Reports

Report of the Council on the establishment of a Property Board

The Council begs leave to report to the University as follows:

1. This Report proposes that a Property Board be established in Ordinance to oversee the development, management and stewardship of the University’s non‑operational estate, including the West and North West Cambridge sites, reporting to the Council’s Finance Committee. The new Board would be an evolution of the West and North West Cambridge Estates (WNWCE) Board, which would be dissolved.

2. In March 2016, the North West Cambridge Audit Group tasked with investigating the background to projected cost overruns for Phase 1 of the North West Cambridge development made a series of recommendations to improve the Development’s governance arrangements (Reporter, 2015–16; 6400, p. 53; 6421, p. 442). These included:

(a)the development of clear business cases for each phase that would then serve as business plans against which performance could be measured;

(b)the reconstitution of the (then) North West Cambridge Syndicate as a Board, with suitably enhanced membership, objectives, support, accountability, and performance review (Reporter, 2015–16: 6426, p. 545; 6433, p. 783);

(c)a simplified reporting structure from the Project Director to the Board to the Council, keeping the Finance Committee informed, and with oversight by a Chief Financial Officer; and

(d)periodic independent review and challenge by an external organisation.

3. The Council endorsed the recommendations in principle and most have now been adopted.1 However, certain challenges remain, mainly relating to the wider context of the University’s non‑operational property portfolio, in particular:

(a)continued confusion over the University’s objectives and plans for the WNWCE Board and delivery team;

(b)perceived lack of connection between the WNWCE Board and wider University governance, with consequences for reporting, especially early reporting of difficulties;

(c)misalignment of objectives with outcomes, suggesting incomplete adoption of the Audit Group’s recommendations on performance measurement and review; and

(d)inefficiencies and confusions caused by the division of the WNWCE organisation from all other non‑operational property, which is currently developed and managed by the Estates Division.

4. The proposed Ordinance, set out in Annex A, sets out the new Board’s membership and remit, including objectives for the Board in relation to the non‑operational estate. These new objectives embed enhanced planning, reporting and performance measures within the relationship between the Finance Committee and the Property Board. These are expanded in the terms of reference (in Annex B), which set out the principal measures that will be adopted, including the submission by the Board of an indicative five‑year rolling business plan, and a more detailed one‑year business plan and budget, both for approval by the Finance Committee, and regular reporting to the Committee on performance against plan and against budget. To the extent not within the approval of the one‑year business plan and budget, further investment in individual projects would be subject to staged business case approval by the Finance Committee until final investment decision.

5. The Board would be directly accountable to the Finance Committee. This would help address challenges around outcomes, since the Finance Committee can, under its existing authority, control and monitor financial approvals and delegations to ensure that projects only proceed if they continue to meet the stated objectives at each stage in the evolution of development proposals. The Finance Committee already has formal responsibility for the non-operational estate and for capital investment in non‑operational development. It also has the expertise to interrogate financial plans, reports and performance for clear objectives linked to outcomes. The Finance Committee would then report to the Council. Any changes to the terms of reference would be submitted for approval to the Finance Committee and, if they concerned the parts in Ordinance, to the Council for submission by Grace.

This represents a modification of the Audit Group’s proposed governance structure, which has the Board part‑report to the Finance Committee, and aligns with the Audit Group’s overall finding that reporting lines should be simplified (and are typically linear for comparable public sector projects). In practice, splitting reporting between the Council and the Finance Committee has compromised clarity over which body has direct responsibility, and to whom the Board is accountable. The Council would continue to receive regular reports from the Finance Committee, including those concerning the Board’s work.

6. As the body with responsibility for the oversight of the whole non-operational portfolio, the new Property Board would assume the responsibilities currently assigned to the WNWCE Board. The membership of the current WNWCE Board (listed in Annex C) would be migrated across to the Property Board, taking advantage of the recent strengthening of external expertise on the Board. A new external chair would be appointed, replacing the current interim chairing arrangements.

7. This proposal is part of a set of changes to create a more effective governance structure for the oversight of the University’s entire (operational and non‑operational) estate. The Council has recently approved a reorganisation of existing resources to establish a Property Group within the Estates Division, which would support the new Board’s work. The Group will bring together the existing North West Cambridge development team with colleagues in the Estates Division to provide a new executive team focusing on property and infrastructure development activities within the University. It will be led by a Director of Property Development, reporting to the Director of Estates, who will be recruited in the coming months, replacing the currently vacant role of North West Cambridge Development Project Director. The Group will work to the Property Board on the development of projects in the non‑operational estate and to the Planning and Resources Committee in relation to those in the operational estate.

8. If this Report’s recommendations are approved, the Sites and Buildings Regulations will be updated to acknowledge the new Board’s powers and revisions, and published by Notice following approval by the Council, the General Board and the Finance Committee.

9.The Council recommends:

I.That a Property Board be established in the University, to be governed by the Ordinance as set out in Annex A.

II.That the Ordinance for the West and North West Cambridge Estates Board (Statutes and Ordinances, 2019, p. 122) be rescinded.

III.That Regulation 5 of the Ordinance on Financial Matters (Statutes and Ordinances, 2019, p. 1049) be amended to read as follows:

5. Regulations 2–4 shall not apply to the finance and property of the University Press, which shall be governed by Statute J and by the Ordinance for the Press Syndicate made under that Statute. Regulation 2 shall not apply in connection with the development, management and stewardship of the University’s non‑operational estate, which shall be governed by the Ordinance for the Property Board made under Statute A VI 1.

5 October 2020	Stephen Toope,Vice-Chancellor	Nicholas Gay	Mark Lewisohn
	Madeleine Atkins	David Greenaway	Ben Margolis
	Gaenor Bagley	Jennifer Hirst	Richard Penty
	R. Charles	Nicholas Holmes	Freddie Poser
	Stephen J. Cowley	Fiona Karet	Andrew Sanchez
	Sharon Flood	Christopher Kelly	Mark Wormald
	Anthony Freeling	Philip Knox	Jocelyn Wyburd

ANNEX A: Ordinance for the Property Board

Property Board¹

1. The purpose of the Property Board is to direct the development, management and stewardship of the University’s non-operational estate.

2. The objectives of the Board are:

(a)to optimise the positive net present value of the non-operational estate (and so financial returns to the University) through its development, operation and/or disposal;

(b)to pursue investment and development opportunities that:

(i)in all cases deliver the same or greater returns as high-quality projects in the external market with a comparable risk and return profile;

(ii)meet property-related strategic priorities that fall outside the University’s operational estate, including the University’s sustainability targets;

(iii)where appropriate, integrate non-operational property activities with core University uses, including research; and

(iv)where relevant, have secured approved funding from either internal or external sources such that the expected rate of return on the residual investment is the same or greater than the return an arm’s length commercial investor would expect for an investment of comparable risk;

(c)to work collaboratively with the wider University and foster community and innovation in its development of the non-operational estate; and

(d)to drive efficiency in the use of non-operational land and built estate.

3. (a) In the pursuit of its objectives, the Board may exercise the authority of the Finance Committee to invest capital and fund operating costs, but only at levels, and according to a process, that the Finance Committee shall specify in writing at least annually.

(b) In exercising its authority under Regulation 3(a), the Board has authority to exercise the powers of the University in the name of the University, except as the Statutes and Ordinances otherwise provide.

4. The membership of the Board comprises nine members appointed by the Council, for up to two consecutive terms of four years:

(a)an external chair with relevant expertise;

(b)six external members with relevant expertise; and

(c)two members of the Regent House.

At least one member of the Board in any class shall also be a member of the Finance Committee and at least one also a member of the Council (or at least one who is also a member of both the Finance Committee and the Council). For those member(s), if their Finance Committee or Council membership ceases, Board membership will simultaneously cease.

5. No business may be transacted unless a quorum of at least four members is in attendance, including either the chair or a deputy appointed from among the members in class (b), and at least one member in class (c).

6. The Board shall report to the Finance Committee through quarterly and annual reports and accounts, and/or by such other means as the Finance Committee determines. The Finance Committee shall report onward to the Council.

¹ For the terms of reference of the Property Board, see Reporter, [reference to be added].

ANNEX B: Terms of Reference for the Property Board1

Purpose

1. The purpose of the Property Board is to direct the development, management and stewardship of the University’s non‑operational estate.

Objectives

2. The objectives of the Board are:

(a)to optimise the positive net present value of the non-operational estate (and so financial returns to the University) through its development, operation and/or disposal;

(b)to pursue investment and development opportunities that:

(i)in all cases deliver the same or greater returns as high-quality projects in the external market with a comparable risk and return profile;

(ii)meet property-related strategic priorities that fall outside the University’s operational estate, including the University’s sustainability targets;

(iii)where appropriate, integrate non-operational property activities with core University uses, including research; and

(iv)where relevant, have secured approved funding from either internal or external sources such that the expected rate of return on the residual investment is the same or greater than the return an arm’s length commercial investor would expect for an investment of comparable risk;

(c)to work collaboratively with the wider University and foster community and innovation in its development of the non-operational estate; and

(d)to drive efficiency in the use of non-operational land and built estate.

Delegated authority

3. In the pursuit of its objectives, the Board may exercise the authority of the Finance Committee to invest capital and fund operating costs at levels, and according to a process, that the Finance Committee shall specify in writing at least annually.

4. In exercising its authority under paragraph 3, the Board has authority to exercise the powers of the University in the name of the University, except as the Statutes and Ordinances otherwise provide.2

Responsibilities

Recommends

5. The Board recommends to the Finance Committee:

(a)annually, a five‑year rolling business plan for the non‑operational estate that fulfils the Board’s objectives, together with a detailed one‑year business plan setting out the planned development activities and annual budget of the Property Group;

(b)as needed, business cases for all individual property development projects within the non-operational estate, in respect of new investment commitments, not already approved as part of the annual business plan or which are outside the Finance Committee’s delegation to the Board;

(c)as needed, any material changes to approved business cases for projects or existing uses of assets within the non‑operational estate; and

(d)annually, a report on the performance of the non‑operational estate, including a valuation, and audited financial statements.

Approves

6. The Board approves levels of financial authorisation for the Property Group.

7. The Board approves the establishment of any sub‑committees of the Board and appointments to those sub‑committees.

Supervises

8. The Board is responsible for the implementation and delivery of the approved five‑year rolling business plan for the non-operational estate, including:

(a)the development of the non-operational estate to plan and budget, including the delivery of approved projects in accordance with their individual business cases, through the Property Group;

(b)the efficient management of the non-operational estate to optimise returns on property assets, through the Property Group; and

(c)the performance of the Director of Property Development and Property Group against the annual business plan.

9. With the advice of its Property Advisory Committee, the Board is responsible for scrutinising all non-operational property proposals and transactions, including the performance of due diligence, risk assessment and financial analysis.

Membership

10. The membership of the Board comprises nine members appointed by the Council, for up to two consecutive terms of four years:

(a)an external chair with relevant expertise;

(b)six external members with relevant expertise; and

(c)two members of the Regent House, normally expected to be a Pro‑Vice‑Chancellor with an appropriate remit and a member of the academic community.

At least one member of the Board in any class shall also be a member of the Finance Committee and at least one also a member of the Council (or at least one who is also a member of both the Finance Committee and the Council). For those member(s), if their Finance Committee or Council membership ceases, Board membership will simultaneously cease.

11. The Board may invite other persons to attend for the whole of meetings of the Board or for particular items of business.

Meetings

12. The Board shall meet at least six times per year, and as often as required to fulfil its purpose. Meetings will have pre-circulated agendas and papers and agreed minutes and actions.

13. No business may be transacted unless a quorum of at least four members is in attendance, including either the chair or a deputy appointed from among the members in class (b), and at least one member in class (c).

14. In any vote, each member in attendance at the meeting will have a single vote and voting will be decided by a simple majority of the members in attendance. If two sides receive an equal number of votes, the chair may make a second, casting vote.

15. The Board may approve business between meetings by circulation, except that no business will be approved by circulation if any member requests that it be discussed at a meeting.

16. Conflicts of interest in relation to the business of the Board will be handled as follows:

(a)Members must declare to the chair any actual or perceived conflict of interest. The chair will determine whether or not a conflicted member should participate in discussion and/or decisions relating to relevant items.

(b)The chair must declare to the Board any actual or perceived conflict and appoint a deputy to take the chair for that item. The deputy chair will determine whether or not the chair should participate in discussion and/or decisions relating to relevant items.

(c)Conflicts of interest will be recorded in the minutes.

17. The business of the Board is confidential unless expressly stated otherwise. Members are required to respect that confidentiality.

Reporting and review

18. The Board shall report to the Finance Committee through quarterly and annual reports and accounts, and/or by such other means as the Finance Committee determines. The Finance Committee shall report onward to the Council.

19. The Board shall review its performance annually and its terms of reference every three years. The Board shall refer any changes to its terms of reference to the Finance Committee for approval, and any changes to those terms also in Ordinance to the Council and the Regent House.

ANNEX C: Membership of the West and North West Cambridge Estates Board

If the recommendations of the Report are approved, the current Board’s membership, listed below, would be transferred to the proposed Property Board and a new external chair would be appointed.

Mr Graham Matthews (Chair)	Director of Estates
Professor Andrew Neely	Pro-Vice-Chancellor; member of the Regent House
Mr Tim Harvey-Samuel	Member of the Regent House
Ms Sharon Flood	Member of Council; external member
Mr Roger Bright	External member
Mr Stephen Barter	External member
Ms Mary Parsons	External member
Ms Karima Fahmy	External member
Mr Richard Meier	External member
Mr Graham Orton	External member

Pending approval of the revised arrangements, the Director of Estates took over as interim Chair of the Board on 4 March 2020, replacing Mr Roger Bright. Mr Bright has agreed to remain an external member of the Board until 31 December 2020, to provide continuity.