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16
Oct
Council approves further £975,000 loan to housing company
North Yorkshire Council has loaned its own housing company a further £975,000 amid continued cashflow problems.
Brierley Homes, which was founded in 2017, is part of the Brierley Group of 12 companies owned by the council.
The company oversees housing developments across the county, including in the Harrogate district.
The firm, which reported a £3.2 million loss last year, has faced issues over cashflow and has recently been reliant on council loans to to "allow the company time for sales to be received”.
Last month, senior councillors backed a proposal to increase a £25 million council loan facility to £27 million to provide Brierley Homes with further financial headroom.
Vicki Dixon, assistant director of resources and environment at the council, said in a report in September that the facility was required to help the company “continue to make all payments due to suppliers in the event of some delayed sales”.
The latest £975,000 loan comes as part of a drawn down on the increased loan facility, which senior councillors backed on September 16.
According to a council decision notice, Gary Fielding, corporate director for resources at the council, made the decision in consultation with the leader, deputy leader and chief executive at the authority.
It added:
Further loan draw down from the existing facility of £975k is required in order to allow the company time for sales to be received and therefore this loan draw down will ensure Brierley Homes can make all payments due in the event of some delayed sales.
The loan is made at a commercial rate of interest and was made to ensure the company had “appropriate cashflow” over the short term, the notice added.
Cllr Gareth Dadd
The decision comes as Cllr Gareth Dadd, deputy leader and executive councillor for finance at the council, said last month that the council would monitor the company’s progress after approving further financial support.
Cllr Dadd told senior councillors at an executive meeting in September:
Have I got confidence that we are on the right track with Brierley Homes? The jury is still out in terms of the confidence that I have got operationally.
But we have got a decision to take. No doubt we will be reviewing it in the future in terms of its policy direction.
His comments came after Mr Fielding confirmed that he would receive weekly cashflow reports from the company as part of “additional due diligence”.
He said the weekly reports would “ensure there is stronger due diligence” into the firm.
Independent review
Meanwhile, the move to approve additional support to Brierley Homes comes after council officials commissioned an independent external review of the company’s operating model, structure, financial position and resilience.
The review, which was published last month, came amid criticism from opposition councillors that the firm was reliant on large sums of money from the authority.
Tony Dodds, a real estate expert who runs Northumberland-based Tony Dodds Consulting, carried out the review.
In his findings, Mr Dodds said Brierley Homes is a business which is based on a “sound operating model” and has “an achievable goal” to build new homes for profit.
He added that the company had endured a difficult trading period and “poor project management”.
Mr Dodds said the company has a “positive impact” on the county and there was “no reason” to cease trading the firm or change its operating model.
The review made a range of recommendations, which included a review of the company’s loan terms, use of private sector funding structure and a change of the firm’s project appraisals.
In July, the council also granted a £1.4 million loan to the housing company to assist it with cashflow while it delivered affordable housing and to "allow the company time for sales to be received”.
The council said the loan, which is separate to the loan facility, will be repaid with base rate interest instead of on commercial terms.
But, the move was criticised by Cllr Kevin Foster, leader of the Green and Independents group on North Yorkshire Council, who questioned how the council could justify further money for the company.
Senior councillors on the authority’s Conservative-run executive said the decision was the “right thing to do”.
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