Issue - meetings
Options to Set up the Housing LATCo
Meeting: 27/10/2020 - Cabinet (Item 69)
69 Options to Set up the Housing LATCo 
PDF 590 KB
(Cabinet Member with Special Responsibility Councillor Jackson)
Joint Report of the Director for Communities and the Environment and the Director for Economic Growth and Regeneration
Additional documents:
- Trowers September report Enc 1, item 69
PDF 95 KB
- NOTE REGARDING APPENDICES LATCO REPORT, item 69
PDF 147 KB
- Savills September report Enc 2, item 69
PDF 1 MB
- EIA LATCo report October 2020, item 69
PDF 805 KB
Minutes:
(Cabinet Member with Special Responsibility Councillor Jackson)
Cabinet received a joint report from the Director for Communities and the Environment and Director for Economic Growth and Regeneration to update members on the findings of the specialist legal and finance advice sought on options to set up the Housing LATCo (Local Authority Trading Company) and to recommend to Cabinet that they approve the establishment of the Housing LATCo.
The options, options analysis, including risk assessment and officer preferred option, were set out in the report as follows:
Option 1: Approve the establishment of the proposed Housing LATCo
Advantages: Will allow a blend of prudential borrowing through the General Fund and HRA to deliver the strategic housing projects identified. Offers potential to create mixed tenure schemes, cross subsidises affordable housing and can create surpluses which could address the future years budget deficit. Diversifies the council’s existing housing portfolio. The council is more able to meet a growing local housing need.
Disadvantages: Set up and operational running costs will be required. There will be capacity issues within the existing workforce in terms of support services with new skill sets needed.
Risks: New area of business for the council with different forms of tenure being provided. Demand for housing products although demand data suggests this would be low risk. Different governance arrangements in place. It could be some time before the LATCo is able to create surpluses. Property values can go down as well as up. The costs associated with producing zero carbon homes could mean schemes are marginal/unviable.
Option 2: Do not approve the establishment of the proposed Housing LATCo.
Advantages: No direct financial risk or exposure to the council. Some outputs could still be achieved through partnerships/the council acting in an enabling capacity.
Disadvantages: The council is not delivering a its key housing and regeneration priorities, growing and diversifying its housing portfolio to meet a wide range of housing need or proactively contributing to climate change through the provision of its own zero carbon homes. Surpluses could only be created through other forms of commercial investments which do not generate the same social value.
Risks: The HRA would be the only source of borrowing with limited headroom. There would be limited scope to provide holistic solutions to regeneration priorities. In areas like the West End, other costs associated with ASB/fly tipping, health inequalities and fuel poverty are likely to increase.
The officer preferred option is Option 1. This is the only mechanism that will allow the council to bring all of their key strategic housing projects into fruition. Investment into housing development cannot be seen as risk free, and house prices and values can fluctuate but as this is a vehicle which will assumes a longer term investment plan, the Savills report clearly demonstrates the successes achieved through housing investment vehicles, and that a scheme of acquisitions in Morecambe can be delivered viably if a longer borrowing period is assumed.
Cabinet approval was required to set ... view the full minutes text for item 69