services can be expanded locally the less the need to travel will be.  There are four public houses all of which serve food and several restaurants and cafés. All of these attract visitors from the surrounding area.

Late night shopping, Christmas 2014

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Key issues for shopping and services  Local shops and businesses were highly valued by 83% of residents in the questionnaire12 and need to be sustained.  To attract more custom, car parking 12, 76 near the village centre needs to be improved.

OBJECTIVE FOR SHOPS AND SERVICES  To support shops and services in the parish.

Policy S1: Local shops Proposals to improve existing shops and/or provide new shops in Winchester Street and High Street will be supported, subject to respecting local character.

‘Improvements’ include accessibility, enlargement and modernisation. The aim of this policy is to increase trade and provide a wider range of goods and services on sale in the village. It aims to promote local prosperity and reduce the need for travel outside the village thereby achieving economic social and environmental benefits.

The policy will also bring environmental benefits if car journeys to buy goods elsewhere are reduced. The policy may also bring social and environmental benefits if visitors travel fewer miles to shop in Overton than they would to reach main shopping centres in Basingstoke, Andover, Winchester and Newbury. However, the lack of parking near the village centre is currently a disincentive. Opportunities to increase and improve parking will be pursued as a project.

Policy S2: Shops, change of use Proposals requiring planning permission to change the use from retail to private dwellings in the Conservation Area will not be supported unless it can be demonstrated that, further to 12 months active marketing, a retail use is no longer economically viable.

This policy aims to prevent any loss of retail premises, to sustain local shopping and reduce the need to travel thereby bringing social, economic and environmental benefits.

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LEARNING AND SKILLS

 There are three nursery schools and activities for parents and carers with babies and toddlers.  Overton Primary School has ‘outstanding’ Ofsted reports.  Overton Primary School has 357 pupils enrolled and has capacity for 420.19,60 The school has enough land for future expansion. However, specific restrictions for infant classes mean that places are not currently available. There is great concern in the village that arrangements decided by HCC when new developments are built will mean that very young children will have to be bussed to Whitchurch which is not locally acceptable.

Overton Primary School at Court Drove

 For secondary education, children mainly go on to Testbourne Community School in Whitchurch which is also rated as ‘outstanding’ by Ofsted.61  The school age population is not predicted to change significantly up to 2019 54 but the figures take no account of the new houses to be built.  Overton U3A (University of the Third Age) is thriving with 100 members and a wide variety of interest groups.  Overton Library is open on three days a week with a public access computer and wifi. However, the premises within the Community centre are too small for a village of this size and the services it provides are limited.

Key issues for learning and skills  To ensure that the nursery schools and Overton Primary School have the capacity to meet the needs of an increased population.  To encourage opportunities for adult learning.

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OBJECTIVE FOR LEARNING AND SKILLS  To support life-long learning.

Policy L1. The development of existing and new nursery schools that results in an increased number of nursery school places and that respects local character and does not harm residential amenity, will be supported.

Community Action. The Parish Council will seek, where possible, to allocate developer contributions to projects that ensure that Overton Library has premises adequate for the projected Parish population growth, including publically accessible internet access.

The aims of the above are to improve skills and educational attainment both for personal development and job prospects which will provide social and economic benefits.

GETTING AROUND

 Overton Station is about 1.4km (0.8miles) from the village centre and provides services to Basingstoke, London Waterloo, Andover, Salisbury and Exeter. There is concern that

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the trains are very crowded at peak hours, parking at the station is inadequate and the area is poorly lit.12  Stagecoach provides bus services to Basingstoke, Whitchurch, Andover and Winchester half-hourly. A village bus service runs to the train station on three mornings a week.  Traffic flow on the B3400 between Whitchurch and Basingstoke is very slow at peak hours especially in Overton High Street.  There is particular concern about the numbers of HGVs on country roads and village centre roads not designed for them.  There is public concern about road safety and that current speed restrictions are inadequate.  There are calls for the time restriction on parking which apply in the High Street to be extended to the London Road car park and the lower end of Winchester Street.  However, provision of multi-use paths will encourage residents to walk or cycle to the village centre rather than to go by car.

Overton High Street cannot be adapted to 21st century traffic.

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Key issues for getting around  Capacity of the roads to accommodate yet more traffic.12  The numbers of HGVs.12  Road safety.12  The need to discourage short car journeys.  Car parking at the station and in the village centre.12

Although traffic congestion and the number of HGVs are key issues, this Plan has no objective to deal with them. This is because they are matters for Hampshire County Council and an issue which cannot be regulated through neighbourhood planning.

Some respondents have suggested placing new developments to the east of the village since traffic leaving for Basingstoke would not have to pass through the traffic lights at the village centre. However, a traffic study of Overton Hill showed that more vehicles leave this site and travel west towards the village centre than travel east towards Basingstoke.74

Since there are six routes out of the village, it may also be beneficial in this respect to disperse new developments rather than using one large site.

OBJECTIVES FOR GETTING AROUND  To encourage walking and cycling and the use of public transport and to reduce reliance on cars.  To improve provision of parking facilities in the village and at Overton Station.

Objective: To encourage walking and cycling and the use of public transport and to reduce reliance on cars.

Policy T1: The provision of multi-use* paths is supported.

*Paths should be well signed and useable by walkers, cyclists and those with mobility scooters, wheel chairs, prams and those with disabilities. Dropped kerbs will be provided on multi-use paths at crossing points.

The aim of this policy is to reduce short car journeys which will result in environmental benefits. It should also reduce the pressure on parking in the village centre and at the station which is a social benefit.

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Objective: To improve provision of parking facilities in the village and at Overton Station.

 There are complex long-standing problems with parking at the station. These include land ownership, that Station Approach is not an adopted road and the absence of lighting. Whilst no easy solution is available now, OPC will engage with stakeholders to seek one and this may need investment.  The village centre lies in the valley. Those with restricted mobility may be able to walk from their homes to the centre but find it difficult to return with heavy shopping. Parking near the village centre is not adequate.  Several Overton not-for-profit organisations have parking areas used by residents for other purposes. They include St Mary’s Church, Town Meadow pavilion (used by parents of young children going to and from Overton Primary School) and the Community Centre. They therefore provide a community benefit beyond their primary purpose.  When this plan and the Local Plan are ‘made’, it is expected that Overton Parish Council will receive 25% of CIL with the power to decide how to spend it.

Community Action. The Parish Council will seek, where possible, to allocate developer contributions to the creation of parking opportunities throughout the village and to upgrading community car parking.

This is an example of the sustainability objectives potentially being in conflict. If it is easier to park in the village it will encourage people to use the car for short journeys which is a negative for the environment and for health. However, it will encourage people who live in the parish and those from further afield to shop in Overton rather than travel further to reach a main centre. This is both an environmental and an economic benefit.

Overton village lies in the valley and as the village expands it necessarily means that the residents of new developments will have to climb the hill to get home with heavy shopping. Better parking provision in the village centre will mean that the elderly and those with restricted mobility will be able to shop in the village more easily and that is a social benefit supported by NPPF, para 40.24 On balance, ONP Group considers that the sustainability benefits outweigh the disadvantages. More cycle stands in the village centre will be encouraged as a project.

The aim of this policy is to reduce the pressure on parking in the village centre and at the station which is a social benefit.

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COMMUNITY SERVICES

 Overton Surgery is part of the Overton & Oakley Partnership and is close to the village centre. Residents can pick up their prescriptions at Overton Pharmacy.  Overton Dental Practice provides non-NHS services.  The Post Office is located in the Co-operative supermarket.  Overton Library is open three half-days a week.  Overton does not have a police station but is served by a Police Community Support Officer. Levels of reported crime and anti-social behaviour are low.62

Key issues for community services  Residents are generally satisfied with community services but there is concern about the capacity to meet future needs.12  Although there is some concern about the capacity of the surgery,12 the Practice has assessed that their premises and staffing will be adequate for future needs.63

OBJECTIVE FOR COMMUNITY SERVICES*  To ensure that our community services continue to meet the needs of an expanding and ageing population. *Includes: parish office, surgery, dentist, pharmacy, post office, library, police, fire station, allotments, cemetery.

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Policy CS1: Community Services Planning permission will not be granted for development which would result in the loss of essential local services and facilities which are considered to be important to the local community, including local shops, the post office, Overton Pharmacy, public houses and Beech Tree Nursing Home, unless 1. there is adequate alternative local provision; or 2. it is shown that it is no longer practical or desirable to retain them; or 3. it is a part of changes by a public service provider which will improve the overall quality or accessibility of public services in the parish.

This policy complies with Saved Policy C8 (Protection of essential services) It aims to provide social benefits. The pharmacy, dentist and post-office are commercial enterprises but they provide services to the community on which many people depend, especially the elderly. If they become at risk at some time in the future it is possible that financial contributions under the control of Overton Parish Council might enable them to continue in the same or alternative locations.

ENJOYMENT AND RECREATION

 Overton Recreation Centre (ORC) is a registered membership charity run by volunteers providing sporting and recreational facilities at Berrydown, Bridge Street and Town Meadow. ORC actively encourages youth sports. The three pavilions also provide a home for Overton Scouts and Guides, a nursery school and a variety of clubs and societies. Income from memberships is the main source of revenue for ORC which is also supported financially by the Borough and Parish Councils.  Overton has facilities for football, rugby, cricket, golf, tennis, swimming, short mat bowls and a running club.  Apart from the ORC pavilions, there are five halls and meeting rooms used by clubs and societies for a variety of activities.  Overton Memorial Institute is a licenced social club.  There are ten green open spaces in the village including five playgrounds with public access.  There are three active churches – St Mary’s C of E, Methodist and the Community Church which meets at St Luke’s Hall.  Amongst services for the elderly are Town Mill (residential accommodation), Beech Tree (nursing home), Kingfisher Day Centre in Laverstoke, Lady Rosemary Portal Club, the Darby & Joan Club and a weekly Lunch Club. Overton surgery is ‘Dementia Friendly’.

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Golf at Town Meadow  Overton hosts regular events including the Overton Harriers road races, the Rugby Festival, the Scarecrow Festival, Wheelbarrow Racing, Inter-street football, St Mary’s Church Fete and the Car Fest. The Overton Sheep Fair every four years attracts thousands of visitors. All of these are supported with enthusiasm.  Youth activities include the Army Cadets, Scouts, Guides, Brownies and Cubs. There is a youth social club at the football pavilion.  Residents place a high value on the Conservation Area, the River Test Site of Special Scientific Interest, land near the river which is part of the Test Valley Environmentally Sensitive Area, the Sites of Importance for Nature Conservation (SINCs) and land north of the London to Exeter railway which is part of the North Wessex Downs Area of Outstanding Natural Beauty.

Overton Sheep Fair, 2012

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Key issues for enjoyment and recreation  Residents are generally satisfied with the cultural and sporting facilities available and say that the village halls are adequate.12  People value the environmentally designated areas as opportunities for exercise and quiet reflection.12  Footpaths within and beyond the village are highly valued12 but can be improved.

OBJECTIVES FOR ENJOYMENT AND RECREATION  To support social, sporting and recreational facilities in the village for people of all ages and abilities.  To work with statutory bodies and partner organisations to protect areas of the parish designated for their environmental and heritage value and their settings.  To encourage access to the countryside for walkers and cyclists and the use of these facilities.

Flashetts

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SECTION 5: THE ALLOCATED SITES

POLICIES FOR ALL ALLOCATED SITES

Policy SS1 The development of approximately 150 homes will be permitted on the following sites: SITE F: S OF TWO GATE LANE, approximately 70 dwellings SITE J: W OF SAPLEY PLAYING FIELD, approximately 55 dwellings SITE A: NW OF OVERTON PRIMARY SCHOOL, approximately 11 dwellings SITE B: E OF COURT DROVE, approximately 14 dwellings

Policy SS2. Where a Design and Access Statement is required, the supporting information should, where relevant, provide sufficient detail to enable the following topics to be considered; design; transport; heritage; landscaping and provision of green space; and public benefits.

SS2. Guidance on producing best practice Design and Access Statements can be found at CABE 2006 Guide on Design and Access Statements 78 with an example from Devon 79 The requirement for consultation is covered under policy LBE1.

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LOCATION PLANS

SITE SPECIFIC POLICIES

SITE F: S OF TWO GATE LANE 6.8 HECTARES, 16.8 ACRES APPROXIMATELY.

70 DWELLINGS WITHIN THE AREA BOUNDED IN RED

The boundary marked in blue is the approximate extent of the site for 70 dwellings. The boundary marked in red is the built area. The area shown in green is designated green space. If required, the site boundary may be extended towards the dotted blue line.

Site Plan F: indicative only

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Site F specific policies 1. Access will be to the B3400. 2. There will be a multi-use footpath with public rights of way (PRoW) from the development to the lower end of Two Gate Lane.

SITE J: W OF SAPLEY PLAYING FIELD 2.65 HECTARES, 6.5 ACRES APPROXIMATELY.

55 DWELLINGS The boundary marked in blue is the extent of the site for 55 dwellings. The boundary marked in red is the built area. The area shown in green is designated green space.

Site Plan J: indicative only

Site J specific policies 1. Access will be to the C29. 2. There will be a multi-use footpath with public rights of way (PRoW) from the development linking the development to Pond Close.

The Parish Council would like to see provision of a Community Shop on the site and would like allotments to be gifted to the Parish Council.

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SITE A : NW OF OVERTON PRIMARY SCHOOL 1.8 HECTARES, 4.45 ACRES APPROXIMATELY.

11 DWELLINGS

The boundary marked in blue is the extent of the site for 11 dwellings. The boundary marked in red is the built area.

Site Plan A: indicative only

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SITE B: E OF COURT DROVE 0.46 HECTARES, 1.14 ACRES APPROXIMATELY.

14 DWELLINGS

The boundary marked in blue is the extent of the site for 14 dwellings. The boundary marked in red is the built area.

Site B Plan: indicative only

Site B specific policies 1. Six of the units will be available for self-build. 2. Proposals must demonstrate that landscaping will screen development in a way that protects local character.

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MONITORING AND REVIEW OF THE PLAN

The Neighbourhood Plan Group is concerned to ensure that this Neighbourhood Plan is actively managed. The Plan will be reviewed to ensure that it takes into account possible changes in National Planning Policy or to the Basingstoke & Deane Local Plan. Responsibility for providing the leadership for the Overton Neighbourhood Plan will rest with Overton Parish Council.

Following implementation of the Plan, each Annual Parish Council meeting will include a detailed report on the progress of the Plan in the previous year and the likely progress in the coming year. The Parish Council website will carry an up to date report on the progress of the Plan during its lifetime.

In 2020 and 2025 there will be thorough five year reviews of progress by a Steering Group having a wider community base. The purpose of these reviews will be to guide the Parish Council in its stewardship of the Overton Neighbourhood Plan, and to consider the need for proposing amendments to the Plan to Basingstoke & Deane Borough Council.

In 2027 the Parish Council will again recruit a new NP Group from the community to undertake a review and decide on the need for a subsequent Neighbourhood Plan and, if so decided, to overview the development of the subsequent 15 year plan.

GLOSSARY

AFFORDABLE HOUSING Social rented, affordable rented and intermediate housing, provided to eligible households whose needs are not met by the market. Eligibility is determined with regard to local incomes and local house prices. Affordable housing should include provisions to remain at an affordable price for future eligible households. CONSULTATION The dynamic process of dialogue between individuals or groups, based upon a genuine exchange of views, and normally with the objective of influencing decisions, policies or programmes of action. COMMUNITY ENGAGEMENT Developing and sustaining a working relationship between those making plans for change and the local community to help them both to understand and act on community needs. DEVELOPER CONTRIBUTIONS Monies paid by landowners to the Local Planning Authority to pay for the infrastructure to support developments where these are necessary to make the development acceptable. The money raised can be used to fund a wide range of infrastructure such as transport, schools, health and social care facilities, parks, green spaces and leisure facilities. This may be through a  Community Infrastructure Levy at rates fixed for the Borough, or  A ‘Section 106 agreement’ which is a legal agreement with the developer of a specific site which may include the provision of affordable housing. EVIDENCE BASE The evidence upon which a development plan is based, principally the background facts and statistics about an area and the views of stakeholders. HERITAGE ASSET A building, monument, site, place, area or landscape identified as having a degree of significance meriting consideration in planning decisions because of its heritage interest. Designated heritage assets include Listed Buildings.

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HOUSING ASSOCIATION Private, non-profit making organisations providing low-cost social housing for people in need of a home. In England, housing associations are funded and regulated by the Homes and Communities Agency (HCA). HOUSING NEEDS REGISTER The Borough Register is the central point of contact for all those wishing to apply for a social housing tenancy, including supported / older persons accommodation within the borough of Basingstoke and Deane. HOUSING NEEDS SURVEY A survey designed to assess future housing need in an area. INFRASTRUCTURE Basic services necessary to enable and sustain living conditions. In the context of planning, infrastructure can include water, gas, electric power, sewerage, roads and telecommunications as well as schools, playing fields, green areas and community facilities. LANDSCAPE An area, as perceived by people, whose character is the result of the action and interaction of natural and/or human factors. The concept of landscape has natural, aesthetic, perceptual, cultural and historic dimensions. LOCAL PLAN The plan for the future development of the local area, drawn up by the local planning authority in consultation with the community under the Planning and Compulsory Purchase Act 2004. Current core strategies considered to be development plan documents form part of the Local Plan. In this case the local area is the Borough of Basingstoke & Deane. MULTI-USE PATH Paths should be well signed and useable by walkers, cyclists and those with mobility scooters, wheel chairs, prams and those with disabilities. Dropped kerbs will be provided on multi-use paths at crossing points. NATIONAL PLANNING POLICY FRAMEWORK The policies set by central government for the preparation of Local and Neighbourhood Plans. NEIGHBOURHOOD PLAN A plan prepared by a Parish Council or Neighbourhood Forum for a particular neighbourhood area (made under the Planning and Compulsory Purchase Act 2004). OBJECTIVE A specific result to be achieved within a time frame with available resources. POLICY A statement of intent expressed as a system of principles to guide decisions and achieve rational outcomes. PROJECT A development not requiring planning permission (permitted development) which may be funded by developer contributions. SETTING The immediate context in which a building is situated. For example, the setting of a listed building could include neighbouring land or development with which it is historically associated, or the surrounding townscape of which it forms a part. SINC. Site of Importance for Nature Conservation. STAKEHOLDERS People, bodies or groups who have an interest in an organisation or process including residents, business owners and government. SUSTAINABLE DEVELOPMENT Development that meets the needs of the present without compromising the ability of future generations to meet their own needs including economic development, social development and environmental protection. SUSTAINABILITY APPRAISAL An assessment of the environmental, social and economic impacts of a Local or Neighbourhood Plan to check that the plan accords with the principles of sustainable development, including biodiversity, the effects of climate change, flood risk, land, soil and water resources, historic environment and heritage, population and community, health and wellbeing, economy and enterprise. VILLAGE DESIGN STATEMENT A document that describes the distinctive characteristics of the locality and provides design guidance to influence future development and improve the physical qualities of the area. A VDS may have the status of Supplementary Planning Guidance which developers are required to follow. The Overton VDS has this status. WILDLIFE CORRIDOR Areas of habitat connecting wildlife populations.

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APPENDICES

APPENDIX 1

Potential projects to be funded from developer contributions

These projects are not prioritised or costed. This list is to inform Overton Parish Council (OPC) of suggested ways to address issues raised during development of the Overton Neighbourhood Plan

Learning and Skills

Ongoing provision of adequate premises for Overton Library for the projected Parish population growth, including publicly accessible internet access. OPC to work with Library and Statutory Agencies.

Investigate opportunities for adult learning to improve of knowledge and skills and promote lifelong learning. To include suitable location(s) with internet access for meetings or individual work and setting up e.g. Job Club, Skills Hub. OPC to work with Library and Statutory Agencies.

Getting Around

Support and seek to extend village bus service (74), to serve new developments. OPC.

Provide signposting of ‘safe’ routes for walking and cycling from Overton village centre to link with adjoining settlements without using A or B classified roads, wherever possible. OPC to work with landowners and adjacent Parish Councils.

Improve knowledge of and signage for multi-use paths and alleyways within the village. OPC.

Improve accessibility to local shops and services and around the village centre with additional dropped kerbs on either side of Greyhound Lane where it joins Winchester St and by the gate to the GP Surgery. Modify pavement corner at the East side of Bridge Street / High Street. OPC to work with HCC and OBA.

Provide more bicycle racks in village centre. OPC. Seek additional secure bicycle storage at Overton train station. OPC and Railtrack. Seek opportunities to increase and improve parking in the village centre. OPC.

Investigate time-limited parking on Winchester Street below Battens Avenue and in London road car park. OPC with HCC Highways.

Investigate provision of ‘walking buses’ to and from Overton Primary School morning and afternoon. OPC with Overton Primary School. Work with Overton Primary School and HCC to

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increase on-site parking for staff and helpers to maximise public parking outside the school. OPC.

Enjoyment and Recreation

Increase the quality and range of existing social, sporting and recreational facilities and public green spaces in the parish. OPC with Overton Recreation Centre (ORC), developers and others, as appropriate.

Identify opportunities for improved public access to the countryside for walkers and cyclists. OPC with local landowners.

Obtain more permissive paths to link together existing footpaths and established rights of way to facilitate further circular walk routes. These will integrate the village with the countryside with publicity to encourage walking for health and leisure. OPC to work with landowners.

Promote local visitor opportunities; information and signposting. OPC to work with OBA, ORC, Library etc.

Upgrade Town Meadow Hut for use by Scouting and Guiding movements and improve car park. Overton Recreation Centre with OPC.

Expand athletic facilities at Berrydown and develop Sports Barn for indoor activities. ORC with OPC.

APPENDIX 2

Saved Local Plan Policies D6 New residential accommodation in the countryside D8 Rural exceptions D9 Rural brownfield sites E1 Development control E2 Buildings of historic or architectural interest E6 Landscape character E7 Nature/biodiversity conservation EC1 Employment areas EC2 Re-use of employment sites EC5 Live work units EC6 The re-use of buildings in the countryside EC7 Farm diversification EC8 Rural tourism C2 Affordable housing C3 Housing mix C4 Housing for the elderly and those with special needs

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C7 The protection, enhancement and replacement of existing liesure and community facilities or open space C8 Protection of essential services C9 New leisure facilities or open spaces A1 Car parking A2 Encouraging walking, cycling and the use of public transport A3 Infrastructure improvements A5 Recycling A6 Renewable energy A7 Water and sewerage infrastructure.

Emerging Local Plan Policies Policy CN1 Affordable Housing Policy CN2 Rural Exceptions for Affordable Housing Policy CN3 Housing Mix for Market Housing Policy CN4 Housing for older people / Specialist housing Policy CN6 Infrastructure Policy CN7 Essential Facilities and Services Policy CN8 Community, Leisure and Cultural Facilities Policy CN9 Transport Policy EM1 Landscape Policy EM4 Biodiversity, Geodiversity and Nature Conservation Policy EM5 Green Infrastructure Policy EM6 Water Quality Policy EM7 Managing Flood Risk Policy EM9 Sustainable Water Use Policy EM10 Delivering High Quality Development Policy EM11 The Historic Environment Policy EM12 Pollution Policy EP1 Economic Growth and Investment

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REFERENCES

1 1st Draft Plan October http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents 2014 2 List of NP Group http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents members 3 NP Area Map http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents

4 NP Application form http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents

5 Benefits of a NP https://www.gov.uk/government/publications/national-planning-policy-framework--2

6 Overton Village Design http://overtontc.users31.interdns.co.uk/documents-and-publications/planning-documents/village-design- Statement statement/ 7 Overton 2020 http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents

8 Overton Futures http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents

11 Questionnaire http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents

12 Responses to the http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents questionnaire 14 November 2014 http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents consultation event 15 January 2015 http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents consultation event 16 Overton Biodiversity http://www.overton-biodiversity.org/society/bap.html Society Action Plan 17 Emerging Local Plan http://www.basingstoke.gov.uk/browse/environment-and-planning/planning/emerging-local-plan/

18 HCC Hampshire key facts http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents

19 Schools Policy Officer http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents conversation 20 Office for National http://www.ons.gov.uk/ons/regional-statistics/index.html _Statistics Statistics 21 Environment Agency https://www.gov.uk/government/organisations/environment-agency 22 English Heritage http://www.english-heritage.org.uk/ 23 Natural England https://www.gov.uk/government/organisations/natural-england 24 National Planning Policy https://www.gov.uk/government/publications/national-planning-policy-framework--2 Framework 25 BDBC Neighbourhood http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents Planning Protocol 29 Overton history Deveson, A. Overton: 1000 years of history, (2000) ISBN-10: 0953333515 ISBN-13: 978-0953333516

30 History of the White http://www.overtonparishcouncil.gov.uk/parish-council/ Hart 31 Summary 1st draft NP, http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents Nov 2014 32 AONB www.northwessexdowns.org.uk/ 33 River Test SSSI http://www.sssi.naturalengland.org.uk/citation/citation_photo/2000170.pdf

34 Overton Conservation http://www.basingstoke.gov.uk/browse/environment-and-planning/conservation/caa/overton.htm Area Appraisal and map 35 Test Valley http://www.legislation.gov.uk/uksi/1998/2178/contents/made Environmentally Sensitive Area 36 Flood Plain Map http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents

37 Overton Biodiversity http://www.overton-biodiversity.org

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Society 38 Ward Profile http://www.basingstoke.gov.uk/Resources/6/6/%7B669C604E-A28E-44CE-B422- 531FB2BEF28D%7D/Documents/Overton,%20Laverstoke%20and%20Steventon%20Ward%20Profile.pdf

39 Lifetime homes www.lifetimehomes.org.uk 41 Economic Hub para 3.8 http://www.basingstoke.gov.uk/Resources/E/E/%7BEE36A71B-F561-4314-8CAF- C12B5F1996B5%7D/Documents/1%20Local%20Plan/02%20Submission%20Local%20Plan.pdf

42 Whitchurch housing http://www.basingstoke.gov.uk/Resources/E/E/%7BEE36A71B-F561-4314-8CAF- para 4.18 C12B5F1996B5%7D/Documents/1%20Local%20Plan/02%20Submission%20Local%20Plan.pdf

43 East of Andover housing http://www.testvalley.gov.uk/resident/planningandbuildingcontrol/planningpolicy/local-development- framework/dpd/ 44 West of Basingstoke http://www.basingstoke.gov.uk/Resources/E/E/%7BEE36A71B-F561-4314-8CAF- housing C12B5F1996B5%7D/Documents/1%20Local%20Plan/02%20Submission%20Local%20Plan.pdf

45 Bombay Sapphire http://distillery.bombaysapphire.com/

46 Definition of village http://en.wikipedia.org/wiki/Village 47 Number of dwellings http://www.visionofbritain.org.uk/ 48 Built up streets 1910 Map, Ordnance Survey, 6"/mile, 1910 49 Dwelling numbers 2011 http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents

50 Housing Development in http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents Overton 51 Skyline, LDF page 21 http://www.basingstoke.gov.uk/NR/rdonlyres/1DA6A9D0-B70F-4A4F-8E4E- D121A15F22C1/0/14219Appendix14screen.pdf 52 Communication & http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents response form May/June 2014 53 House prices www.rightmove.com, 2012-2014. 54 Population Forecast http://www3.hants.gov.uk/planning/factsandfigures/population-statistics/small-area-pop-stats.htm

55 Housing need http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents

58 Overton Business www.overton-business.uk Association 59 Survey of Shops http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents

60 Overton Primary School http://overtonprimary.co.uk/ 61 Testbourne www.testbourne.hants.sch.uk/?attachment_id=571 62 Crime statistics http://www.ukcrimestats.com/Neighbourhood/1637 63 Future capacity of http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents surgery notes

64 Building for Life http://www.designcouncil.org.uk/knowledge-resources/guide/building-life-12

68 Estate agent interviews http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents

71 Secured by design http://www.securedbydesign.com/

74 Traffic study Overton Hill http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents 76 Business responses http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents

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78 CABE Guide Design and http://www.designcouncil.org.uk/knowledge-resources/guide/design-and-access-statements-how-write- Access Statements read-and-use-them 79 Example Design and http://www.devon.gov.uk/plandoc_21_4117.pdf Access statement 80 Pre-submission Plan http://www.overtonparishcouncil.gov.uk/wp-content/uploads/2015/02/DRAFT-NP-FINAL-PRINT-v2.pdf

81 Site Assessment http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents 82 Consultation processes http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents 83 Sustainability Appraisal http://www.overtonparishcouncil.gov.uk/regulation-15-reference-documents

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