Agenda item

Report of Director of Service Delivery.

Lead Cabinet member:  Councillor Alan Shuttleworth.

(1) Governance structure for new Eastbourne and Lewes Joint Investment Partnership (JHIP) incorporated and agreed in line with section 2 of report and director of service delivery and the assistant director of legal and democratic services authorised to take all such step as are necessary to establish the same limited liability partnership (LLP).

(2) Up to £30m allocated in the council’s capital programme, as described  in section 4 of the report, and delegated authority arrangements, as set out in report, be approved to progress the first phase of delivery for both EHICL and the new JHIP.

85.1 Cabinet considered the report of the director of service delivery up-dating members on progress with the establishment of a joint housing and regeneration investment vehicle with Lewes District Council as previously approved by cabinet at their meeting on 13 December 2016.  Work to set up the new joint vehicle had been ongoing with a target incorporation date of 1 April 2017.  In parallel Lewes District Council had also been taking steps to establish their own housing investment company – Lewes Housing Investment Company (LHICL).  With EHICL this meant that, across the two authorities, there would be three similar wholly owned subsidiaries working in association to each other:-

·         Eastbourne Housing Investment Company (EHICL)

·         Lewes Housing Investment Company (LHICL)

·         Joint Housing Investment Partnership (JHIP)

85.2 The relationship between the three new housing investment vehicles had been further explored and external legal advice obtained to ensure that the potential benefits of the new vehicles could be best realised.  The report provided:-

·         The business case to support the proposal for the two new vehicles.

·         Detail on how the joint partnership and EHICL would operate.

·         An explanation of their respective primary focus and inter-relationship.

·         For approval an associated set of governance arrangements and financial delegations so that first phase delivery could be progressed.

The initial cost of setting up the proposed JHIP, developing the business case and investment proposals were expected to be £30,000 per authority. 

85.3 The scale of potential new housing development required new vehicles, and a new structure, if the council wanted to maximise housing delivery and associated regeneration beyond the constraints of the housing revenue account (HRA).  Over the last 3 years the council had brought forward and largely completed a 97 unit mainly affordable programme of new housing via the HRA which had utilised available headroom capacity.  This had placed the council ahead of many other local authorities in terms of experience and associated resources.  The potential for a much more ambitious programme of new housing delivery in Eastbourne had been assessed by the EHIC board and comprised:-

·         An EHICL 5-year development pipeline to incorporate approved schemes such as Bedfordwell Road and potential future developments of 265 new homes with a projected gross development cost of £51m and a net borrowing requirement of £18.7m.

·         Transfer to JHIP of the affordable housing elements of EHICL delivery required under planning policy, Section 106 and delivery of affordable schemes beyond the capacity of the HRA where the council wanted to take a direct enabling and place shaping role.  70 new homes with a projected gross development cost of £13m and a net borrowing requirement of £5.5m.

The scale and focus of overall investment, and decisions on larger individual schemes, would remain matters for cabinet approval.

85.4 Previous delegations gave authority to deliver different elements of the new housing as follows:-

·         Feb 2013 Cabinet delegation of £20m of borrowing within the 5 year capital programme for the delivery of the new HRA housing – the new HRA housing has been delivered for around £10m because of higher than anticipated grant, sales receipts and internal funding.

·         March 2016 Cabinet approval to purchase the Bedfordwell Road site for a maximum acquisition value of £2.45m – site acquired for £1.45m.

·         November 2016 Cabinet delegation of £5m by way of loan to EHICL for the purchase and repair of street properties to alleviate temporary housing demand.

·         December 2016 Cabinet, by way of the capital programme, a sum of £30m for the acquisition of commercial assets based on yield targets some of which include an element of new housing and which may be held in EHICL.

85.5 Appendix 1 to the report provided a diagram to illustrate, in summary form, the relationship between the 3 housing investment vehicles and links back to cabinet via the proposed joint housing investment board (JHIB).  The JHIB would have membership comprising elected members of both councils and directors who would operate at a strategic level to co-ordinate activities and have programme level oversight and make recommendations to ensure the most efficient placing of assets and utilisation of internal funding.  The JHIB would also exercise delegated control on overall levels of development, individual loan tranches and larger transactions and would also decide which schemes would be brought back to respective cabinets for separate approval.  The operational arrangements for delivery, programme development, financial and risk control were also set out to include a more formal role for the director led project review and sign-off group (PRSO) tasked with undertaking detailed risk appraisal and financial due diligence for all schemes. 

85.6 The new structure provided a clearer and more robust framework for risk management and the exercise of various cabinet delegations.  Delegations had been determined to date by the requirements of individual schemes or housing strategy priorities. They had not created programme level capacity or acted as a programme control mechanism.  If the new structure of companies and governance was approved it was proposed that more general delegations were made to enable the relevant programmes of housing to be brought forward most effectively:-

·         EHICL: £ 20m by way of loan for the delivery of new mixed tenure homes and associated activities.

·         JHIP: £10m by way of loan for the delivery of new mixed tenure homes and associated activities.

The lending to the companies and/ or partnerships would form part of the councils treasury management strategy and create a revenue income stream for the general fund.  The JHIB would exercise delegated control on overall levels of development, individual loan tranches and larger transactions and would also determine which schemes were brought back to respective cabinets for separate approval.

85.7 The report also set out details of the legal powers under which the council was entitled to undertake the activities described above.

85.8 Resolved (key decision): (1) That the governance structure for the new Eastbourne and Lewes Joint Investment Partnership (JHIP) be incorporated and agreed in line with section 2 of the report and the director of service delivery and the assistant director of legal and democratic services be authorised to take all such step as are necessary to establish the same limited liability partnership (LLP).

(2) That up to £30m be allocated in the council’s capital programme as described  in section 4 of the report and delegated authority arrangements, as set out in the report and described at paragraph 85(5) above, be approved to progress the first phase of delivery for both EHICL and the new JHIP.

(Note:  Councillors Tutt and Ungar declared interests in the above matter and withdrew from the meeting (see minute 80 above).  Councillor Mattock took the chair for this item.)