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 AContinue with the existing arrangements A1 Extend the ALMO management agreement (30 plus years) BThe Council brings the service ‘in-house CTraditional stock transfer. DTransferring 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 Meeting 22 nd 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 HCA01-11-2011 05-12-2011 - Response to specific questions posed by HCA05-12-2011 21-12-2011 - Letter to DCLG / HCA21-12-201 08-02-2012 - Meeting DCLG / HCA 10-02-2012 - Letter to DCLG / HCA10-02-2012 17-02-2012 - Letter to DCLG / HCA17-02-2012

13. Communications with Government Agencies 21-02-2012 - Meeting with Grant Shapps and Richard Graham MP 21-02-201 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