Update on Fossetts Farm development

Update on 30th May 2024

"Earlier today, the council, its advisers, and Citizen Housing met to discuss the first and second pieces of the due diligence work that have been received.

"It was a productive and collaborative meeting. The significant complexity of the proposal and elements of the due diligence work done so far inevitably raised questions from all parties, and it is therefore necessary for the recently received financial analysis to be reviewed with some additional information. This effectively places us somewhere between the outcomes laid out in my first update of 23rd May (see below).

"We expect this work to be completed and returned to us early next week with an initial summary report of the third part of due diligence also anticipated to arrive by midweek. All parties have agreed to meet again at the end of next week, once those reports have been received to progress discussions further.

"I understand the uncertainty for fans and other stakeholders is hard and all parties are working to support the club. However, it is necessary for the long-term protection of public finances and future financial sustainability of the Council for the due diligence work on this highly complex and high value project to be extremely thorough."

"We know that the football club is close to the hearts of many people, and we are all keen to provide clarity and certainty, but we must be mindful that the council has responsibilities and obligations in excess of a typical investor in a deal of this nature.

"The timeline for the next step has been laid out and we will update again as soon as is practicable after the next meeting."

Cllr Daniel Cowan, Leader of the Council

Update on 24th May 2024

"Late this afternoon, the Council received the financial analysis to reach the latest milestone in the due diligence process. The Council must now work through this with Citizen Housing next week.

"The due diligence has always been a complex and ongoing piece of work where each stage must be completed before the next can be concluded. As part of our commitment to transparency, we will endeavour to update each week as matters progress."

Cllr Daniel Cowan, Leader of the Council

Statement issued on 23rd May 2024

The angst and frustration felt by fans of the football club is understandable.

I also fully understand that people want regular, open, and honest dialogue about this vital issue, and we have promised to give this. This update is part of that promise.

The first thing to say is that the council is committed and supportive of the football club. It has been for many years.

The council is trying to help as much as it can. That is why the council has been working with Citizen Housing since the consortium took over to take the previously proposed new stadium out of the equation and focus on a housing-led development at Fossetts Farm.

There is a perception that the council should be getting on with its part of this quicker. We understand this perception, but the council has been getting on with it.

However, carefully working out whether this deal is right for the city, the council and residents is not a simple thing. Many of us will know that even buying and selling a house can take many months. This is a half a billion-pound project with huge opportunities and risks for the council and therefore the taxpayers of the city. It is not something we can just jump into lightly or without very detailed consideration.

As a public body, the council has a legal duty to ensure the part of the deal we are involved in represents value for money over the long-term and is something that the council can financially sustain into the future.

The transaction that the council is working on for the large-scale development of land at Fossetts Farm is complex and relatively specialist in nature. It requires extensive due diligence.

As the April cabinet report made clear, there are four elements to the due diligence. These cover market/property, financial, legal, and external audit. These areas all require specialist and external advice. This is being funded by the developer, not the council.

As the April cabinet report also stated, although headline terms were agreed in principle (subject to the due diligence) on 1 January 2024, the council did not have visibility of the proposed housing development until 21 March. Outstanding information was still required from the developer including specification and gross area of properties for example. The schemes and information have been evolving during, and to some extent, based on the due diligence work and this means some elements of work so far have been based on assumptions and all parties need to be comfortable with any risks around this. It may be that the due diligence process will also pose further questions which will need to be addressed. This is not yet known.

The council wants to make this work, but it also has a duty to ensure this is done properly and that the council protects itself and its taxpayers from any undue financial risk. It is a significant and complex transaction, and the background work unfortunately takes time.

The new cabinet and officers met on Tuesday night to discuss several matters, including this. I know that officers are working as hard as they can with our advisors to complete the due diligence work that will enable a decision to be taken by the council. This work is not all in the council's hands, but we are pushing this as much as we can, and whilst we cannot pre-empt the findings of this process, we will report back as soon as possible.

The council's position has been consistent throughout and as raised during scrutiny, once the various elements of outstanding due diligence are completed, these will need to be carefully read and understood so that the relevant councillors can be briefed. There are, at this stage three possible outcomes:

• if the conclusion of this stage of due diligence (property/market and financial) is that the deal should be cleared to progress, then the council must get its external auditors to review everything and be satisfied that everything is in the council and taxpayers' best interests
• if the conclusion is that the transaction is very close to being cleared to progress subject to a small number of minor adjustments, then further negotiation will be needed to see if these matters can be resolved to enable matters to proceed. Citizen Housing might decide to engage with other parties at this point
• if the conclusion of this stage of due diligence is that the transaction is not in the council and taxpayers' interest, and it should not proceed, then we will share that position. Further stages of work will not be required, at which point an alternative partner to the council will certainly be required for the development to progress

There will of course be different considerations for the football club and consortium itself associated with each of these potential outcomes.

The council will work to keep all stakeholders updated. We know that fans have been patient and are keen for a conclusion, and we appreciate the continued patience of fans as we work through everything.

Cllr Daniel Cowan, Leader of the Council