Agenda item

Further to Minute 23 of the Cabinet, the City Council considered a report of the Deputy Chief Executive (Place) on the proposed development of a regional materials recycling facility with partnering authorities. A site location plan was attached as an appendix to the report.

A corresponding private report was also submitted to the meeting setting out the commercially confidential matters of the proposals (Minute 44 below refers).

The City Council currently paid c.£1.6million per year to the private sector for the treatment of recyclable material collected in Coventry (including haulage to the treatment facility in London and any recyclate value benefit). This cost had increased substantially over the last five years. Evidence from recent procurement exercises in both Coventry and neighbouring authorities showed that this upward trend of cost was likely to continue with substantial rises as the private sector continued to move the risk of end market prices and legislation more and more to local authorities.

In 2017/2018 a feasibility study was undertaken to consider the technical and economic viability of developing a Material Recycling Facility to serve Coventry City Council (CCC), neighbouring authorities, and commercial businesses across the region. This study indicated a positive business case, subject to more detailed information. During the last 12 months a detailed Business Case was developed to determine the viability of a Materials Recycling Facility, which concluded that a facility with a capacity of 120,000 – 175,000 tonnes would be commercially viable. CCC currently collected c.24,000 tonnes of recyclable waste per annum.

To make the construction of a Materials Recycling Facility financially viable and, in order to share the risks and benefits of this project, a formal agreement has been formed with five other local authorities: Nuneaton and Bedworth Borough Council; North Warwickshire Borough Council; Rugby Borough Council; Solihull Metropolitan Borough Council; and Walsall Council.

The Business Case considered in this report had therefore been developed assuming the recyclable materials from each of these authorities would be committed to the Project, thereby making the facility cost effective, whilst leaving some tonnage head room for commercial growth and the future needs of the Partner Councils, or the addition of more Partner Councils.

The existing Local Plan had made provision for future waste management facilities in Coventry by allocating the site adjacent to the current Energy from Waste plant on Bar Road. The project described within this report proposed to use c.50% of this site to develop the Material Recycling Facility.

RESOLVED that, subject to the consideration of the private report on this matter, the City Council:

a)  Approves the use of its powers under Section 12 of Local Government Act 2003 and Section 1 of the Localism Act 2011 to establish AssetCo between the Council and the Partner Councils and to acquire shares in the AssetCo.

b)  Approves a loan facility to AssetCo on commercial market terms to facilitate the construction and operation of the Materials Recycling Facility.

c)  Approves expenditure under Joint Working Arrangement (2) in respect of the Council’s share of development costs up to the point of financial close, to be funded from earmarked reserves.

d)  Delegates authority to the Deputy Chief Executive Place and the Director of Finance and Corporate Services, in consultation with the City Solicitor and the Cabinet Member for City Services, to finalise and agree the detailed terms of the transaction with AssetCo. The authority under this delegation shall also include:

i.  the power to enter into the relevant legal agreements and associated documents necessary to complete the transaction with AssetCo;

ii.  (in relation to the management of the loan facility) the power to negotiate and agree variations to the terms of the loan facility;

iii.  the power for the Council to provide such services as is deemed necessary (e.g. HR and/or Payroll) to AssetCo;

iv.  The power to enter into the Service Level Agreement with AssetCo committing the Councils waste tonnage for 20 years.

e)  Approves the addition to the Councils approved capital programme for the purposes of delivering the Materials Recycling Facility.