Copyright Bromsgrove District Council
Minutes:
At the start of the debate around this item Members discussed whether there was a need for the recommendations arising from the Cabinet meeting held on 31st October 2018 to be considered in exempt session. The Executive Director of Finance and Corporate Resources explained that the capital costs of the programme were considered to be appropriate to consider in exempt session as these figures would be sensitive when the Council went through any subsequent procurement exercise. However, due to the financial implications involved in establishing the housing company referred to in the papers Councillor P. McDonald suggested that the decision should be considered in a public session of the meeting.
On being put to the vote Members agreed to consider all the information arising from the Cabinet meeting on 31st October 2018 in open session.
The recommendations detailed in the minutes of the Cabinet meeting held on 31st October 2018 were proposed by Councillor B. Cooper. These were seconded by Councillor C. Taylor.
In proposing the recommendations Councillor Cooper noted that the Cabinet had resolved various matters related to this project, including the approval of the indicative plans and projected financial outcomes for the development project and the agreement in principal to set up a housing company to manage the retained housing stock. The Cabinet was asking Council to approve the necessary financial measures for the scheme. The total development costs were estimated to be £8.072 million. The Council proposed to fund this with the £1 million grant from Homes England and with £7.072 million borrowed from the Public Works Loan Board (PWLB). By agreeing to these financial recommendations, Council would allow the start of this project, with the aim to deliver at least 61 homes in Bromsgrove, and to create an income stream for Bromsgrove District Council from the 37 market rental properties that would be retained by the housing company.
During consideration of these recommendations Councillor P. McDonald proposed an amendment to the recommendations. This amendment was seconded by Councillor M. Thompson.
The amendment proposed the following:
“Action in respect of the Burcot Lane site should be placed on hold for 8 weeks to allow for meaningful discussions with Bromsgrove District Housing Trust (BDHT).”
In proposing the amendment Councillor McDonald noted that the Council had already borrowed money in the past and the proposals to introduce a capital programme of £8.072 million would extend the Council’s debt. Councillor McDonald commented that a board of directors would be required for the new housing company and he expressed concerns about who would be appointed to the board. The land at the Burcot Lane site provided an opportunity for the Council to develop much needed social housing. There were more houses in Bromsgrove district available for sale at a market rate than social housing and there was less affordable housing available in the district than in the rest of the county.
In discussing the amendment Councillor Hotham commented that a number of Members had not received the exempt papers in time for discussion at the meeting of the Overview and Scrutiny Board when the matter had been considered. As such there had not been time to date to clarify the borrowing figures detailed in the report. Councillor Hotham also questioned whether any stress testing had been undertaken to assess the potential impact of events such as Brexit on the interest rates that the Council would have to pay back on any borrowing.
The Executive Director of Finance and Corporate Resources explained that the total cost would be £8.072 million. This would include £3.962 arising from the sale of the land and a debt of £4.110 million. Officers had considered a number of scenarios in relation to the interest payments. However, as the Council would be borrowing from the PWLB on a long-term basis there would be a fixed rate of interest.
Councillor S. Baxter noted that the proposed development contained 18 units of affordable housing, including 10 flats, together with a number of houses sold at the market rate and on the basis of shared ownership. Similarly Councillor S. Shannon raised concerns that the Council had the lowest affordable housing rates in the county and he suggested that shared ownership arrangements would not benefit those on low incomes. In response Councillor G. Denaro explained that the 18 affordable units had been included in the plans to comply with requirements from Homes England that 30 per cent of the development should be affordable.
In response to the amendment the Portfolio Holder for Planning Services and Strategic Housing commented that he agreed that there was not enough social and affordable housing available in the district to meet demand. However, a delay of 8 weeks could place the grant funding from Homes England at risk. Discussions had already been held with BDHT about the available options and they would continue to take place as BDHT was the Council’s preferred provider. The houses that would be developed at the Burcot Lane site would be a mixture of market, social housing and affordable housing. Further information about the proposed housing company would be discussed by Members, including the Overview and Scrutiny Board, at a later date.
Councillor C. Bloore subsequently spoke on the amendment and noted that there were other ways in which the Council could develop new houses, including building Council houses. In speaking on the amendment Councillor Bloore raised concerns about the level of debt associated with the proposals.
In accordance with
Council Procedure Rule 18.3 a recorded vote was
taken on this amendment and the voting
was as follows:
For the Amendment: Councillors S. Baxter, C. Bloore, M. Buxton, S. Colella, R. Jenkins, C. McDonald, P. McDonald, S. Peters, S. Shannon, M. Thompson, L. Turner and K. Van Der Plank. (12)
Against the Amendment: Councillors C. Allen-Jones, B. Cooper, R. Deeming, G. Denaro, R. Dent, M. Glass, H. Jones, R. Laight, K. May, M. Sherry, C. Taylor, P. Thomas, M. Webb, S. Webb and P. Whittaker. (15)
Abstaining on the Amendment: Councillor C. Hotham. (1).
The Chairman ruled that the amendment was lost.
Members subsequently discussed the recommendations detailed in the agenda papers and Councillor B. Cooper noted that the housing company would be owned by Bromsgrove District Council. He expressed concern about the potential for the Council to build Council houses as these would be subject to Right to Buy. Instead, Councillor Cooper suggested that a company would help to provide new affordable housing whilst the houses would become a source of income for the authority. New income streams were increasingly important to explore at a time when the Council faced financial challenges. The houses proposed in the paper would only be the start of the project, with the Council planning for further houses to be built that could be managed by the housing company at a later date.
I speaking on the recommendations Councillor C. Bloore raised concerns about the levels of homelessness in the district, including the hidden homeless. He suggested that the establishment of a new housing company would cost a lot of money and instead the authority should be working on developing and managing houses. Councillor Bloore also questioned where any future properties that would be managed by the company would be built and he noted that in some parts of the country housing companies had gone into administration after they had been in operation for some time.
Councillor S. Baxter also commented on the proposals and noted that she welcomed the fixed interest rate for the loans from the PWLB. There was a need to develop the Burcot Lane site and this could be used for housing. As the housing company would also help to generate income for the Council she welcomed the proposals.
It was noted by Councillor C. Hotham that the articles of association for the housing company would help to provide protections. These articles of association would be reported back to the Council in due course.
In accordance with
Council Procedure Rule 18.3 a recorded vote was
taken on this amendment and the voting
was as follows:
For the Proposals: Councillors C. Allen-Jones, S. Baxter, S. Colella, B. Cooper, R. Deeming, G. Denaro, R. Dent, M. Glass, C. Hotham, R. Jenkins, H. Jones, R. Laight, K. May, M. Sherrey, C. Taylor, P. Thomas, K. Van der Plank, M. Webb, S. Webb and P. Whittaker. (20)
Against the Proposals: Councillors C. Bloore, M. Buxton, C. McDonald, P. McDonald, S. Peters, S. Shannon, M. Thompson and L. Turner. (8)
RESOLVED:
a) that the £1m conditional grant funding offered by Homes England, be accepted and delegated authority be given to the Head of Legal, Equalities and Democratic Services and Section 151 Officer to finalise the terms of the Funding Agreement with Homes England, after consultation with the Leader and Finance Portfolio Holder; and
b) that Council approve an increase in the Capital Programme of £8.072m to fund the associated costs of the demolition and development of the site and that £7.072m be borrowed from Public Works Loans Board. Additional £1m will be funded from the grant allocation. The 3 year increase in the Capital Programme be allocated:
2018/19 £1.611m
2019/20 £2.065m
2020/21 £4.396m
(As the exempt minutes and recommendations arising from the meeting of Cabinet held on 31st October 2018 were considered in public session there is no private version of the minutes for this item).
Copyright Bromsgrove District Council
Copyright Bromsgrove District Council