ALMO INVESTMENT PLANNING
SUSTAINABILITY AND OPTION ANALYSIS
JULY 2003
REPORT OF CAPITAL INVESTMENT MANAGER, INFORMATION AND
ADMINISTRATION MANAGER AND POLICY/STRATEGY OFFICER
1. ALMO Investment Planning
The City Council are aiming to achieve the Decent Homes Standard by 2010.
The planning process is using an estate base of approximately 350 estates. The
investment planning process for each of these estate groups, the estimated
investment requirements are being linked to a sustainability assessment.
2. Sustainability Assessment
The overall sustainability assessment uses the key “management demand”
indicators of demand, popularity, stability and turnover. It links these to known
investment requirements from the Stock Condition Survey. Management demand
indicators cover four categories and investment requirements are banded in 5
value bands. The detail is set out below. Where “management demand”
indicators are high and show a poor sustainability assessment linked with
investment requirements or where “investment” costs are high then an estate
based option appraisal will be carried out. This will also be linked with the
council’s area planning process.
3. Management Demand Indicators
The following indicators are proposed to make up an overall management
demand indicator:
(a) Length of Time Void
This component of the indicator first looks at the number of properties on the
estate that are empty at a particular time (eg at the beginning or end of the
month). The data collected is banded as follows:
empty less than one month
empty more than one month and less than three months
(Together these bands form a larger band of properties that have been empty for
less than 3 months)
empty more than for three months and over less than six months
empty more than six months and less than twelve months
empty for more than twelve months
(Together these bands form a larger band of properties that have been empty for
3 months or more)
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A citywide calculation of the length of time properties are void is calculated for
properties void for less than 3 months, each estate average is compared against
the citywide average. Where the estate average is greater than the citywide
average it scores 0, where the number of properties void for 3 months is greater
than the citywide average the estate scores a positive, 1. This indicator provides
demand information as it helps us to identify properties that are potentially difficult
to let.
(b) Council Voids as a Percentage of Stock on the Estate
This component of the indicator again starts with the number of properties on the
estate that are empty at a particular date. This is then expressed as a percentage
of the total properties on the estate. At the same time, the citywide average of
total voids against total properties is calculated.
The two percentages are compared and if the estate average is higher than the
city average then a score of 1 is awarded. If the estate average is lower than the
city average then a score of 0 is awarded.
(c) LA Tenancy Turnover
This component of the indicator starts with those properties that have been relet
once or more in the last 12 months. The average figure of properties which have
not been relet within a twelve month period is calculated for the city as a whole.
If the estate average is higher than the city average then a score of 1 is awarded.
If the estate average is lower or equal to the city average then a score of 0 is
awarded.
(d) Length of Tenancy
This component of the indicator looks at all properties on the estate and assesses
the length of tenancy in each. The tenancy lengths are banded as follows:
Tenancy length less than one year three years
Tenancy length between one and three years
(Together these bands form a larger band of tenancy length of less than 3 years)
Tenancy length between three and five years and over
Tenancy length over 5 years
(Together these bands form a larger band of tenancy length of 3 years and over)
The citywide average for tenancies of longer than 3 years is calculated. The
number of tenancies longer than three years is then calculated for each estate
and compared with the citywide average. Where the average is greater than the
city average a 0 is awarded, where the average is less a 1 is awarded.
4. Investment Analysis
The Investment needs of estates are the subject of the Stock Condition Survey.
All the City housing stock is linked to approximately 350 asset planning
groupings. These “estates” are banded for the investment needs to meet the
DHS by 2010.
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The bandings of investment needs per unit are as follows:
1. Low Below £5,000
2. Low medium £5,001 - £10,000
3. Medium £10,000 - £15,000
4. High medium £15,000 - £20,000
5. High £20,000 +
Note: the average cost per unit to meet the DHS in Newcastle is c.£13,790
5. Estate Sustainability Score
The scores for each of the management information indicators will be added
together to give a total score. This will then be added to the investment score.
Investment and Management demand scores are illustrated in the matrix shown
below. This is used to illustrate the indications of sustainability levels within the
estate.
Scoring System Matrix
Management Investment Cost
Demand Score Score
0 1 2 3 4 * 5 *
1 1 2 3 4 * 5 *
2 1 2 3 4 * 5 *
3 1 * 2 * 3 * 4 * 5 *
4 1 * 2 * 3 * 4 * 5 *
* Indicates Option Analysis triggered.
When the Management Demand and Investment Scores are aggregated an
Option Analysis is triggered if the Total Sustainability score is 6 or over.
Examples
If an estate scores 1 on management data and 2 on investment cost then the
total score is 3. This shows no critical investment/management sustainability
issues so an options analysis is not required.
If an estate scored 3 on management data and 3 on investment costs then the
total score would be 6. This is classified as estate requires an option analysis
being triggered to determine the interventions required.
6. Option Analysis
In Summary Option Analysis is triggered when:
Investment Cost Indicator of 4 or 5
Management Indicator Score of 3 or 4
Total Sustainability Score of 6 plus
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Once triggered, an Option Analysis will be carried out to inform future investment
and management decisions. This would be carried out in conjunction with
stakeholders.
The Option Analysis would be stage 2 of the process and allow further
consideration and analysis including:
(a) Comparison of management indicators by stock type (e.g.sheltered stock
averages against sheltered stock averages citywide, rather than total citywide
stock averages)
(b) Tenure profile of the estate.
(c) Key Options (reasons for and against):
Improve
Convert
Sell
Demolish
Other Interventions
(d) Costs of options
(e) Disruption to tenants
(f) Future Landlord and City Council responsibilities
More detailed guidelines and format will be developed.
Note: certain unpopular house types like bedsits and walk up maisonettes will
also need Option Analysis.
This option analysis would form the basis for consultation on plans prior to any
action. The option analysis would then feed to a third stage of decision making by
the ALMO Board and City Council.
7. Consultation and Tenant Involvement
This report has been considered and commented on by the Cabinet Members
ALMO Advisory Group and been amended to take on board their comments. The
report is open to wider tenant and stakeholder consultation.
Tenants will be involved in developing this methodology in practice. Tenants will
also be involved in estate based options analysis where required following the
initial sustainability assessment.
8. Links to Area Planning and Regeneration
The above proposed Sustainability analysis would form the basis for Investment
and Housing Business Plan decision making linking to the wider City
Sustainability Model of N N I S.
Contact Officers
Chris Mills – Capital Investment Manager, ext. 26850
Louise Wood – Information and Administration Manager, ext. 26802
Greg Walker – Housing Policy and Strategy Officer, ext. 25838
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