The controversial 3 Rivers Developments housing firm owned by Mid Devon Council is still expected to cause an £8 million financial hit. A fresh report shows that even though the size of the write-off linked to the developer has fallen, the total cumulative loss to the authority is currently £8.1 million.
The council set up and wholly owned 3 Rivers to build houses for sale in 2017, but decided earlier this year to ‘soft close’ it, preventing it from embarking on new projects but allowing it to complete ongoing schemes in Tiverton and Bampton.
Challenging trading conditions in the construction and housing sectors proved problematic for the company, with the firm shutting down projects amid rocketing prices for materials, facing struggles with restricted site availability, and being affected by rising interest rates and their subsequent impact on the housing market.
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Now, in a letter to our sister print title the Mid Devon Gazette, one local says that lessons aren't being learnt. And he calls for anyone senior involved in the debacle to resign.
Read the full letter below
- At the MDDC scrutiny committee meeting on February 19, I asked further questions about the ‘lessons learned’ concerning the financial disaster for local taxpayers that is 3 Rivers.
All of my questions, and the responses received, will be available eventually on the MDDC website. For now, here is the first lesson learned, my relevant question and the response received.
Recommendation 1: When setting up any commercial Special Purpose Vehicle (SPV) in future, ensuring the relevant skills and experience required at board level is indispensable. This should include at least two external directors with specialised skill sets unrelated to the council.
Question on Recommendation 1: Were two external directors with relevant specialised skills, who were unrelated to the council, in place from the outset?
Response: As confirmed on numerous occasions, directors were appointed with the relevant specialised skills from the inception of the company – this decision was made by the council after securing external professional legal and financial advice.
The council did make two external appointments following additional advice at significant cost. It would be interesting to reflect how these additional overheads placed further financial viability pressure on the company at a time when its pipeline of potential development opportunities was being constricted.
This response is, in my opinion, highly economical with the truth. I believe there were actually no external directors appointed at the outset of the company, with the three initial directors being directly connected to MDDC.
Independent directors were only appointed some years later, when forced upon the council.
The comment about cost placing further financial viability pressure on the council demonstrates that 3 Rivers was already in trouble before the new directors arrived.
Had competent directors, with the necessary skills, been present from the outset the huge losses could have been avoided, which will now be a burden on local taxpayers for many years to come.
In view of the apparent inaccuracy of this first response, I have no trust in anything MDDC now says about 3 Rivers, and I repeat my assertion, in a previous letter, that those senior officers involved should resign forthwith.
Goff Welchman
Tiverton
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