The Fielden Acre project is managed through the wider Fielden Centre Task Group with specific risks identified in relation to the purchase of and future management of the properties.
Significant areas of risk have been mitigated – particularly repair costs and tree safety - through a recently commissioned buildings survey and tree safety survey both of which put in place the foundation for a regular process for the management of the repair of the buildings and site.
Areas of risk associated with the potential purchase of the residential properties by CVCLT include relationships with the managing association (Fielden Hall Association) and with the tenants. These relationships have been managed over the past few months through careful communication between CVCLT, the owners, FCA and the tenants. CVCLT has been able to assure tenants that they will have security should CVCLT proceed with the purchase.
The single biggest risk to the project at present is raising sufficient capital to purchase the properties. Of the three sources of capital finance, an interest only loan for up to £120,000 has been secured and a Booster Fund equity investment of £50,000 has been confirmed.
Homes England Grant
CVCLT is a Registered Provider of Social Housing and is entitled to apply for and receive grants from Homes England to develop affordable housing. CVCLT has been in close contact with Homes England over the past 5 years around this and previous development and have successfully raised Homes England capital grant in 2018/2019.
The level of grant applied for is within accepted levels of grant for housing purchase and developments by community-led housing organisations and the society is confident that, should Homes England still have funds available, the application will be successful at this level.
In the unlikely event that the society is unsuccessful in achieving this level of grant or no grant at all, the purchase is unlikely to go ahead and the society’s Receiving Agent, Ethex, will refund any investments made at no charge.
The Community Shares funding is the least well known quantity at this stage. However, the society has been successful in raising funds very rapidly for the Walsden Project, in 2019. In 2018, the Trustees undertook a survey of known supporters and secured significant pledges of financial support for a large community shares fund on another project and has an identified core of supporters willing to invest in community shares at a range of levels. The project has had revenue support through the Booster Fund and secured £50,000 of equity match from the Fund which is very advantageous to securing a public offer.
Through its own reserves, a Booster Fund revenue grant and a REACH investment readiness grant, CVCLT has the funds available to launch and manage a share offer. The society also has an excess of loan agreed by CFfC which will provide a balancing fund should the optimum share target of £220,000 not be reached.
Future Loan Repayments
The Fielden Acre project is supported by the Community Foundation for Calderdale which has made an interest only loan available to the project at 2.5% interest. The capital is repayable after 5 years (2026). The society has the option to renegotiate the loan with CFfC prior to 2026 and extend the interest only period or repay the capital in full. The society’s contingency for this is to raise an additional £100,000 in community shares equity in 2025 to repay the loan.
The risks associated with acquiring the properties are relatively low as once funds are secured, the process is a straightforward purchase and transfer of deeds. There are none of the risks associated with a new build project as with the Birks Court, Walsden project and the properties are already tenanted with tenants that have a good track record of looking after the properties and paying regular rent.
Unexpected Building Costs
The properties are Victorian, Grade II listed buildings. Over the past 20 years, the entire building has been fully renovated to a good standard including fitting of a new roof, refurbishment of heritage windows, drainage works, and fitting of modern heating, hot water and electrical systems. As part of the purchase, CVCLT is generating funds to undertake a range of repairs that a 2020 Building Survey has identified and has in place a 10-year Maintenance Plan which should ensure that a managed maintenance programme will prevent undue deterioration of the building and raise any repair issues before they become major repairs.
The society will fund general repairs and maintenance through annual repair costs covered by income and the reserves policy of the society provides sufficient cumulative reserves to cover longer-term building repairs on the basis of 15% of the value of the properties over the period of the plan. The society will also have recourse to heritage and other grant funds to support the longer term maintenance of the heritage elements of the building should they be required. As a last resort, CVCLT will raise additional funds for major building works through further community shares issues or through social investment funders. The buildings will be fully insured.