Agenda item

At this point in the meeting the Executive Member for Regeneration withdrew from the meeting having declared a prejudicial interest in the item.

The Deputy Mayor and Executive Member for Children’s Services and the Director for Regeneration submitted a report for Executive’s consideration.

The purpose of the report was to determine the long-term future of the Middlesbrough Development Company, given future delivery expectations, and the wider context of best practice guidance published by Local Partnerships (a joint venture between the Local Government Association, HM Treasury and the Welsh Government), and new guidelines recently issued by The Chartered Institute of Public Finance and Accountancy (CIPFA).

Middlesbrough Development Company was established in 2018 under its previous name of MHomes. The role of the company was to intervene in the housing market on sites that commercial developers would not progress. The role of the company had however evolved since 2019 as the Council focused its activities more on facilitating urban living developments and taking control of eyesore sites and properties.

Since its establishment, Middlesbrough Development Company had successfully progressed the following:

1.     Development of Boho Village, 45 apartments and 16 houses at Middlehaven in partnership with Bright Ideas (due for completion March 2023);

2.     Development of 24 homes and four retail units at Newbridge Court on the site of the former Tollesby Shops (due for completion April 2023);

3.     Purchased eyesore sites at Evesham Road and Penistone Road to enable future development; and,

4.     Funded the redevelopment of eight empty properties in North Ormesby and Gresham in partnership with the Ethical Housing Association.

The company was always intended to be a facilitator of development and therefore had operated with only one employee (a Managing Director), buying in further expertise when required on issues such as marketing, accounting or legal support. This had proven to be sufficient to enable the above developments to be progressed.

OPTIONS:

Although the option to continue with the company did exist, it would have required significant investment to meet the expectations of the recent guidance published by CIPFA which would impact financially on the ongoing business case for the company’s viability. Adherence with the guidance would minimise the longer-term risk to the Council, although some residual commercial risk would always remain.

The benefits of continuing with the company did not seem to justify the investment of time and money required to reshape and bolster the company, and it had therefore been concluded that the company had run its natural course, once its current development portfolio is complete.

There was also an option to ‘do nothing’ and keep the company operating as it existed. This would have exposed the Council to unnecessary risk in the longer term, which would be unacceptable given the conclusions of the above review, and the increased requirements of the recent CIPFA guidance.

ORDERED:

That the Executive endorses the proposal to close down the Middlesbrough

Development Company and put in place alternative arrangements within the Council to manage or dispose of any assets.

REASONS:

The limited benefits of continuing to operate a trading company structure did not justify the investment required to reshape the company and minimise the short and long-term risks to the Council given a separate company was not required to enable the Council’s goals in this area to be achieved.