Agenda item

(Director of Communities) To consider the attached report (CHB-006-2016/17).

(1)        That the contents of this Progress Report on Council house-building be noted;

(2)        That the Leader of Council be asked to convene a special Cabinet Meeting, to be held before the next scheduled meeting on 2 February 2017, to consider the use of 1-4-1 Receipts that will not be able to be used before their 3-year deadline at the end of March 2016; and

(3)        That a recommendation be made to the proposed Special Cabinet Meeting, that the 1-4-1 Receipt be passed to a Housing Association currently on site with an affordable housing development in the District, to enable the 1-4-1 Receipts to be used for the benefit of the District and to avoid the Council incurring interest payments to the DCLG, subject to the Council having nomination rights to the properties built with this money.

The Assistant Director (Housing Property & Development) presented a report to the Cabinet Committee. He advised that as set out in the Terms of Reference, the Cabinet Committee was to monitor and report to Cabinet on an annual basis the progress and expenditure in relation to the Council Housebuilding Programme.

The Assistant Director advised that by the end of Quarter 4 of 2016/17 there would likely be a £1.6 million deficit below the spend target for the 1-4-1 Receipts. Part of the reason why this had occurred was due to the delays that had occurred with Phases 1 and 2 of the house-building programme.

Phase 1

The Council formally determined the contract with Broadway Construction Limited on the 1 June 2016. This occurred as Broadway Construction Limited was failing to regularly and diligently progress with the works. At its meeting on 22 September 2016 The Cabinet Committee awarded the contract for the recovery phase for the construction works to P A Finlay & Co Limited in the negotiated contract sum of £2,674,335.10.

The works recommenced on site on the 31 October 2016 with phased completion for each site reflecting the work that remained outstanding. The target completion dates for each site were as follows:

Phase 2

Mullalley & Co. Limited was appointed on 7 March 2016; the company had undertaken site and soil investigations and progressed with detailed design works. The garages had been demolished and the site secured. Highways diversions had been submitted and agreed in relation to the public footpath, vehicle cross-overs and the bus stands.

During the ground contamination surveys asbestos waste had been found and the detection of methane gas. The extended ground monitoring had led to a 9 week delay in the contractor’s programme. However the Contractor has reported that this time will be clawed back and had anticipated that the completion date would remain the same, which was 9 April 2018. If events led to a claim for an extension of time in the future,  it was noted that the Council would not be liable for loss and expense as a result of any delays.

Phase 3

The Cabinet Committee, at an earlier meeting, agreed to procure the Phase 3 sites as a mixture of design and build and traditionally designed contracts. Tenders had been issued, returned, evaluated and reported.

Subject to the Cabinet Committee agreeing the various contract awards, work will start on site early in 2017. Each contract was based on its own contract period, which were as follows:

Phases 4-6

The Cabinet had previously decided to impose a temporary moratorium on work to progress Phases 4-6 of the Housebuilding Programme with immediate effect, with the exception of progressing planning applications up to their determination.

Barnfield, Roydon (Purchase of 8 affordable homes - Section 106 Development)

Following a joint bid from the Council and B3Living that had been accepted by Linden Homes, the Council had entered into an agreement to purchase 8 x affordable rented homes, with B3Living purchasing the 3 x shared ownership homes. The works were now on site with the target completion date for the works being October 2017.

Purchase of Street Properties

Following the Cabinet Committee’s decision to spend around £2m on the purchase of street properties in January 2016 in order to utilise 1-4-1 Receipts, six 2 & 3-bed houses in Waltham Abbey had been purchased at a total cost of around £2.1m including fees and stamp duty. Each of these required works and were currently in the process of being let at affordable rents.

Financial Position

The Cabinet Committee regularly monitored expenditure on the Council Housebuilding Programme.  This included income by way of 1-4-1 Receipts and other affordable housing contributions as well as expenditure on a quarterly basis.

As reported earlier, since the time that decisions had been made that led to the HCA grant not being taken up and unspent 1-4-1 Receipts being returned to the Government, the delays to Phases 1 and 2 reported earlier, had resulted in expenditure not keeping up with the projected cash flow required to spend the accrued 1-4-1 Receipts. Whilst every effort was being made to claw the slippage back, it was likely that some further 1-4-1 Receipts would have to be paid to the Government, with interest.

Members expressed concern about the possibility of having to pay money to the Government with interest and asked Officers if there was a way the money could be utilised, perhaps by buying more street properties.

The Assistant Director advised that not only was there insufficient time left in this financial year to purchase street properties as they would have to be in the Council’s possession by 31 March 2017, the remaining 70% of the acquisition costs would have to be met from sources other than 1-4-1 Receipts, which would be contrary to the moratorium placed on the Housebuilding Programme and the reasons for implementing the moratorium. However, he advised that consideration could be given to the Council giving the 1-4-1 Receipts to a Housing Association who were building in this area, in the form of grant, for which the Council would receive nomination rights secured on the properties purchased.

On discussion members were in agreement, in principle, that consideration should be given to the 1-4-1 Receipts being given to a Housing Association currently on site, developing in this district.

The Director of Communities advised that the Terms of Reference of the Council Housebuilding Committee did not give delegated authority to the Cabinet to decide this issue, which would have to be a Cabinet decision.

Members agreed that this should be referred to Cabinet as soon as possible, perhaps with a special meeting of the Cabinet being convened if necessary.

Decision:

(1)        That the contents of this Progress Report on Council house-building be noted;

(2)        That, if necessary, the Leader of Council be asked to convene a special Cabinet Meeting, to be held before the next scheduled meeting on 2 February 2017, to consider the use of 1-4-1 Receipts that will not be able to be used before their 3-year deadline at the end of March 2016; and

(3)        That a recommendation be made to the Cabinet that these 1-4-1 Receipts be passed to a Housing Association currently on site with an affordable rented housing development in the District, to enable the 1-4-1 Receipts to be used for the benefit of the District and to avoid the Council incurring interest payments to the DCLG, subject to the Council having nomination rights to the properties built with this money.

Reasons for Decision:

The Cabinet Committee was required to monitor progress and expenditure in relation to the Council House-building Programme, as set out in its Terms of Reference.

Other Options Considered and Rejected:

This report was on the progress made over the last 12-months and was for noting purposes only. There are no other options for action.