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Committee Report


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									                                                                       ITEM No: 9

                            Committee Report
                  Date:     7 October 2008

               Subject:     Community Build Programme Update

   The Community Build Programme has been promoted to enable over 500 new
   homes to be constructed on existing Council owned housing land, utilising a
   variety of funding routes.

   The homes will predominantly be for Social Rent and Low Cost Home Ownership
   and will provide much needed affordable accommodation for Westminster
   Residents and Key-Workers.

   This report provides an update on progress to date, with regard to establishing
   the Community Build Programme.


   This report is provided for information and discussion.
City of Westminster         Committee Report

               Item No:     9

                   Date:    7 October 2008

         Classification:    FOR GENERAL RELEASE

         Title of Report:   Community Build Programme

              Report of:    Director of Housing

       Wards involved:      All

         Policy context:    Delivering a step change in Affordable housing
                            Maximise delivery of permanent supply and access
                            to affordable housing for Westminster residents and
                            key workers

    Financial summary:      The total scheme of 526 units is funded by a
                            combination of Housing Corporation Grant, outright
                            sale proceeds and long term financing provided by
                            the private sector. This borrowing will be repaid over
                            30 years, from the rental income from the affordable

         Report Author:     Gary R. Clarke, on behalf of
                            Rosemary Westbrook; Director of Housing

        Contact details     07973 519899; Gary R. Clarke,
                            Interim Project Manager
1.   Background Information
1.1 The Community Build (CB) programme is a key One City project which will enable
    over 500 new homes to be built on City Council estates over the next three years.
    This will in part be funded through Housing Corporation grants, with the remaining
    costs being met by sales income and loans. The initial programme, on which a
    successful bid for Housing Corporation funding has been made, comprises a total
    of 526 units.

1.2 Within this programme of 526 new homes, 246 are for Social Rent and 104 units
    are for low cost home ownership (on which a bid was made to the Housing
    Corporation for Grant funding). The balance of 176 starter homes and outright
    sales units do not qualify for Housing Corporation funding, but it is intended that
    they will generate surpluses, which will be entirely reinvested within the overall
    programme to make it financially viable.

1.3 In partnership with City West Homes (CWH), the City Council undertook an
    extensive evaluation of Council housing land to identify potential sites. A Task
    Group of Councillors met on the 30th July 2007 to discuss the programme and
    identify any issues in relation to planning and other policies. The Task Group
    supported the overall CB programme and put forward a number of
    recommendations for resolving potential planning and corporate policy tensions.

1.4 The Council Land is to be disposed of by way of a long lease to a Special Purpose
    Vehicle, set up specifically to deliver the Community Build programme. The Land
    disposal will have covenants relating to its future usage (which will primarily be to
    support the provision of low cost home-ownership and rented Social Housing) and
    payment of an annual ground rent.

1.5 The land disposal will be further restricted by relevant planning conditions and
    housing nomination agreements.

 2. Detail
2.1 The Government decision to allow City West Homes (and ALMO’s in general) to
    access Housing Corporation funding is not without challenges for the Council. The
    City Council has taken detailed legal, taxation and financial advice and in order to
    take the ALMO’s funding element off balance sheet it is necessary to create a
    structure involving a finance vehicle and a charitable vehicle to achieve the
    necessary tax efficiencies.

2.2 To take forward the creation of the Group Structure and these Special Purpose
    Vehicles, a joint Project Board has been set up consisting of Senior Officers from
    Housing and CWH supported by external experts - Devonshire’s (for Legal
    advice), Tribal (Financial) and Price Waterhouse Coopers (Tax) and a specifically
    appointed Consultant Project Manager.

2.3 This Group Structure has two key vehicles, the “Operational Company” - a charity
    which will hold the completed affordable homes and the “Development Company” -
     which will hold the superior lease and provide the funding to develop this

2.4 The creation of the “Operational Company” (charity) is the subject of a separate
    Cabinet Member report, which is currently awaiting formal approval. It is
    anticipated that this Special Purpose Vehicle could be legally formed and in place
    by the end of the calendar year.

2.5 The “Development Company” is still the subject of further consideration with
    regard to its exact structure and this will be clarified after further discussions with
    its potential funders (likely to be a Bank or Building Society). The creation of this
    Special Purpose Vehicle is expected to be in the first quarter of next year, subject
    to any necessary approvals.

2.6 A comprehensive Consultation Exercise has been started across the Borough by
    CWH (on behalf of the Council), to raise awareness of the Programme with all
    relevant stakeholders. For example, a newsletter has sent to all Westminster
    Council Residents and Leaseholders outlining the proposals. Any questions
    arising from this initial consultation have been dealt with by tailored responses to
    detailed queries. This is now being followed up by “open days” within the

2.7 Future consultation will take place on a more targeted basis as the individual
    schemes are progressed, with briefing sessions for residents, Ward Members and
    other stakeholders. Community Architects will be engaged to work alongside the
    residents (and their representatives) to make certain that the housing plans are
    driven by and developed with the Community, as its main focus, thus ensuring an
    all “inclusive” process.

2.8 This latter process has already commenced on a number of schemes (the
    Warwick Estate, Bourne Terrace and the Undercrofts) and residents have also
    been involved with interviewing prospective Consultants for the overall
    “Framework Agreement” currently being finalised by CWH.

3.   Financial Implications
3.1 The total scheme is funded by a combination of Housing Corporation Grant,
    outright sale proceeds and long term financing provided by the private sector and
    repaid over 30 years from the rental income from the affordable housing.

3.2 Before the scheme can proceed as proposed tax clearance will need to be given
    by HMRC. It is anticipated that the Development Company will not form part of the
    City Council’s Group Accounts but that the Operational Company will do.

4.   Legal Implications
4.1 There are no legal implications arising out of this report.

5.   Staffing Implications
5.1 There are no staffing implications arising out of this report.
6. Business Plan Implications
6.1 The recommendations set out in this report support the following Service Aim of
    the Business Plan 2007/8 – “to maximise delivery of permanent supply of
    affordable homes for Westminster residents and key workers”.

7.     Outstanding Issues
7.1 There are still a number of issues to be resolved with regard to the Group
    Structure for the Community Build Programme, particularly with regard to setting
    up the Special Purpose Vehicles, in the most tax efficient way. These will be
    subject to further reports to Council and specific Cabinet Members approval at the
    appropriate time.

8.     Consultation

8.1 The proposals affect all wards.

9.     Reason for Decision
9.1 The report is provided for information and discussion.

        If you have any queries about this report or wish to inspect one of the
     background papers please contact Gary Clarke on 07973 519899, or by email

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