Agenda item

Community Municipal Investment

To consider the report of the Team Manager Regeneration Opportunities.

Minutes:

Consideration was given to report of the Team Manager Regeneration Opportunities.

 

The Team Manager Regeneration Opportunities presented the report which sought approval to progress Community Energy Investment as a financial instrument to fund low carbon energy generation infrastructure and technology to provide energy and heat to Blaenau Gwent residents and businesses.

 

The Officer went through the report and highlighted points contained therein.

 

A Member asked whether the Council would still be able to access EU funding, and what return people could expect on their investment.

 

In response the Officer said a Member Briefing Session on European Funding would be beneficial.  In terms of this funding, it was originally through Horizon 2020, and while the UK has left Europe there was agreement that the UK could continue to participate in this funding arrangement.  This was also the case with Horizon European, its successor in the programme.

 

In terms of the rate of return that could be expected, this was for the Council to determine.  It was aimed to be below the Public Works Loan Board rate which tended to be between 2-4%.  The Council would agree a rate slightly below that rate, and that would be the return given to residents.

 

A Member referred to section 2.4 of the report and asked whether the bond fund could be used to provide loans.

 

The Officer said the bond fund was a benefit for the Council to utilise rather than going to a bank or prudential borrowing. 

 

The Member then referred to section 2.5 and asked who would be responsible for approving projects.

 

The Officer said some Authorities had taken the approach of stating a specific project, or the Council may want to take a more generic approach, and state that money would go towards a number of projects included within our Energy Prospectus, with the assurance of a business case.  However, the risk would be with the Council to undertake those projects and have the money to repay the borrowing, so it was important not to access any money until projects were ready to proceed.  The Council’s normal structures could be used to govern that process.

 

A Member referred to the potential impact on projects should an investor decide to pull their money.

 

In response the Officer said bonds would normally be invested for a set period of time, generally 5 years.  However, should an investor want to withdraw their money it would go back to the platform through Abundance and the bond would be re-advertised.

 

A brief discussion ensued when the Officer clarified points raised by Members.

 

A Member expressed concerns regarding the financial impact on the Authority in the event of the company failing, and asked whether the funding would be underwritten.

 

In response the Officer explained that the company was a platform to facilitate the investment, and the money was for the Council to invest.  The Council’s failure to deliver the project was the biggest risk to investors, however, this would be made clear as part of due diligence processes and discussions with our Legal Section.

 

The Committee AGREED to recommend that the report be accepted and the Scrutiny Committee:

 

·        Endorse Option One as the preferred way to proceed;

·        Due diligence be commenced alongside the Head of Legal and Corporate Compliance together with the Chief Officer Resources;

·        Endorse the launch of Community Municipal Bonds subject to due diligence and final sign off of the necessary agreements delegated to the Head of Legal and Corporate Compliance in consultation with the Chief Officer Resources; and

·        That the Chief Officer for Resources be delegated to determine the date of the formal launch of the bond, bond length period and bond issue rate so long as it is below the PWLB rate.

 

Supporting documents: