Folkestone & Hythe District Council is severely constrained financially with regard to the Otterpool Park development of 10,000, due to several factors including any investment write-off. The Minimum Revenue Provision impact of £7.5m to £16.7m – range from 23/24 to 27/28, arising from funding Otterpool Park will increase the financial pressure on the Council. As such the Council does not have the appetite or capacity to fund the Project even to the extent initially envisaged (£75m) prior to the request for increased funding.
It has come to light the Council has been only partially compliant with the Minimum Revenue Provision Regulations (MRP) in respect of the Otterpool Park scheme; where they wish the LLP to build out 10,000 homes. The Council set aside the sum of £1.4m to meet this requirement in 2022/23. But between 2023/24 & 2027/28 they need to set aside anywhere between £7.5m and £16.7m to pay down the Otterpool MRP.
Put simply the MRP is the amount a council has to set aside from its day-to-day budget to repay the money it has borrowed. This is usually paid out of Council Tax income, so effects frontline services, if it rises, which it is set to do, this means they’ll be less frontline services.
On the 19 Dec 2022, KPMG were awarded a contract to give:
Financial Advice on behalf of Folkestone & Hythe District Council regarding the Otterpool Park Garden Town Project. The key developments that the Council requires advice on are: * a proposal from Homes England (HE) * Stewardship Vehicle for Otterpool Park * Joint Venture with Places for People * Strategic Land Agreement (SLA) & Phase Delivery Strategy (PDS)
The report was released on the 10 October 2023 by KPMG, and titled:
Overview of KPMG analysis and key commercial considerations related to Otterpool Park Garden Town
It makes for stark reading. If the Council fail to listen to it, there is the real possibility of the Council cutting core services to the bone and redundancies at level never seen before. However, if they heed the report’s recommendations then Otterpool Park is a reality and one which can be pulled off, even if it means less profit to the Council.
Regarding the Governance and Management of Otterpool Park, the report says:
There is insufficient reliance on internal/external audit; this needs more rigorous reporting.
The Council needs to review and improve the Golden Triangle of CEO (Susan Priest), Monitoring Officer (Amandeep Khroud) and Section 151 Officer (Lydia Morrison);
Board meetings are limited in scope and detailed papers are not maintained;
Decisions are taken in silos with insufficient engagement from the executive leadership;
In the report it indicates the Council should consider a Joint Venture Partner. This partner will more likely be Places for People, who we said were one of the choices of developers to build out Otterpool Park back in Sept 2022
Places for People are a strategic partner of Homes England, who own 10% of the land at Otterpool Park . Places for People have worked with Homes England previously, plus they have the experience, knowledge and the cash to help and assist the Council in building out 10,000 homes at Otterpool Park.
There are a few aspects of the current delivery model that are challenging for the Council. The summary findings include but are not limited to:
– the funding requirement (peak funding requirement of £199m) being significant when
compared against the Council’s revenue budget of £15m;
– an MRP impact of £7.5m to 16.7m (range from 23/24 to 27/28) on the Council’s revenue
account; and
– returns being secured over time from unit sales and overage;
Giving over 49% of the LLP to Places for People, means they’ll be de-risking almost half the project, bringing in know-how and cash; which will make the project affordable, with less risk. What’s not to like about that?
Lets hope the Council will heed the advice of KPMG, if not there may be trouble ahead.
The Shepway Vox Team
Journalism for the People NOT the Powerful
