3Rivers is to close
Nearly £4 million is to be written off by a Devon council over its controversial housing firm.
Mid Devon District Council says £3.7 million will need to be found from reserves and other sources to cover losses linked to its 3Rivers Developments housing company.
Luke Taylor (Lib Dem, Bradninch), the leader of the council, said the precise make-up of the funding to cover the gap in the budget would be decided, but it would comprise of earmarked reserves, the new homes bonus, as well as various sinking funds.
The authority has prevented 3Rivers, which is wholly-owned by the council, from taking on new projects, and plans to close it once projects at St George’s in Tiverton and Bampton are complete.
A report to the council also showed that more than £1.3 million was loaned to 3Rivers in the three months to 30 September.
This means the total outstanding loans were £22.3 million. The council said interest of £312,000 was charged by the authority for these loans for the third quarter.
The business launched in 2017, but challenging trading conditions in the construction and housing sectors proved problematic.
The firm shut down projects amid rocketing prices for materials, and faced struggles getting hold of land, as well as rising interest rates and their subsequent impact on the housing market.
The company’s latest published accounts show pre-tax losses ballooned to more than £1.9 million in the year to 31 March 2022 compared to a loss of nearly £96,000 the prior year.
It has to publish new accounts by 31 December.
Mid Devon District Council’s scrutiny committee tackled the divisive issue of the company this month, and formed a working group to try to learn lessons.
The closure of the company will mean that previously identified expenses linked to 3Rivers will now no longer be needed by the council. That saves nearly £10 million for projects at Park Road in Tiverton and Knowle Lane in Cullompton as they have been scrapped.