Agenda item

Further to Minute 92 of the Cabinet, the City Council considered a report of the Director of Streetscene and Regulatory Services which indicated that in September 2019 the Council approved a report to support the procurement, financing, construction and operation of a material recycling facility (MRF) to be based in Coventry.  The facility at the time was in partnership with 7 other surrounding authorities (Solihull MBC, Walsall Council, Nuneaton and Bedworth Borough Council, Rugby Borough Council, North Warwickshire Borough Council), together the Partner Councils and at such time, Stratford-on Avon District Council as a feedstock supplier council only.  The respective shareholding for each Partner Council is based on the total (2018/19) tonnage of recyclable material provided by each authority – for Coventry this was 27.72% in September 2019.

The report detailed the evolution of the Project over the course of the last 18 months, including the addition of 2 further Partner Councils (with Stratford-on-Avon District Council converting its status from a feedstock supplier council into a Partner Council and the addition of Warwick District Council as a Partner Council), associated increase in facility capacity and building footprint to accommodate a technologically advanced intelligent facility. This solution will mean the Coventry MRF will be able to deliver higher purity levels of recyclate, as well as the flexibility to ensure it can react to legislation and consumer habits and the introduction of new and changing material streams. The revised annualised net savings to the Council are c£1.4m per year, which is £0.52m pa greater than contemplated within the September 2019 business case albeit with a higher capital investment requirement. A comprehensive Briefing Note, which detailed developments in the MRF industry was appended to the report.

As the procurement exercise is nearing conclusion, the  report  sought approval for the additional capital financing required, by way of a commercial loan, to the special purpose Company to be incorporated to operate the facility (AssetCo) which will be incorporated as Sherbourne Recycling Limited).  Additional funding is required to meet the requirements detailed within the report and as summarised in the paragraph above.

A corresponding private report was also submitted to the meeting setting out the commercially confidential matters of the proposals. (Minute 112 below refers.)

RESOLVED that the City Council:

1)  Approves the sum as detailed in the corresponding private report for a loan facility from the City Council for the purposes of delivering the Materials Recycling Facility. 

2)  Delegates authority to the Director of Streetscene and Regulatory Services and the Director of Finance, in consultation with the Director of Law and Governance and the Cabinet Member for City Services and the Cabinet Member for Strategic Finance and Resources, to finalise and agree the detailed terms of the transaction with AssetCo. The authority under this delegation shall also include:  

·  the authority to enter into two payment guarantees on

  behalf of AssetCo with the Civils Contractor and the

Process Contractor;

·  the authority to incorporate AssetCo and to enter into

a shareholders' agreement with AssetCo and the other Partner Councils in respect of the governance arrangements of AssetCo;

·  the authority to enter into the Service Level Agreement

with AssetCo committing the Councils' waste tonnage for 25 years; and the authority to enter into the Loan Agreement and ancillary security documents with AssetCo for a loan over a repayment period of 25 years.

(Note: Councillor R Bailey abstained from voting on this item and asked that this be recorded)