Finance and Asset Management for Long Term Delivery

Transcription

1

2 Finance and Asset Management for Long Term Delivery

3 Financing Social Housing John O Connor PwC

4 Agenda UK Experience AHB Funding Options

5 UK Market Evolution Pre 1988 mostly grant funded Since 1988 grants reduced, direct rent support increased Grant funding reduced from 11.4b in 2009 to 5.3b in 2015 Housing Benefit expenditure increased from 16b in 1995/6 to 25.1b in 2015/16 Big increase in private funding to HA s, to replace government grant funding

6 UK Housing Associations

7 UK Role of Housing Associations

8 UK HA Funding Mix of short term bank debt with long term fixed funding. 77b debt in 2016

9 AHB Funding Options Funding Sources and Structures Funding Challenges

10 PwC Role Mandated by ICSH to investigate private funding options Objective to secure off balance sheet funding for AHBs Assess the different funding options Positive feedback to date

11 AHB Funding Options Illustrative Funding Models Current Model Possible Model - 1 Possible Model - 2 Investor Equity HA Equity CALF Senior Debt

12 Debt funding requirements Long term, stable cashflows, credit worthy entity Ring fence cash flows, clean security AHB performance Acceptable risk profile Legal/governance Indep Regulator?

13 AHB Debt Funding Sources Commercial Bank debt EIB funding ISIF funding Institutional debt large pension funds Credit Union funding

14 Funding Challenges Indexation Structural P&A, Continuation Agreement Development/Construction funding Scale long term funding Role of LA s?

15 Conclusion Real Appetite to fund AHBs and social housing Basic structures robust, notably P&A Some tweaks may be required to secure project financing May be mix of funding solutions similar to GB

16 Slide Title Here Top Level Content Second Level Third Level

17 End of Presentation Thank you! Reminder: Drinks reception sponsored by Campbell Tickell at 7pm in Main Foyer & Bar

18 Stock Condition Surveys and Asset Management Process. Making Home a Reality Community, Respect & Empowerment, Excellence & Innovation, Accountability & Integrity

19 Context. In response to the current Homeless Crisis Dublin Simon Community has diversified and expanded rapidly over the last number of years. Dublin Simon Community is known as a provider of supported residential, emergency, treatment & recovery, employability, education, health and wellbeing and prevention services to people who are experiencing homelessness or at risk of becoming homeless. Dublin Simon Community is now also a Tier III Approved Housing Body with circa. 500 units of accommodation. 500 This has grown from 180 units of accommodation in As the housing and homeless crisis continues, we see this growth continuing and accelerating over the coming years Future Making Home a Reality Community, Respect & Empowerment, Excellence & Innovation, Accountability & Integrity

20 Dublin Simon Community. Strategic Objective People who occupy housing provided directly by Dublin Simon Community will have had accommodation of an approved high standard as a consequence of a robust Asset Management Framework being in place. This will deliver all necessary repair and maintenance, utilising both internal and external resources on a cost-effective and sustainable basis that is aligned with sectoral best practice. Making Home a Reality Community, Respect & Empowerment, Excellence & Innovation, Accountability & Integrity

21 Context The Dublin Simon Community property portfolio includes properties in Dublin, Kildare, Meath and Wicklow. Apartment Blocks Individual apartment units within managed developments Duplex apartment units and mixed use developments Houses within existing residential developments and on individual sites. Local authority and privately owned properties leased and managed by Dublin Simon Community. Support service buildings including retail, social enterprise and office accommodation. Long Term Supported Housing, Supported Temporary Accommodation, Treatment and recovery accommodation. We own, lease and manage multiple building types with various different forms of construction and materials. Making Home a Reality Community, Respect & Empowerment, Excellence & Innovation, Accountability & Integrity

22 Project Scope : To develop a new stock condition survey configuration, with accompanying schedules of rates and component lifecycles, which is fit for purpose and sufficiently detailed to enable us to identify and differentiate both performance characteristics and financial liabilities of different property types. To project manage and deliver the inspection of dwellings of mixed tenure and covering a range of asset types. To provide data in a format which shall enable this to be viewed, analysed and reported on without the need for any specialist software, investment. To make all arrangements for access to inspect the properties and liaise with residents and where appropriate housing management personnel in relation to appointments. To produce a summary report combining statistical reports on future maintenance cost forecasts, with written narrative and commentary on the stock condition, the findings of the survey with conclusions. Making Home a Reality Community, Respect & Empowerment, Excellence & Innovation, Accountability & Integrity

23 The Project The Consultants Faithorn Farrell Timms LLP (FFT) were appointed, following a competitive tender process, to undertake the stock condition surveys and produce a comprehensive asset management database tool in order to manage the building portfolio over a thirty year period. FFT are specialist providers for stock condition surveys and have provided this service to approved housing bodies in the Irish Social Housing Sector. They have experience and understanding of the requirements within the sector. The Timeline September 2016 : Project Scoping and Tender for Services. December 2016 : Tenders returned and Evaluated. January 2017 : Consultant Appointed. April 2017 : Surveys completed. May 2017 : Asset Management database and report handed over to Dublin Simon Community. Making Home a Reality Community, Respect & Empowerment, Excellence & Innovation, Accountability & Integrity

24 Project Delivery and Collaboration. Collaboration between Dublin Simon Community and FFT in the implementation and delivery stages was key to the delivery of the project. Detailed briefing meetings at project inception and pre survey stage to confirm the brief requirements. The provision of a detailed asset list was formulated as a joint effort forming the foundation for the database. Shared responsibility for management of access arrangements and local knowledge reduced the programme time. Designated surveyors provided consistent points of contact during the process. Regular progress meetings between the project managers during the process ensured the project deliveries were met. The collaboration provided a solution which was bespoke to the requirements of the organisation. Making Home a Reality Community, Respect & Empowerment, Excellence & Innovation, Accountability & Integrity

25 Project Delivery and Collaboration. Existing Stock Asset lists were provided to FFT by Dublin Simon Community FFT cleaned the data lists in conjunction with Dublin Simon Community All Assets given a UPRN. (Unique property reference number.) Surveys Completed and Stock Condition Asset Database created. FFT report for the use of the database and recommendations for the ongoing maintenance and updating of the database. Making Home a Reality Community, Respect & Empowerment, Excellence & Innovation, Accountability & Integrity

26 The Output. Full Stock Condition database containing all block and accommodation assets. A full schedule of elemental rates and lifecycles linked to each asset from which cost reports for planned preventative maintenance can be drawn. A schedule of short term works (1-4 year) identified as part of the survey process. A full data export schedule identifying the specifics of the elements of each unit surveyed. A 30 year cost summary identifying the preventative maintenance requirements up to A comprehensive stock condition survey report summarising the findings of the surveys and advising on the next steps in the asset management programme. Making Home a Reality Community, Respect & Empowerment, Excellence & Innovation, Accountability & Integrity

27 The Output. Statistics. Age Profile : The largest concentrations of dwellings in the stock were constructed Pre and post Roofs : 70 properties with pitched roofs were inspected : No roofs required replacement in 0-5 years. 5 Roofs require replacement in 5-10 years. Windows : 5 Properties inspected require window replacement in 0-5 years Kitchens : 210 kitchens were recorded in the database. 23% require replacement in 0-5 years. Further 44% in 6-10 years Bathrooms : 367 Bathrooms and WC facilities were recorded in the database. 7% renewal in 0-5 years. Further 44% in 6-10 years. Heating systems : 185 heating sources recorded in the database. ( Individual, communal and electric heating.) 31% renewal in 0-5 years. Further 18% in 6-10 years. The renewal data combined with the age profile identifies where the peaks and troughs of expenditure will be required. This will allow for accurate modelling of budgets to provided a more consistent allocation of resources and an accurate sinking fund provision. These surveys, going forward will reflect the trends of the construction output nationally. Making Home a Reality Community, Respect & Empowerment, Excellence & Innovation, Accountability & Integrity

28 Next Steps. There is a temptation to put the shiny new toy back in the box and put it up high for everyone to see it but well out of reach in case it gets damaged. Understanding the need for the database to be operated as a live tool, recording the management and development of the property portfolio and informing the forward financial planning is paramount. FFT have come on board to update the database regularly and provide quarterly reports for the organisation identifying progress being made through planned preventative maintenance. This will inform the cyclical reviews and financial planning for the maintenance and upkeep of the portfolio as it expands. Making Home a Reality Community, Respect & Empowerment, Excellence & Innovation, Accountability & Integrity

29 Thank you. Making Home a Reality Community, Respect & Empowerment, Excellence & Innovation, Accountability & Integrity

30 Finance and Asset Management for Long Term Delivery ICSH National Social Housing Conference, Limerick 27 September 2017 Susanna Lyons Head Of Regulation

31 Regulatory Focus Our mission is to protect AHB assets and safeguard the interests of their current and future tenants by regulating for a well governed, well managed and financially viable sector. Our Regulatory Focus 31

32 Role of Regulation Provide Assurance to Tenants, Boards, Government & Potential investors & the AHB Sector Demonstrate, a stable and well-regulated Sector Safeguard tenants and public investments Facilitate investment in Social Housing by growing confidence in the Sector Contribute to the overall sustainability of the Sector 32

33 Regulation Office Our work remains focused on: Implementing the VRC Assessing AHBs against the VRC Pending Legislation: Developing & Embedding Standards Establishing a Regulatory Framework Enhancing of Relationships with Key Stakeholders: CRA, HSE, HIQA, ICSH Proportionate, Transparent, Risk-Based 33

34 What do we look for Good Governance o Fully functioning Boards o Skills, expertise & diversity o Provides strategic direction & oversight Financial Management o Financial Viability - Short & Long Term o Strategy underpinned by Financial Planning o Linking of Financial & Asset Management Performance Management o Tenant Focus o Asset Management o Long Term sustainability of the Housing Asset 34

35 3 rd Year of VRC 232 AHBs Assessed, 28,781 homes regulated 83% AHBs Reported High levels of Compliance against the VRC Evidence of Strengthening & Embedding of Code Governance Sinking Fund Provision Risk Management Financial Standard Larger AHBs indicate significant growth plans c.9k units Forecasted funding predominately HFA. However, evidence of innovative funding mechanisms under consideration by AHBs Enhanced Regulatory Framework, pending Legislation Organisation s continue to develop their Governance, Financial and Performance Management

36 Key Focus Areas Pending Legislation Sector Growth & Long Term Sustainability Execution Management Continued Embedding & Strengthening of Standards AHBs NOT signed up to the Code Wider Regulatory Burden

37 Statutory Framework LEGISLATION Statutory Regulator Proportionate Governance Standard Financial Standard Performance Standard Transparent Risk Based Comply or Explain Fully Functioning Board Oversight, Direction & Control Strategy/Leadership Outcomes Focused Transparency Skills, Expertise & Diversity Financial Governance & Risk Management Financial viability Assess & Monitor: S-T Viability Surplus/Deficit Liquidity Cashflow L-T Viability Business Planning Profitability Debt to Equity Sinking Fund Stock Condition Protect & safeguard Tenants & Housing Asset Tenant focused Delivery Nominations & Allocations Voids Communication Repairs & Maintenance Sinking Fund Stock Condition Surveys Asset Registers

38 Finance & Asset Management for Long Term Delivery

39 Long Term Management & Delivery of Housing P R O P O R T I O N A T E New Homes Execution Management Performance Evaluation Asset Management New & Existing Risk Management Financial Viability: Business & Financial Planning Sensitivity Analysis Mission, Objectives & Strategy Clearly defined Goals Outcomes Focused S U S T A I N A B L E

40 Mission, Direction & Strategy The Financial Standard What is the Mission of the organisation? What are key Objectives? Is there a clearly defined strategy? Is there a clear plan on how to execute on the strategy? Have risks been evaluated? Can plans be achieved in a safe and sustainable environment? 40 Boards are responsible for the Direction, Control & Oversight

41 Financial Management The Financial Standard Financial Viability Planning Strategic Business Financial Sensitivity Analysis Financial Governance Audit & Risk Committee Controls & Evaluation Tools Risk Management Framework 41

42 Financial Viability Short Term Viability Ensuring: Generating positive cashflows from operations Has sufficient liquidity Trends In a word it s about being PRUDENT Long Term Viability Ensuring: Balance Sheet Management: Assets and Liabilities Cashflow Projections over L-T L-T Profitability and what drives it Financial Risks Management of the asset, the output from the Stock Condition Survey & link to the L-T cashflow

43 Asset Management Asset Management: Existing & Future Homes o Policies Clearly Defined Outcomes o Strategy Long term o Planning Short term Housing Management Data and Systems Internal Controls Standards of Service SLAs, Contracts, Tenders Value for Money Evaluation Performance Monitoring

44 Essentials of Asset Management Asset Register(s ) What assets do we have? Where are the assets? Stock Condition Survey(s) Sinking Fund(s) Asset Management Strategy & Policy What condition are properties in? What is L-T funding requirements for these properties? How is sinking fund provision established? Do the L-T cashflow profiles provide for adequate provision, as informed by SCS Does the organisation have the appropriate Property Management in place for current & future Stock? Performance Evaluation

45 Risk Management Identify Execution Risk Financial Risk Operational Risk Reputational HR KRI s Issue Mgnt Appetite Actual V Plan Communication Monitor & Report Assess Likelihood Impact Inherent Residual Scenario Planning Mitigate Avoid Transfer Mitigate via controls Accept residual Risk

46 Overall Ensure the Strategic, Financial and Asset management plans integrate and inform each other Sustainability Ensure housing Asset will meet the needs of the tenants and the community into the future Pro-actively manage Risk Ensure plans integrate the L-T costs of assets: made on the basis of life cycle component costs identified via Stock Condition Surveys Focus on Tenants

47 Key Takeaways: The Financial Standard Clearly defined Strategy & Objectives Strong disciplined financial governance Boards with relevant financial & risk expertise Strong line of sight on existing & future asset costs and how they will be funded Plans that are realistic and integrated 47

48 THANK YOU E: Ph