new ways to pay
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Alan Benson - GLA Patrick Odling-Smee - LB Islington Colin Ross - NavigantTRANSCRIPT
Future of LondonBREAKFAST SEMINAR SERIES
5 April 2011
New Ways to Pay: Mixed economies for housing and regeneration delivery, using TIF, the new homes bonus and more
New ways to pay New ways to pay Alan Benson Greater London Authority5 April 2011 5 April 2011
OverviewOverview
• Devolution • The current programme• The affordable rent model• New ways to pay
Devolution – housing and regenDevolution – housing and regenLocalism Bill:• Turning off Mayor’s s30 restriction • Turning off HCA powers in London• Royal Assent Nov – commencement Apr 2012
Delivery:• GLA Housing and Regeneration Dept • Co-location Autumn – go live April 2012• London Housing & Regeneration Board
On target for 50k On target for 50k
2008/09 outturn
2009/10 outturn
2010/11 2011/12 2008-12 Total
Rent 6,100 6,992 7,760 11,022 31,874Intermediate 5,996 5,928 4,361 4,930 21,215Number of re-provision completions 1,553Total forecast programme 51,536
Coalition housing agendaCoalition housing agenda
• Deficit reduction• Localism• Questioning
social housing model
Funding and targetsFunding and targets
• c£4bn for affordable housing nationally 2011-15 • 150,000 new completions by 2015• 65,000 already in pipeline (£2.2bn)• 28,000 in London (£1.1bn) so …• £1.8bn new money available nationally • But no new money until 2012 • And no regional allocation of the national budget
The affordable rent modelThe affordable rent model
• Rents up to 80% of market rent (new and relets) • Plus disposals, pipeline conversion & surpluses• Much lower grant levels – all on completion• Renewable, not lifetime, tenancies• Works in London & SE (where rents are higher)• LHA caps don’t apply but £26k total cap will • It is affordable housing in planning terms• It is not social rented or intermediate housing
Process and timetableProcess and timetable
• Two sets of contracts (national and London)• London contract novates to Mayor
•Timetable• Feb: HCA/CLG bidding prospectus issued • May: Registered Providers’ proposals submitted• Jun: Programme signed off by Board/Minister• Apr 2012: Contracts novate to the Mayor
5Bs – the barriers5Bs – the barriers
• Benefits• Banks• Boroughs• Boards
Shiny new things Shiny new things
• TIFs• LEPs• EZs• NHB• LHC • JVPs• REITs• PRSI/PLI
[email protected]@london.gov.uk
Patrick Odling-Smee Director of HousingIslington Council5 April 2011
New ways to pay – the local authority perspective
New ways to pay• New Homes Bonus • Land supply – without
grant• S106• HRA Headroom• Regeneration – using
the value
View from the bunker
• We are going to be delivering less housing after 2013
• Welfare benefits changes• “Affordable” rent product is not
affordable and politically unacceptable - who is this housing for?
• What we do deliver has to be right.• We have to find new ways of doing
things. • The housing world is divided
New Homes Bonus
• No new money • Islington second highest in the
country. • Balance of uses
New Homes Bonus
2011-12£000
2012-13£000
2013-14£000
2014-15£000
Provisional Allocation Based on 2009-10 Housing 3,700 3,819 3,819 3,819
Estimated Allocation Based on 2010-11 Housing 3,500 3,500 3,500
Estimated Allocation Based on 2011-12 Housing 2,000 2,000
Estimated Allocation Based on 2012-13 Housing 2,000
Total Received in NHBS 3,700 7,319 9,319 11,319
Estimated Extra Loss in Formula Grant (based on £176m nationally) 0 0 (2,000) (4,000)
Estimated Cumulative Net Impact through Formula Grant on Council’s MTFS 3,700 7,319 7,319 7,319
Land supply, without grant
• Local authority new build programme
• Land disposal without grant• Capacity to deliver
Islington New Build Programme
2011/12 2012/13 2013/14 2014+
Funded 54 58
Other LBI Sites 45 580
Unfunded 75 28 135
Funded RP Programme 867 527 123 180
• Current funded programme is £22m
• Pipeline programme £22m
Getting more from s106
• Reduced social housing contribution delivered without grant
• Financial contribution on small sites
• CIL
HRA Headroom
• Decent homes vs new build?• Temptation to subsidise the GF• Taste for borrowing• Land and money not always matched • Disposals
HRA Headroom
Regeneration – using the value• Land assembly
• Increased densities
• Place shaping
• Protecting social housing
RegenerationSocial Rented
Shared Ow’ship
L’holders LBI Sub Total
Outright Sales
Total Homes
Current Stock 533 0 204 737 0 737
Proposed Stock 533 200 0 733 333 1,066
Change 0 +200 -204 -4 +333 +329
•Development cost estimated to be £163.617m.
•developer would have ownership of 333 of these new homes - estimated £102.775m
•net cost to be paid for by the developer would therefore be £60.842m
•£4.832m a year for the next twenty years
•Shared ownership capital receipts of £34m.
• cumulative HRA surplus over the thirty year period of £3.256m
Summary
• Local authority control?• Devolution? • HCA?
Thank youPatrick [email protected]
Future of LondonBREAKFAST SEMINAR SERIES
5 April 2011
New Ways to Pay: Mixed economies for housing and regeneration delivery, using TIF, the new homes bonus and more
Tax Increment Financing
Colin Ross
Associate Director (Assets and Infrastructure)
“Introducing TIF would ensure that London can lead the way out of recession by generating and sharing in the “growth dividend”. TIF is also an important practical response to the localism agenda.” Boris Johnson, Dec. 2009
“The new borrowing powers, known as Tax Increment Financing (TIF), will allow Local Authorities to borrow against predicted growth in their locally raised business rates. They can use that borrowing to fund key infrastructure and other capital projects, which will support locally driven economic development and growth.” Nick Clegg, Sept. 2010
How Does It Work?
Where is the Evidence That it Works?
» Initiated in 1950s in California» Features of US TIFs
› Lead by Private or Public Sector› Local taxation Structure› Volatility of Income› Basket of measures available› Competition
» North of the Border» England & Wales?
Will This Happen in the UK?
» “The LGRR will consider proposals...allowing (Councils) to retain locally raised business rates, and introducing new powers to enable local authorities to carry out tax increment financing.” Bob Neill MP, Jan 2011
» Timetable› Core Group: Treasury/DCLG April 2009 - 2010› Local Government Resource Review, completed by April
2011› Outline Proposals, July 2011› Formally Introduce Proposals, April 2012
Issues for the Public Sector
» Government› Displacement› Additionality
» Authorities› Borrowing Powers› Set up costs› Defining the TIF Zone
Conclusion
For information about the Future of London Programme and to book events please visit our website:
www.futureoflondon.org.uk
Next Seminar: 17 May 2011New Ways to Save: Shared services, outsourcing, and other new models for council departments and services to maximise efficiency and effect