gloucester city council and gloucester city homes gloucester co-co model october 2012 martin shields...
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Gloucester City Counciland
Gloucester City Homes
Gloucester Co-Co ModelOctober 2012
Martin Shields
Corporate Director of Services and Neighbourhoods
Gloucester City Council
martin.shields@gloucester.gov.uk
About Gloucester City Homes
• 0* in 2005; 2* in 2007; 3* excellent organisation with excellent prospects - Dec 2010
• Delivered 100% Decent Homes / 99% Tenant Satisfaction with improvements – March 2012
• Wide range of external accreditations including IIP Gold; BSI ISO 9001; Customer Service Excellence
• Excellent performance in virtually all service areas
• High levels of efficiency savings c£13M
Purpose of the Options Review
• Determine a clear strategy for future investment in the Council’s housing stock
• Regenerate our housing communities
• Develop new affordable housing
• Identify a preferred option model to deliver these.
Investment Requirements
• In summary: Overall investment 30 years: c£260,000,000 to maintain the stock to a decent homes standard. No regeneration or development
• Equates to c£57k per property over 30 years, or £2k per property per year.
Investment Requirements
• Self financing is good for Gloucester £2.143M additional debt
• Around c£3M better off per annum through retaining rents
• However Investment Shortfall of £13.1M over first 11 years of plan because of required investment in non-traditional stock
Options Considered by Council
A Continue with the existing arrangements
A1 Extend the ALMO management agreement (30 plus years)
B The Council brings the service ‘in-house
C Traditional stock transfer.
D Transferring the stock to a CoCo
Option A and B: Investment Shortfalls
Option C: traditional stock transfer
• Council would transfer ownership of the housing stock to a Housing Association
• Price paid for the stock would be the amount which the association could afford to service and repay within 30 years
• Total debt £59m, stock value £14m, debt write off requirement of £45m
• This option was discounted by the Council.
Formal Resolution – Council Meeting22nd September 2012
1. That a Council and Community Owned (CoCo) model be adopted as the best option and that further work be undertaken with Government to establish, in detail, whether the necessary support for a CoCo would be given.
and:
2. That a continuation of existing arrangements be regarded as the next best option if a CoCo cannot be made to work. Including;
• Extending GCH’s management agreement to 35 years
• Changing GCH’s ownership so as to allow it to borrow outside the public sector borrowing requirement.
Community- and Council-owned Organisation (CoCo)
Another form of transfer: • CoCo ‘pays’ for the stock by paying the council’s
debt charges (at public sector rates) and repays debt as it becomes due
• CoCo takes on its own debt as necessary
• Modelling assumed that government will adjust the debt settlement for the VAT which the new landlord would pay and not be able to recover
• This could be regarded as a form of support –
– but the government would be receiving extra VAT
Community- and Council-owned Organisation (CoCo)
• The Council is retaining £36.3m of the HRA debt – at least some of which is being written off on other LSVTs
• The CoCo model is consistent with CLG policy – except requires a debt write off of £23.6m
• The model delivers £22.7m of private finance – otherwise unavailable because of HRA debt cap.
• It reduces public sector debt by £22.7m public borrowing and repays all the HRA debt within 30 years
• It creates the potential for regeneration and a substantial new build programme
Communications with Government Agencies
Started discussions
• 01-11-2011 - First Meeting held with DCLG and HCA
• 05-12-2011 - Response to specific questions posed by HCA
• 21-12-2011 - Letter to DCLG / HCA
• 08-02-2012 - Meeting DCLG / HCA
• 10-02-2012 - Letter to DCLG / HCA
• 17-02-2012 - Letter to DCLG / HCA
Communications with Government Agencies
• 21-02-2012 - Meeting with Grant Shapps and Richard Graham MP
• 24-02-2012 - Letter to DCLG following meeting with Housing Minister
• 22-03-2012 – Letter from Grant Shapps
• 11-05-2012 - GCC write to DCLG with formal letter responding to concerns.
• 25-06-2012 - Tel call from HCA
• 19-09-2012 - Meeting with HCA to review options and respond to requests for more
info required by HMT
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