The Regional Chamber of Accounts (CRC) of Brittany recently published an observation report on the local mixed economy company (SEM) Terre et Toit, formerly known as SADIV. This document highlights notable improvements in the governance and management of this company since its previous audit in 2017, but also significant structural challenges to ensure its sustainability in a rapidly changing market and regulatory context.
Land and Roof Ille-et-Vilaine is a Local Mixed Economy Company (SEM), formerly known as SADIV, created to meet the planning and territorial development needs of the Ille-et-Vilaine department. It plays an important role as a public actor in the promotion of housing, land management, and support for local authorities in the implementation of real estate projects.
This company is mainly involved in urban and peri-urban development operations, facilitating the creation of housing, infrastructure and activity zones in the department. Terre et Toit collaborates with local authorities, such as municipalities and public intermunicipal cooperation establishments (EPCI), to develop projects which are part of a logic of public interest.
A history of deficits corrected thanks to renewed governance
Under the leadership of the Department of Ille-et-Vilaine, SEM Terre et Toit has strengthened its governance. Following management failures noted in 2017, the company undertook an overhaul of its management structure. In 2016, the department increased its shareholding from 58% to 71%, marking significant financial support. Now chaired by the head of the departmental council and equipped with independent general management, the SEM has consolidated the confidence of financiers, thanks in particular to more precise contractual documents and more rigorous monitoring of activity reports.
SEM Terre et Toit has restored the stability of its finances by limiting the losses of certain operations, in particular thanks to the abandonment of the most loss-making projects. However, the report highlights the continued fragility of its results. While the real estate market in Ille-et-Vilaine is slowing down, the SEM continues to be under competitive pressure, facing around ten other well-established public and private players in the region. As a result, its project portfolio remains limited and struggles to renew itself, a crucial issue as the SEM depends on a limited number of operations to generate revenue.
The challenges of the “Zero Net Artificialization” (ZAN) law
The Climate and Resilience law, imposing “Zero Net Artificialization” (ZAN) by 2050, profoundly modifies the business prospects of Terre et Toit. Historically oriented towards the development of urban and peri-urban spaces, the SEM must now consider densification projects, a more complex and less profitable approach than urban sprawl. This transition towards more costly and difficult-to-profit operations requires a strategic adaptation for the SEM, particularly in terms of partnership and land prospecting.
A central point of the CRC report is the absence of a clearly defined commercial strategy for Terre et Toit. Despite the CRC’s recommendations in 2017, the SEM has not yet established a structured commercial plan, which limits its ability to capture new business opportunities. Only one-off initiatives, such as the creation of a website for the sale of land, have been undertaken. The Chamber therefore recommends that the SEM formalize a strategy from 2024 to ensure its sustainability and seize new opportunities on the development market.
Although Terre et Toit has improved its cash management since 2017, the report notes that this financial stability is largely based on re-invoicing activities with the SPL (Société Publique Locale) public construction company of Ille-et-Vilaine. This dependence on SPL, whose activity is growing, could constitute a risk in the event of a reduction in SPL orders. Furthermore, the SEM is faced with a reduction in its land inventories and a slowdown in sales, which accentuates its vulnerability in a context of a less dynamic real estate market.
Recommendations for the future: a clear strategy for 2024-2029
To address these issues, the CRC issues several recommendations, the main of which is the development of a strategic plan for 2024-2029. This plan should include development objectives and concrete means to strengthen the SEM’s commercial offering. The CRC also encourages Terre et Toit to strengthen its customer satisfaction evaluation policy, an essential lever for adjusting its services to the needs of local authorities and guaranteeing the quality of its services. Finally, the Chamber recommends more intensive canvassing of municipalities and public intermunicipal cooperation establishments (EPCI) to develop new partnerships and diversify its portfolio of activities.
While SEM Terre et Toit has made significant progress in its governance and financial management, its future will depend on its ability to adapt to current economic and regulatory challenges. The need for a clear and proactive strategy, associated with a strengthened commercial offer, is essential to guarantee its sustainability and maintain its mission of sustainable development at the service of the communities of Ille-et-Vilaine.
Full report here
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