51 Middlesbrough Development Company (MDC): Empty Homes Partnership PDF 560 KB
Additional documents:
Minutes:
Following a declaration of interest in respect
of this item, the Mayor left the meeting at this point. For the remainder of
business, Councillor Smiles chaired proceedings.
The
submitted report recommended approval of the provision of up to £1m to MDC in
the form of a commercial loan, (subject to sign off from the Council’s Section
151 Officer), which would be taken from the approved Investment Strategy
allocation to MDC.
MDC
would then enter into a loan agreement with the partner(s) for a maximum term
of 20 years. The loan would incur a cost charged by MDC, which was negotiable.
The partner(s) would then be required to state how that cost would be covered,
such as through the payment of interest on the loan.
The
commercial loan from the Council to MDC would be on the same terms as the loan
from MDC to the delivery partner(s).
The
partner(s) would fund the refurbishment works in the first instance but would
reclaim those costs from MDC through draw-downs from the loan. Once a property
was fully refurbished and ready to be let, the partner(s) would request a
payment, based on the previously agreed refurbishment costs of each property.
That draw-down was anticipated to be on a monthly or quarterly basis.
Funds
loaned to the partner(s) from MDC would be secured via a first charge on each
property acquired, which would be registered by the partner(s) once the
refurbishment loan costs were drawn-down. As the Council owned 100% of the shares
of MDC, MBC would have a secured legal interest in those properties. A company
debenture may also be considered as an alternative form of security to legal
charges on each property.
Any
charges on the loan from MDC to the partner(s) would be invoiced and recovered
on an annual basis. The charges would be incurred for all funds drawn down via
the loan from the first letting of the property and then continuing until
repayment of the proportion of the loan relating to that particular property.
The
loan to the partner(s) for each property would be repaid in full upon disposal
or no later than the projected end date of 2041.
Although
the financial arrangements of the investment proposal would be a matter for the
MDC Board rather than the Council, the Council’s Section 151 officer would need
to be satisfied that the funding was being used appropriately and in line with
the Company’s objectives, and that it represented an appropriate use of the
Council’s resources.
In
response to Members’ queries, the Director of Finance advised that the
commercial loan provided by the Council would be made up of monies secured from
Section 106 Agreements and the Affordable Housing Fund. A Member sought further
clarification in respect of the sum obtained from Section 106 Agreements, the
Director of Finance advised that further information would be provided in due
course.
OPTIONS
In respect of the recommendation for the Council to invest £1m to enable MDC to enter into an Empty Homes Partnership, ... view the full minutes text for item 51