Issue - items at meetings - Cornovii Developments Ltd

Lead Member: Councillor James Owen, Portfolio Holder for Housing

Lead Officer: Kassandra Polyzoides, Interim Service Director – Place Shaping

RESOLVED:

That Cabinet:

1. Noted the financial circumstances currently facing the Council and especially the limitations on borrowing arising from EFS commitments in at least the short and medium terms.

2. Noted the financial circumstances of CDL as illustrated by their most recent balance sheet and the need for the Council to act in order to maintain solvency of the company in the absence of Council funding for future development activity.

3. Approved the structured closure of the Company over a period of time (Section 4; Option 6) in order to minimise the financial exposure to the Council and to seek best consideration to the Council from any property and land disposals and transfers.

4. Noted that this decision is consistent with the requirements set out in the Financial Sustainability and Recovery Strategy agreed by Cabinet in July.

5. Authorised the s151 Officer with support from the Monitoring Officer to notify formally the CDL Board of Directors of the decision of the Cabinet to close the company.

6. Instructed the two statutory officers to bring together a governance structure which works together with CDL to ensure an orderly closure of the Company and the future management and ownership of land and property.

7. Approved funding for CDL to complete planning applications for London Road Phase 2 and for SUE West sites in order to maximise the future value of the sites, as housing developments as originally requested.

8. Authorised the s151 Officer to ensure that CDL has sufficient funding to remain solvent whilst completing planning on the schemes in progress and the sale or transfer of sites as set out in this report.

9. Noted the estimated cost to the Council arising from the closure of CDL and delegates to the s151 Officer and Monitoring Officer to take actions necessary to ensure that the company remains solvent.

10.Noted that as estimated costs arising from the closure will be included within the next Medium Term Financial Plan to be presented to Cabinet in November.

11.Instructed officers to ensure that additional and appropriate professional support and advice as necessary throughout the period of closure to ensure full compliance with company law and local government regulation.

12.Instructed officers in consultation with the CDL Board of Directors to ensure that their tenants are kept fully informed of changes that will be made and that those tenants are in no way impacted adversely by the closure of CDL

It was agreed to bring this item forward to this point in the meeting.

Cabinet considered a report on the future of Cornovii Developments Limited (CDL) and heard that the Council’s financial emergency and reliance on Exceptional Financial Support meant it could no longer provide the borrowing required to support the company’s existing business model. Members were advised that, whilst CDL had delivered 196 homes and made a positive contribution to housing provision, the recommended option represented the lowest-risk approach available and would limit further financial exposure to the Council.

The Chair of the Finance and Improvement Scrutiny Committee advised that the committee supported the recommended approach and emphasised the importance of keeping tenants informed and undertaking a ‘lessons learned’ review once the closure process is complete.

Members discussed the achievements of CDL, the implications for future housing delivery, the estimated financial impact of closure, and the need to protect existing tenants throughout the process.

Cabinet acknowledged that the decision was driven by the Council’s financial circumstances rather than the housing needs of the county, which remain significant, and noted that alternative mechanisms for delivering affordable housing would continue to be explored.