| Who owns CIFCO? |
CIFCO Capital Ltd (CIFCO) is a property investment company established in 2017 and 50% owned by Babergh District Council (BDC) and 50% owned by Mid Suffolk District Council (MSDC). |
| What is CIFCO's purpose? |
CIFCO has been set up to generate income from a portfolio of commercial properties and remit as much of that income as possible to its owners. The income from CIFCO is used to pay debt that has been borrowed by CIFCO's owners and the surplus is used to pay for council services. |
| What is the level of BMSDC Borrowings for CIFCO? |
Babergh and Mid Suffolk District Council (BMSDC)'s Treasury function runs all the financing for BMSDC on a holistic basis. Details of the CIFCO related borrowing is published annually in the Business Plan report. |
| What is the interest rate on the CIFCO loan? |
The current rate of interest on the CIFCO loan is 5% per annum. |
| What is the repayment period of the loans? |
The current CIFCO loans mature between December 2067 and July 2070. |
| What are the portfolio details? |
View the Portfolio page. If you click on the image of each property, it will give you more information. |
| What are the criteria for Director selection and what is the directors' experience? |
There are six directors for CIFCO. Three are independent, two are councillors and one is the Assistant Director for Assets and Investments at Babergh and Mid Suffolk District Councils. The independent directors were selected for their experience in commercial property investment and banking. The independent directors' contracts are typically for three years and may be renewed. The contracts expire on different dates for resilience purposes. View full details of the Board. |
| What Council members and senior officials are on the board? |
There is one councillor director from Mid Suffolk, and one from Babergh. The Assistant Director for Assets and Investments for Babergh and Mid Suffolk is also on the Board. View full details of the Board. |
| What is the current value of CIFCO holdings and what is the change since purchase? |
View the Portfolio page. |
| What date does the valuation happen and what are the details of the valuers? |
The properties are valued annually as at 31 March. View details of the valuers. |
| What is the book value of the properties? |
View the Portfolio page. |
| What is the annual/quarterly net rental income and interest paid? |
View the Financials page. |
| What is the source of Council borrowing to invest in CIFCO? |
Prior to 26 November 2020, the Councils accessed funds from a range of sources including the Public Works Loan Board (PWLB). Following changes to PWLB rules, this funding source is no longer available for investment in CIFCO. Babergh and MSDC have different funding strategies. |
| Reason for difference between CIFCO income and amount paid to councils? |
Babergh and Mid Suffolk District Councils have different borrowing strategies and as a consequence have different costs of borrowing, which is why the net benefit to the two Councils differ. |
| What is the impairment in the accounts? |
Impairment arises from two main sources in the accounts. The costs associated with the original purchase of each property which are typically in the region of 6.75% and impairment can also arise if properties are devalued for any reason. |
| What evidence was relied upon to set up CIFCO? |
BMSDC relied on a number of advisors in deciding to set up CIFCO. They employed outside consultants to look into the legality, economics, taxation and risk issues associated with CIFCO. The decision to set up CIFCO was debated fully in Council meetings in November 2016. |
| Are the council's liabilities limited to the maximum paid up share capital of the company? |
The councils' liabilities are limited to the maximum paid up share capital of CIFCO Capital Ltd. However, the council is a lender to CIFCO and has risk exposure associated with the loan which is an asset not a liability. |
| Are there any indemnities and/or guarantees issued by the company, shareholders, BDC/MSDC to any lenders or any other person or entity by means of mortgages or other charges that appear on the charges register held at companies house? |
CIFCO is funded in part by loans from the two councils. These loans are secured by a charge over the properties owned by CIFCO. |
| Is there a remuneration committee to set rewards for directors and staff? |
CIFCO does not have any staff. Director compensation is set by the boards of the two holding companies that form part of the company shareholder governance structure. |
| Does CIFCO record any conflicts of interests for its board members? |
CIFCO has a Conflicts of Interest Policy. Given the nature of the Board, it is likely that conflicts of interest will arise from time to time. CIFCO maintains a Conflicts Register as part of this policy. Directors are required to declare any potential conflict as soon as they are aware of it as well as at the start of each Board meeting. This is audited annually and updated as required. |
| What is the impact of losses on taxpayers? |
To date, CIFCO has not realised any losses. The Councils continue to receive income in excess of the costs of their borrowing. This income supports the Councils to deliver services. |
| How is CIFCO's performance monitored and scrutinised? |
The CIFCO Business Plan and Performance is approved by both Full Councils on an annual basis. The Joint Overview and Scrutiny Committee also review the Business Plan and Performance on an annual basis. In addition, annual financial audits and internal audits are carried out, which look at the company governance and procedures. |
| What central government legislation applies to these limited companies and officers? |
The Localism Act 2011 provided local authorities with the powers to undertake any function so long as any commercial function was undertaken within an appropriate company structure. Council owned companies are governed by Company Law in the same way as any private company. |
| How will continuing capital losses be funded? |
Capital losses do not require additional funding to be paid into CIFCO by the shareholders. The capital loss is shown within the accounts to demonstrate the potential loss that could be realised if the assets were sold prior to the costs of acquisition and revaluation being recovered. |
| What is the total purchase price of the portfolio including SDLT and fees? |
This can be seen in the annual Company Accounts. |
| What are the investment criteria? |
These can be found on the Requirements page. |
