The juggling of finances of a council housing scheme in Ayr will cost the council the equivalent of 20 new homes, according to a former housing spokesperson.
Labour councillor Philip Saxton, along with senior SNP councillor William Grant, and Labour colleagues Ian Cavana and Cameron Ramsay, is calling in the decision to transfer land at the John Pollock Centre from South Ayrshire Council’s general services account to the housing revenue account.
The council is to build around 160 homes at the Mainholm site.
The issue centres around the decision to accept a proposal that will see the council’s housing fund pay out £1m more than the £2.2m the site has been valued at.
When the previous SNP/Labour administration considered the transfer of the John Pollock Centre site to the HRA in August 2021, they were told that DM Hall had valued the site at £3.4m.
However, when ‘abnormal costs’ of £3.222m for demolition and drainage works were taken into account, the HRA would only be required to pay the general fund around £177,000.
This changed when the cabinet met last month. A lower ‘social housing’ land value of £2.2m was revealed, based on new policy that allows the council to accept a lower than market value transfer where there are benefits like social housing.
But instead of the HRA paying £2.2m to the council’s general fund, cabinet agreed to a ‘nil’ transfer, on the basis that the HRA covered the full £3.222m in abnormal costs, effectively paying £1m above the new valuation.
Speaking to the Local Democracy Reporting Service, Cllr Saxton said that the decision would see the HRA lose money that could pay for 20 new council houses.
He called for the £1m difference between the new valuation and the ‘abnormal costs’ to be paid for by the general fund.
The Troon councillor added that the last administration had struggled to get information when considering the transfer last August.
He said the administration was not given the social housing value of £2.2m, only being informed of the open market value of £3.4m.
“At the leadership panel we were originally not given the value for social housing, only the value stated market value which was £3.4m,” he said.
“We requested the social value and eventually found this to be £2.2m, which was more realistic.
“Both values were from DM Hall and would be reduced by the abnormal costs of £3,222,539.
“At the time we requested the demolition costs should be met by the general services account.”
It is understood that an investigation concluded that both values should have been given at the time.
In January the leadership panel had sought to mitigate the cost to the HRA, agreeing that the demolition of the existing buildings would be funded by the general services capital account.
Cllr Saxton’s call in questions why this decision was reversed at Cabinet.
It asks for the outcome of the consultation with tenants and residents held in August.
The call in request concludes that the £1m difference could ‘allow the HRA to build a further estimated 20 social homes along with Scottish government grants’ and states that the general policy for transfer of council land for housing should be based on social housing value.
Asked whether the call in would delay or pause work, a council spokesperson said that the enabling works were already completed and the next phase was scheduled to start in mid September.
They added: “This item will be discussed at Audit and Governance Panel on Wednesday, September 7.
“It would be inappropriate to respond to these questions in advance of that meeting.”
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