South Ribble Borough Council is to put an extra £800,000 into a property investment portfolio designed to help the authority maintain its services.
Warren Bennett, the cabinet member for assets, told a meeting of the authority that the additional funds would shift the borough into “a more favourable bracket of potential investment opportunities”.
The council committed to creating an investment fund last year. It aims to secure a return of £100,000 in its first full year of operation in 2018/19 and a “challenging” target of £300,000 in future years.
The authority has commissioned an investment management company to find suitable commercial properties into which to place its money. Lambert Smith Hampton (LSH) has pledged to seek a return of between 4.5 and 6.5 percent on all investments.
It was originally proposed that cabinet would give final approval before any funds were committed to invest. But that responsibility has now been delegated to two senior officers within the council – as well as the cabinet member for assets – after the authority was advised that decisions would sometimes have to be made within 24 hours.
The opposition Labour group welcomed the strategy as a way of supporting the council’s budget, but Cllr Matthew Tomlinson sought confirmation that the new arrangements would remove the “discomfort” of members being asked to make investment decisions in future.
Cllr Bennett confirmed proposals would not be brought to full council: “There’s been a debate around the pros and cons of doing things in a public format where you can ask and answer questions, but [to quote your own remarks], ‘don’t seek legal and professional advice and then not take it’.
“The likelihood is that this is a relatively conservative strategy,” Cllr Bennett added.
It is expected that the first investment made by the fund will be into a single asset.
LSH will provide information to the decision-makers at South Ribble to ensure the council deems potential investments to be appropriate. Once that assurance is given, the company will then carry out due diligence on the proposed purchase before referring the matter back for final approval.