Agenda item

The attached report provides Cabinet with an update with regards to Brick by Brick Croydon Ltd (BBB), a wholly owned housing development company. Progress has been made by Directors and Management at the company since the reviews carried out in 2021.

RESOLVED: To

1.     Note the progress on delivery of key developments by Brick by Brick Croydon Ltd.

2.     Note the progress on BBB finances as provided within Part B of the report. This has been included as Part B to ensure management financial information remains commercially confidential.

3.     Delegate authority to the Corporate Director of Resources and Section 151 Officer, in consultation with the Monitoring Officer and the Cabinet Member of Finance, to enter into a Letter of Comfort to be provided to Brick by Brick Croydon Ltd, under the Council’s shareholder function. Information has been included within the Part B report.

4.     Consider the PwC review, including recommendations, within the Part B report, agree to proceed with the option set out in Part B.

5.     Note that under delegated authority the Corporate Director of Resources and Section 151 Officer, in accordance with paragraph 9 of the Financial Regulations, has approved to vary the Option Agreements on Regina Road, Malton House and Belgrave & Grosvenor Road to include an option for the Council to purchase those sites instead of setting off against the loan agreement and to extend the buy back option period for Regina Road and Malton House. The Council is currently working with BBB to varying the Option Agreements. This is further detailed within Section 2 of this report.

6.     Delegate authority to the Corporate Director of Resources and Section 151 Officer, in consultation with the Monitoring Officer and the Cabinet Member for Finance, to exercise buy-back option(s) under the relevant option agreement(s) for the undeveloped sites earmarked by BBB for disposal, should these be required. The value of any such buy backs shall either be paid to BBB or be set off against the Loan agreement, as varied within the option agreement(s).

7.     Delegate to the Corporate Director of Resources and Section 151 Officer, acting as lender, in consultation with the Monitoring Officer to vary the Loan agreement with BBB to permit set off values under recommendations 5 and 6 above if required.

8.     Delegate authority to the Corporate Director of Resources and Section 151 Officer, acting as shareholder, in consultation with the Monitoring Officer and Cabinet Member for Finance to instruct BBB not to dispose of the undeveloped 5 sites on the open market if the Council decides to consider exercising its buy back option(s) in accordance with recommendation 6 above.

9.     Delegate authority to the Corporate Director of Resources and Section 151 Officer, in consultation with the Monitoring Officer, Executive Mayor and the Cabinet Member for Finance, to approve that BBB may dispose of developed properties in the open market at less than 95% of red book value (including where this a key decision and above Corporate Director delegations within the Financial Regulations) on the request of BBB as in accordance with the Loan Facility Agreement.

10. Delegate authority to the Corporate Director of Resources and Section 151 Officer in consultation with Cabinet Member for Finance and Corporate Director of Housing and subject to any final due diligence, whether to purchase 12 new properties at the Trellis Mews development as detailed in Section 6 of this report with a further recommendation within Part B.

11. Approve updated amendments to the Terms of Reference of the Brick By Brick Shareholder Mayor’s Advisory Board (formerly Brick by Brick Shareholder Cabinet Advisory Board) as set out at Appendix C to reflect changes to appointments and to confirm the governance model as set out in the November 2021 Cabinet report (attached as a background paper), including delegations as follows:

a.     Delegate to the members of the Brick by Brick Shareholder Mayor’s Advisory Board the authority to exercise limited shareholder functions on behalf of the Council when making recommendations to Brick By Brick relating to risk in accordance with Section 5 of this report (recognising, however, that Brick By Brick shall make its own independent decisions).

12.Approve the process for appointment and removal of directors from the Brick By Brick board of Directors in accordance with Section 5 of this report; and delegate authority to the Corporate Director of Resources & S151 Officer in consultation with the Executive Mayor, Cabinet Member for Finance and Chief Executive on appointments and removals of Directors of the board of Brick by Brick Croydon Ltd, who shall have authority to exercise shareholder functions on behalf of the Council to approve such appointments and removals (any such appointments or removals shall be notified as part of the next scheduled report to the Executive Mayor in Cabinet).

Cabinet considered a report, which advised that progress had been made by Directors and Management at the Company since reviews had been carried out in 2021.  It was reported that the Company had reached Practical Completion on all its development sites except Lion Green Road and Kindred House and BBB continued to make good progress with disposing of the developments in the open market and to the Council.

It was further reported that the Council held Option Agreements on six undeveloped sites, of which, the Council was considering exercising its buy back option for the Regina Road site and the others, subject to further due diligence of the sites for Council use.  It was noted that BBB had also repaid to the Council £30.04m of the principal loans with a net balance of £142.5m outstanding as at end of October 2022.

Accordingly, the Executive Mayor, in Cabinet, RESOLVED that:

1.            The progress on delivery of key developments by BBB Croydon Ltd. be noted.

2.            The progress on BBB finances, as provided within Part B of the report, be noted (this has been included as Part B to ensure management financial information remains commercially confidential.)

3.            The Corporate Director of Resources and Section 151 Officer, in consultation with the Monitoring Officer and the Cabinet Member of Finance, be authorised to enter into a Letter of Comfort to be provided to BBB Croydon Ltd, under the Council’s shareholder function (information has been included within the Part B report.)

4.            Having considered the PwC review, including recommendations, within the Part B report, to proceed with the option set out in Part B, be agreed.

5.            Under delegated authority to the Corporate Director of Resources and Section 151 Officer, in accordance with paragraph 9 of the Financial Regulations, the approval to vary the Option Agreements on Regina Road, Malton House and Belgrave and Grosvenor Road, to include an option for the Council to purchase those sites instead of setting off against the loan agreement and to extend the buyback option period for Regina Road and Malton House, be noted (the Council was currently working with BBB to varying the Option Agreements. This was further detailed within Section 2 of this report.)

6.            The Corporate Director of Resources and Section 151 Officer, in consultation with the Monitoring Officer and the Cabinet Member for Finance, be authorised to exercise buy-back option(s) under the relevant option agreement(s) for the undeveloped sites earmarked by BBB for disposal, should these be required (the value of any such buy backs shall either be paid to BBB or be set off against the Loan agreement, as varied within the option agreement(s)).

7.            The Corporate Director of Resources and Section 151 Officer, acting as lender, in consultation with the Monitoring Officer, be authorised to vary the loan agreement with BBB to permit set off values under recommendations 5 and 6 above if required.

8.            The Corporate Director of Resources and Section 151 Officer, acting as shareholder, in consultation with the Monitoring Officer and Cabinet Member for Finance, be authorised to instruct BBB not to dispose of the undeveloped five sites on the open market if the Council decided to consider exercising its buy back option(s) in accordance with recommendation 6 above.

9.            The Corporate Director of Resources and Section 151 Officer, in consultation with the Monitoring Officer, Executive Mayor and the Cabinet Member for Finance, be authorised to approve that BBB may dispose of developed properties in the open market at less than 95% of red book value (including where this was a key decision and above Corporate Director delegations within the Financial Regulations) on the request of BBB as in accordance with the Loan Facility Agreement.

10.         The Corporate Director of Resources and Section 151 Officer, in consultation with Cabinet Member for Finance and Corporate Director of Housing and subject to any final due diligence, be authorised to decide whether to purchase 12 new properties at the Trellis Mews development as detailed in Section 6 of this report with a further recommendation within Part B.

11.         The updated amendments to the Terms of Reference of the BBB Shareholder Mayor’s Advisory Board (formerly Brick by Brick Shareholder Cabinet Advisory Board), as set out at Appendix C, to reflect changes to appointments and to confirm the governance model as set out in the November 2021 Cabinet report (attached as a background paper), including delegations as follows, be approved:

A)     Delegate to the members of the BBB Shareholder Mayor’s Advisory Board the authority to exercise limited shareholder functions on behalf of the Council when making recommendations to BBB relating to risk in accordance with Section 5 of this report (recognising, however, that Brick By Brick shall make its own independent decisions).

12.         The process for the appointment and removal of directors from the Brick By Brick board of Directors, in accordance with Section 5 of this report, be approved and that the Corporate Director of Resources and S151 Officer, in consultation with the Executive Mayor, Cabinet Member for Finance and the Chief Executive, be authorised in respect of appointments and removals of Directors of the board of Brick by Brick Croydon Ltd, to exercise shareholder functions on behalf of the Council to approve such appointments and removals (any such appointments or removals shall be notified as part of the next scheduled report to the Executive Mayor in Cabinet).