The report's comment that "it is difficult to see what can be done now to prevent the insolvency" has alarmed the incoming Liberal Democrat-led administration.
The commission says the former Labour leadership's long-term low rents policy has left the council needing £250m to reach the decent homes standard. At 8.5%, it has many more empty homes than any other unitary authority.
Maximum rent increases over the last two years have not solved the problems.
The report castigates a culture of bullying by councillors and "service departments acting as independent fiefdoms". It says the council has a record of accepting criticism then ignoring it.
"Recommendations from inspection and audit reports have usually been tackled late, grudgingly and under threat," the report adds.
Measures earmarked for immediate action include exploring stock transfers. The council must take a final decision on the future of its 35,000 homes and begin implementing its plans by April 2004.
Cabinet member for community services Chris Jarvis said he was starting immediate talks with the as-yet unrecognised Hull Tenants Federation and other local groups.
"Without consultation and choice we cannot move forward," he said.
He hopes to persuade the commission to hold off a formal takeover if the council can quickly develop a realistic way forward.
The commission refused to comment until the final report is published in July.
Source
Housing Today
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