WS1. Case study

Linking your commercial strategy

to your medium-term financial

strategy

John Rice Director of Commercial Services

Summary

• Our Story

• Commercial approach – Investing for the

future

• Commercial property acquisitions

• Commercial Services & SPVs

• Regeneration schemes

RUNNYMEDE:OUR STORY

• Historically low Council Tax

• Sharply declining Revenue

Support Grant £5.6m to nil

• 2013 - No preparation for

austerity:

– Service reviews

– Zero based budgeting

– Voluntary redundancies

2013-18

RUNNYMEDE: OUR STORY

THE OPPORTUNITIES

• 2012: Council debt free

• Vibrant economy (13th of 324

authorities in England)

• Borough ripe for regeneration

• Political support if no cuts in

services

• Plenty of investment

opportunities

Investing for the future• Strategy: Adaptive Innovative Council

– Redefining our role - A bold commercial strategy

to be more self-sufficient

– Debt free to approved borrowing of £600M

– MTFS – generate £24M gross / £10M net income

– Changed from being a disposer of land to a

commercial development funder and developer -

using capital to generate revenue

– Place shaping regeneration schemes

– Demonstrating our confidence by investing in the

local economy

Strategic framework

• Capital Strategy 2019

• 2019/20 Treasury Management Strategy

• Property Investment Strategy 2016/17 – 2021/22

• Annual Investment Strategy

• Prudential and Treasury Management Indicators

• Minimum Revenue Provision (MRP)

Property Investment Strategy - progress

Expenditure to date by financial year

Progress - by sector (by value)

Progress by location (by value)

MTFS Income Target

VW Financial Services Milton Keynes

AXIS 1, Langley, Berks

Chiswick Green, Chiswick

Pine Trees, Egham

Egham Business Park, Thorpe

Regeneration of the Towns

• Why?

– Continued economic viability of the towns

(economies cannot stand still – Amazon / F&B

changes / etc)

– Providing new housing (Local Plan targets)

– Place shaping

– Commercially viable development

– Creation of local jobs

Regeneration - Where?• Addlestone ONE - 213 residential units + 13,201 sq m

commercial including The Light 6 screen Cinema, Waitrose

store and 101 Bedroom Premier Inn

• Egham Orbit – 25M pool, sports hall, spa, gym, etc

• Ashdene House – 26 unit residential development

• Marshall Place – 10 house residential development

• Egham Gateway West – approx. 100 residential

units, 100 student units and 9,000 sq m commercial

including a 4 screen cinema

• Parkside (HRA) – 60 unit affordable residential

How funded

• £200M Funding for regeneration in the MTFS

• Development cash-flow funded by income

from commercial property

• RBC agree a payment profile for the

development (not a coupon)

• All regeneration schemes are commercial

and so income generating or in the case of

residential sales / lettings (PRS), achieve full

market value

Commercial Services

• RBC Commercial Services

• SPVs:

– RBC Investments (Surrey) Ltd

• Estate Agency Team to optimise income and

capital values

– RBC Services (Addlestone ONE) Ltd

• Service charge team – commercial properties

– RBC Heat Company

RUNNYMEDE: OUR STORY

Lessons learned

• Get a good team in place

• Analyse investments carefully

• Be sure you have a plan to pay back what you borrow

• Embed a project management approach

• Don’t expect too much too quickly in a changing world: contingencies

• Assure members and keep them on side

In conclusion• Runnymede BC is a small well managed local

authority that is financially sustainable as a

result of commercial activities

• In bottom 10 LAs for cost of Council Tax

• Lost Government Revenue Support Grant fully

replaced by income

• Strategy for current and future sustainability

• Strong Property Investment Strategy

• Commercial income funding a £200M

regeneration programme

Property Investment Strategy 2016/17 – 2021/22