Purpose

Seeking approval to form a Limited Liability
Partnership between B&NES Council and Aequus Group for the
delivery of housing regeneration projects.

Decision

(1) 
To agree to the establishment of a Limited Liability Partnership
(LLP) between the Council and the Group.
 
(2) 
To approve the proposed membership agreement of the LLP set out in
Attachment 1 of the report.
 
(3) 
To delegate to the Director of Capital & Housing Delivery the
authority to take all steps necessary to form the Limited Liability
Partnership for the regeneration of the Bath Quays North plots 6
& 7 and Bath Quays south (collectively referred subsequently as
the Site) in the proportions provided for in attachment 1 of the
report.
 
(4) 
To agree to loan the LLP the Site development costs.
 
(5) 
To agree in principle to the use of the existing Aequus Development Loan Facility and the
Aequus Working Capital Facility by the
LLP.
 
(6) 
To delegate to the Director of Capital & Housing Delivery in
consultation with the Leader, Cabinet Member for Resources and S151
Officer authority to transfer the Site to the LLP.
 
(7) 
To delegate to the Director of Finance (S.151 Officer) in
consultation with the Executive Director of Sustainable
Communities, the power to approve the Full Business Case to develop
the Site and enter into a loan agreement with and take security for
the loan from the LLP.

Reasons for the decision

The LLP will be a commercial entity and
capable of taking risks that the Council might not. The LLP sits
outside of the Council and does not carry balance sheet risks for
it. Additionally, the LLP will be created solely for the
redevelopment of the Site.
 
Creating an individual LLP for each
regeneration project will ringfence the risk to that site and not
impact the viability of the Group or adversely impact the
Council’s finances.
 
The Council and the Group have been provided
with accountant advice from Bishop Fleming that concluded that the
most efficient model is for the Council and ACL to incorporate a
limited liability partnership (LLP).
 
The main reason for this model being
financially efficient, being that:
 
· 
The LLP can recycle any profit to support the Council’s
regeneration and housing duties.
· 
As the LLP itself is not subject to corporation tax (unlike a
company limited by shares), any profit of the LLP is taxed in the
hands of the members. As the Council is exempt from corporation
tax, the Council’s share of the profits would be exempt (the
Groups share of profits would be subject to corporation tax in the
hands of ACL).
 
Any profit created by the regeneration of the
Site which is subsequently received by the Council could be used to
further regeneration activity in the Council area and provide
subsidy for social housing on those future sites.

Alternative options considered

None.