The Option of a local authority/developer-funder
Asset-Backed Vehicle for Regeneration
Does your local authority have a continuing need for estate regeneration?
Are you, and your residents and stakeholders, frustrated at the lack of public subsidy available to refurbish existing and procure new affordable homes?
Adams Integra has contact with developer/funders to assist in setting up local authority asset-backed vehicles or Joint Ventures (JVs).
We understand that a number of local authorities have entered into asset-backed vehicle partnerships with developer/funders following OJEU procurement where the partnership vehicle is a Limited Liability Partnership or LLP (jointly owned by the local authority and the developer-funder partner). In Liverpool, Salford, Solihull and Edinburgh the local authorities have entered into such arrangements.
A key advantage of the local authority-backed LLP is that the Vehicle can obtain institutional loan finance at very advantageous rates. For example, we understand that recent arrangements of this kind have attracted loan finance at some 2.5% below assumed current norm rates and cheaper than local authority prudential borrowing.
This means that the overall interest charge is much less than would otherwise be the case and, therefore, fewer new market sale dwellings are required to pay for new social homes, decent homes works, refurbishment and improvements to the public realm.
It could therefore enable the delivery of more new social rent homes (either as new Council homes or via a registered provider partner).
In Liverpool, Salford, Solihull and Edinburgh we understand that the LLP is able to give the local authority a modest capital receipt for each parcel of its land and contribute the remainder of the agreed valuation for each parcel into the Vehicle thereby enabling land assembly – tenant decants and leaseholder buyouts as well as land assembly from third party land/property owners, facilitating phasing and overcoming all too common start-up cashflow difficulties.
The LLP is able to employ other builders and developers underneath the Vehicle as it wishes.
The local authority share of the Vehicles ranges from 19% (typically 49%) to 99%, however, we understand the latter are treated as Council Owned Council Controlled Organisations or COCOs and may pose difficulties for local authority finance.
Nevertheless, regardless of the local authority’s equity stake in the Vehicle, the local authority may be able to take a majority of the enhanced capital value (e.g. in private house sales) and cross-subsidise other community benefits.
Adams Integra can explain the options and help work up viable schemes and act as critical friend and/or project manager as schemes progress.
We have a very skilled and experienced team – covering financial viability, planning, design feasibility, resident consultation, etc.
For more information and to arrange a no-obligation meeting please contact:
Andrew Seddon, Director, or Simon Jenkins, Director of Planning, Adams Integra, on 01243 771304 or email enquiries@adamsintegra.co.uk.
