To consider the report of the Chief Executive & Growth Director.
Decision:
Agreed:
RECOMMENDED that Council:-
(1) approve the Business Case and support the operation of a property management function and that a single company structure (Exeter City Living) be the vehicle for delivery, rather than Exeter City Homes being made operational;
(2) agree to the production of a Business Plan outlining the objectives, planned activities, deliverables, performance management framework and forecast financial performance for the property management function, using the financial model developed with actual projects costs and actual incomes to demonstrate that the venture would be feasible, viable and profitable, before it is entered into; and
(3) agree to the review and amendment of the original Management Agreement between any involved subsidiary company and the Council as the shareholder of the parent company Exeter City Group, to permit Exeter City Living to exercise the function of a property management company, with the proposed amendments brought back to Council.
Reason for Decision: As set out in the report.
Minutes:
The Director Corporate Services declared an interest as a Director of Exeter City Living and the Exeter City Group and left the meeting during consideration of the following item.
The Executive received the report which related to a business case supporting the operation of a Residential Property Company (Exeter City Homes) under the Exeter City Group (ECG) to further the aims of Exeter City Council in relation to housing and the environment. The report appendices provided legal and financial advice to address the feasibility of making the Residential Property Company operational and whether any of the initial advice or legislation had changed that would impact on the original advice provided.
The purpose of setting up the Residential Property Company Exeter was City Homes was rooted in the provision of greater social benefits around housing, quality of accommodation and a fair tenancy basis. It is also seen as an opportunity to raise the game across the housing sector in Exeter.
The Business Case, which accompanied the report, provided the Council with a framework of structured thinking and assurance that the establishment of a Residential Property Company aligned with Exeter City Council’s strategy and addressed legal and tax implications. A number of scenarios had been modelled and demonstrated a viable business that would generate a profit for the company. But the advice was that a two company structure, i.e. Exeter City Living and Exeter City Homes, would not be necessary, and there were significant advantages with Exeter City Living also carrying out a property management function, and this was the approach being recommended to Members.
The Business Case had been modelled using a mix of sites and number of units, setting out potential risks and mitigation measures and to help determine whether it would be appropriate to proceed with the Residential Property Company. If the business case is approved a business plan would need to be developed using real project costs and actual incomes to demonstrate viability before it is entered into.
Councillor D. Moore, as an opposition leader, spoke on this item, stating that excellent work had been made to develop Council houses to sustainable standards, but expressed concern that, notwithstanding the intention to provide affordable homes, the rentals offered could still be beyond the reach of some. She further enquired on the impact of the proposal for Brownfield developments in relation to Government guidance on affordable homes.
The Leader in responding, requested detailed questions be submitted to him, to help inform the debate on the item at the Extraordinary Council meeting.
The Chief Executive & Growth Director stated that the Housing Needs Assessment being prepared for the Greater Exeter area would identify the demand for affordable forms of tenure. This would inform the planning process and that planning applications would be presented to the Planning Committee as the decision maker on the appropriateness of the mix of units proposed for individual developments.
Members welcomed the report and were pleased that the means for delivering built to rent and environmentally friendly properties was moving forward.
RECOMMENDED that Council:-
(1) approve the Business Case and support the operation of a property management function and that a single company structure (Exeter City Living) be the vehicle for delivery, rather than Exeter City Homes being made operational;
(2) agree to the production of a Business Plan outlining the objectives, planned activities, deliverables, performance management framework and forecast financial performance for the property management function, using the financial model developed with actual projects costs and actual incomes to demonstrate that the venture would be feasible, viable and profitable, before it is entered into; and
(3) agree to the review and amendment of the original Management Agreement between any involved subsidiary company and the Council as the shareholder of the parent company Exeter City Group, to permit Exeter City Living to exercise the function of a property management company, with the proposed amendments brought back to Council.