Council owned property firm to close with debts of £21m
A council owned property development firm with debts of £21m is to cease trading.
The company 3Rivers Developments was formed by Mid Devon District Council in 2017.
The aim was to deliver high quality homes in Mid Devon, while providing a financial return to the council.
The council has admitted that after six years it is clear these long term aims have not materialised and set against a back-drop of high interest rates, high building costs and a changing housing market the future of the firm has been uncertain for some time.
Councillors have been told the authority had loaned the company more than £21m and an annual sales turnover of around £3-3.5m is needed just to cover overheads.
While 3Rivers has delivered housing projects in Mid Devon since it began, including the Orchard, Halberton, Threwstones, Tiverton and a development of social housing in Burlescombe, the council decided in March that it would not start any new projects.
Following this decision the Council’s Cabinet met in August and has recommended 3Rivers undertake a “soft closure”, which in effect means the business would be wound down and ultimately cease trading.
This recommendation from the cabinet will now be put forward to full council on September 6th for a final decision.
Luke Taylor, leader of Mid Devon District Council, said: “We know there have been concerns raised about the viability of 3Rivers, and the council funding of it, for some time and as a newly appointed Leader I committed to addressing this concern swiftly.
“Building more homes in Mid Devon, which are high quality and in the right location, is something most of us agree needs to happen, but we must make sure the process to build these homes is the right one and that our limited council resources are used in the most efficient way.
“We are committed to investing in Mid Devon and will now work with our officers to plan future housing delivery across the district in an open and transparent way.”
The council will now look to seek independent advice to ensure that, should the full council agree to the closure, it is undertaken correctly in order to reduce any further costs.
