THE ROYAL BOROUGH OF KENSINGTON AND CHELSEA TENANT MANAGEMENT ORGANISATION. TMO Board
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1 THE ROYAL BOROUGH OF KENSINGTON AND CHELSEA TENANT MANAGEMENT ORGANISATION TMO Board Meeting held on 9 th December 2010 Present: Mr Reg Kerr-Bell, Borough wide Board Member (Chair) Mrs Sylvia Collet, Borough wide Board Member Mrs Celine Green, Borough wide Board Member Ms Kathy Harris, Borough wide Board Member Mr Iain Smith, Borough wide Board Member Mr Roy Turner, Borough wide Board Member Mr Tony Ward, Borough wide Board Member Ms Rona Nicholson, Council appointed Board Member Mr Jeff Zitron, Council appointed Board Member Mr Peter Chapman, Appointed Board Member Mr Jon Dee, Appointed Board Member In Attendance: Mr Robert Black, Chief Executive Ms Yvonne Birch, Head of Strategy and Engagement Mrs Catherine HardySmith, Company Secretary Ms Sacha Jevans, Director of Customer Services Mr Anthony Parkes, Director of Financial Services Ms Lornette Pemberton, Director of People and Organisational Development Mr Simon Throp, Assistant Director, Asset Investment and Engineering (for part of the meeting) Mr David Gobel, Commercial Properties Manager, RBKC (for part of the meeting) Mr Rob Shaw, Housing Options Manager, RBKC (for part of the meeting) Ms Jane Clifton, Executive Office Manager Apologies: Ms Fay Edwards, Borough wide Board Member Councillor Maighread Condon-Simmonds, Council appointed Board Member Councillor Emma Dent Coad, Council appointed Board Member 1. Declarations of interest Action by There were no declarations of interest. 1
2 2. RBKC draft Allocations Policy Rob Shaw, Housing Options Manager, RBKC, introduced himself to the meeting, and gave apologies for Amanda Gill and Laura Johnson. He gave an overview of the draft Allocations Policy, including the main differences with the current policy, which had been out to public consultation until 26 th November. However, the Board s comments would be considered as part of the consultation. The new policy aimed to be both clearer and easier to understand for both residents and staff. It tackled severe cases of overcrowding, and would be fairer to homeless families living outside the borough in temporary accommodation, but was more realistic about who could be rehoused. The points based scheme was being retained rather than introducing a banded scheme because it helped applicants with multiple needs. High priority cases: Applications for urgent rehousing would have a 1,000 points including those with exceptional priority i.e. serious domestic violence/physical threats which would awarded by the Chief Housing Officer/Cabinet Member for Housing Emergency health and independence cases also had a 1,000 points i.e. where the current property was unsuitable because of mobility needs i.e. a resident could not return to their previous home from hospital Vacating homes: under-occupiers, or residents with no mobility problems in an adapted home would get 700 points. Next level of high priority cases would have points: Supporting health and independence: in unsuitable accommodation for their needs with limited access to facilities Applications subject to decants due to re-development of their homes Severely overcrowded: lacking 2 bedrooms Support for adoption/fostering Families/individuals at serious risk i.e. domestic violence. Medium points: 100 points: Residents in supported housing or care, not in work or vulnerable, and the private rented sector is unsuitable for them as they would have no support Homeless families in temporary accommodation Residents assessed as needing sheltered accommodation with some support. 2
3 Low priority: Homeless (B) - no statutory duty Overcrowding: lacking 1 bed rather than 2 beds Health and independence: members of household with health problems but not sufficiently serious Poor quality housing where Environmental Services were involved i.e. disrepair (5 points) In summary those with low priority were unlikely to get an offer because of the limited amount of available stock, but were still recorded on the system. Board members asked the following questions: Concern was expressed about homeless people who were working being given a low priority. Statutory homeless would receive 200 points, and if working, they could have an additional 50 points, a total of 250 points. It was pointed out that if a homeless applicant was pregnant, it would be rather short sighted to give them a bedsit. Such cases would be advised to bid after their baby was born An applicant with 2 children over 10 years old of different genders requiring 2 beds, but no other needs, would not get a property as they would only have 5 points. However, the new policy would not raise expectations that could not be met although the Council did want to help those needing 1 additional bedroom Clarification was given that a single person would only be eligible for a bedsit although it might be possible to get a 1 bed if it had been turned down by couples. It was commented that this policy was not very fair for single applicants. Clarification was given that a single person with 2 children of different genders would be eligible for separate bedrooms for them if they were over 10. It was recognised that the application of the policy would be difficult, but the reality was that last year there had been 560 properties to let of which only 56 had been 3 bedrooms, and 12 had been 4 bedrooms, so the right sized stock was not readily available. It was not possible to guarantee that all housing need could be met. It was pointed out that there were many empty properties within the borough, including within the Council s housing stock. Options for additional points: 3
4 Applicants would receive an additional 50 points if they had had continuous residency within the borough for at least three years. The exception was a homeless person who was living outside the borough Homeless families who were working received an additional 50 points There was also detailed definitions around the composition of a household i.e. children over 20 and elderly parents would be encouraged to seek rehousing independently so the family was more likely to be rehoused. As already mentioned children under 10 years old of either gender would be expected to share bedrooms. Finally priority would be given to families requiring 2 additional bedrooms. Changes to bidding process: Applicants would be limited to three bids on choice of property, and failure to attend a viewing would also be regarded as a refusal. After three refusals in 6 months, an applicant would not be able to bid for 3 months. This was in order to reduce the number of failed viewings. The criteria for direct offers had been expanded to ensure that people were not offered properties which were unsuitable. Additional questions by Board members: Further information was requested on direct offers, and clarification was given that an offer may be made to someone with mobility needs when a suitable property became available. It was mentioned that there were a lot of empty homes in the private sector, and asked why the Council did not serve more notices. Environmental Services focused on this area which helped to address the housing crisis. Points for vacating homes had gone down from 1,000 to 700. This initiative was aimed at under-occupiers, and offered incentives to encourage them to move to free up larger properties, but 700 points would be granted as it could not be classified as an emergency It was queried whether Executive Team would be commenting on what the implications for the TMO would be from the introduction of this new policy, and confirmation was given that the consultation period would remain open for any further TMO comments. The Board noted the draft Allocations Policy, and comments would be noted by RBKC. Rob Shaw left the meeting at this point. 4
5 3. HRA commercial properties David Gobel, Commercial Properties Manager, RBKC, gave a presentation on the management of the HRA commercial property portfolio. A number of Key Performance Indicators (KPIs) had been agreed for the performance of the commercial property portfolio. The following points were made: Number of voids was higher than the performance target, but was expected to decrease Performance on collection: rent demands were being sent out at an earlier date which had achieved a lower level of arrears than previously. Income target was 2.365m, but there was a risk from 7 unsettled rent reviews in the Golborne and Kings Roads areas which would go to arbitration, and would bring the figure within the income target. Property Services managed the portfolio on behalf of TMO, and included shops, surgeries, cafes, aerials, underground garages. There were also voluntary groups and artist studios. The portfolio included a small number of prime commercial units which provided most of the income. 50% of the income was from retail units, with the next largest area being car parks, some of which were storage units Majority of rents were between 20 50k, and the number of low value units made the portfolio fairly management intensive. 40% of income was from the Jigsaw letting in Fulham Road, and this rent would be increased in 2011 Changes had been made since Michael Clark, Director of Property, had been appointed, and officers no longer worked in a geographical area, but focused on particular tasks. Quarterly investment reports with a detailed breakdown of performance were now being produced, and the next report was due in January. Reports covered income, voids, KPIs etc. Voids were currently 16 with a value of 239k of which 99 Fulham Road was the biggest with a value of 110k, now under offer. Rent increases were valued at 68k. Targets had been set for rent collection, and performance had improved from 76% in September to 92% in November. Arrears were currently 141k with the largest debt owed by Chelsea Boys Club which would be repossessed although it was hoped that Council employees based there would take over paying the rent. Property Services was now more proactive in using bailiffs. 5
6 Work was going ahead on dilapidations, and works would be paid for by the tenant at no cost to the TMO i.e. costs would be negotiated with the incoming tenant There were 30 artist studios, and the main changes were that 30% had to be let to new and emerging artists who were given subsidy so the studios were more affordable, but the HRA would not lose income. Property Services had no budget to manage repairs and maintenance on the properties, and it was hoped that the TMO would provide money for some work. A meeting had been held that week, and consideration was also being given to the development of 21 sites for new homes. Board members asked the following questions: With reference to paras 5.73 and 5.74 regarding key worker units, it was thought that these should be used as Council homes. However, they would be let to the TMO for utilisation through a formal arrangement which was set up correctly. With reference to Elm Park Gardens basements, para 5.65, it was commented that these had been HRA properties and should have been used as such rather than disposed of. However, they had been classified as difficult to let or develop Consultation with residents on new commercial lettings was raised with a view to maximising income. Lettings were subject to the political process, and the TMO was consulted on the letting of HRA properties. Because of the need to maximise income, it was felt that there could be conflict between commercial lettings and residents. Concern was expressed that there was no process to deal with any potential conflict of interest, and it could be a bigger issue with the use of a commercial agent. However, the commercial agent would be working in line with the Council s criteria. This issue could be considered at a workshop with Property Services in the New Year, and brought back to Operations Committee for approval. This proposal was welcomed. Property Services were under pressure to complete lettings before the client lost interest, but it was agreed that a policy needed to be in place to deal with any conflicts of interest. However, it was noted that the majority of lettings were for small retail units. On the income target of 2.4m, the consequences for the TMO were queried of under or over occupancy. It was commented that there had probably been a lack of investment in these properties, and the TMO would work more closely with Property Services. It was commented that almost 20% of rental income came from properties let to the Council. Clarification was given ST/SJ 6
7 that transfer rents were additional to the 2.3m. At the meeting between Property Services and the TMO that week, this issue had been raised. There were approximately 20 properties occupied by Council staff, who had often been there for many years. It was asked how the TMO would be involved in the hidden homes initiative. Simon Throp was involved with the Council in identifying these, and would continue to work closely on feasibility studies, option appraisals etc. Further details would be brought back to Board and the Operations Committee. The main question would be how these initiatives would be funded, and triplicate agreements would be considered. The way forward depended on the government s self financing proposals next year, and whether it would be possible for the TMO to get funds through self financing. The Board thanked David Gobel for the presentation on the HRA commercial portfolio, and noted the report. The end of year report would be presented to the Board in May Mr David Gobel left the meeting at this point. ST/SJ 4. Summary of Housing Stock Option: investment requirements Simon Throp, Assistant Director, Asset Investment and Engineering made a presentation to the Board, and the following points were made: The perception was that the TMO properties were of a high standard, but there was an underlying problem of poor maintenance and repairs, and under-investment since the Decent Homes programme. However, we had only 1% of properties qualifying as non-decent following the stock condition survey. The report summarised the results of the survey which looked at investment needs and risks for the next 30 years As part of the HRA review, the Council had asked the TMO to look at the consequences and risks associated with the decline in funding. The survey had looked at the value of assets, the funding gap, and made a comparison with existing information. Both street and estate properties had had a 100% external survey, with street properties 24% internally, and estate properties 19% internally. A 17m investment gap had been identified. Previous M&E data from 2008 had been included as new M&E data was not yet available. The main difference from the 2008 desk top survey was in 7
8 the first five years which had been offset by 19m. There would be funding gaps of 87.5m in the next five years, and over the 30 year period, it would be 170m. Consideration was being given whether any reductions could be made to planned works. Items had been categorised which could be taken out of the programme, and had been given a risk code which would increase over the 30 year period. However, this approach would increase repairs costs, the quality of the stock would decline, and there would be reputational risks as well. The current position: This information had been presented to the Cabinet Working Group, and work was being done on the options to close the gap. Self-financing for the HRA would be published in January 2011 for implementation from April Appendix 1 looked at rent increases/cost savings. Disposals were also being considered to close the gap, and external financing to regenerate the estates, and develop hidden homes. However, this work was not complete so the impact could not yet be assessed. In summary, the Council did not have the required funding over the next 30 years, and as mentioned above, 160m - 170m would be needed. Summary of risks if money was not found: Reduction in the quality of the stock A reduced reputation Increase in the amount of repairs Decrease in staffing The number of non-decent homes would increase We would not meet our carbon targets resulting in fuel poverty. Board members asked the following questions: The validation of the data was queried for meeting decent homes standards, as it seemed over-generous. Clarification was given that the survey had been completed at the end of August, and further work had been done on the data. Work had also been done on the cyclical decorations programme so it could be co-ordinated with other works such as roof renewals in order to take advantage of scaffolding. This work would be ongoing on the programme for next year. The data from the survey was being kept live through hand held technology, and any 8
9 changes would be validated. Clarification was given that although decent homes had addressed internal works, it had not included lifts and central plant. There had also been quite a lot of refusals for decent homes work, and these properties were becoming void. It was pointed out that these works were not included in years 1 5. Concern was expressed about the 10.1% rent increase expected next year, and the link to the investment gap. The Chief Executive confirmed that rents were not under consideration, and were set by the Council. The target for the installation of showers was queried, and confirmation was given that this was aspirational as it would help reduce water bills It was agreed that validation of the data was very important because of the scale of the funding gap. We were also making savings before the validation process had been completed. There was also concern about medium risk works being taken out of the programme when it was reasonable for residents to expect these. Clarification was given that one of the consequences of removing works would be a large increase in repairs, which was the least effective way of carrying out works. Decisions would have to be made when the self-financing proposals were published, as a programme of 7m - 8m would just keep properties water-tight and deal with health and safety issues. It was queried that if repairs costs increased over the next five years, what the impact on leaseholder costs would be. Confirmation was given that leaseholders would continue to contribute to the costs of repairs, but the funding gap would remain. Concern was expressed about a 40 year cycle for replacement of bathrooms. A request was made for more information on the validation of the data, and this could be presented to Operations Committee before any decision was made on the way forward. However, the paper had aimed to update the Board on the position. The Council would consider any opportunities arising from HRA self-financing, and investment in the stock, and were already aware of the need to carry out further validation. The Board noted the current position on the resource gap between HRA funding and the minimum statutory needs of the stock, and that the Council were aware that more validation of the data was needed before the true position was known. In the meantime, updates would be given to the Operations Committee on the validation of the data. Simon Throp left the meeting at this point. ST 9
10 5. Budget Monitoring April September 2010 The Board were advised that this report now went to the Finance, Audit and Risk Committee in the first instance, and then on to Board for information. The deficit at the end of September was 65k against the original forecast of 35k profit so there was a variance of 100k. There was also additional expenditure on legal fees of 125k, which had resulted in arrears being brought down, benefitting the HRA, but resulting in additional costs to the TMO. The possibility of the Council taking on some the TMO s legal costs was being discussed with them, but no agreement had yet been reached. However, there was underspending of 120k on other budgets. The Board noted the budget monitoring position for the end of September. 6. Morrison contract update An update on the mobilisation of the Morrison s contract over the last ten months was presented to the Board for information. It covered trends on performance, and action being taken was outlined in section 5 of the report. The work being done had resulted in improvements in the management of the contract and performance. Board members asked the following questions: It was asked how long the contract was due to run, and this was confirmed as four years. Performance would be reviewed for the first year, but the KPIs for November already showed significant improvement. If the contract was terminated prematurely, six months notice would have to be given and there would be the costs of procuring a new contract. Morrison s staff would also move across to the new contract under TUPE arrangements. The Board were advised that a new permanent manager had been appointed who was committed to improving performance on the contract. The aim was to achieve some stability on performance. It was commented that customer services were not good generally in addition to problems with the contract. Sacha Jevans undertook to provide more detail on the November data. Para 4.1 provided information on response times, which showed an improvement to October on both urgent and routine repairs. These figures showed an improving trend. Board members had initially been concerned about potential under-pricing on Morrison s tender, but were impressed with the effort to turn round the contract by Sacha Jevans and SJ 10
11 her staff. Confirmation was given that the contract manager would also attend the next Board member meeting with Morrison s on 26 th January in addition to their CEO. The Board noted progress made on the Morrison s contract for information. 7. RBKC Mid Year Report on TMO Performance Agreement 2010/11 This report was presented to the Board for information, which was a statutory requirement under the management agreement. The report had already been to RBKC s Scrutiny Committee who had commended the TMO for making good progress in improving performance. The limited assurance on the lift maintenance audit was raised, and it was explained that this was due to the contract not having been re-tendered for eleven years. The Board noted the RBKC mid year report on TMO performance for information. 8. Digital TV update Following approval on 21 October by RBKC for this contract, a series of six road shows by SCCI was now underway. However, the start of the installation programme was delayed, but it was hoped that the programme would be completed in 12 months. Board members asked the following questions: A comment was made that the road shows should have started with estates scheduled to receive installations at the beginning of the programme. Confirmation was given that more localised road shows would be carried out nearer the time of installation, plus where residents associations were asking for consultation, so there was flexibility on this. It was recognised that residents would need to be briefed again nearer the time that installation was carried out. It was queried whether installations could be made in resident meeting rooms as initially promised by Paul Wooldridge, former project manager, and also whether residents would be able to arrange with SCCI to have extra face plates fitted. Clarification was given that Paul Wooldridge had been involved at an earlier stage, and subsequent decisions had been made, including that installation of face plates would be made on a like for like basis, so would only be done where there was an existing TV connection. It was pointed out that it would be more expensive to put a connection in at a later date. Although this principal of replacing like for like had already been agreed with the Board and RBKC, further consideration would be given to this point. Regarding installation of 11
12 additional face plates, SCCI had said that these could be available, but were not being offered because of difficulties with the calculation of service charges, and maintenance considerations. The Board noted progress on the installation of Digital TV. 9. Committee terms of reference The Board were asked to approve terms of reference for committees and panels. The terms of reference for the Board and Executive Team were based on the Constitution and Code of Governance. The Operations Committee had considered its draft terms of reference at its meeting on 25 November. The terms of reference for Finance, Audit and Risk Committee had a minor change to the quorum so only two resident Board members were required. The Resident Engagement Panel had not had an opportunity to consider their draft terms of reference to date. Operations and Finance, Audit and Risk Committees had asked that Board agree their terms of reference, and that work plans be produced. CHS Board members made the following comments: Para 3.3 was queried on the length of the term of office for Board members, and further clarification was given that at the expiry of the three year term of office, the Board member would continue to serve until the next Resident Board election date. There was concern that the Resident Engagement Panel would not be sufficiently open to the public Concern was expressed about the terms of reference for the Appointments Panel, in particular the delegated powers for reviewing and approving payments to Executive Directors. Catherine HardySmith clarified the different roles of non-executive and executive directors. The Board approved the terms of reference with two votes against. 10 Code of Conduct for TMO Board Members The Code of Conduct was no longer fit for purpose, and the following changes had been made so that it reflected good practice: co-opted committee members were now incorporated. declarations of interest had now been simplified negative behaviour that was not in the best interests of the company had been added 12
13 the definition of hospitality had been expanded. Board members made the following comments: a request was made by IS to see a copy of the Code of Governance, and confirmation was given that it would be sent out. Section 10 concerning issues about privacy was raised, and concern was expressed that any breach of a tenancy could be deemed to be negative conduct. However, any breaches would have to be confirmed by the Board as negative conduct. Any conflicts of interest would be published. A challenge was made about the rationale for the Code of Conduct as it was felt that Board members were being targeted, and similar criteria did not apply to staff. However, other Board members felt that the Code of Conduct was very thorough, and it was necessary to be explicit about standards of behaviour. With reference to disclosing interests and completing declaration of interest forms, it was thought that if a Board member was not prepared to do this, they should not sit on the Board. However, it was commented that Board members should not be excluded from a meeting if they had an interest in the item being discussed. It was pointed out that this stipulation was also in the old code of conduct. CHS The Board agreed the revised Code of Conduct with two votes against. The new Code of Conduct was circulated to Board members for signing, and a request was made that they be returned to the Company Secretary by 17 December. Failure to comply with this deadline would mean that the person concerned would cease to be a Board member at the next meeting. 11 Date of next meeting The next Board meeting would be held on Thursday, 6 January CE/JDC
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