Issue - decisions

The Chair ruled that under 100B(4)(b) of the Local Government Act 1972 the late item be considered despite not being made publicly available for this committee five clear days prior to the meeting.

 

The following item on the agenda related to a key decision that was not included on the Forward Plan for the whole 28-day requirement before the meeting. This was because it wasn’t clear whether contracts and affordable housing agreements for Fanshawe, ATS/Murketts and Newbury Farm would be signed and sealed in time for the March 31st S&R Committee. As it became clear that there was a possibility of sealing all contracts in time, a paper was submitted.

 

With the permission of the Chair of Strategy and Resources Scrutiny Committee the urgency procedure was invoked to suspend the 28-day requirement so that the item can be considered at Committee, so it was open to scrutiny and debate rather than a decision being made through the out of cycle process.

 

Matter for Decision

The council has acted in the past as the development debt provider to fund the development of regeneration and housing schemes delivered by Cambridge Investment Partnership (CIP). To date this partnership has already delivered over 1,000 new homes since 2018, across 23 sites, including 732 council homes, with 656 being net new council homes.

 

As stated in the CIP Members Agreement, the development costs for mixed tenure schemes are funded by 60% of debt, and 40% equity funded internally by Hill Partnerships and the council as investment partners.

 

Development financing has been in place for Mill Road and Cromwell Road. Since then, there had been considerable change in public sector lending rules since prior funding arrangements were agreed between the council and CIP. Most notably the requirements of the subsidy control principles set out in the Subsidy Control Act / (Gross Cash Amount and Gross Cash Equivalent) Regulations 2022.

 

The Council proposed to continue to fund the development of regeneration and housing schemes delivered by Cambridge Investment Partnership (CIP) whilst acknowledging the changes required to be compliant. Future loan facilities will be subject to a covenant, to the effect that any draw down is to be utilised solely for the purposes of Housing delivery, including regeneration activities, new build development and delivery of affordable housing.

 

Decision of Executive Councillor for Finance and Resources  

Recommended to Full Council to:

      i.          Approve a capital budget for 3 loan facilities amounting to £18,500,000, to be provided to Cambridge Investment Partnership (CIP) and to be utilised solely for the purposes of Housing delivery, including regeneration activities and new build development at Newbury Farm, ATS/Murketts Histon Rd, and Fanshawe Road.

     ii.          Delegate authority to the Chief Finance Officer to make arrangements for capital financing of the loans in accordance with relevant statutory guidance and the council’s Treasury Management Strategy and Capital Strategy.

   iii.          Approve the setting of interest rates applicable to the 3 loan facilities at 3.5% margin above 5-year Gilt Rates.

   iv.          Delegate authority to the Chief Finance Officer to agree the detailed terms of the loans, including (but not limited to) availability period, drawdown dates and arrangements, pricing dates, and restrictive covenants.

 

Reason for the Decision

As set out in the Officer’s report.

 

Any Alternative Options Considered and Rejected

See Officer’s report.

 

Scrutiny Considerations

The Committee received a report from the Assistant Director of Development.

 

The Assistant Director of Development said the following in response to Members’ questions:

      i.          Three loans amounting to £18,500,000 were secured on land for each development. The development program showed loans would be paid after two years for each development. The return on investment should include the land value and purchase cost.

     ii.          The CIP bought land which the loans were secured against, and would pay this back quickly, so the risk (ie possible decline in land value) transferred from the City Council to CIP.

   iii.          Value for money options had been reviewed to ascertain if the City Council was paying the right amount for land/housing/development.

 

The Chief Finance Officer said the following in response to Members’ questions:

      i.          The loans were a fifty-fifty joint venture with CIP. Regular scrutiny committees and project delivery meetings occurred so accounts were monitored.

     ii.          CIP had never defaulted on loans so they were considered an acceptable investment.

   iii.          Officers had sought advice on how to interpret MRP guidance. They did not expect to charge MRP on the loans. If money was lost through land value decline, the City Council would impose an additional charge to make up the difference.

 

Councillor Bick sought clarification on the number of affordable homes to be delivered and if a restrictive covenant was required to limit how homes could be marketed so city residents could be prioritised instead of overseas investors.

 

The Executive Councillor for Finance and Resources said Hills brought agility to the housing delivery process. The private sector wanted to work with the public sector although they could get comparable borrowing rates elsewhere. The partnership was to deliver housing in line with market conditions ie quality and affordable.

 

The Assistant Director of Development said a policy was in place not to market homes offshore. He referred to the sales and marketing subcommittee policy that the City Council and CIP would not undertake offshore marketing of homes.

 

The Committee unanimously resolved to endorse the recommendations.

 

The Executive Councillor approved the recommendations.

 

Conflicts of Interest Declared by the Executive Councillor (and any Dispensations Granted)

No conflicts of interest were declared by the Executive Councillor.