Council agree £21m loan to firm which lost £6m as boss says ‘lessons learnt’
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Norwich city council has agreed to lend its own housing company up to £21m to prevent the firm’s collapse, after bosses insisted “lessons were learned” from the loss of £6m of taxpayers’ money.
The city council set up housing firm Norwich Regeneration Ltd in 2015 to create 1,000 homes at Rayne Park, in Bowthorpe.
And the authority loaned the business millions of pounds to fund the project’s completion.
But it was revealed the company lost £6m after initial homes were sold for less than they cost to build and the council was overcharged according to a leaked report.
But now the council has agreed to lend up to £21m by upping its loan facility - the maximum NRL can borrow from them - by £9.6m rather than liquidating the firm.
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That figure is currently capped at £11.4m, as agreed in November.
Speaking at the city council’s first remote cabinet meeting, held on Wednesday, June 6, managing director Dave Shaw said “lessons were learned” from the firm’s mistakes and the company had worked to take control of finances.
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He said: “I do believe we were on the verge of success with the company.
“Nobody would have envisaged the pandemic would take such a grip on the world.”
He said steps had included reviewing contracts and he was now proud of the housing quality.
“We have moved from RG Carter to Carter Housing,” he said.
The remaining homes will be remarketed as Trinity Gardens at Rayne Park, and he said they had a better picture of the market and could therefore maximise revenue.
Karen Davis, Labour councillor for Town Close ward, said: “We’ve seen every document we’ve asked to see and everything has been very clear. I do have complete faith in Dave to steer this.”
But Sandra Bogelein, leader of the Green Party group, said: “I cannot believe that NRL asks for this kind of additional money without having completed a review of their governance.”
The council’s chief executive officer Stephen Evans said non-executive directors were in the process of being appointed.
And council leader Alan Waters said there were accusations the council had kept issues “behind closed doors” but insisted the firm had been discussed at meetings 52 times in the past three years.
He added: “This is something which has been exhaustively discussed and available for all members to contribute to.”
The cabinet agreed to increased loan and equity financing for the company to complete the homes.