That, subject to the Council’s approval of recommendations 6 and 7, the following be implemented:

1.            TorVista be instructed to progress the current projects of St Kilda and Torre Marine, subject to viable business cases, as directed by the Director of Adult and Community Services;

2.            TorVista be instructed to refrain from taking on any new development work, or projects, until further notice unless requested to do so, in writing, by the Council’s Chief Executive or formal decision from Council;

3.            TorVista be instructed to reduce operating costs from £370,000 per annum to a maximum of £223,700 per annum through removing all functions, and associated costs, other than those required to provide a landlord service for the current 32 Units within their ownership;

4.            Torbay Council set up a ‘Torbay Council Strategic Holding Company’ and, subject to ensuring compliance with the Regulator of Social Housing, move the wholly owned company of TorVista from Torbay Economic Development Company to become a wholly owned sub company of the Council ‘Strategic Holding Company’ and the Chief Executive, in consultation with the Leader of the Council and Cabinet Member for Finance and Corporate Services, be given delegated authority to establish all governance arrangements for the Strategic Holding Company;

5.            That further work is undertaken by the Director of Finance with regards to the future management and operation of the 32 units currently owned by TorVista, (plus any subsequent units that might arise through either St Kilda and/or Torre Marine), to drive down operational costs which, subject to the compliance with the Regulator of Social Housing, might include:

(a)  Transferring the residential assets to alternative Residential Providers and the land assets back to Torbay Council; and / or

(b)  Integrating the TorVista landlord function with the management and maintenance of other Council owned assets such as temporary accommodation properties;  and

The outcome of this work be reported to the Cabinet to enable it to make recommendations to the Council meeting on 7 December 2023, (as part of, and to inform, the budget setting process), on whether it wishes to continue to fund TorVista to develop, and deliver, specialist housing schemes which link directly to the Council’s Community and Corporate Plan and Housing Strategy priorities which could include:

o   Extra Care Housing;

o   Supported Living;

o   Care leaver accommodation;

o   Temporary Accommodation

Recommendations to Council:

That Cabinet recommends to Council:

6.         The Director of Finance be instructed to write off the ‘working capital’ loan of £1.5m, accrued by TorVista as at September 2023, to be funded through a strategic review of Council Reserves;

7.         that Council Minute 67(v) of 20 July 2017 be rescinded, thereby removing any approval of prudential borrowing to facilitate further schemes by TorVista; and

8.         The Council approve revenue funding of £115,000 for maintaining TorVista operations for the six-month period from October 2023 to March 2024.

The future options for the structure and operation of TorVista Homes was aligned to the “Future Options on the structure and operations of Torbay Economic Development Company” which was intended to accelerate delivery. In the case of TorVista however, with the assets and liabilities of TorVista being underwritten by the Council, with an accrued loan debt of £1.5m and on-going operational costs of £370k per annum, the Council needed to determine whether:

(a) it could afford to maintain the existing structure and operational arrangements of TorVista within the context of the wider Council budget and

(b) whether the annual costs incurred by TorVista represent Value for Money from public sector funding when considering the outcomes delivered to date and those forecasted over future years.

Alternative options were set out in the submitted report and included the following:

·         Cease trading;

·         Maintain trading and continue to acquire new stock;

·         Expand the remit / responsibilities of TorVista.

The recommendation of the Cabinet will be considered at the Council meeting on 20 September 2023.

TorVista Homes was set up as a wholly owned company of Torbay Council, reporting into Torbay Economic Development Company in 2019.  The initial objectives of the company, as reported in September 2016, was to ‘develop and own homes with the overarching aim of maximising income back to the Council’. 

A secondary objective was to help the Council deliver against its Housing Strategy. This was reaffirmed in a Full Council report in December 2018 which included the recommendation ‘that in principle there appear to be clear benefits in merging the Housing Rental Company (RentCo) into the TDA, or a subsidiary of the TDA to enable relevant affordable housing schemes to be delivered at pace’.

In July 2017, Council approved a loan facility of up to £25m to develop, and deliver, specific housing schemes subject to individual business cases to be submitted and approved by the Council’s Section 151 Officer (in consultation with Cabinet member).  However, whilst planning permissions have been achieved at Preston Down Road, Crossways, Torre Marine, St Kildas, and Totnes Road for circa 300 homes, as at 31 August 2023, only business cases, and subsequent loans, amounting to £3.2m have been approved.

The Business model of TorVista was based on the premise of accumulating a critical mass of developments, and subsequent ownership of assets, that would cover the entire operational cost of running the company with the intention that, ultimately, TorVista would generate an on-going revenue surplus in line with the September 2016 report. However, the company currently owns, and manages, just 32 units.

When setting up TorVista, it was recognised that there would be a need to ‘pump prime’ the operational costs of the company whilst assets were being developed and accumulated. In July 2019 the Council approved that a loan of up to £1 million be approved to TDA, if required, to allow access to the necessary working capital required to set up the Housing Company with the terms of the loan delegated to the Chief Finance Officer to agree, in consultation with the Cabinet Member for Finance. This was subsequently increased to £1.5m as approved in October 2022. It was intended that this working capital loan would be repaid to the Council, by TorVista, when the level of rental income received was sufficient enough to generate a surplus position.  However, the full £1.5m has now been drawdown, and spent, by the company with on-going net costs, (accounting for existing rental income), of circa £370k per annum.

Whilst there is value in the assets held by TDA, without an achievable route through to a substantial critical mass, these costs will ultimately fall back on Torbay Council and will need to be accounted for within the Council’s budget and financial framework.

At the meeting Councillor Tyerman proposed and Councillor David Thomas seconded a motion that was agreed unanimously by the Cabinet, as set out above.

None.