Strategic Housing Liaison Panel

1.

1.1

19 January 2016 Agenda

Page Nos.

1-2

1.2

Minutes of meeting 25 November 2015

3-4

1.3

1.4

2.

2.1

2.2

2.3

2.4

Proposed Work Plan – Housing Development within HRA An Understanding of the HRA Business Plan (presentation and discussion facilitated by Amanda Wasilewski and Suzanne Williamson) with handouts 1.4.1 Breakdown of HRA Account and NSH Management Fee 1.4.2 Newark and Sherwood HRA Business Plan Inputs 1.4.3 Housing Revenue Account – Outturn 2014/15 and Budget 2016/17 to 2020/21 – Rent Decrease 1% Annually 23 February 2016 Agenda Minutes of meeting 19 January 2016 – to be circulated at meeting Summary from the previous meeting, work plan and context – verbal item - Karen White (NSDC) and Rebecca Rance (NSH) A consideration of the strengths of and opportunities for the HRA Business Plan (presentation and discussion facilitated by Rob Main and Cara Clarkson)

5-8

9-10 11-13

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1-2

Kelham Hall Kelham Newark

Nottinghamshire NG23 5QX

www.newark-sherwooddc.gov.uk

Councillors: R.V. Blaney, Mrs C. Brooks, R.B. Laughton, D.J. Lloyd and Mrs A.A Truswell

Officers:

David Dickinson, Rob Main, Amanda Wasilewski and Karen White (H. Bayne)

Newark and Sherwood Homes

Rebecca Rance, 5 Board Members

Telephone: 01636 655882 Email: helen.bayne@newark-sherwooddc.gov.uk

Our ref: KW/HCB

15th January 2016

Dear Councillor/Colleague, Strategic Housing Liaison Panel Please find attached the Agenda for the above meeting which is scheduled to take place on Tuesday, 19th January 2016 at 4.00pm in Room G21, Kelham Hall, Newark. Yours sincerely,

Helen Bayne Democratic Services Assistant

NEWARK & SHERWOOD DISTRICT COUNCIL

STRATEGIC HOUSING LIAISON PANEL

TUESDAY, 19TH JANUARY 2016 4.00 PM

ROOM G21

KELHAM HALL

Page Nos.

1.0 Apologies for Absence

2.0 Declarations of Interest from Councillors, Board Members and Officers

3.0 Minutes of the Meeting held on Wednesday, 25th November 2015

3 – 4

4.0 Proposed Work Plan – Housing Development within HRA

5 – 8

5.0 An Understanding of the HRA Business Plan (Presentation and Discussion facilitated by Amanda Wasilewski and Suzanne Williamson)

6.0 Date of Next Meeting To be Arranged

NEWARK AND SHERWOOD DISTRICT COUNCIL

Minutes of the meeting of the Strategic Housing Liaison Panel held in Room G23, Kelham Hall on Wednesday, 25 November 2015 at 4.00pm.

PRESENT: Council Panel Members: R.V. Blaney (Chairman), Councillors: R.B. Laughton and Mrs C. Brooks.

Company Panel Members: Board Members: Lynn Clayton, Jean Clarke, Peter Duncan, Paul Handley and Kenneth Sutton.

Officers Karen White (Director – Safety) in Attendance: Rob Main (Business Manager - Strategic Housing)

Stephen Feast (Director – Newark and Sherwood Homes) Rebecca Rance (Chief Executive – Newark and Sherwood Homes) Robin Clay (Accountant) Andy Dewberry (Assistant Director, Asset & Development Services - Newark and Sherwood Homes)

8. APOLOGIES FOR ABSENCE

An apology for absence was received from Councillors D.J. Lloyd and Mrs A.A. TruswellDavid Dickinson (Director – Resources).

9. DECLARATIONS OF INTERESTS BY MEMBERS AND OFFICERS

There were no declarations of interest by Members or officers.

10. MINUTES OF THE MEETING HELD ON MONDAY, 2 SEPTEMBER 2015

The Panel considered and agreed the minutes of the meeting held on Monday, 2September 2015 as a correct record.

11. HOUSING GROWTH

The Panel considered a report detailing progress in the delivery of an extra carehousing scheme in partnership with Nottinghamshire County Council, at BowbridgeRoad, Newark. The proposed scheme comprises 60 apartments which would remain inthe ownership of the District Council with Newark and Sherwood Homes managing andmaintaining the scheme on behalf of the Council. The County Council would havenomination rights to 40 of the extra care units, with the remaining 20 being utilised forsupported accommodation by the District Council.

Details of the funding sources were included within the report. A grant bid equating to18% of funding for the development had been submitted to the Homes andCommunities Agency Care and Support Specialised Housing Fund, with a further 38%and 44% from the County Council and District Council/Newark and Sherwood Homesrespectively. Subject to a successful bid, a co-operation agreement between theCounty Council and District Council would be required, and the project was still subjectto planning approval. Proposed layouts and designs were distributed at the meeting.

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Some initial work on site had been undertaken, alongside the procurement process, in anticipation of a successful bid. It was anticipated that if successful, work could commence on site in late spring 2016. Members of the Panel considered the proposed layouts and design and were complimentary about these.

It was suggested and agreed that the orientation and exact location of the proposed development should be altered to maximise the potential use of the remainder of the site.

The Panel acknowledged that this would be a new scale and type of extra care housing delivery for the Council and its Company but was vital to meet the growing need for this type of housing within the District.

AGREED (unanimously) that the report be noted.

12. DATE OF NEXT MEETING

Tuesday, 19th January 2016 at 16:00 hours.

The meeting closed at 4:57pm

Chairman

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STRATEGIC HOUSING LIAISON PANEL AGENDA ITEM NO. 4 19TH JANUARY 2016

PROPOSED WORK PLAN – HOUSING DEVELOPMENT WITHIN THE HRA

1.0 Purpose of Report

1.1 To enable the Panel to consider a draft work plan (spanning the next two months) that will focus on the formulation of clear proposals for development levels year on year over the next 5 years within the Housing Revenue Account Business Plan (HRA BP) whilst sustaining its viability. These proposals will then be submitted for consideration and approval by the Council.

2.0 Background Information

2.1 By way of reminder, the remit of the Strategic Housing Liaison Panel, which was set up by the Council’s Policy & Finance Committee is to:

• Strengthen the relationship, joint working and common purpose and understandingbetween the Council and its housing Company;

• Discuss the Council’s longer term strategic view and direction for the Company;• Develop the forward Delivery Plan; Key Performance Indicators and outcomes; and• Review progress against the Delivery Plan at a strategic level;

all of which is to be set against the context of the Housing Revenue Account Business Plan (HRABP). The recommendations from the Panel covering these areas of work will then enable the Council’s Policy Committee to make informed decisions in respect of these matters.

2.2 Over the past 5 years the Council and Newark and Sherwood Homes have developed effective working arrangements with the aim of minimising the duplication of resource in the area of housing development. This has also meant that significant development experience has been gained and shared between the two organisations, which has yielded considerable success, (given the Council’s size), in delivering housing growth.

2.3 However the Council’s current HRABP is predicated on a set of inputs and assumptions that now need to be reviewed as a result of a number of anticipated changes. Some of these changes are as a result of legislation being introduced by the Government and others involve other matters such as changes to CPI, underlying risks to the business plan, reduced anticipated income etc. These changes present a key challenge for the Council in appropriately assessing the ability of the HRABP to deliver its strategic housing priorities, including a programme of Council HRA housing growth, and in maintaining the current management and maintenance standards. Included within this assessment will be a consideration of the choices/options available to the Council in order to determine the balance it wants to achieve between allocation of the available resources within the HRABP for asset management, responsive repairs, housing management, development and debt repayment.

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3.0 Proposals

3.1 Set out in Appendix A to this report is a proposed work plan for the Panel to consider. It is proposed that the Panel undertakes a detailed review, to take place over four meetings, of the HRABP and the various options available within the current and future constraints and changes that will impact upon it to arrive at the capacity for housing ‘growth’. This will then lead to a consideration of the Council’s aspirations for development within the available HRA resources and the various delivery mechanisms open to it – including utilising Newark and Sherwood Homes. This should result in clear proposals about development levels, year on year, over the next five years within the HRABP and what the Council’s expectations are for the Company in assisting the delivery of this.

3.2 In order to achieve this piece of work in a timely manner it is suggested that the four meetings proposed in the Plan need to take place fairly close together, (perhaps at fortnightly or three weekly intervals), to enable the Panel to gather together all of the various elements of information needed in order then to reach an informed view on a strategy going forward. It is intended to take an approach for these meetings based upon facilitated workshop style meetings rather than officers simply presenting reports to encourage greater participation and debate.

4.0 Equalities Implications

4.1 There are no equalities implications arising directly from the report.

5.0 Impact on Budget/Policy Framework

5.1 This reports highlights a process of forward planning to allow due diligence, ensuring the Council’s strategic direction and the Company performance and activity aligns with the sustained viability of the Housing Revenue Account Business Plan.

6.0 RECOMMENDATION

That the Panel consider the proposed work plan as suggested in 3.1 of the report.

Reason for Recommendations

To consider and determine a short term work plan for the Strategic Housing Liaison Panel.

For further information please contact Karen White on 01636 655240, or email karen.white@nsdc.info

Karen White Director – Safety Newark & Sherwood District Council

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STRATEGIC HOUSING LIAISON PANEL

PROPOSED WORK PLAN

Schedule of Meetings and Proposed Areas

Meeting Date Area(s) to be Covered Delivery

19th Jan 2015 1. Consider and agree plan of work for SHLP and scheduleof additional meetings.

2. Explanation of HRA covering self- financing, HRAstructure and its various elements

Objective: to get a good understanding of the HRA and how it works

1. Short report and draft work plan for discussion and approval.

2. An officer facilitated discussion in a workshop environment ledby Amanda and Suz, looking at the current position in terms ofhow the HRA is made up, the various spend elements includingdebt repayment and the management fee to the Company.

Second meeting (date to be set)

1. A consideration of the current changes that will impactupon the HRA BP i.e. reduced rental income, CPIchanges, National Government policy impact and Risks

2. Look at Company business plan

Objective: increased knowledge of the various changes and an understanding of how these taken together are likely to impact upon the assumptions and forecasts within the HRA BP

1. SWOT - information sharing and knowledge building session

2. Report presented by Company Officers/Board Members

Third meeting (date to be set)

1. Consider the options/choices available in the context ofthe Council priorities and make proposals for the wayforward. This will need to incorporate debate andconsideration of the options and risks concerning thefollowing:

1. Workshop and presentation format

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Asset Management; Responsive Repairs; Housing Management; Development aspirations; Debt Repayment; and Other considerations?

Objective to discuss, test out and debate the parameters for, and balance between, these competing options to enable officers to model what it would mean for the HRA BP going forward This should then illustrate the capacity for ‘growth’.

2. Property Development Cost Information – then take thiswhen considering delivery mechanisms under 4 below.

2. Report which could be broken up with Quiz which delivers ourproperty development cost info in the context of others

Fourth Meeting (date to be set)

1. Consider modelling that has been done as a result of theprevious meeting’s discussion.

This will also involve stress testing (both negative andpositive) and monitoring.

2. Consider development aspirations within the availableresources identified by the work under 1 above and thevarious delivery mechanisms available.

Objective: To develop clear proposals about development levels year on year over the next 5 years within the HRA BP whilst sustaining its viability, and establishing monitoring mechanisms, all for consideration and approval by the Council.

1. Results of modelling presented by officers.

2. A SWOT or similar may work well here again?

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9

Reference Expenditure Description Comments

1 Fee based on level and standard of

programme being requested.

2

3

4

5

6 As per Section 27

7 Income generation from commercial

activities

8 Outcome focused allocation funded

through HRA Growth/Debt Repayment

Reserve (See Appendix B)

9 The annual allocation of HRA funds to be

allocated and spent within the year on

debt repayment/development 8 - 11 Council HRA

expenditure

10 Council services and external costs

associated with HRA

Key

NSH Total Fee Income

NSDC HRA Costs

Notes

i

ii

iii

iv

v Base year 2014/15

The budgets will be adjusted to take into account external factors and other aspects which are out of the control of the Company reflecting impact on

costs.

A price index will be applied - based on all other things impacting on costs being equal (see iv)

An agreed efficiency target will be set for years 2 and 3 for appropriate aspects of the management fee- based on all other things impacting on costs

being equal (see iv)

Budgets to be based on a rolling three year period

}Major Repairs Reserve, Depreciation,

Servicing of NSDC and NSH reserves,

capital charges/insurance and pension

costs.

Capital and financing costs

2-6 NSH Core

Management Fee}Other NSH Work - Entrepreneurial

HRA - Debt Repayment/Development

NSDC - HRA Costs - Council Services

Service Fees - Core Housing Management Services - Core Service Support

Service Fees - Core Housing Management Services - Company

As set out in the Section 27 schedule +

costs to service IT provision

Service Fees - Core Housing Management Services - Tenancy Sustainment and Income Recovery

Other NSH Work - Non HRA Core Services (Right to Buy/Hostel management)

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Breakdown of HRA Account and NSH Management Fee

Fee Income from Third Party Schemes/Investments

Service Fees - Core Housing Management Services - Repairs and Maintenance

Works Fee - Fee Payable for the delivery of the Asset Management Programme

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Schedule 8

Breakdown of balances and reserves]

(Clauses 12.2 and Schedule 5)

See the Commentary in Schedule 4

Reserve NDSC NSH Notes

Minimum Reserve Minimum level determined by NSH business planning and risk management. NSDC as

set by HRA Balances and Reserves Policy. Management of reserve in line with Council

/Company Financial procedures. NSH currently 5% of T/O.

Core Services

Reserve

Reserve set aside to meet in year unplanned service changes to respond to tenants,

business environment or to manage risks. The future impact on the Management Fee

would then be reviewed as part of the budget setting.

Bad Debts Reserve Amount set aside to meet unexpected increases in bad debts. The provision will be

calculated by an agreed formula based on business environment and risk

management approach.

Development & IT

reserve

Will need annual contributions by NSH to ensure funding available when new software

etc needed.

Staffing & pay

reserve

To protect against future redundancies (which should be self funding and allow

reserve to be built up again ultimately)

MRR/Depreciation An amount set aside to fund future housing capital investment programme -

determined by the housing investment need informed through the stock condition

surveyGrowth/Debt

repayment

NSDC - The accumlative balance of any year on year resources available to allocate to

housing expenditure or HRA debt repayment. Schemes will be put forward by NSH &

NSDC. Growth will be commissioned either using NSH or another provider to meet

NSDC housing priorities and to maximise the HRA business plan viability. NSH -

Reserve to hold resources rolled forward to fund future projects.

Breakdown of Balances and Reserves NSDC - HRA and NSH Appendix C

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Newark and Sherwood HRA Business Plan

Assumptions Summary Base Year 2015/16

1 RPI From Year:

2 2.0% 3 2.0%

4 2.0% 5 2.0%

2 CPI From Year:

2 2.0% 3 2.0%

4 2.0% 5 2.0%

3 Opening Dwellings

Tenanted 5,400 Shared Ownership 0

Leasehold 149

4 Rents

Average Rent £76.44

Number of Rent Weeks 52

5 Void Allowance: From Year:

1 1.0%

2 1.0% 3 1.0%

4 1.0% 5 1.0%

6 Allowance for Bad Debts: From Year:

1 2.0%

2 4.0% 3 5.0%

4 6.5% 5 5.0%

7 Other Income:

Non Dwelling Rents £240,030

Charges for Services & Facilities £402,800

Contributions towards expenditure

£113,900

8 Right to Buy Sales:

Year 1 25 Year 2 25

Year 3 25 Year 4 25

Year 5 25

Years 6 to 30 625

9 Average RTB Value £111,525 Average Discount £57,272

RTB Admin per Sale £1,300

HRA Use of LA Assumed Income 100%

HRA Use of Receipts for

Replacement Homes 100%

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10 Other Stock Changes:

Year 1 0 Year 2 0

Year 3 0 Year 4 0

Year 5 0 Years 6 to 30 0

11 Management Costs:

Tenanted: £4,617,880

12 Real Growth on Salaries From Year:

2 0.0% 3 0.0%

4 0.0% 5 0.0%

13 Real Growth on Other Costs From Year:

2 0.0% 3 0.0%

4 0.0% 5 0.0%

14 Service Costs

Tenanted: Fixed Costs £0 Variable Cost per Unit £0

15 Real Growth in Costs

From Year:

2 0.0% 3 0.0%

4 0.0% 5 0.0%

16 Other Expenditure

Other Revenue Spend £0

Miscellaneous Expenditure

£0

17 Rent Rebates:

Percentage of Rent Rebated 58%

Limit Rent £78.79

18 Depreciation Depreciation per Unit £480

19 Revenue Repairs & Maintenance

Year 1 £3,890,040 Year 2 £3,890,040

Year 3 £3,890,040 Year 4 £3,890,040

Year 5 £3,890,040 Years 6 to 30 £97,251,000

Total £116,701,200

20 Major Repairs & Improvements

Year 1 £5,770,000 Year 2 £5,785,000

Year 3 £5,885,000 Year 4 £5,885,000

Year 5 £5,585,000 Years 6 to 30 £178,265,000

Total £207,175,000

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21 Opening Balances

Revenue Reserves £2,000,000

Major Repairs Reserve £5,980,000

22 HRA Capital Financing

Requirement £97,444,291

Capital Receipts Set Aside for Debt Repayment £0

HRA RTB Receipts for Replacement Homes £472,000

External Loans Outstanding

£90,159,167

23 Borrowing & Interest Rates

Borrowing Cap £112,475,000

Average interest Rate on Borrowing

Year 1 4.50% Year 2 4.50%

Year 3 4.50% Year 4 4.50%

Year 5 4.50%

24 Average interest Rate on

Investments 1 0.30%

2 0.30% 3 0.30%

4 0.30% 5 0.30%

HEALTH & HOMES PORTFOLIO APPENDIX A1

HOUSING REVENUE ACCOUNT - OUTTURN 2014/15 and BUDGET 2016/17 to 2020/21 - RENT DECREASE 1% ANNUALLY

Col 1 Col 2 Col 3 Col 4 Col 5 Col 6 Col 7 Col 8

2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

LINE SUMMARY OUTTURN BASE BASE BASE BASE BASE BASE

NO. BUDGET BUDGET BUDGET BUDGET BUDGET BUDGET

£ £ £ £ £ £ £

INCOME

1 Dwelling rents 20,814,674.78 20,507,260 20,369,540 20,165,840 19,964,180 19,764,540 20,357,480

2 Non dwelling rents 239,321.97 240,030 250,950 253,130 255,330 257,550 259,800

3 Charges for services 285,991.27 371,720 290,640 293,540 296,470 299,430 302,410

4 Contributions to expenditure 62,850.15 60,220 65,550 65,550 65,550 65,550 65,550

5 HRA Subsidy Grant 0.00 0 0 0 0 0 0

6 Other income 327,462.12 84,760 151,580 151,580 151,580 151,580 151,580

7 Sub Total - Income 21,730,300.29 21,263,990 21,128,260 20,929,640 20,733,110 20,538,650 21,136,820

EXPENDITURE

Management & maintenance

Supervision & Management General:

8 Management 4,313,150.43 576,890 576,610 586,260 593,160 601,820 609,290

9 Management Fee NaSH 3,784,460 3,796,920 3,683,010 3,572,520 3,465,340 3,361,380

10 Maintenance Fee NaSH 3,903,619.92 3,890,040 3,910,470 3,793,160 3,679,370 3,568,990 3,461,920

11 Rents, rates, taxes & other 0.00 0

12 Government subsidies payable 0.00

13 Depreciation - dwellings 2,214,015.14 2,218,260 2,294,860 2,294,860 2,294,850 2,294,850 2,294,850

14 Depreciation - others 385,160.66 376,720 393,550 393,550 377,490 362,190 362,190

15 Impairments of assets - dwellings (7,578,328.47)

16 Impairments of assets - others 150,761.79

17 Debt Management Expenses 27,219.35 32,350 36,350 37,490 38,690 39,080 39,480

18 Sub Total - Expenditure 3,415,598.82 10,878,720 11,008,760 10,788,330 10,556,080 10,332,270 10,129,110

19 NET COST OF SERVICES (18,314,701.47) (10,385,270) (10,119,500) (10,141,310) (10,177,030) (10,206,380) (11,007,710)

20 Profit/Loss on sale of HRA fixed assets 3,892,279.29

21 Interest Paid 4,407,007.72 4,381,230 4,321,310 4,344,970 4,278,810 4,079,350 4,026,690

22 Interest Receivable (24,449.64) (27,240) (36,330) (45,410) (45,410) (45,410) (45,410)

23 Income from Feed In Tariffs (459,376.29) (525,000) (525,000) (525,000) (525,000) (525,000) (525,000)

24 Feed in Tariff to NSH 459,376.03 525,000 525,000 525,000 525,000 525,000 525,000

25 Provision for Bad Debt 122,324.01 0 0 0 0 0 0

26 Contribution to NSH Reserves 781,270.00 0 0 0 0 0 0

27 NET OPERATING EXPENDITURE (9,136,270.35) (6,031,280) (5,834,520) (5,841,750) (5,943,630) (6,172,440) (7,026,430)

APPROPRIATIONS

28 Premiums on repaid debt 0.00

29 Profit/Loss on sale of HRA fixed assets (3,892,279.29)

30 Employers Contribution NCC 260,000.00 260,000 260,000 260,000 260,000 260,000 260,000

31 Major Repairs Reserve Movement 7,970,683.29 5,771,280 5,574,520 5,581,750 5,683,630 5,912,440 6,766,430

32 Contribution to capital 771,290.98

33 Impairments of assets - dwellings 7,578,328.47

34 Depreciation 0.00

35 Impairments of assets - others (150,761.79)

36 Repaid debt 0.00

37 HRA (SURPLUS)/DEFICIT FOR YEAR 3,400,991.31 0 0 0 0 0 0

38 WORKING BALANCE B/F (excluding NSH efficiency gain) (5,400,991.31) (2,000,000) (2,000,000) (2,000,000) (2,000,000) (2,000,000) (2,000,000)

39 WORKING BALANCE C/F (excluding NSH efficiency gain) (2,000,000.00) (2,000,000) (2,000,000) (2,000,000) (2,000,000) (2,000,000) (2,000,000)

Major Repairs Reserve

Brought Forward 1,424,785.60 5,979,950 8,143,390 10,162,020 12,241,880 14,677,550 17,326,730

Contributions in year 10,569,859.09 8,366,260 8,262,930 8,270,160 8,355,970 8,569,480 9,423,470

Used to fund major repairs (6,014,695.18) (6,202,820) (6,244,300) (6,190,300) (5,920,300) (5,920,300) (5,920,300)

Projected balance carried forward 5,979,949.51 8,143,390 10,162,020 12,241,880 14,677,550 17,326,730 20,829,900

External Debt carried forward 90,159,167.02 88,141,910 88,123,111 88,102,631 88,080,317 88,056,002 88,029,504

Internal Borrowing 14,015,640.90 16,032,898 16,051,697 16,072,177 16,094,491 16,118,806 16,145,304

Total debt carried forward 104,174,810 104,174,810 104,174,810 104,174,810 104,174,810 104,174,810

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