How your Council is making new investments to help finance the future of South Somerset
What do the Marks & Spencer building in Yeovil, a pioneering energy storage plant near Taunton and a housing development in Marlborough have in common?
They are all part of South Somerset District Council's new and bold commercial strategy.
The Council is making investments which will provide a solid financial return that will enable us to protect the services we deliver for our communities and help fund important community initiatives like the Yeovil Refresh and Chard Regeneration.
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Here's a guide to our new commercial approach:
Why is South Somerset District Council becoming more commercial?
The Council is currently operating in a complex financial climate, where between 2018 and 2022, it needs to deliver savings rising to £6 million per year. This is in addition to having to cut its costs substantially since 2010.
SSDC has sustained a 70 per cent reduction in its Government grant funding since 2010 and further reductions are likely in the future whilst demand for and costs of many services continues to rise. It became clear that SSDC needed to make the most out of its assets and look for new opportunities which could generate income to protect the wide range of services our communities receive and create opportunities to fund new projects.
It has seen the Commercial Services and Income Generation team given an on going annual income target of £2m for commercial investment income and great progress is being made. Some of the investment will be outside of the district.
This is about making prudent financial decisions which will create significant income to get the best results for South Somerset but still, where possible, supporting the local economy.
What investments have been made?
The total amount invested to date is £26.2m on four commercial investments.
This investment continues to provide strong annual revenue to SSDC. M&S has just announced a 7% increase in profits this year, whilst it continues its own Transformation programme between 2018 and 2022. Despite store closures in other area, there are no indications from M&S that there is any intention to leave Yeovil which is a strong commitment to the strength of Yeovil's town centre.
This investment also continues to provide strong annual revenue to SSDC and performs well as an anchor store in the town. Again, there are no indications from Wilko that there is any intention to leave Yeovil. With the recent sale of Glovers Walk and regeneration of this area of town on the horizon, we expect that this will remain the case for the foreseeable future.
Energy Storage Facility, Taunton
Somerset will be at the cutting edge of renewable energy storage thanks to a significant investment in this facility. The Council, in partnership with Somerset-based Opium Power Limited, is creating a new 25MW Battery Storage facility that will provide essential power management assistance to the National Grid. It will be one of the largest and most-advanced in the UK.
What is the fourth project?
We're excited to reveal details about an investment in a residential development in Marlborough.
Late in 2017, SSDC purchased a former NHS nursing home in Marlborough for conversion into apartments and some new houses in the grounds, ready to be sold in 2019.
A year on, the site is coming on well with sales anticipated to take place in spring and summer 2019.
Whilst this purchase and development is out of the SSDC area, we are using local businesses and contractors, aiding our local economy and in return they are helping us to deliver a high quality scheme.
The sales will generate a generous capital receipt for SSDC, which is earmarked to be reinvested back into the SSDC area for regeneration and the community's benefit.
We are working with Opium Holdings Ltd as project managers and D R Jones as the lead building contractor as well as other local suppliers and the project is working as anticipated within budget to date.
We aim to have a show-house and show-flat ready this year and local estate agents are very confident about the Marlborough residential market remaining buoyant for sales.
How does the council decide on where it invests?
Every decision that is made is being rigorously tested and checked. The Commercial Property Team is working to ensure that SSDC does not overpay for property due to the lack of supply, and is not exposed to undue risk, for example within the retail sector, where significant changes are currently occurring nationally.
A huge and diverse range of opportunities have been considered and rejected in the past year from a car showroom in Newcastle to an industrial estate in Poole.
Reasons for rejection can include the asking price not matching our valuation, unacceptable risk to income, non-compliance with our commercial aims and objectives, and over-exposure to a particular market.
What about assets including buildings the Council already owns?
SSDC's Commercial Property Team is assessing a number of land and property assets currently owned by the District Council in order to ensure that all assets held are for community use, council operational needs, part of a strategic regeneration programme or purely for investment in order to generate income.
Each asset assessed by the team will be looked at to rate its performance under the above headings. Assets that don't meet a set of criterion will be offered for sale on the open market. Community Groups will also have the option to submit a business case to take on certain assets for their own use. The income from the sale of assets will be used to invest in projects that create an income for the council to use in providing services to the district or to regenerate our towns and local facilities for the benefit of our communities.
Councillor Henry Hobhouse, portfolio holder for property income generation, said: "Our commercial strategy is already proving to be hugely exciting and successful, and it's about making the right choices for our communities. This is a Council which is committed to protecting front line services and meeting its ambition to improve life in South Somerset. To achieve that aim we are being more commercial in our approach and making investments that will deliver valuable income.
"We're also making decisions which demonstrate how we take our role in caring for the environment seriously. The Battery Storage Plant near Taunton is a great example of this.
"The project will not only assist the Council's income generation, it also meets our Council Plan objectives and commitment to promote the use of green technology. It will also aid development in the region in the future by removing some of the electricity supply constraints which can be a barrier to further investment."