Housing Development Fund Model Loan Agreement

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A decision made on 21 October 2014:

Decision Reference: MD-TR-2014-0084
Decision Summary Title:	Housing Development Fund - Approval of Model Loan Agreement with Andium Homes Limited		Date of Decision Summary:	14th October 2014
Decision Summary Author:	Head of Shareholder Relations		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Housing Development Fund - Approval of Model Loan Agreement with Andium Homes Limited.		Date of Written Report:	14th October 2014
Written Report Author:	Head of Shareholder Relations		Written Report : Public or Exempt?	Public
Subject: Housing Development Fund – Approval of Model Loan Agreement for use with Andium Homes Limited.
Decision(s): The Minister for Treasury & Resources approved the model Loan Agreement (see Appendix 1) to be used when lending money to Andium Homes Limited from the Housing Development Fund.
Reason(s) for decision: In support of States proposition P.33/2013: “The Reform of Social Housing” and in accordance with the use and operation of the Housing Development Fund as set out in Appendix C of the Draft Budget Statement 2015 (P.129/2014: “Draft Budget Statement 2015”) (see Appendix 2). Under MD-TR-2014-0015 the Minister for Treasury and Resources delegated all Ministerial Shareholder duties in relation to States Utilities, Andium Homes and SoJDC during the election period to the Assistant Minister.
Resource Implications: None.
Action required: The Treasurer of the States to advise the Finance Director of Andium Homes Limited and the Law Officers Department, that the approved model Loan Agreement will be the basis on which funds will be lent to Andium Homes Limited from the Housing Development Fund on an agreed projects basis.
Signature:		Position: Deputy E J Noel, Assistant Minister for Treasury and Resources
Date Signed:		Date of Decision:

Housing Development Fund Model Loan Agreement

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Treasury and Resources

Ministerial Decision Report

Housing development fund- approval of Model loan agreement with andium homes limited

Purpose of Report

To provide background information to support the request to the Minister for Treasury and Resources to approve the model Loan Agreement ( see Appendix 1) to be used when lending monies to Andium Homes Limited from the Housing Development Fund.

Background

The States in approving the Budget 2014 agreed, following the approval of P.33/2013: The Reform of Social Housing, that the States be authorised to borrow up to a maximum £250 million in 2014. The amount borrowed was to be transferred to the Housing Development Fund.

Of the £250 million borrowed, £207 million is planned to be allocated to Andium Homes Limited on an approved project basis and up to £43 million is available to fund schemes proposed by other approved providers (but is also potentially available to Andium Homes Limited in respect of additional schemes proposed)

This was published in the rules for the operation of the Housing Development Fund approved by the States, in the Draft Budget Statement 2015 – proposition (f) (P.129/2014).

It is anticipated that this model loan agreement will be used as the basis for loans approved relating to the remainder of these funds (up to £43 million.) However there may need to be additional provisions included in the loan agreement to cover any security required for loans to other approved bodies.

Development of the Draft Model Loan Agreement

The Draft Model Loan Agreement has been developed by the Law Officers Department, Treasury and Resources Department and Andium Homes Limited (supported by their independent legal advisers).

In compliance with the rules for the Housing Development Fund:-

Loans will be made on an “Agreed Projects” basis with a separate loan agreement prepared for each project.
The loans will be charged at an interest rate determined at the time of entering into each loan agreement, agreed between the parties.
Each loan agreement will be authorised by a Treasury and Resources Ministerial Decision and will be signed by the Treasurer of the States, in accordance with the signed Ministerial Decision.
Loans will be made for “Agreed Projects” which are defined as, a project in Jersey selected by the Housing Trust/Association /Trust and approved by the Minister for Treasury and Resources as part of an agreed Business Plan or otherwise. The Ministers approval will take into account the financial viability of each scheme and the ability to repay the loan requested
Andium Homes will pay the full cost of the “set up” charges for the £207million allocated to them when they take up their first loan. The share of the “set up” costs on the remaining £43 million will be allocated on a pro rata basis to each loan made from this element.

Appendix C of the Draft Budget Statement 2015, as approved by the States, sets out rules giving further instruction and guidance on the use of funds and the purpose and the operation for the Housing Development Fund. (see Appendix 1 for a copy of the draft Model loan agreement and Appendix 2 for a copy of Appendix C).

Appendix C will be issued in a Financial Direction by the Treasurer of the States.

Recommendation

The Minister for Treasury and Resources is recommended to approve the Draft Model Loan Agreement which is to be used when lending money to Andium Homes Limited from the Housing Development Fund.

Resource Implications

None.

Report author : Head of Shareholder Relations	Document date : 23rd September 2014
Quality Assurance / Review : Business Manager	File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2014-0084 - Housing Development Fund Model Loan Agreement\WR - Housing Development Fund Model Loan Agreement.doc