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Telford Fire Safety Remediation | 12 Months Ended
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Dec. 31, 2023
Restructuring and Related Activities [Abstract] |
Telford Fire Safety Remediation | Telford Fire Safety Remediation On April 28, 2022, Telford Homes signed the U.K. government’s non-binding Fire Safety Pledge (the Pledge) to comply with the Building Safety Act of 2022 (BSA). The BSA introduced new laws related to building safety and the remediation of historic building safety defects, effectively requiring developers to remediate certain buildings with critical fire safety issues. The BSA also retrospectively amended the Defective Premises Act of 1972 (DPA) to allow claims to be made within a 30-year limitation period for dwellings completed before June 28, 2022. The U.K. government had previously established a Building Safety Fund (BSF) and an Aluminum Composite Material (ACM) fund, whereby applicants to the fund would be funded by the government to remediate certain fire safety defects if certain criteria were met. On March 16, 2023, Telford Homes entered into a legally binding agreement with the U.K. government, under which Telford Homes will (1) take responsibility for performing or funding remediation works relating to certain life-critical fire-safety issues on all Telford Homes-constructed buildings of 11 meters in height or greater in England constructed in the last 30 years (in-scope buildings) and (2) withdraw Telford Homes-developed buildings from the government-sponsored Building Safety Fund (BSF) and Aluminum Composite Material (ACM) Funds or reimburse the government funds for the cost of remediation of in-scope buildings. We believe there is an obligation attributable to past events, including as a result of retrospective changes in building fire-safety regulations, under the Pledge and the legally binding agreement. During the year ended December 31, 2023, management substantially finalized the determination of in-scope buildings that require some level of remediation with assistance from internal and external experts. We believe approximately 79 buildings are in-scope as compared to 84 buildings previously deemed to be at risk. The accompanying consolidated balance sheets include an estimated liability of approximately $192.1 million (of which $82.2 million was current) and $185.9 million (of which $51.6 million was current) as of December 31, 2023 and 2022, respectively, related to the remediation efforts. The current liability includes estimates related to remediation activities we plan to perform within one year and the net amounts that the U.K. government has already paid or quantified through the BSF for remediation of Telford-constructed buildings. The remaining balance represents estimates developed by Telford’s internal team and/or third-party experts for the remaining in-scope buildings. The overall balance increased during 2023 primarily due to the movement of foreign exchange rates, partially offset by costs incurred for work performed in 2023. We did not record any additional provision during the year ended December 31, 2023, as the above balance remains our best estimate of future losses associated with overall remediation efforts. We did not have any significant cash outflows related to this work in 2023. To the extent management did not have comprehensive cost assessments for certain buildings, the liability was estimated using the best available data, including (i) industry data, (ii) certain cost assumptions applied to scope of remediation work on specific building as identified by fire safety assessments (also known as PAS assessments, which include fire risk appraisal of external wall construction), and (iii) bids from subcontractors. We applied an inflation factor to account for the extended period of time during which the remediation work will be performed, an estimate of direct costs associated with an internal team dedicated to this remediation, and a contingency to account for unknown remediation costs. The estimated remediation costs for in-scope buildings are subjective, highly complex and dependent on a number of variables outside of Telford Homes’ control. These include, but are not limited to, individual remediation requirements for each building, the time required for the remediation to be completed, cost of construction or remediation materials, availability of construction materials, potential discoveries made during remediation that could necessitate incremental work, investigation costs, availability of qualified fire safety engineers, potential business disruption costs, potential changes to or new regulations and regulatory approval. We will continue to assess new information as it becomes available during the remediation process and adjust our estimated liability accordingly.

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