Agenda item

To receive any questions relating to items on the Agenda from members of the public and replies thereto.

 

The following questions were received from members of the public:

 

Paul Elstone:

 

Question 1

During the July 2020 Cabinet Meeting the MDDC Leader stated “it was time to Lift the Veil” on 3 Rivers. Since then, the MDDC has continued to make full use of PART 2 constraints. Constraints that act as an iron curtain preventing an expected level of public transparency. More than two years later and with increasing MDDC financial exposure, the justification for this additional 3 Rivers loan is being hidden behind secret reports. The public are not permitted to see these documents and not even know their titles! Will the Council Leader please do what he can to “Lift the Veil” of secrecy now?

 

Question 2

Given that the MDDC loan agreements with 3 Rivers are on an individual project basis and not on a group basis, how much of the additional funding request of £2.3 million is allocated for the St Georges Court Tiverton Development?

 

 

 

Question 3

Cabinet are being asked to lend an additional £2.3 million to 3 Rivers when MDDC’s own risk reports show 3 Rivers as a high lending risk. Are Cabinet Members aware that an external Credit Report available in the public domain dated July 2021 also deemed 3 Rivers a high credit risk?

 

Question 4

How can MDDC Officers and Cabinet Members reconcile the following two statements?

 

Statement 1

Grant Thornton state in the latest MDDC Audit: Report (Page 9) “For MDDC we have concluded that the greatest risk of material misstatement relates to Group Revenue”. “We have therefore identified the occurrence and accuracy of 3 Rivers trading income as a significant risk of misstatement and a key audit matter”.

 

Statement 2

Cabinet Members briefing notes (Page 396) and in justification for the additional funding of £2.3 million states the following: “strengthened expected sales income of the properties which should allow for net profit and loan repayment profiles in line with previously declared expectations”

 

Question 5

Have Simpkins Edwards, as the 3 Rivers newly appointed internal auditors, completed a full Audit on the 3 Rivers business. If so, has their Audit Report received full oversight by Grant Thornton as the MDDC Auditors and has it also been made available to MDDC Councillors?

 

Question 6

It appears the St Georges Court impairment amount of £790,000 is being written off over a period of 5 years. Can it be confirmed this is not the case and that the impairment will not be written off by MDDC at any time?

 

Question 7

Can it be confirmed that no portion of the additional St Georges Court funding now requested will also be added to the impairment amount going forward?

 

Question 8

In terms of 3 Rivers revenue stream predictions, are Cabinet Members aware of how many of the 39 St Georges Court properties have been sold off plan?

This given the latest completion date being given is just 2 months away, November 2022. My understanding is the number is very low, perhaps even with just one flat having been reserved but not confirmed as sold.

 

Nick Quinn

 

Question 1

In paragraph 3.2 of this report, the recharges paid to the Council are shown as £0.387M. But, the figure previously given to Audit Committee and Cabinet, in November 2021, for recharges already received by the Council was £0.452M (this was confirmed in a clarification report to Scrutiny Committee in February 2022). This inconsistency raises yet another question on the reporting of financial transactions with the Company.

 

Why is the Recharges Paid figure shown in this report, £65,000 lower than the amount previously reported, as already received, in November 2021?

 

Question 2.

In paragraph 3.3, the net benefit of 3RDL is calculated as £1.52M.

However, this amount has only been achieved by subtracting a very reduced impairment figure. All amounts which have been, or will be, “written-off” are a loss to the Council; so the whole of the impairment figure should have been subtracted from the total benefit calculation.

 

Why has the full impairment of £790,000 not been subtracted in the

calculation of net benefit?

 

Question 3

I am very concerned with the amount of public money that is being put at risk in loans to 3RDL. A further loan of £2.3M, when added to the £19.66M already promised, results in a massive exposure of £21.96M.

 

Have the Council's Audit Committee, or External Auditors, been consulted on this loan; or whether an exposure risk of nearly £22M with this single Company, is appropriate, advisable or acceptable?

 

 

Hannah Kearns:

 

Question 1

In the report, it says the Cabinet have received regular project updates from 3 Rivers which have identified additional funding pressures on two (2) of its current live schemes. I have looked through past Cabinet papers and the last regular update was in April. I cannot find any mention of pressure on live schemes.

 

Will the Cabinet please provide the details of when these regular updates were presented to Cabinet and indicate which sections refer to specific additional cost pressures on these two schemes?

 

Question 2

 

The report gives various reasons for why 3 Rivers needs an additional loan of £2.3 million, including increases in price of material and labour. But it also talks about hostage pricing. If 3 Rivers are being held hostage, then it seems that 3 Rivers did not put proper contracts in place, leaving them open to unreasonable increases. As usual, it seems their only way out of their mess is to come to the inexhaustible money tree that is this Council.

 

Why did 3 Rivers not have in place proper contracts for these two developments to stop such a large additional, hostage, costs being demanded to achieve completion?

 

Question 3

A Part 2 paper is said to set out how this £2.3 million will be used to complete the two current sites. I take it that these would be St Georges Court and the development at Bampton (a total of 48 properties). An extra £2.3 million across 48 properties means an extra £48,000 cost per property.

As this Part 2 paper is hidden from the public, will Cabinet please state whether the asking price of these properties will bear an additional £48,000 or will the Company have to bear this additional cost?

 

Question 4

The report says that the Council 2022/23 budget includes a sum of £0.578 million for the repayment of interest and recharges. With the recent rises in Interest rates, 3 Rivers are now paying 6.25% on loans of £15 million (soon to be £18 million if this report goes through). Interest rates and consequential charges will very likely to rise significantly before year end and into 2023.

 

If the Cabinet is going to grant the request for a loan of £2.3 million, will Cabinet assure the Public that 3 Rivers will only use this money to pay for materials and work to complete these two sites and that none of it will be used to pay interest and charges back to the Council?

 

Question 5.

The report proposes to use of £0.58 million previously agreed for projects. The funding allocation agreed in previous Business Plans was for specific projects and it has not been made clear how these projects will be affected. No proper business case has been put forward for this and the 3 Rivers Business Plans will not be revised until this November.

 

Can the additional loan of £0.58 million be set aside at this meeting, so that it can be considered properly as part of the revised 3 Rivers Business Plan in November?

 

The Leader thanked the Questioners and noted that answers to these questions would be given at an appropriate time during the meeting.