Issue - meetings

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