Issue - meetings

Report to follow.

The Leader of the Council raised that at the last Cabinet meeting (22 September 2022) Cabinet resolved not to accept the recommendation from the Scrutiny Committee in relation to the Call-In of the 6 September Cabinet decision on ‘Three Rivers Developments Limited – Funding Request’.

For avoidance of doubt the Leader asked the Cabinet if they were content to confirm the decision made on the 6 September.

RESOLVED: ThatCabinet confirms the decision of the 6 September “That it be agreed to increase the current loan agreements by a total of £2,280,784 to cover; the identified project overspends on 2 projects included in the previously agreed Business Plan funding envelope agreed on the 30 November 2021 and increased the working capital loan agreement. In addition, it be agreed that a transfer from a future projects budget of £0.58m in order for the business to work up new potential projects to replace the out of District projects that had to be removed from the company’s business plan after changes to the Treasury’s Public Works Loan Board loan arrangements.”

(Proposed by the Leader)

(Councillor S Penny Abstained)

Note:

The Cabinet Member for Finance announced that he had become an independent councillor with immediate effect.

To consider a report from the Deputy Chief Executive (S151) considering the recent funding request that has been received from 3 Rivers Development Ltd. 

The Cabinet had before it a report from the Deputy Chief Executive which sought approval for a funding request from 3 Rivers Development Limited.

The Cabinet Member for Finance who raised the following:

·         This report and associated recommendation is for Cabinet to authorise an increase to the current loan agreements to 3RDL of £ 2,280,784.  This is for 3 specific purposes:  to deal with projected overspends on the 2 active projects at St George’s Court and Bampton, to increase the working capital in the business, and to allow the business to work on alternative prospects following the revised Treasury guidance on out-of-District projects.  It is important to stress that these increases do not breach the overall funding envelope agreed within the Council’s budget, in fact, far from it.  Rather it reflects a pragmatic rescheduling of finance arising from the impact of external factors beyond the business’s control.

·         That the lending envelope approved by full council was £19.66m Lending envelope for 2022/23. The request for an additional £2.3m would put the total projected spend at circa £12.7m, £7m under the enveloped budget.

·         Regular updates to Cabinet have highlighted the inflationary cost pressures on the business arising from materials and labour challenges in various guises.  These have had an inevitable impact on the 2 live projects, driving these loan increase requests.  On the other hand, the housing market in the region has been vibrant, reflected in an increase in sale prices.  Overall, project outturns, assuming somewhat pessimistic sales forecasts, remain broadly the same.  Full details are in the Part 2 element of the report.

·         Both these projects fit within Treasury guidance, meeting MDDC policy to provide housing and regeneration in area.  As the Lender, the Council was interested in risks and returns on its capital investment.  Were Cabinet not to approve the loan increases, to cease funding the projects prior to completion as some propose, there would be a sudden and significant threat to the Council’s investment.  By carefully proceeding, by contrast, there is no notable change in Council capital risk by increasing loan value, while interest returns remain very beneficial to overall Council finances, particularly noting my previous report.

·         It has always been the goal for the business to be a long-term net positive contributor to the Council’s finances whilst fulfilling policy objectives. The change in Treasury guidance earlier this year brought an unwanted change to the business’s geographical ambit and forced the abandonment of several prospects one of which was very advanced.  As, in the true sense of the words, a going concern, the business must refocus on a revised pipeline of work.  A sum of £580k was sought to explore new sites, as set out in the Part 2 part of the paper, to make up for the loss of a number of opportunities. As such this is no more than a redirection of existing budget allocation.

·         Section 3 of your report provides an overall summary of the Council’s financial position with regard to the business, indicating a healthy  ...  view the full minutes text for item 55