Issue - meetings

(Director of Communities) To consider the attached report, CHB-001-2018/19.

That the following were recommended to the Cabinet:

(1)     That, subject to any minor amendments agreed with the Housing Portfolio Holder (including bid amounts and borrowing profiles), the Director of Communities be authorised to submit four separate bids to Homes England for additional Housing Revenue Account (HRA) borrowing approvals, for four separate “schemes” totalling £8.052million in year 2021/22, with the borrowing profiles as set out in the report;

(2)     That the Council’s Chief Financial Officer reports to a future meeting of the Finance and Performance Cabinet Committee on the most appropriate way to arrange the additional HRA borrowing when required; and

(3)     That the Cabinet noted that, due to the deadline for bids being 7^th September 2018, the Chairman of Council had been requested to determine that the call-in provisions of Rule 53 of the Overview and Scrutiny Rules, contained within the Council’s Constitution, can be disregarded for this decision – the Chairman’s decision will be reported orally.

The Director of Communities presented a report to the Cabinet Committee. He advised that the report was not about borrowing any more money than the Council will otherwise need to borrow to complete Phases 4-6 of the Council Housebuilding programme and to purchase the completed affordable rented homes at the Pyrles Lane Nursery site.

The Council were unable to borrow money for Housing Revenue Account (HRA) purposes  above the amount for which HRA borrowing approval(s) have been granted by the Government (MHCLG).

In 2012, the Council borrowed £185.456million from the Public Works Loan Board (PWLB) to fund the levy that had to be paid to the Government at that time in order to enable all stock-retained councils, and councils with arms-length management organisations (ALMOs), to leave the discredited former HRA Subsidy System – and to provide an internal loan between the HRA and the General Fund.  As a result of this transaction, the Council was left with HRA Borrowing Headroom of £31.065million, set by the Government, which was the amount of additional borrowing that the Council could undertake for HRA purposes.

This HRA Borrowing Headroom was sufficient to cover the additional borrowing required by the Council to fund its current Housebuilding Programme, up to and including Phases 4-6 and the purchase of the affordable rented homes to be built by a private developer at the Pyrles Lane Nursery Site, Loughton.

However, the Council was one of a number of councils invited to bid by 7th September 2018 for additional HRA borrowing approvals from the MHCLG. If the Council submitted one or more bids for additional borrowing approvals and were successful, these additional approvals could be utilised to cover the borrowing requirements for Phases 4-6 and Pyrles Lane, enabling the Council’s existing HRA Borrowing Headroom of £31.065million to be maintained. This would then provide scope to enable the Council to undertake further borrowing in the future if it wanted - to either extend the Housebuilding Programme or to fund expenditure for other HRA purposes.

The Director of Communities had worked with the Council’s HRA Business Planning Consultant and senior housing and finance officers to assess the additional borrowing requirement to fund the remainder of the Council’s existing Housebuilding Programme, bearing in mind that 30% of the costs would be funded from One-for-One Replacement RTB Receipts (“141 Receipts”).

As a result, it was proposed that four bids covering the three Broad Market Rental Areas (BRMAs) in the District and the development of the Pyrles Lane Nursery site, Loughton, totalling additional borrowing approvals for £8.052million, in year 2021/22, be submitted to Homes England (which was acting on behalf of the MHCLG), in accordance with the bidding strategy as set out in the main report to the agenda, summarised as follows:

Bid 1 – Ongar                                                     £204,319

Bid 2 – Waltham Abbey                                  £1,497,368

Bid 3 – Loughton (excluding Pyrles Lane)      £5,884,227

Bid 4 – Pyrles Lane, Loughton.                          £466,168

If all four bids were successful, they would increase the Council’s HRA Borrowing Headroom by £8.052million. If  ...  view the full minutes text for item 8