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:

 

Mr Nick Quinn:

 

My questions concern Agenda Item 8 – The 3 Rivers Soft Closure Update Report Paragraph 2.4 lists a number of key actions to be carried out by the end of March 2024, my first questions are on these actions:

 

The assets/holdings listed as actively being transferred include "Knowle Lane, Park Nursery Expenditure and Working Capital".

 

Question 1:

The Council purchased Knowle Lane on February 2nd and the other two items were previously ‘impaired’ loan amounts, not assets – so can this statement be explained please?

 

Response from the Cabinet Member for Finance

The key actions listed in 2.4 made reference to assets/holdings that will be transferred by the 31/3/24. Some items had already been completed and some were still subject to completion. This was a simple statement to give reassurance that they would all be completed by the 31/3/24.

 

Question 2:

Has the Purchase of St Georges Court been completed yet?

 

Response from the Cabinet Member for Finance

No St Georges Court has not been completed yet. It was currently on target to complete next week.

 

It is also stated that “the management of assets on behalf of the General Fund will be transferred to a new external management company”.

 

Question 3:

Is the Council setting up this “New External Management Company”?

If Yes?

 

Response from the Cabinet Member for Finance

No, the Council was simply looking to procure an external letting agent for 4 Council owned residential flats/houses.

 

Question 3(a):

Will it be set up properly, and implement the recommendations of the Scrutiny Committee ‘Lessons Learned’ report on 3 Rivers?

 

Response from the Cabinet Member for Finance

This would be awarded to an existing lettings company which would have its own governance arrangements.

 

Question 3(b):

Will the Director, or Directors, be External?

 

Response from the Cabinet Member for Finance

Yes as it is an external company 

 

 

Question 3(c):

By what date will this be set up?

 

Response from the Cabinet Member for Finance

The external letting company and these arrangements would be in place by the 1/4/24.

 

Paragraph 3.1 puts the projected total loss at around £5.1Million - dependent on sales and the valuation of the transferred assets.

 

Question 4:

Has the interest on loans continued to be added, to the outstanding amounts, during this close-down process?

 

Response from the Cabinet Member for Finance

The Council had continued to charge interest against all live projects.

 

Question 4(a):

What is the current ‘Total Outstanding Amount’ owed to the Council, by 3 Rivers, inclusive of interest?

 

Response from the Cabinet Member for Finance

As at 1/3/24 the total gross outstanding amount was £19.0m. Obviously, this sum would significantly reduce as loans were cleared/repaid as assets were transferred and/or sold by the 31/3/24.

 

Question 4(b):

How is the value of each asset being assessed?

 

Response from the Cabinet Member for Finance

By a combination of: external formal valuations, costs incurred to date and reference to selling agents advice.

 

Paragraph 4.1 states there must be a 3 month “no-trading” period and asks Cabinet for a reduction to one Director. So, 3 Rivers will continue as a Company until at least the end of June and its Director will have to be paid.

 

Question 5:

Does the projected £5.1Million loss figure include these continuing?

Director payments and any costs, and assumed liabilities, of final closure?

 

Response from the Cabinet Member for Finance

Assessment had been made of the total costs and the revenue from sales in order to deliver the closure of the company. Clearly, some of these were still based on market estimates and would vary, but at the current point were deemed materially correct.

 

Mr Paul Elstone

 

Each of my questions relate to Agenda Item 8- 3 Rivers Soft Closure.

 

Question 1:

There have been various and confusing figures provided in terms of the TOTAL losses incurred due to 3 Rivers.  £5.1 million being the latest. Given that previously reported  impairments do not appear to have been included in the latest number, can the S151 Officer pleases confirm the exact  amount of losses incurred by this Council to date ?

 

Response from Cabinet Member for Finance:

£5.1m was the first publically announced figure provided that estimates the full trading loss of 3Rivers – so it was interesting to reflect on your comments about various and confusing figures. The figure that had been provided in the report you refer to had been produced by the Council’s S151 Officer and would include all previous calculations on impairments. As some of these calculations were still commercially sensitive a part 2 appendix had been included which showed precisely how the £5.1m had been calculated, including any previous impairment calculations. It should also be noted that these prior impairments and associated loss calculations were audited by the Council’s external auditors.

 

Question 2:

Given a totally different set of numbers were provided to the Planning Committee in terms of Haddon Heights property prices when the S106 contributions were decided, has a provision been made for any S106 payment for Affordable Homes for Haddon Heights.  If not, why not?

 

Response from Cabinet Member for Finance:

The housing market was clearly in a different place than when the initial viability assessment was prepared. It was also worth reflecting that during the project build out of this development that both material and contractor costs had also risen significantly. In order to reassure the questioner, I can confirm that the Council would need to ensure that all company liabilities, including any potential S106, were assessed, as part of the company closure process.

 

Question 3:

 

With the income from the 2 sold properties and the 2 sales still to be completed – will the Council have to set a very high cash equivalent figure, for the transfer of the 5 unsold properties, so they can say this development did not produce yet another financial loss?

 

Question 4:

The report, at paragraph 2.3, stated that:  “A small working group of Council Officers and 3 Rivers Directors who are working to ensure that everything is completed by 31^st March 2024 and Officers have continued to secure external advice as required”.

On how many occasions have you contacted external advisors for advice?

Who were the organisations?

What external advice have you actually received?

 

Mr Barry Warren

 

My first question relates to item 4 on the Agenda – Minute 103. My questions, which I had submitted in advance, start on page 9.  All my questions are shown in the minutes correctly. With the exception of the answer to question 2, all of the answers shown in the minutes are verbatim, as can be heard on the audio recording of the meeting - including your political statement of some 139 words before question 7 was addressed. 

The answer shown in the minutes to question 2 is “We are not aware of contraventions or discrepancies with the approved planning permission.”

The answer given by the Cabinet memberfor Planning, which was repeated, can be heard on the recording of the meeting. He said: “Yes they have been complied with. But if the former leader of this Council has material evidence to indicate that they have not, I would be pleased for him to write to me, so that I may investigate”.

This is completely different from the answer shown in the minutes.

Question 1:

Will Cabinet please have this minute corrected to show the actual answer given, before approving the minutes as an accurate record?

Response from the Leader of the Council:

Yes, when the Leader puts forward to Cabinet the minutes this amendment will included to answer to the question at the previous meeting correctly.

 

Paragraph 2.3 refers to a ‘Small working group of Council Officers and 3 Rivers Directors.’

Question 2:

Who are the Council Officers in the Group please?

Paragraph 2.4 refers to transfer of assets to a new external management company.

Question 3:

What is the name of this company so that, in the interests of openness and transparency, interested parties can be aware of Directors etc.?

Paragraph 3.1 makes reference to projected losses being funded by ‘transferring some funds from previously agreed earmarked reserves.’ In a recent press article by the Leader, and at the recent Council meeting, he was critical of the previous administration in using £600,000 from reserves to balance the budget - which he voted to approve.

Question 4:

The budget for 2024/25 has been approved which uses reserves to cover losses so what is different this year from last year?

Paragraph 4.1 refers to a reduction of Directors to ONE to finalise any remaining transactions.

Question 5:

Who will that Director be and what procedures will be in place to ensure that the interests of the residents of Mid Devon are protected from any further losses?