Decision - Brighton & Hove Seaside Community Homes Ltd – funding options and consent

(1)         That Cabinet notes the outcome of the recent discussions with officials at CLG and for the reasons set out in paragraph 3.12 approves the adoption of the general consents route as the basis for securing the benefits from the LDV.

(2)         That Cabinet notes the method for determining best consideration for the property leases.

(3)         That Cabinet notes the latest capital receipt projections and the reasons for the reduction since the September 2008 report as set out in paragraphs 3.18 to 3.21 and appendix 3.

(4)         That Cabinet approves the risk sharing matrix as set out in appendix 5 as the basis for a financial offer to the LDV.

(5)         That Cabinet approves additional resources of up to £0.2m temporarily funded from General Fund reserves as detailed in paragraph 3.25 needed to further develop and finalise the general consents route and to allocate an appropriate budget to the LDV Board to undertake relevant work to deliver the project including negotiating with funders.

(6)         That Cabinet notes that Cabinet and Full Council have already agreed that the Director of Adult Social Care & Housing be authorised, after consultation with the Cabinet Member for Housing, to take all steps necessary or incidental to the formation of the LDV and implementation of the proposals generally save as to decision on funding options.

(7)         That Cabinet authorises the Director of Adult Social Care & Housing to take all steps necessary or incidental to implement the proposals in this report.

(8)         That an offer be taken to the LDV Board within four weeks of this decision and that a letter be written to Board members for their meeting on 18 January confirming the timetable.

The reasons for the specific recommendations are set out in detail in the body of the report.

1.      The report discusses in detail and shows the implications for the general consents route but there remains an option not to use the general consents and continue just to seek express consent from the Secretary of State. The capital receipt would be significantly higher under private funding for the reasons set out earlier in the report and higher still if express consent was given to allow the council to fund the borrowing of the LDV. However, it is unclear whether CLG officials could ever be persuaded of the merits of the proposal based on the extensive correspondence to date and even if they were, there are no guarantees of either when or if the Secretary of State will give his approval. The proposal to use the general consents route provides the council with greater certainty and control in contrast to the potential indefinite delay and possibility that no receipt would be generated by relying solely on express consent.

2.      The application for express consent will not be withdrawn and the option remains to pursue this route again at a later date if there are indications of a change in view from CLG.

3.      The HRA Business Plan profile is that significant investment is needed over the next 3 years to meet decency and after this period the level of investment is spread fairly evenly.  Therefore, if this option was not pursued the HRA would need to evaluate whether it could afford to borrow instead.  Borrowing £10 - £15 million over 25 years would cost approximately £0.650 - £1 million per annum which would need to be funded from both the Major Repairs Allowance and savings in the HRA revenue account.  It should be noted that over the term of the borrowing the HRA would pay approximately £6 – £9 million in interest charges.

4.      Further options will be explored to ensure that the receipt is maximised commensurate with risk.