Agenda item

As a result of a number of external factors the Council’s Housing Private Finance Initiative (PFI) project currently faces considerable financial challenges and a projected deficit which falls on the Local Authority. This report proposes a number of contractual revisions to provide the Council with flexibility in order to improve the financial performance of the project and substantially reduce the prospective deficit. These have been arrived at following a period of negotiation with the Council’s PFI contract partner, Brent Co-Efficient (BCE) and following consultation with the Homes and Communities Agency (HCA) the Department for Communities and Local Government (DCLG).

(i)         that the proposed revisions to the Project Agreement (and related documents) as set out in paragraphs 4.1 to 4.15 of this report be noted and authority to agree of the final terms of revision to the Project Agreement (and related documents) contract be delegated to the Strategic Director for Regeneration and Growth in consultation with the Chief Finance Officer and the Borough Solicitor;

(ii)        that authority be authority to the Strategic Director for Regeneration and Growth, in consultation with the Chief Finance Officer and the Borough Solicitor, to agree the variation to the PFI Project Agreement and all other related documents, in order to enable the contract revisions to be properly documented;

(iii)       that the Borough Solicitor, or an authorised delegate acting on her behalf, be authorised to execute all of the legal agreements, contracts and other documents on behalf of the council and such other legal agreements and documentation which may be necessary to give full effect to the variation to the PFI Project Agreement, subject to her receiving confirmation of continuing credit approval from the Department for Communities and Local Government, through the Homes and Communities Agency (HCA) or, executing such contracts and other documentation with a pre-condition that they shall only come into full effect upon the issuing of such PFI credit approval by the HCA/DCLG;

(iv)       that the Chief Finance Officer can issue, on behalf of the council, such certificate or certificates under the Local Government (Contracts) Act 1997 to:

a.            Brent Co-Efficient in respect of the Deed of Amendment (or such other document) to give effect to the variations to the PFI Project Agreement;

b.            Brent Co-Efficient's funders in respect of any the Direct Agreement Amendment Deed (or such other document) to give effect to the variations to the Direct Agreement entered into between the council, such the funders and Brent Co-Efficient; and

c.            Hyde Housing Association and the Brent Co-Efficient’s funders in respect of a the Residual Value Amendment Deed (or such other document) to give effect to the revised Residual Value Deed to be entered into between the council, Hyde Housing Association and the funders.

(v)        Agree that the Chief Finance Officer will be fully indemnified by the council in the event of any claim against him arising from the provision of any Certificate he may issue in accordance with recommendations/decisions in (iv) above.

As a result of a number of external factors the council’s Housing Private Finance Initiative (PFI) project currently faced considerable financial challenges and a projected deficit which fell on the Local Authority. The report from the Strategic Director Regeneration and Growth proposed a number of contractual revisions to provide the council with flexibility in order to improve the financial performance of the project and substantially reduce the prospective deficit. These have been arrived at following a period of negotiation with the Council’s PFI contract partner, Brent Co-Efficient (BCE) and following consultation with the Homes and Communities Agency (HCA) the Department for Communities and Local Government (DCLG). Councillor McLennan (Lead Member, Regeneration and Housing) in introducing the report, reminded the Cabinet that the PFI agreement was due to end in 2028 and, on current estimation, there would be a £17.1m deficit mainly due to welfare reforms introduced by central Government which led to rental income to fund required payments not having risen as assumed. The proposed changes introduced flexibility over the way in which the 364 units intended for use as temporary accommodation were used and the rents charged, with the effect of reducing the deficit to an estimated £1m by the end of the contract.

The Chief Finance Officer contributed that project was susceptible to legislative changes and would be kept under review. The Borough Solicitor added that this was seen to be the best way of the council meeting its fiduciary duties.

The Executive also had before them an appendix to the report which was not for publication as it contained the following category of exempt information as specified in Schedule 12 of the Local Government (Access to Information Act) 1972: 

Information in respect of which a claim to legal professional privilege could be maintained in legal proceedings.

RESOLVED:

(i)         that the proposed revisions to the Project Agreement (and related documents) as set out in paragraphs 4.1 to 4.15 of the report from the Strategic Director Regeneration be noted and authority to agree of the final terms of revision to the Project Agreement (and related documents) contract be delegated to the Strategic Director for Regeneration and Growth in consultation with the Chief Finance Officer and the Borough Solicitor;

(ii)        that authority be delegated to the Strategic Director for Regeneration and Growth, in consultation with the Chief Finance Officer and the Borough Solicitor, to agree the variation to the PFI Project Agreement and all other related documents, in order to enable the contract revisions to be properly documented;

(iii)       that the Borough Solicitor, or an authorised delegate acting on her behalf, be authorised to execute all of the legal agreements, contracts and other documents on behalf of the council and such other legal agreements and documentation which may be necessary to give full effect to the variation to the PFI Project Agreement, subject to her receiving confirmation of continuing credit approval from the Department for Communities and Local Government, through the Homes and Communities Agency (HCA) or, executing such contracts and other documentation with a pre-condition that they shall only come into full effect upon the issuing of such PFI credit approval by the HCA/DCLG;

(iv)       that the Chief Finance Officer can issue, on behalf of the council, such certificate or certificates under the Local Government (Contracts) Act 1997 to:

a.            Brent Co-Efficient in respect of the Deed of Amendment (or such other document) to give effect to the variations to the PFI Project Agreement;

b.            Brent Co-Efficient's funders in respect of any the Direct Agreement Amendment Deed (or such other document) to give effect to the variations to the Direct Agreement entered into between the council, such the funders and Brent Co-Efficient; and

c.            Hyde Housing Association and the Brent Co-Efficient’s funders in respect of a the Residual Value Amendment Deed (or such other document) to give effect to the revised Residual Value Deed to be entered into between the council, Hyde Housing Association and the funders.

(v)        that the Chief Finance Officer be fully indemnified by the council in the event of any claim against him arising from the provision of any Certificate he may issue in accordance with recommendations/decisions in (iv) above.