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Gloucester City Council and Gloucester City Homes

Gloucester City Council and Gloucester City Homes. Gloucester Co-Co Model October 2012 Martin Shields Corporate Director of Services and Neighbourhoods Gloucester City Council martin.shields@gloucester.gov.uk. About Gloucester City Homes.

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Gloucester City Council and Gloucester City Homes

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  1. Gloucester City Council and Gloucester City Homes Gloucester Co-Co Model October 2012 Martin Shields Corporate Director of Services and Neighbourhoods Gloucester City Council martin.shields@gloucester.gov.uk

  2. 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

  3. 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.

  4. 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.

  5. 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

  6. 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

  7. Option A and B: Investment Shortfalls

  8. 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.

  9. 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.

  10. 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

  11. 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

  12. 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

  13. 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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