The Committee will receive a presentation on the development of New Housing Delivery Vehicles in Tower Hamlets

The Committee received a presentation from Mark Baigent, Interim Divisional Director Housing and Regeneration that highlighted the Key drivers and purposes behind the introduction of the New Housing Delivery Vehicles which included:

·         Increase housing supply;

·         Deliver social and living rents;

·         Secure long term supply of temporary accommodation;

·         Generate GF savings and income;

·         Balance HRA new build and stock investment;

·         Make use of RTB receipts;

·         Make use of s106 cash-in-lieu;

·         Avoid unnecessary complexity; and

·         Focus on speed of delivery.

This was followed by questions and comments from Members which is summarised as follows:

The Board noted:

·         The quality of housing outside the Borough is poor and the establishment of the Seahorse Homes Limited and Mulberry Housing Society will expand the range of options available to the Council to deliver new supply across tenures, both permanent and temporary homes. These two vehicles were intended to complement the Council’s existing housing delivery approaches, within the Housing Revenue Account and the General Fund;

·         That Seahorse Homes and Mulberry Housing had been developed in the light of what had been learned within the Borough as part of the Stock Transfer process;

·         That the introduction of the New Housing Delivery Vehicles will allow the Council to use borrowing power to obtain land for housing that would restricted under the established methods to develop social housing;

·         That the governance arrangements for housing delivery approach are there to ensure that power and decision making is structured and exercised appropriately;

·         That the Scrutiny Function will have the ability to develop and maintain a dialogue.  Which will enable there to be an overview of what the New Housing Delivery Vehicles are doing to address the availability of affordable housing in the Borough (e.g. The Housing Scrutiny Sub-Committee could consider the development of these new structures).

The Pre-Decision Scrutiny Questions and responses were noted.

The recommendations were amended and then agreed.

DECISION

1.    To agree to establish Seahorse Homes Limited, a Wholly Owned Company Limited by Shares, and Mulberry Housing Society, a Community Benefit Society, and delegate to the Corporate Director, Place after consultation with the Corporate Director, Resources and the Corporate Director Governance authority to take all necessary steps for this purpose including but not limited to approving the Rules of the Society and Articles of Association of the Company.

2.    To agree that the officers identified in section 4 of the report be appointed as directors and members of the Wholly Owned Company (WOC) and Community Benefit Society (CBS) respectively.

3.    To authorise the Corporate Director, Place to recruit three independent members to the CBS, after consultation with the Mayor and Statutory Deputy Mayor and Cabinet Member for Housing Management and Performance and Cabinet Member for Strategic Development, ensuring that the appointments are made on the basis of relevant skills and expertise and the recruitment process follows equalities principles in terms of promoting diversity on the Board.

4.    To authorise the Corporate Director, Resources to agree and sign off the final business case.

5.    To authorise the Corporate Director, Resources to

a)    make equity investments up to £6M in the WOC

b)    grant up to £9M of retained Right To Buy receipts and £2.5M of s106 commuted sums to the CBS with appropriate grant conditions;

c)    make available to the WOC a commercial loan facility up to £24M;

d)    make available to the CBS a loan facility up to £18.5M charged below a full commercial rate;

e)    enable both loan facilities by use of reserves and prudential borrowing within the General Fund as necessary;

subject to the above being in line with the Council’s Budget  framework, where required, the negotiation and finalisation of the loan agreements and decision to release funding subject to satisfactory due diligence delegated to the Corporate Director, Resources.

6.    To authorise the Corporate Director, Resources to approve the WOC and CBS’s first business plan.

7.    To agree to provide the WOC and CBS with a credit facility of up to £50,000 each for use as working capital and delegate to the Corporate Director, Resources the negotiation and finalisation of the necessary agreements.

8.    To delegate authority to the Corporate Director, Place after consultation with the Mayor, Statutory Deputy Mayor and Cabinet Member for Housing Management and Performance and Cabinet Member for Strategic Development, the Corporate Director, Resources and the Corporate Director, Governance to approve the Shareholder Agreement, Deed of Covenant and any other necessary agreements required between the Council and the WOC and CBS respectively. In particular, ensuring that the Deed of Covenant protects the local accountability and focus of the CBS by restricting the scope for future changes in ownership (including mergers and acquisitions), business purpose, scope, or status (such as registration as a Registered Provider).

9.    To authorise the Chief Executive to exercise the Council’s rights as Shareholder.  ...  view the full decision text for item 5

Councillor Rachel Blake, Cabinet Member for Strategic Development, introduced the report. She highlighted the innovative ideas proposed in the report and stated that she would welcome the Overview and Scrutiny Committee maintaining a review of the proposed governance arrangements of the new organisations. She then proposed amendments to recommendations 3 and 8 in respect of the governance arrangements.

The Mayor noted the need to ensure the Overview and Scrutiny Committee had the necessary powers to review these new bodies. He then:

·         Noted the pre-decision scrutiny questions and responses (and the dissatisfaction expressed with the officer response to the third question).

·         Noted the exempt appendix and agreed that it was exempt under paragraph 3 (financial affairs) and paragraph 5 (legal advice) of Part 1 of Schedule 12A of the Local Government Act 1972.

·         Agreed the proposed amendments to the recommendations

·         Agreed the recommendations as amended.

RESOLVED

1.    To agree to establish Seahorse Homes Limited, a Wholly Owned Company Limited by Shares, and Mulberry Housing Society, a Community Benefit Society, and delegate to the Corporate Director, Place after consultation with the Corporate Director, Resources and the Corporate Director Governance authority to take all necessary steps for this purpose including but not limited to approving the Rules of the Society and Articles of Association of the Company.

2.    To agree that the officers identified in section 4 of the report be appointed as directors and members of the Wholly Owned Company (WOC) and Community Benefit Society (CBS) respectively.

3.    To authorise the Corporate Director, Place to recruit three independent members to the CBS, after consultation with the Mayor and Statutory Deputy Mayor and Cabinet Member for Housing Management and Performance and Cabinet Member for Strategic Development, ensuring that the appointments are made on the basis of relevant skills and expertise and the recruitment process follows equalities principles in terms of promoting diversity on the Board.

4.    To authorise the Corporate Director, Resources to agree and sign off the final business case.

5.    To authorise the Corporate Director, Resources to

a)    make equity investments up to £6M in the WOC

b)    grant up to £9M of retained Right To Buy receipts and £2.5M of s106 commuted sums to the CBS with appropriate grant conditions;

c)    make available to the WOC a commercial loan facility up to £24M;

d)    make available to the CBS a loan facility up to £18.5M charged below a full commercial rate;

e)    enable both loan facilities by use of reserves and prudential borrowing within the General Fund as necessary;

subject to the above being in line with the Council’s Budget  framework, where required, the negotiation and finalisation of the loan agreements and decision to release funding subject to satisfactory due diligence delegated to the Corporate Director, Resources.

6.    To authorise the Corporate Director, Resources to approve the WOC and CBS’s first business plan.

7.    To agree to provide the WOC and CBS with a credit facility of up to £50,000 each for use as working capital and delegate to the  ...  view the full minutes text for item 5