Cherwell to provide additional £500,000 to complete delayed Banbury Crown House project following a £2m loan last year
Using urgency powers, CDC's chief executive, Yvonne Rees in consultation with the leader of the council, Cllr Barry Wood have agreed to provide additional funding of £0.5m to support the final completion of the apartments at Crown House which runs between Matalan and Bridge Street.
Bought in October 2017 from Brickmort Developments, CDC planned to re-purpose the building that had lay dormant for two decades, into 51 flats, plus a coffee shop, to be constructed in three phases.
Originally the development was due for completion by the end of 2018, a revised completion date of April of this year was touted last summer.
In a statement from CDC regarding the delay, they said "The development has had challenges/delays including the removal of asbestos from the site and the need to replace the roof tiles to allow the installation of the extensive solar panels.
"Currently being advertised by the letting agent Centrick initial interest has been good following two open days where prospective residents were shown around the development.
"Crown House is now nearing completion and next month will be opening its doors to the first residents."
The latest delay in getting over the line, however, appears to be a large scale snagging issue.
The document outlining the use of Urgency powers and presented to the council, in part, reads: "The construction works at Crown House are nearing completion, which has resulted in the letting agents assessing the final finish and quality of the apartments.
"This assessment has identified a number of urgent improvements to secure the highest market value for possible.
"This assessment has established that the final finishing and completion works will cost an additional £0.5m, which Crown House have requested the Council to consider a further loan of £0.5m.
"This request requires the Chief Executive to urgently approve a further loan of £0.5m, in consultation with the Leader of the Council, in lieu of a recommendation to Council.
It adds: "This assessment has established for example, that improvements to the bathrooms, with more tiling, shower screens etc. are needed, along with improvements to the finish and fittings in the kitchens.
"With the imminent opening and marketing of the apartments urgent improvements need to be made. Crown House have requested an additional loan of £0.5m on the same terms as the earlier loan approved at the April 3, 2018 meeting of the Executive."
Due to the Urgency power used councillors did not get to vote on whether or not to approve the additional loan, motivating a number of questions.
Cllr Sean Woodcock, leader of the Labour group, said: "I would like some reassurance that no other council lead construction projects that maybe somewhat larger (Castle Quay 2), which we will be presented with a report on in a few months time, that Cllr Wood hasn't agreed massively to increase expenditure on because of a failure to plan properly in advance."
Cllr Wood gave that assurance.
Crown House, a relatively small project compared to the canal side Castle Quay development, received a £2m cash injection last year, again via Urgency powers...
Responding to costs of the project, CDC said: "The acquisition of Crown House was completed during the financial year 2017/18. To purchase the asset, the council effectively purchased the company that owned the asset having taken advice and undertaken due diligence at the time.
"A price was agreed of £5.9m to buy the company including the acquisition of an asset under construction as well as capital costs for additional works of £2.7m. This created a total capital budget of £8.6m was made available for the project.
"This was in part for the purchase of the company, and therefore the asset owned by the company, as well as funding part of the works. These were reported to June 2017 Executive meeting and then July 2017 council meetings, to ensure the capital budgets were in place.
"The Council then approved a further £2m loan to the company in April 2018 which was the balance of the works required to complete the properties to the original specifications. This was taken under urgency powers by the Chief Executive due to a Council meeting not being available during local elections.
"The recent loan to the company for a further £0.5m was made following advice from external letting agents who advised that achieving the best value for rental income meant that the original advice around the fixtures and fittings and provision of white goods had changed, and it would make more commercial sense to provide these to tenants moving in. This reflects changes in the rental market.
CDC added: "The provision of these loans are at market value so the Council will charge the company an interest rate that is compatible with ensuring state aid compliance. Therefore, the decision made by the Chief Executive under urgency powers (to ensure that the work could be done prior to letting the properties out) was to increase the amount loaned to the company."
The process by which funds can be allocated without council debate was questioned by Cllr Nick Cotter who asked the head of the law and governance to indicate the paragraph in the constitution that allows such powers to be exorcised. He was promised a written response within seven days.
The Crown House development is part of the council's vision to redevelop the area running from Cherwell Street and the train station, known as canalside, having taken on the expansion of Castle Quay Shopping Centre and the purchase of the former Antelope Garage.