1. CWAG 06 03 15 NSDC/NSH Management Agreement – determination of annual Management Fee

2. Background 5400 properties – around 50% sheltered Rural area NSH established in Nov 2004 New management agreement from 01/11/13 Management fee around £7.5m Rent income £20m per annum Debt £104m incl £11m internal borrowing from GF

3. Methodology Method for calculating fee agreed under new Management Agreement. (01/11/13) Previously fee was all HRA income less whatever NSDC HRA continued to pay out (debt charges, insurance, depreciation, etc). NSH surpluses paid to NSDC on 31/03, returned to NSH on 01/04 New fee based on costs of undertaking the work required by the M.A. New agreement allows NSH to retain surpluses but may only use them following consultation with NSDC and in line with NSDC’s strategic objectives/aims

4. NSH Income Sources Management fee – Core housing management services including tenancy sustainment & income recovery, central services, repairs & maintenance, management etc. Works fee 8% asset management plan, 5% new build. Fees from GF for non HRA core services – hostels, debt advice etc. Fee income from 3 rd parties e.g. NCHA, & FIT Rent from NSH owned properties. Now also some passported extra care & support.

5. Initial Management Fee 2014/15 Methodology agreed by NSDC Finance & NSH Finance and incorporated into agreement. Reserves to be created/retained by both parties agreed. Fee from 1/11/13 to 31/3/14 agreed. Basis for fee for 1/4/14 to 31/3/15 agreed. Methodology for increases/efficiencies agreed for determination of future years’ fee.

6. Agreed Reserves NSH Minimum Reserve Bad debts Development & IT Staffing & Pay MRR/Depreciation Growth/Development NSDC/HRA Minimum Reserve Bad Debts MRR/Depreciation Growth/Debt repayment

7. Agreed uplift/efficiencies Agreed efficiency target of 3% to be applied to the fee in years 2 and 3. Increased by relevant annual price indices where appropriate – Local Govt pay award, RPI and ‘output price index for repairs & maintenance’. Any agreed variation in services to be covered by a variation in fee.

8. but There is a clause that allows NSH and NSDC to agree to vary the efficiency factor if they consider that there is a likely to be any unintended or unacceptable adverse impacts upon delivery of the services and/or the other outputs or requirements of the Management Agreement.

9. and then ….. Just when you thought it was safe to go back into the water …… Temporary staff/communication Year end – change in accounting practice too early. Calculation of base year – were things missed? Who pays to top up reserves? The begging letter & the negotiations. What happened next. Examples of adjustments. The future? Will it be easier?