Minutes:
The Director of Resources introduced the report stating that in discussions with the developer estates, the Strategic Lead for Economic Development was seeking options to secure development on the Northern Sustainable Urban Extension.
One option that was explored was to offer a loan from the Council to the developer to fund the development of outline planning permission.
Discussions had been taken to the stage of Head of Terms and were presented for approval within the report.
The loan would provide an income of approximately £15k and should the Council borrow externally there would be a net income of approximately £8k.
The loan would be secured by a charge on the land under development and would be repayable on the occasion of the first land sale or seven years whichever was the sooner.
Permission was sought to borrow these funds to ensure the Council had sufficient borrowing limit for future use, however at this time it was anticipated that the funding of this amount would be by using the Council’s resources which would increase the net return by £4k.
This loan generated a small return for the Authority but importantly it assisted a local land owner to move forward with potential housing development in support of the Local Plan.
It was recommended to delegate final agreement of the Loan arrangement and documentation to the Director of Resources following consultation with the Chair of Corporate Policy and Resources Committee.
Concerns were expressed that approval of the proposal could set a precedent for other developers to request the same assistance, or that there could be a perception of preferential treatment. The Director of Resources indicated that there was no issue of preferential treatment as the market rate of interest was being charged and any other similar requests would be treated on a case by case basis. The project was to generate income and facilitate development of the land. The list of due diligence undertaken was attached to the report.
Other concerns were raised regarding the conflict with the Planning Committee and it was felt that approval of the loan asserted a pressure to approve the application, and that it was felt that more detail on the eventual application should be available prior to the loan being approved, particularly at the key site that was a gateway to the town. It was proposed that the report be deferred to allow for further detail be submitted to the committee prior to approval. This was not seconded.
The Director of Resources informed Members that it was hoped to tie in the decision with the adoption of the Local Plan, and approval in principle at this point would enable negotiations to continue. Assurance was given that details were still being worked on and it was necessary to keep the loan and Planning Application as two separate issues.
It was then proposed that Recommendation 2 be amended to request that the loan be approved in principle and the final agreement of the proposal be approved by the Committee in due course. This was seconded, voted upon and it was:
RESOLVED: that Recommendation 2 be amended to read that the loan be approved in principle and the final agreement of the proposal be approved by the Committee in due course.
The substantive motions were then seconded and voted upon and it was:
RESOLVED: that
a) a capital budget of £400k be approved for the purpose of a loan advance, to be funded from prudential borrowing;
b) the release of funds for this purpose be agreed in principle and the final agreement of the proposal be approved by the Committee in due course.
BUDGET AND TREASURY MANAGEMENT MONITORING
It was then proposed and seconded that the recommendation of the Budget and Treasury Management Monitoring report to approve to incur Capital expenditure be agreed.
RESOLVED that the Capital Expenditure be approved.