The Scrutiny Committee resolved at its meeting of 11 February 2015:

That following consideration of the Forum Shopping Centre, Sittingbourne report at Cabinet on 11 March 2015, the Chairman will call-in the decision using the procedures as set out in the Constitution.

In accordance with the Scrutiny Committee’s resolution passed on 11 February 2015, I as Chairman of the Scrutiny Committee, am calling-in the Cabinet’s decision for consideration by the Scrutiny Committee, to include that there was inadequate consultation relating to the decision.

The Chairman welcomed the Leader, the Chief Executive and the Head of Finance to the meeting. He explained that the Scrutiny Committee on 11 February 2015 had resolved that following consideration of the Forum Shopping Centre, Sittingbourne at Cabinet on 11 March 2015, the Chairman would call-in the decision using the procedure as set out in the Constitution.  The Cabinet minutes (Minute No. 554 refers) were published on 16 March 2015 and the decision was called-in, as above and for the specific reason that there was inadequate consultation relating to the decision.

The Leader advised that consultation had been carried out with external financial and legal advisors.  He acknowledged the importance of the Forum Shopping Centre, and explained that it was not usual to take every decision to the Scrutiny Committee.  The Leader explained that the decision made at  Cabinet was a financial decision and he was unsure what other consultation should have been carried out.

Members asked the following questions.

Question:  if the current offer of £9.25million for the Forum was increased, would the whole process be repeated?

Response from the Leader:  no, as a maximum investment of up to £3.5million was agreed.

Question:  at what stage did the agreement to purchase with Development Securities Plc become binding?

Response from the Leader:  on the day that the agreement will be signed.

Question: what was the preferred method for funding the cost of the purchase?

Response from Chief Executive:  planning this project had been on the basis of borrowing the money because of other commitments in the Town Centre, rather than using reserves; and also the cost of borrowing was low.

Question:  with such a good return on the investment, why was the holding company happy to share this?

Response from the Leader: they wanted to be part of a cooperative partnership, it was an advantage for SBC to have their experience.  The Chief Executive added that this showed commitment to making the regeneration of Sittingbourne work.

Question:  pay down borrowing, support revenue budget, or invest in the property so value increases; out of these, what were the priorities for the return on the investment?

Response from the Leader: all of the above.  He advised that in the future local authorities were likely to go down this route of investment so as to become less dependent on ever reducing funding from central Government.

Response from Chief Executive:  there will be an increase in rental values with increased footfall in the Forum, and this would be a revenue stream for the budget as well as an increase in the value of the property holding.

Question: will there be a sensible final price for the Forum?

Response from the Leader: advice had been taken and it will be purchased at the agreed right price.

Question:  can returns from the project be spent on the Isle of Sheppey?

Response from the Chief Executive:  with revenue support reducing, this was an opportunity to get a revenue stream for the whole Council.  He reminded Members of recent investment programmes that had taken place on the Isle of Sheppey.

A Member suggested that less than 8% return was acceptable, and increased social and economic value were notable as well.  This was acknowledged by the Leader.

A Member considered this matter could have been discussed some time ago to include more consultees.  He suggested that there could have been consultation with the Group Leaders and also with the Consultation Group on Sittingbourne Regeneration.  He considered that consultation was very important and it had failed in this instance; he did not accept that it was solely a financial decision, and as it involved borrowing significant amounts of money, there should have been consultation.

Question:  was this the right investment to make bearing in mind the demise of the high street in general?

Response from the Leader:  advice had shown that this was the right investment, and he added that this type of investment had previously been discussed at Cabinet.

In response to a question, the Head of Finance advised that initially he was sceptical about buying out the Forum Car Park lease, but considered buying both the Forum and the Car Park worked financially.  The Chief Executive added that this was an opportunity to invest in the freehold of a large asset in Sittingbourne, and opened up other opportunities for the future.

Councillor Stokes requested that the minutes specifically recorded his comments that he had some concern over buying into Tesco.

In response to questions about the leases within the Forum, the Head of Finance acknowledged there was some risk, and advised that the holding company was confident that new tenants would come forward.  The Leader added that increased footfall should increase demand for tenants to lease the units within the Forum.

The Chairman thanked the Leader, the Chief Executive and the Head of Finance for attending the meeting for this item.

Resolved: 

(1)  That the decision on the Forum Shopping Centre, Sittingbourne taken at the Cabinet meeting on 11 March 2015 is not referred back to Cabinet; and that the decision is to take effect from 19 March 2015.