PURPOSE

1. To consider, in the light of a motion approved by Full Council on 21 July 2004, an amendment to the Constitution in relation to property transactions.

BACKGROUND

2. On 21 July 2004 Full Council resolved as follows :

“1. This Council recognises that the majority of Executive Delegated Decisions made speed up the process and increase capacity. Furthermore the Council recognises that the issue of land and property acquisition and disposals have proved controversial in the past.

2. In the light of these issues, the Council instructs its officers to amend the Constitution regarding Executive Delegated Decisions in respect of land and property to ensure all transactions in the area within an agreed threshold of £20,000 are scrutinised by the Resources Select Committee who should then instruct whether the transaction should be taken by delegated powers or by the Council’s Executive.”

3. The wording of that resolution has created some difficulty. Legal advice was given during the debate and subsequently. As that advice proved controversial, further opinion, from leading Counsel, has been obtained. The full text of that advice is available as a background paper to this report.

4. Legal advice, from various sources, has always been consistent. Taking the opinion of Counsel as the most authoritative source, the key parts of the advice are :

· The resolution of 21 July 2004 cannot be lawfully implemented as passed.

· The resolution of 21 July 2004 has rightly been interpreted as an instruction to officers to bring forward for consideration a proposed amendment to the Council’s Executive arrangements which would achieve the aim expressed in the resolution.

· Asked to advise ways in which the spirit or letter of the original resolution could be lawfully implemented, Counsel suggests either adoption of a protocol, such as that which appears at Appendix 1, or some more radical solution, requiring amendments to the Executive arrangement or the creation of a wholly new committee.

5. Amendment of Executive arrangements requires consultation with the public and stakeholders and creation of a new committee seems somewhat removed from the spirit of the 21 July resolution. Either of those solutions may also seem disproportionate and beyond the spirit of the resolution which seeks an adjustment of existing arrangements rather than the creation of new structures.

STRATEGIC CONTEXT

6. In determining how to implement the motion, Members may wish to consider advice given by the Local Government Ombudsman. The advice pre-dates the advent of the Executive and Select Committees but nevertheless is still of considerable relevance.

“Councils may feel it appropriate also to involve Councillors in the decision as to which of several approved procedures should be adopted for a particular disposal.

A Council’s approved procedures might also include criteria as to when a particular procedure is to be used; for example, that disposals of land valued above a specified figure should normally require the invitation of competitive bids.”

7. At the time the Local Government Ombudsman gave that advice local authority procedures were more rigid than they are today. The protocol at Appendix 1 seeks, in line with the spirit of the 21 July motion, to use the Select Committee, the Portfolio Holder and the Executive as flexible tools to give proper, open consideration to the disposal of property whilst also maintaining the efficiency in decision-making which is necessary to achieve best value in the management of property.

OPTIONS

8. Procedure Rule 17 states that a motion, or amendment to rescind a decision at a meeting of Council within the past six months cannot be moved unless notice of motion is signed by at least 12 members. Equally, a motion, or amendment, in similar terms to one that has been rejected at a meeting of Council in the past six month cannot be moved unless the notice of motion or amendment is signed by at least 12 members.

9. The effect of Rule 17 is that Members should not seek to debate the merits of the 21 July motion. Unless that motion has previously been rescinded as the result of a motion on notice signed by 12 members, it remains the policy of the Council.

10. Debate on this report, in the light of the legal advice set out in it, must concern the implementation of the 21 July motion.

11. The central question is whether or not the draft Code of Practice set out at Annexe 1, in the view of Elected Members, gives effect to the spirit of the 21 July resolution even though the letter of that motion is not capable of lawful implementation.

12. It is suggested that the draft Code of Practice is a proportionate and efficient way of giving effect to the stated intent of the Council to conduct property transactions in a way which balances openness and efficiency and involves the Select Committees, local members and Parish and Town Councils.

13. The draft Code reflects the recommendations of 2 August Resources Select Committee, is drafted to apply to all property disposals, rather than those under a threshold of £20,000, and has specific reference to the position of local members, Town and Parish Councils and occasions where a property transaction is in the electoral division of the Portfolio Holder. The Select Committee was also concerned that a full report would be available in relation to any property disposal. This is not reflected in the draft Code as the constitution already requires a public report to be prepared in relation to any decision by the Executive or by a Portfolio Holder.

14. If Members do not accept this recommendation, the only option, in the light of the advice set out in this report is to require further work to be undertaken in order to identify other amendments to the Constitution which will give greater effect to the spirit of the 21 July motion.

15. The Corporate Governance Working Group would be an ideal forum in which that work can be undertaken. That option is not offered as part of this paper as it was moved, but not passed, as an amendment on 21 July and cannot be revisited in a six month period.

16. The only option, therefore, as an alternative to approving the protocol as the best way of implementing the 21 July motion is to request, as that motion says, officers to undertake further work. That work will, of course, involve the mover and seconder of the 21 July motion, the Portfolio Holder, the Chairman of the Resources Select Committee and other interested members.

EVALUATION/RISK MANAGEMENT

17. The motion of 21 July 2004 was, itself, lawfully passed on its face but in its detail is not itself capable of lawful interpretation. It does require work to be undertaken by officers and brought back to Full Council. This report achieves that requirement. It is a judgement for Full Council as to whether the draft Code of Practice offered gives the best possible effect to the spirit of the 21 July motion.

18. Appendix 2 sets out a proforma for the reporting of proposed property sales to the Executive and Resources Select Committee. It is not proposed that this format is approved by Full Council as it should remain flexible to serve the needs of the Select Committee and the Executive from time to time.

RECOMMENDATION

19. That the Constitution of the Council be amended to include the Code of Practice for Members and Officers Dealing with Property Transactions included as Appendix 1.

BACKGROUND PAPERS

20. Brief to Counsel dated 27 August.

21. Advice of Counsel dated 4 October 2004

22. Commission for Local Administration in England – Disposal of Land Guidance on Good Practice

Contact Point : John Lawson, Head of Legal and Democratic Services, ' 823203

JOHN LAWSON

Head of Legal and Democratic Services

CODE OF PRACTICE FOR MEMBERS AND OFFICERS DEALING WITH PROPERTY TRANSACTIONS

THE NEED FOR GUIDANCE

1 The sale and acquisition of property by the Local Authority will always have a high profile. This is partly because the property in question is often located in the heart of communities and is therefore of considerable importance to those communities.

PREPARTORY WORK

2 The Head of Property Services will produce each year a plan setting out proposed disposals of property, freehold or on long leases, which are likely to reach completion within the next 12 months and also an indication of planned disposals in subsequent years.

3 The plan of proposed transactions will appear on the Executive Forward Plan as part of the process of setting the capital programme and be sent to the Chairman of the Resources Select Committee so that the Select Committee can have the opportunity to consider the contents of the plan.

4 The plan of proposed transactions will show :

· The objectives of the transaction (eg maximising capital receipt; delivering policy objective)

· The proposed method of disposal (open market, restricted tender, special purchaser, etc)

· The proposed decision-maker (officer delegation, portfolio holder, Executive)

· Whether or not the disposal is of redundant property or to achieve some other identified policy objective.

5 The programme of proposed disposals will be updated in year as the Select Committee requests or as changes in the programme require.

MEMBER DECISION-MAKING

6 Member decision-making should concentrate on setting the objectives, parameters and mechanisms for proposed transactions and Members, where their involvement adds value to the process, should be involved as early as possible.

7 Reports to Members will, therefore, set out :

· The proposed objectives (including alternative objectives) of the transaction.

· The proposed method of pursuing the transaction.

· The circumstances in which a further report to Members is necessary.

· Proposed consultation with local Member(s), the local community and other stakeholders (exceptionally the report will be sufficiently late in the process to set out the outcome of consultation already undertaken).

· Arrangements to secure the long term objectives of the sale.

8 Where a disposal also declares property redundant or is to achieve a policy objective which is the responsibility of another Portfolio Holder then any report to Members will be to that Portfolio Holder and the Portfolio Holder for Resources (in the case of delegated decisions) or to the Executive, jointly in the name of those two Portfolio Holders (in the case of decisions by the Executive).

CONFIDENTIALITY

9 There is a presumption that both the plan of proposed transactions and reports to Members will be taken in public. The exception is when, and for so long as, information contained within them would prejudice either the Local Authority or would give an advantage to any person seeking to enter into a contract with the Local Authority or would disclose information about the financial or business affairs of a person other than the Local Authority.

10 The reasons for confidentiality, where these exceptions apply, will be recorded on the face of the report.

URGENCY

11 Sometimes property transactions are urgent. Where it is, in the opinion of the Portfolio Holder for Resources, not reasonably practicable to delay a decision until the transaction has appeared in a plan, other means of informing the Select Committee in advance of the decision wherever possible will be followed.

12 Where it is not possible to involve the Select Committee in advance of the transaction, then in these circumstances a record of the decision, including the reasons for urgency, will be provided to the Resources Select Committee as soon as is reasonably practicable. The Resources Select Committee will, by these means, be able to hold the Portfolio Holder to account for their judgement in relation to urgency.

SPECIAL PURCHASER

13 Some transactions involve disposal of property rights which directly affect :

· An existing leaseholder and/or

· Some other individual with a particular interest in the property in question.

14 When such a transaction is proposed the bid of a special purchaser will either be above the market value because landed interests are being merged or the Council will be better able to pursue a particular policy objective such as economic development. In either case a negotiated settlement is to be pursued rather than a tender or other competitive process.

15 Where there is known to be a special purchaser :

· This will be shown on the plan of proposed transactions as the method of disposal.

· A report proposing the use of the special purchaser regime will be submitted to the Portfolio Holder for Resources and copied to the Chairman of the Resources Select Committee.

· The opinion of two independent valuers will be obtained and taken into account in determining the terms of any disposal of property to a special purchaser.

16 Decisions in relation to special purchaser transactions will be taken by the Executive.

INTERESTS

17 The regime from the Members’ Code of Conduct in relation to declaration of interest applies to property transactions. Members taking decisions (or engaging in policy development or scrutiny) will wish to consider whether the nature of the transaction, the identity of the other party to the transaction and/or the location of the property gives rise to a personal or prejudicial interest.

18 Members taking decisions (or engaging in policy development or scrutiny) will wish to consider whether the nature of the transaction, the identity of the other party to the transaction and/or the location of the property gives rise to a personal or prejudicial interest. Interests may arise due to the location of the property being in the area where the elected member resides, being in the electoral division which the member represents, or for some other reason to do with the private or public life of the member.

19 The Portfolio Holder will not use delegated powers in relation to property transactions in their own ward.

LOCAL MEMBER

20 The elected member for the ward where the property is located will be informed of the proposed transaction (except where genuine urgency prevents) firstly when the plan of disposals is put to the Select Committee and again, prior to any public marketing or before substantial negotiations with a special purchaser.

TOWN/PARISH COUNCILS

21 A copy of the annual plan of disposals will be sent to all Town and Parish Councils. The local council where a property transaction is proposed will be informed prior to any public marketing taking place.

ACQUISITIONS

22 This protocol supplements existing arrangements to plan and report proposed acquisitions through the capital programme.

23 Where a property acquisition is proposed which, for any reason, has not appeared on the capital programme, the Select Committee will be given the opportunity to consider the proposal, or if genuine urgency prohibits this, to subsequently consider the acquisition.

PURPOSE

STRATEGIC CONTEXT

OPTIONS

EVALUATION/RISK MANAGEMENT

APPENDIX 2

PRO FORMA REPORT TO EXECUTIVE AND SELECT COMMITTEE

Proposed Disposals 2005-2006

Reason for Sale