Minutes:
In accordance with paragraph 10.2 of the Council Procedure Rules, Councillor Wilkes asked the following question:
Is it the policy of this Council that dividends received from Durham Villages Regeneration Limited from income raised from house building in the former Durham City District Council area should as it always has been be spent within the Durham City area, where the revenues were generated in the first place, and if not, how would Cabinet members justify money being spent outside this area on housing investment especially given the fact that the Council’s most recent quarterly report shows that the Council has failed to hit its own targets on house building in the Durham City area?
Councillor A Napier, Deputy Leader of the Council and Portfolio Holder for Finance thanked Councillor Wilkes for his question and responded as follows:
In terms of background, Durham Villages Regeneration Company Ltd was a joint venture between Keepmoat Homes and Durham County Council that was first established in 2001 as Durham Villages Regeneration Ltd between Keepmoat (formerly Haslam Homes) and the City of Durham Council.
It now operated with the Council identifying land for residential development and Keepmoat then providing the commercial development expertise to bring forward the house building. Full land value and a 50:50 share of development profit was received by the County Council.
In responding to Cllr Wilkes question, Councillor Napier emphasised three points:-
1. Firstly, the joint venture scheme had been working countywide for nearly five years. Following Local Government Reorganisation, the previous Durham Villages Regeneration model was re-evaluated and this led to an amendment to the Company’s articles to enable it to work across the whole county rather than only within the city boundary. Councillor Napier quoted from the revised objects of the company (December 2009) which stated: “to do anything which is to achieve the promotion or improvement of the economic, social and environmental well-being of the areas, villages, neighbourhoods, localities and lands currently administered by Durham County Council.” Since then various sites including sites at Spennymoor, Newton Aycliffe and Dipton had progressed through the planning system.
2. Secondly, the model had been established in very different financial times by the former City of Durham Council as a way of directing funding to some of its priority projects. The model had not operated in that way anywhere else in the county and last week, Cabinet agreed to honour the last two outstanding commitments made by the City Council before 2009. These were schemes in West Rainton and Sherburn Hill, which required the County Council to allocate £700,000 of dividend that they were due to receive from the Company, but these were the last two schemes. No further such commitments had been made since the Council became a unitary council in 2009. All of the capital receipts for land that the City of Durham Council had included in the joint venture between 2009 and 2012 had been used to offset a legacy £7.867 million loan that the City of Durham had borrowed from Keepmoat to fund the Freemans Quay development.
3. Thirdly, Durham Villages Regeneration developments no longer delivered locally ring-fenced funds. Instead, any impacts for individual communities were addressed through the Section 106 process - as they were consistently for all developments across the whole county.
In conclusion, the Council now had a countywide scheme offering valuable benefits to all areas. The Council had honoured the two City Council legacy commitments but once these were complete and paid for and a discrete fund for countywide housing regeneration formed, the County Council would use future dividend receipts to contribute to the Council’s corporate financing as it would with any other income stream.
This meant that use of the Council’s countywide land assets would directly contribute to addressing the unprecedented financial challenges that the Council was faced with, supporting the overall budget and allowing the Council to continue to focus resources on agreed priorities, wherever they may be in the county.