The Cabinet Member for the Economy introduced a report by the Strategic Director of Regeneration and Environment which sought the Cabinet’s approval to start a process to design a Local Asset Backed Vehicle (LABV) with the intention of using Council owned assets to support future regeneration activity in the Borough.  The Strategic Director informed that if Members agreed to explore this direction of travel then a more detailed framework would be prepared which would include legal structures, risk, financial considerations and further project information would be presented to the Cabinet for consideration.

The Cabinet for Economy set out the principal advantages of setting up a LABV included:

• Flexibility: LABV’s could react to the market to allow proposals to be developed between the Council and investment partner to deliver optimum financial and regeneration outcomes.

• Significant Procurement Cost and Time Savings: The creation of a true Joint Venture arrangement lying outside Local Authority control  should bring the entity outside the scope of usual procurement rules and  mean that the Council would only have to procure ‘once’ to deliver multiple sites over a mid/long term period.  This delivered substantial cost and time savings for both the public and private sector.

• Economic Leadership: The Council would be able to maximise financial returns and generate and sustain local jobs during construction and re-build of the local economy.

• Property Benefits: LABVs’ levered in significant private sector investment not just from specialists but from the wider property and funding market as a whole. This attraction related to the advantages of the partnership structure and the length of the project, which could be up to 15-20 years, and the returns generated.

• Risk Benefits: The LABV structure allowed the public sector to transfer risk, as their assets were assigned a guaranteed minimum price at the outset regardless of future outcomes.

• The LABV model was being used by other Local Authorities across the Country to deliver economic, social and environmental regeneration.

The Cabinet was informed that if it agreed to the proposal outlined in the report, Officers would seek to undertake a number of pieces of work, including using the existing asset review being undertaken to ensure the Council continued to rationalise its estate in a way that maximised the economic benefit of the assets released.

The report set out the steps that would need to be taken and the process to be gone through to select the partner.

RESOLVED: That

(1)  the Strategic Director of Regeneration and Environment be authorised to develop a delivery framework for the development of a Local Asset Backed Vehicle model (LABV) to support future regeneration activity in the Borough utilising Council owned assets; and

(2)  this draft framework be presented to a future Cabinet meeting for consideration.