Agenda item

Alliance Homes (Rother) Limited (AH) was established to aim to complete 1,000 new homes by 2035.  AH’s approved Business Plan sought to deliver a programme of 335 new homes at an estimated cost of £80m and these costs were reflected in the Capital Programme, approved in February 2021.  It was anticipated that most of these costs would be met through loan funding at commercial rates provided by the Council as the sole Shareholder.

Dependant on cashflows, it was not expected that the maximum lending facility of £80m would be needed, however the capacity to fund the programme was necessary to enable AH to enter into contracts with development partners.  Projects would be staggered to ensure cost-effective, efficient development which could be appropriately resourced.

Council lending was likely to be short-term on the basis that the new homes would be disposed of to either a registered social landlord (affordable homes) or direct to market, which had the benefit of recycling receipts from the disposals into repaying borrowing or further schemes to minimise the cost of borrowing.

Concern was aired regarding openness / transparency / process issues and the significant levels of funding required and whether full Council approval should be sought.  Members were reminded this was a line of finance, over a period of time, that would enable the Council to provide homes for the district.  It was also clarified that the Business Plan and principle of spending £80m had already been formally approved and adopted by the Council.

Cabinet was supportive of the recommendations proposed and agreed that the Council entered into a separate loan agreement for each scheme delivered by AH subject to the overall limit of £80m.  Each loan would be subject to specific conditions as determined appropriate by the Finance Manager, as well as state subsidy compliant.  It was also agreed that delegated authority be granted to the Chief Executive and Finance Manager in consultation with the Portfolio Holder for Finance and Performance Management to approve each loan.  It was noted that advice would be sought from the Council’s treasury advisors regarding the most appropriate loan structure to adopt.  Cabinet also agreed that the Audit and Standards Committee and Overview and Scrutiny Committee should be encouraged to review and scrutinise the borrowing and activities of Alliance Homes (Rother) Limited.

Cabinet was pleased to note that all projects would be developed using modern energy efficient methods which would contribute towards the Council’s carbon reduction ambition and acknowledged the work of the Development Projects Manager in progressing the Blackfriars project.

RESOLVED: That:

1)    the provision for a lending facility of up to £80m to Alliance Homes (Rother) Limited to build out residential schemes, in support of their Business Plan 2020-23 (and any subsequent update) be approved;

2)    the approval of each loan be delegated to the Chief Executive and Finance Manager, in consultation with the Portfolio Holder for Finance and Performance Management;

3)    separate loan agreements, secured on the assets of Alliance Homes (Rother) Limited, be entered into for each specific residential scheme, the terms and conditions of which to be approved to the satisfaction of the Finance Manager;

4)    the £80m lending facility as set out in the approved Capital Programme be funded through internal and external borrowing as appropriate; and

5)    the Audit and Standards Committee and Overview and Scrutiny Committee be encouraged to review and scrutinise the borrowing and activities of Alliance Homes (Rother) Limited.

(When it first became apparent, Cllr Drayson declared a Personal Interest in this matter as a Director of Alliance Homes (Rother) Limited and remained in the meeting during the consideration thereof).