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Richmond Park and Birklands Stock Transfer
1. Introduction
1.1 This report informs Cabinet of the outcome of the formal tenants’ ballot and seeks authority for officers to negotiate and finalise the transfer agreement.
1.2 The Richmond Park, Birklands and Athelstan estates comprising of 463 Council homes, were part of the final phase of Neighbourhood Commissions, in Housing Management Area K. The recommendation of the Commission in relation to this estate was to pursue stock transfer to a Registered Social Landlord (Housing Association). On 27 October 2004 Cabinet resolved in relation to all the potential stock transfer estates in Areas F and K,
‘authority be delegated to the Head of Housing Strategy in consultation with the Cabinet Member for Neighbourhoods to agree and implement a competitive selection process for the selection of one or more RSLs, in conjunction with tenants; such recommendation to be reported to Cabinet for approval.’
1.3 This recommendation was reported to Cabinet on 23 November 2005 and it was approved that Manchester Methodist Housing Association be appointed as prospective landlord.
1.4 The estates were originally running to the same timescales as the transfer proposals in the Manor and Castle area. However, it became clear a straight refurbishment solution might not achieve a sustainable result on the Richmond Park estates and a decision was made to consult tenants on a proposal to demolish 76 one bedroomed flats and replace them with between 40-50 new build properties. The development would be required to comply with the Council’s affordability policy and the target would be provision of at least 5 socially rented homes. The composition of the affordable element will be dependent on actual development costs and sale prices. Although MMHA were also the prospective landlord on the Wybourn estate, they were separated from Wybourn, to become two separate transfer projects in the pre ballot period. However, should the transfer ballot be positive on the Richmond Park estates, as it was at Wybourn, then the estates will be rejoined together to achieve the same transfer date.
1.5 A further report was considered by Cabinet on 13 September 06 which approved:
That the Director of Housing, in consultation with the Assistant Chief Executive (Legal and Governance) and Director of Corporate Resources,
a) Agree any necessary changes to the first stage offer/consultation document before it is issued to the tenants affected
b) Agree any necessary changes to the offer/consultation document arising from the first formal consultation
c) Hold the transfer ballot
d) Subject to the outcome of the tenants’ ballot, to negotiate an ‘in principle’ agreement with Manchester Methodist Housing Association for the transfer of the Richmond Park and Birklands estates for consideration by Cabinet
2. Outcome of the Formal Ballot
2.1 The formal consultation takes place in two Stages, and was conducted in accordance with the DCLG’s requirements. Stage 1, which is the Offer Document stage, ran from 20 November 2006 until 18 December 2006. Stage 2 ran from 5 January 2007 until 2 February 2007. As is normal practice in stock transfer, the ballot of tenants ran concurrently with the second Stage consultation. Electoral Reform Ballot Services administered the ballot, which closed at noon on 2 February 2007. The results were made available on the afternoon of the same day.
2.2 The outcome of the ballot is shown below:
2.2.1 Are you in favour of the Council’s proposal to transfer the ownership & management of your home to Manchester Methodist Housing Association?
Total number of eligible tenants … 537
Total number of votes received 429
Overall rate of participation 79.9%
Total number of spoilt/blank ballot papers 1
Therefore, total number of valid votes counted 428
Result
Number voting YES ....... 304 (71% of the valid vote)
Number voting NO ........ 124 (29% of the valid vote)
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TOTAL 428 (100% of the valid vote)
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2.3 The outcome shows that there is clear support for the transfer proposal. It is recommended the transfer should proceed to completion, subject to the approval of the Secretary of State. The Secretary of State in considering an application for consent to transfer is required to be satisfied that the majority of secure tenants affected by the proposed transfer are not opposed to it. The ballot result clearly satisfies this requirement.
3. Governance Arrangements
3.1 Manchester Methodist Housing Association (MMHA) is a not-for-profit Registered Social Landlord, and an exempt charity. The organisation has restructured recently, due to growth in the organisation and the coming together of MMHA and Ashiana Housing Association. A parent group – Great Places, was created, with MMHA and Ashiana being stock owning registered social landlords within the group. The parent group – Great Places, provide strategic direction.
3.2 It is governed by a board of 11 independent members along with the Chief Executive of Great Places. It is proposed that if the stock transfer goes ahead, the Sheffield stock transfers will be represented on the MMHA board. It is likely that this will be offered as a tenant place.
3.3 Tenants on both the Wybourn and Richmond Park and Birklands estates feel that local decision-making is essential on their estates. MMHA are therefore proposing to set up a local board of management – called Parkway Homes. They would be a division of MMHA. They would be authorised to oversee the management of the homes, the delivery of the improvements programme and monitoring housing management services across the estate.
3.4 It is proposed that Parkway Housing, the local management board, would be comprised in the following way:
· 3 Wybourn tenants
· 3 Richmond Park and Birklands tenants
· 1 owner occupiers from the estates
· 2 Council nominees
· 1 MMHA nominees
· 2 Independent nominees
3.5 Following the positive ballot at Wybourn, the Council has already nominated Cllr Pat Midgely and Cllr Marjorie Barker to sit on the board.
3.5 Manchester Methodist Structure
3.6 MMHA has been working closely with the Richmond Park and Birklands TARA, and the Wybourn tenant representatives. They are committed to supporting these groups in the future with staffing resources. MMHA will continue to collect levy money on the tenants’ behalf.
3.7 Current steering group members will form in the short term, the shadow management board of Parkway Homes. Within 12 months of the ballot taking place, MMHA would advertise openly for a new board. All tenant and resident positions would be subject to nomination and election every 3 years.
3.8 It is expected that services are to be delivered locally, by staff who have transferred to MMHA from Sheffield Homes under the TUPE regulations. The local staff would provide services such as :
- Liaison and support during improvement works
- Debt advice and arrears recovery
- Void management and lettings
- Tenancy enforcement and dealing with anti social behaviour
- Tenant Involvement & supporting the Committee
These will be supported by the RSL’s central services teams who will provide HR, IT and financial assistance.
3.9 MMHA recognise the need to support the City Council in meeting housing need in Sheffield and have agreed that 50% of all vacant properties at Richmond Park, Birklands and Athelstan, will be let to applicants nominated by the City Council.
4 Rehousing Arrangements
4.1 Out of the 76 flats proposed for demolition, there are 72 tenanted and 4 leaseholders. Currently 7 of the 72 are vacant, including 6 long-term vacants arising from an arson attack. There are also 7 vacant flats amongst those that would be retained. The expectation at this early stage is that if redevelopment proceeds then approximately 30 tenants would be likely to be re-housed by MMHA into newly refurbished flats on the estate and approximately 35 would need to be re-housed by the Council elsewhere in the city. Sheffield Homes managers have been consulted over the potential impact this may have on re-housing pressures across the city and confirm the impact is likely to be minimal. It would be unhelpful both for the individuals concerned and for the process of emptying the 76 flats, if new tenants were placed there now, only to need re-housing after the transfer. Therefore as is normal practice in redevelopment solutions, lettings to the 72 flats have ceased.
4.2 Following a positive ballot result, the Board of Management of MMHA will make a resolution to begin re-housing lawful occupiers of the flats involved in the redevelopment proposals from a certain date. It is recommended that from this date, such lawful occupiers be awarded "Demolition/Clearance Priority" in accordance with Paragraph 18 of Section I of the Lettings Policy as though they were Council tenants and in all other respects in accordance with the Lettings Policy.
4.3 During the demolition and replacement works, vacant properties on the estate will initially be ring-fenced by MMHA, for allocation to applicants needing to be re-housed from the 76 flats.
5. Actions Required to Complete the Transfer
5.1 The completion date is proposed for 23 April 2007.
5.2 There are a number of tasks, consents and agreements that must be in place before the transfer can take place and three of the more significant ones are detailed in paragraphs 6 to 8 below.
6. Consent of the Secretary of State
6.1 The Council must formally resolve to seek the Secretary of State’s consent to the transfers and the decisions to do so must be made by the City Council and cannot be delegated to Cabinet. As stated above, the Secretary of State cannot give consent unless he is satisfied a majority of tenants are not opposed to the transfers. The ballot result will clearly satisfy this requirement.
7. Transfer Agreements
7.1 Following the successful ballot of tenants, the Transfer Agreement will document the agreements the Council has with Manchester Methodist Housing Association to transfer the homes on the estates. The Transfer Agreement is a contractually binding document which set out the rights, responsibilities, covenants and requirements of both parties and contain all the necessary arrangements to enable the Housing Association to receive and manage the dwellings and the Council to enforce all the promises made during the consultation period.
7.2 As well as documenting the details of the transfer itself, the Transfer Agreement will be used in future to regulate the relationship between the Council and Manchester Methodist Housing Association. Practical arrangements including the rights the Council would have to nominate tenants into 50% of all lettings, will all be set out in the Transfer Agreement.
7.3 The Council's external legal advisors, Wright Hassall, have prepared the first draft Agreements and negotiations with the Housing Association are underway. It is a complex and lengthy legal document and a tight timescale has been set to ensure that the transfers can take place on the proposed date in paragraph 5.1.
7.4 The Transfer Agreement will contain the following:-
a) Covenants committing the Housing Association to i. Carry out the promises made by the Council on the Housing Association’s behalf in the Consultation Document; ii. Carry out the programme of repairs and modernisations detailed in the Consultation Document to ensure all transferred properties are improved to well above the decent homes standard by 2010/11. The Housing Association has been required to put in place a 30 year business plan that will ensure investment remains available to ensure homes are maintained to that standard for the next 30 years; iii. Grant all transferring tenants Assured Tenancies as presented in the offer document, iv. Not vary the terms of the new Assured Tenancy Agreement for transferring tenants without first consulting the Council over the changes;
v. Consult with tenants on any changes in matters of housing management.
b) The agreements include a Nominations Agreement requiring the Housing Association to let at least 50% of vacant properties to applicants nominated by the Council. MMHA are currently exploring using the Council’s Choice Based Lettings scheme which is administered by Sheffield Homes.
c) A requirement that the tenancy to be offered to all Council nominees will be the standard form of assured non shorthold tenancy used by the Housing Association for granting new tenancies to all new tenants.
d) An obligation on the Housing Association to make properties available to contribute towards the Council’s delivery of its contract with the Home Office for the accommodation and support of asylum seekers.
e) An obligation on each Housing Association to take all necessary action to prevent homelessness within it’s own housing stock on the estates and as a minimum requirement to apply the guidelines set out in the South Yorkshire Charter and to engage with support providers to ensure that adequate support is in place to prevent homelessness.
f) A Right to Buy Sharing Arrangement to protect MMHA from the impact of RTB sales on their 30 year business plan whilst giving the Council a share of RTB sales proceeds following transfer. DCLG have suggested, because of the extremely high level of gap funding being provided, that the Council's share of future RTB receipts from this transfer should be allocated to contribute towards the gap funding. The response of Council officers has been that this is not feasible as those assumed future receipts have already been accounted for to match fund the ALMO decent homes funding. Negotiations are ongoing.
g) Arrangements for the purchase of the Council's arrears portfolio for existing tenants. The purchase price to be based on a standard formula developed by CIPFA and applied to many stock transfers.
h) A dispute resolution process which allows unresolved disputes to be referred for expert adjudication where both parties agree or to the courts if either party wishes.
7.5 In order for RSLs to secure funding it has become normal practice for lenders to require councils involved to provide environmental warranties in respect of the stock, both to the RSL and directly to the lender. The form of warranty has become relatively standardised. Wording is couched to try to ensure the council retains all environmental liabilities. As a result, the environmental warranties include liabilities arising from any dangerous substance present in, at, on or under the Property and any deleterious building materials such as lead paint and asbestos and from naturally occurring contaminants such as radon. Warranties are sometimes demanded for as long as thirty years although between 22 and 25 years is now more normal. As part of the City Council’s RSL selection process the RSLs were required to give a written commitment that they would not seek, whether at the behest of funders or themselves, to require the Council to provide unlimited warranties. However, the Housing Association will need to seek external funding to finance the proposed works and so to make it fundable the agreement will include warranties given to them and their funders by the Council.
7.6 The Council will be required to warrant the information it has provided is accurate, as this forms the basis of the Business Plan. The Council will also be required to provide a warranty in respect of environmental liabilities. It will limit the asbestos warranty to any costs arising above and beyond those allowed for in the valuation.
7.7 Desk top studies show the possibility of environmental hazards, as they do throughout much of the city. The Council’s Contaminated Land Officer is of the view that if a need did arise to address a hazard that did not arise from redevelopment, then a grant could be expected to be made available to the Council from DEFRA to meet the cost. The DEFRA grant is a cash limited national fund that has been in operation for over 20 years and has always been under-subscribed. The transfer agreement will oblige MMHA to provide timely and sufficient information to enable the Council to make a bid to DEFRA, to supply further information if necessary and to give rights of access and survey. Consideration is also being given to taking insurance against an environmental warranty claim. A quotation is being obtained. Officers will take a decision on whether to purchase insurance once the cost and claim details are known.
7.8 In view of the timescale and the length and complexity of the document it is recommended that authority to negotiate and finalise the Transfer Agreement be delegated to the Director of Housing in consultation with the Assistant Chief Executive (Legal and Governance) and Director of Corporate Resources.
8. Development Agreement
8.1 Linked with the Transfer Agreement is a Development Agreement for the refurbishment of the dwellings. This is an essential part of the VAT mitigation arrangements outlined in the report to Cabinet on 13 September 2006. In the Transfer Agreement the Council agrees to transfer the dwellings with the benefit of the proposed improvements, notwithstanding that they will not have been done when the dwellings transfer.
8.2 In the Development Agreement the Council agrees with MMHA that they will carry out the improvement works on behalf of the Council and the rest of the Agreement is concerned with the machinery of VAT claims and what happens if, for some reason, VAT cannot be reclaimed.
8.3 VAT reclaimed through the VAT mitigation scheme will be invested in environmental and public realm works on the estates, after the Council’s set up costs have been recovered. The nature of the work will be agreed between the Council and MMHA. Account will be taken of the need to deliver works that both improve the local environment and minimise future maintenance costs.
8.4 In view of the timescale and the length and complexity of the document it is recommended that authority to negotiate and finalise the Development Agreement be delegated to the Director of Housing in consultation with the Assistant Chief Executive (Legal and Governance) and Director of Corporate Resources.
9 Kier Sheffield City Council
9.1 Kier Sheffield LLP and MMHA are holding constructive discussions about arrangements for delivery of maintenance services on the estate and there are high expectations an agreement will be reached.
10 HR Implications
10.1 The HR implications were reported fully in the report of the 13 September 2006. However, Members are reminded that there are no TUPE implications for staff of Sheffield City Council, as all operational housing management staff transferred to work for Sheffield Homes in April 2004. There is, therefore, a TUPE impact for Sheffield Homes, involving 19 staff members.
10.2 Legal responsibility for ensuring TUPE legislation is properly applied in respect of Sheffield Homes employees rests with Sheffield Homes and MMHA, rather than with the City Council. A comprehensive communications programme has been in place to ensure that all potentially affected staff are well informed about the implications of the stock transfers.
10.3 The three prospective Housing Associations in the Manor and Castle stock transfer proposals and Sheffield Homes are developing an agreement to form a consortium to jointly manage the delivery of estate services and neighbourhood warden services across their estates. The understanding is that this consortium will employ Sheffield Homes to deliver some of these services on its behalf and so Estate Officers and Neighbourhood Wardens will remain employed by Sheffield Homes and will not be involved in a transfer of employers. Streetforce will be seeking to negotiate a new contractual arrangement with this consortium for the delivery of grounds maintenance services. However, if the grounds maintenance work is not secured with the resulting loss of up to £174k of workload this may result in residual costs to Street Force and the Council [which will vary depending on whether or not TUPE applies] if alternative work and/or equivalent cost reductions are not found.
10.4 All staff who TUPE transfer from Sheffield Homes to the Housing Associations will transfer with their existing contract of employment intact including their existing conditions of service
10.5 Sheffield Homes has adopted the Council’s Code of Good Practice ‘Transfer of Employees to Other Employers’, which states:
“ …The Council will expect a new employer to take up Admitted Body status in the Local Government Pension Scheme (LGPS). Where this is not possible the matter will be the subject of consultation with the Trade Unions within the established consultation processes. The new employer must demonstrate that the alternative pension scheme to be provided will be broadly comparable in all material respects. Where the new employer is not part of the LGPS the minimum acceptable provision will be a scheme certified as broadly comparable by the Government Actuary’s Department”
MMHA have applied for Admitted Body Status and are in negotiations with South Yorkshire Pension Authority. There is no reason to believe their application will not be successful but in that unlikely event they will ensure that transferring staff receive a pension scheme that is broadly comparable as per the Code of Good Practice.
10.6 The Code of Good Practice also requires that employment issues are identified as a topic for evaluation and that Trade Union representatives be engaged in that part of the evaluation process. This was complied with by involving Trade Union representatives very early in the landlord selection process, evaluating and scoring the employment aspects of the Pre Qualification Questionnaire.
10.7 MMHA are negotiating a contract with Kier Sheffield, for the delivery of responsive repair services on the estates. They are hopeful of a satisfactory outcome based on specification and price.
10.8 If an agreement is not reached and MMHA appoint a different contractor to deliver the responsive repairs services, then it would need to be explored whether TUPE was likely to apply for some Kier operatives. This would be a matter for Kier Sheffield and the new contractor to manage but the Council would play a role to help ensure TUPE processes and staff consultation work effectively.
11 Financial Implications
11.1 The detailed financial implications were fully explained in the Cabinet report of the 13 September 2006. Members are reminded that this transfer has a large negative valuation. Following extensive negotiations between the DCLG, the MMHA and officers and consultants of the City Council, DCLG have committed to providing significant funding to MMHA to help address the negative valuation. The actual final sum being offered by DCLG has not yet been confirmed and negotiations are continuing. The expectation is that negotiations will be satisfactorily resolved in time for the transfer completion date of 23 April 2007.
11.2 A significant change since the report of 13th September 2006 is that the financial risk to the Council of having to meet the set up costs in the event of a ‘no’ vote in the ballot will now not arise. The Council’s set up costs will be met by MMHA.
12 Equality Impact Assessment
12.1 This project aims to make a significant contribution to the corporate agenda of closing the gap and creating sustainable communities where people choose to live across the whole of the city. A successful stock transfer will have a positive impact on all tenants and residents on the estate. All will benefit from a package of both internal and external improvements, to their homes and neighbourhood. In addition, tenants with disabilities will benefit from the delivery of aids and adaptations where required as part of the improvement works
12.2 Cultural and other diverse needs will be considered as part of developing the investment programme and provision of public services.
12.3 All consultation has been, and will continue to be inclusive and accessible.
12.4 All Registered Social Landlords are required, as a condition of their Housing Corporation registration, to comply with the Housing Corporation Regulatory Code. The Housing Corporation conducts regular monitoring to ensure compliance. The code includes the following requirements in relation to equality issues;
Housing Associations must demonstrate when carrying out their functions, their commitment to equal opportunity. They must work towards the elimination of discrimination and demonstrate an equitable approach to the rights and responsibilities of all individuals. They must promote good relations between people of different racial groups………………
The governing body must have adopted an equalities and diversity policy that covers all aspects of equalities and includes race, religion, gender, marital status, sexual orientation, disability or age.
13 Property Implications
13.1 If the stock transfers proceed, the ownership of the land and property in Neighbourhoods/HRA ownership within the estate boundary will be transferred to the respective Housing Associations. It is a requirement of DCLG that the freehold interest in the dwellings is transferred. Aside from the dwellings, the land and property to transfer includes some garage sites and garages, electricity sub stations, boiler rooms and other small pieces of land. No other buildings will transfer.
14 Environmental Impact
14.1 This project aims to make a significant and positive impact on the environment, both now and into the future. At the landlord selection stage, MMHA demonstrated a commitment to energy efficiency and environmentally sustainable development, and this commitment has been translated into the offer. As part of the complete improvements programme, MMHA will replace the existing windows and doors with high performance fittings and will over-clad the concrete panels of Reema properties with both insulated brick & sustainably sourced timber to reduce energy loss from the home. This will ensure that properties continue to perform well against national standards for energy efficiency. Central Heating systems will also be replaced or renewed to ensure they are working efficiently and making best use of energy resources. Overall, the impact on the environment will be a matter for consideration throughout the housing management process as well as the investment programme and the proposed new build affordable housing on Richmond.
15 Recommendations
1) Subject to the Secretary of State’s consent:
a) the dwellings at Richmond Park, Birklands and Athelstan be transferred to Manchester Methodist Housing Association
2) The Director of Housing in consultation with the Assistant Chief Executive Legal and Governance and the Director of Corporate Resources negotiate and finalise the Transfer and Development Agreement together with associated agreements with Manchester Methodist Housing Association, and take all such other steps as are necessary to complete the transfer.
3) Council be recommended to apply to the Secretary of State, under Section 32 Housing Act 1985, for consent to transfer the dwellings to Manchester Methodist Housing Association.
4) The Director of Housing in consultation with the Assistant Chief Executive Legal and Governance be authorised to negotiate and agree any necessary changes, including partial assignment of the agreement, to the Construction and Building Services Agreement made between the City Council and Kier Sheffield LLP.
5) From the date on which a resolution of the Board of Management of Manchester Methodist Housing Association is made to begin re-housing lawful occupiers of Flats: Richmond Park Rise 107 to 153(odd numbers) and 124 to 146 (even numbers), 1 to 65 Richmond Park View and 50 to 64 Richmond Park Grove, such lawful occupiers be awarded "Demolition/Clearance Priority" in accordance with Paragraph 18 of Section I of the Lettings Policy as though they were Council tenants and in all other respects in accordance with the Lettings Policy."
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