Agenda item

Cabinet Member: Cabinet Member for Resources & Financial Governance, Councillor Callton Young

Officer: Interim Executive Director Place, Sarah Hayward

Key decision: yes

RESOLVED on the basis of the terms set out in Part A and B of the report to

1.    Approve the disposal of the Croydon Park Hotel;

2.    Approve the disposal of the College Green site;

3.    Delegate the approval for the disposal of Heath Lodge, Grangewood Park by auction to the Interim Corporate Director Resources in consultation with the Cabinet Member for Croydon Renewal and to note the representations made following the Notice for the disposal of public open space;

4.    Delegate the approve for the Disposal of Ashburton Lodge by auction to the Interim Executive Director Resources in consultation with the Cabinet Member for Croydon Renewal;

5.    Approve the extension of the leases for Concord and Sycamore House;

6.    Agree to the amended asset disposal list as detailed in section 7 of the report; and

7.    Note the update on the Investment Asset performance as detailed in section 8 of the report.

The Cabinet Member for Resources & Financial Governance (Councillor Callton Young) began by noting that there had been a large petition from residents in his ward in relation to the recommended disposal of Heath Lodge and so stated that he would not participate in the decision making for that disposal.

The Cabinet Member welcomed the emphasis placed on good governance within the development of the report; including the business cases for disposals, independent valuations and appointing suitably qualified agents to market the properties. It was noted that Savills had been appointed for the disposals of Croydon Park Hotel and College Green to ensure best value was achieved. The Cabinet Member highlighted that ten formal expressions of interest were received for Croydon Park Hotel and College Green sites. Those expressions of interests had been analysed by both Savills and officers and had led to a short list of eight viable bidders for Croydon Park Hotel and six bidders for College Green.

Members’ attention was drawn to paragraphs 5.6 and 5.14 of the report and the implications of obtaining the values set out in the report. Furthermore, paragraph 11 was also highlighted as it showed the positive revenue and capital consequences of the disposals. In particular it was noted that for every £10 million reduction in capital borrowing the council would stand to save around £790,000 during the lifetime of the loan.

The Cabinet Member for Culture & Regeneration (Councillor Oliver Lewis) queried how monies received from the sales might benefit the council’s financial positon. Furthermore, he noted that the park lodges of Asburton and Heath Lodges were from a time when park keepers remained on site and did not reflect current practices of running parks. In light of this, the Cabinet Member queried whether there was precedent of disposing of similar properties elsewhere.

In response to the questions, the Cabinet Member for Resources & Financial Governance stated that it was normal practice for council to dispose of surplus assets as it cost money to maintain them. It was noted that money had been invested in the Lodge to look at alternative uses of the property, however it was now in a state of disrepair. It was felt that it was right and proper to dispose of surplus assets to support Croydon’s renewal. The Cabinet Member confirmed that when the council received capital receipts that money would be used in order to keep costs down elsewhere in the council.

In response to a question from the Cabinet Member for Sustainable Croydon (Councillor Muhammad Ali), the Cabinet Member confirmed that Savills had undergone a consultation exercise with adverts in the Estates Gazette and a data room which interested parties could visit to understand what was on offer. The Cabinet Member noted also that as part of the shortlisting offers interviews had been undertaken. The Head of Asset Management & Estates (Stephen Wingrave) added that around 5,000 adverts had been sent to Savills contacts and in the case of Croydon Park Hotel; specific adverts were sent to the hotel industry.

The Leader of the Council (Councillor Hamida Ali) noted that professional advice had been sought but queried as to the level of engagement with the Assurance & Improvement Panel and whether their opinion had been sought as another form of external advice. In response, the Cabinet Member confirmed that all conversations with the Panel in relation to the disposal and achieving best consideration had been positive. He added that in addition to external advice, independent valuations had been sought and competition had driven the price of the disposals.

The Cabinet Member for Homes (Councillor Patricia Hay-Justice) noted that whilst she did not like the idea of disposing of any assets she recognised that this was a decision which had to be made and in doing so the council was receiving a higher return than had been anticipated.

It was noted by the Shadow Cabinet Member for Croydon Renewal (Councillor Jason Cummings) that there had been positive commentary in relation to Croydon Park Hotel but queried whether the Administration accepted that the purchase had not been a good investment decision. In response, the Cabinet Member stated that there was an acceptance that markets changed and that the hotel market had suffered during the pandemic. It was stated that the Cabinet Member was not there to look back at history but to help fix the situation and find solutions. It was highlighted that the council was receiving a higher amount than had been anticipated and that money would be used to towards fixing the financial challenge faced by the council.

It was felt by the Shadow Cabinet Member for Resources & Financial Governance (Councillor Simon Hoar) that the sales of Croydon Park Hotel and College Green had become inevitable in the face of the financial challenge faced by the council. It was noted that the sale of the two assets and the two Lodges would bring in around £30million to the council. In light of this, the Shadow Cabinet Member queried whether this money would be reinvested into council services or staff. In response, the Cabinet Member stated that the money would be in the form of capital receipts and so would be used within the constraints of capital receipts. However, it was further highlighted that there would also be benefit in terms of interest payments on the loan.

Councillor Robert Ward noted that the College Green site was associated with the Fairfield Halls, and queried whether the external auditors value for money report had been received by the council. The Chief Executive (Katherine Kerswell) advised Members that the report had been received but that the external auditors had been requested the council not proceed with any further work in relation to it as they had wanted to do some further research themselves. It was stated that the council were waiting for the external auditors to conclude their work on the report.

The Leader of the Council confirmed with those in attendance that there were no questions on the Part B report and so proceeded to ask Cabinet to consider and agree the recommendations in the Part A and Part B reports.

The Leader of the Council delegated authority to the Cabinet to make the following decisions:

RESOLVED on the basis of the terms set out in Part A and B of the report to

1.     Approve the disposal of the Croydon Park Hotel;

2.     Approve the disposal of the College Green site;

3.     Delegate the approval for the disposal of Heath Lodge, Grangewood Park by auction to the Interim Corproate Director Resources in consultation with the Cabinet Member for Croydon Renewal and to note the representations made following the Notice for the disposal of public open space;

4.     Delegate the approve for the Disposal of Ashburton Lodge by auction to the Interim Executive Director Resources in consultation with the Cabinet Member for Croydon Renewal;

5.     Approve the extension of the leases for Concord and Sycamore House;

6.     Agree to the amended asset disposal list as detailed in section 7 of this report; and

7.     Note the update on the Investment Asset performance as detailed in section 8 of the report.