Cabinet considered a report and an exempt Business Plan reviewing the structure of Knowle Green Estates Ltd following a 3 year operational period. The report proposed a new corporate structure for the business in keeping with the Council’s ambitious development plan.
Alternative options considered and rejected by Cabinet
None
The Cabinet considered the recommendations from the Overview and Scrutiny Committee following its consideration of the Business Plan at its meeting held on 21 January 2020.
The Chairman, Councillor V.J. Leighton spoke to the recommendations which were:
1. That the Business Plan for the Knowle Green Estates Group is presented alongside a mission statement or that a mission statement is subsequently developed identifying the purpose and aims of the Group.
2. That the process of asset valuation and transfer detailed in the Business Plan for the Knowle Green Estates Group be subject to further clarification.
The Leader responded to the recommendations, on behalf of the Cabinet, as follows:
“Mission Statement
As regards a mission statement for Knowle Green Estates Group Ltd – I can see how this will provide some assurances for members. I think the business plan makes it clear the direction of travel for the business, but I have no reservations to ask the Directors to consider their proposal for a mission statement and submit it to the Council. I think this will complement the Business Plan.
Asset valuation and transfers
I know that this is a live issue for the Directors because it fundamentally affects the financial appraisals for all the development sites.
I am also aware that the Council has taken some initial advice in this area. This has clarified that we do not need to transfer at full value where there is affordable housing and the Council is the sole proprietor of the Company. It is worth the Council and the Company developing a protocol on this for the future schemes and taking further advice on a revised protocol. As Shareholder Representative, I will discuss this with the Directors to see how such a protocol could be developed and how the approach can be clarified in the business plan.
Thank you for your recommendations which I propose to accept.”
Resolved that the Directors of Knowle Green Estates Ltd be requested to furnish further information to Cabinet along the lines outlined by the Leader in his response to the Overview and Scrutiny Committee recommendations.
The Cabinet then considered the recommendations in the report, and exempt appendix, before them and
Resolved to:
1. Authorise the Head of Corporate Governance to establish a group holding company – Knowle Green Estates Group Ltd;
2. Authorise the Head of Corporate Governance to establish a Lettings Agency and to subscribe to one share in this company in the name of the Council and thereafter to transfer the share to Knowle Green Estates Group Ltd;
3. Authorise the Head of Corporate Governance, subject to their confirmation of willingness to be so appointed, to appoint the Directors of Knowle Green Estates Ltd as the Directors of Knowle Green Estates Group Ltd and the new letting agency company;
4. Authorise the Head of Corporate Governance to recruit an additional independent Director for the Group;
5. Appoint Spelthorne Borough Council as the Company Secretary for Knowle Green Estates Group Ltd and any subsidiary companies and delegate the Head of Corporate Governance to undertake that function and update the scheme of delegation accordingly;
6. Authorise the Head of Corporate Governance to transfer the Council’s shareholding in Knowle Green Estates Ltd (KGE) to Knowle Green Estates Group Ltd;
7. Authorise the Head of Corporate Governance to establish a Limited Liability Partnership with Knowle Green Estates Group Ltd for the development at Block E of London Road (Berkeley Homes scheme);
8. Authorise the Head of Corporate Governance to establish a Limited Liability Partnership with Knowle Green Estates Group Ltd for Ceaser Court;
9. Authorise the Head of Corporate Governance to establish a Limited Liability Partnership with Knowle Green Estates Group Ltd for Thameside House;
10. Approve the Knowle Green Estates Group business plan 2020-2024 submitted and approved by the Board of Knowle Green Estates Ltd (Exempt Appendix 1); and
11. Appoint the Leader of the Council as the Shareholder representative for Knowle Green Estates Group Ltd and all subsidiary companies.
Reasons for decision
To review the purpose of Knowle Green Estates Ltd in light of its first three years of operation.
1. To recommend a new corporate structure for the business which is in keeping with the Council’s ambitious development plan.
2. To document the relationship between the Council and the Company and a proposed Group holding company.