7 11/249 PERTH AND KINROSS COUNCIL Housing and Health Committee – 1 June 2011 PROPOSED COUNCIL HOUSING NEW BUILD PROGRAMME SUBMISSION TO SCOTTISH GOVERNMENT Report by Executive Director (Housing and Community Care) ABSTRACT This report seeks approval for a proposed submission to the Scottish Government’s ‘Innovation and Investment Fund’, for subsidy funding, to support the development of 39 local authority new build affordable units. 1. RECOMMENDATION It is recommended that Committee: 1.1 Approve the attached proposals (appendix 1) to be submitted to the Scottish Government. 2. BACKGROUND 2.1 Since 2009, the Scottish Government, in three phases, has invited bids from local authorities for capital funding to assist in delivering new build local authority housing across Scotland. 2.2 Committee reports: 09/18 9 January 2009 Executive Sub-Committee of Housing and Health Committee 09/448 23 September 2009 Executive Sub-Committee of Housing and Health Committee 10/214 26 April 2010 Joint Executive Sub-Committee of Housing and Health Committee and Strategic Policy and Resources Committee approved the Council’s previous successful submissions, totalling 81 units, securing £2,300,000 of Scottish Government grant. 2.3 The Scottish Government has invited local authorities to bid for a fourth ‘Innovation and Investment’ round of capital funding, with a subsidy of up to £30,000 per unit. 155 3. PROPOSALS 3.1 Delivering high quality housing in safe and secure neighbourhoods and ensuring that Perth and Kinross is a place where everyone enjoys good quality housing in a pleasant and safe environment is a key priority for Perth and Kinross Council and its partners. 3.2 Perth and Kinross Council’s submission is consistent with the investment priorities of the Local Housing Strategy and Strategic Housing Investment Plan and contributes to meeting local unmet housing needs including homelessness and high demand ‘pressure’. 3.3 Perth and Kinross Council’s overall proposal is for 39 houses on 4 sites. The house /location/size mix is outlined in table one below. Table 1: Perth and Kinross Council Local Authority New Build Proposals Unit Nos./Size/Location Site A - Perth Road, Scone No. Units Apartment Size Person Nos. 10 3 Apt 4 Site A Total – 10 units Site B – Lower Oakfield, Pitlochry No. Units Apartment Size Person Nos. 6 3 Apt 4 Site B Total – 6 units Site C - Dalchampaig Phase 2, Pitlochry No. Units Apartment Size Person Nos. 6 2 Apt 2 Site C Total – 6 units Site D - Quinns Cinema, Blairgowrie No. Units Apartment Size Person Nos. 8 3 Apt 3 9 3 Apt 4 Site D Total – 17 units Sites A - D Summary No. Units Apartment Size Person Nos. 6 2 Apt 2 8 3 Apt 3 25 3 Apt 4 Sites A - D Total – 39 units 156 4. CONSULTATION The Head of Finance, Head of Legal Services, and Head of Planning and Regeneration have all been consulted on this report. 5. RESOURCE IMPLICATIONS 5.1 The total cost of creating 39 new affordable housing units is estimated to be £4,723,318 at an average cost of £121,110 per unit. 5.2 The project will be funded through three funding streams and these are: • Scottish Government Subsidy – A potential subsidy of up to £30,000 will be made available for each new build council house. Should this full amount of funding be available it will inject £1,170,000 into the projects. • Council Tax Income on Second Homes Reserve – The balance ear- marked for Affordable Housing within the General Fund Reserve at 31 March 2011 was £2,650,000. After applying balances to meet the cost of previously approved spending commitments and allowing for a budget of £500,000 per annum from 2011/12 onwards to support future Housing Association projects, it is anticipated that there will be £1,069,000 available which can be utilised to assist in meeting the costs of this programme and accordingly reduce borrowing costs. The utilisation of £390,000 for this programme means that the anticipated balance on the Second Homes Reserve at 31st March 2013 will be £679,000. The Housing Investment Programme presently assumes that £10,000 of Second Homes Reserve money will be used to fund each new affordable unit. Table 2: Summary of Second Homes Reserve Expenditure Profile (including previous commitments) Year Item 2011/12 2012/13 £000' £000' Opening Balance (2,650) (619) Existing Commitments Housing Associations Funding 384 50 Council New Build Phase 1 81 0 Council New Build Phase 2 544 0 Council New Build Phase 3 1,522 0 Anticipated New Commitments Housing Associations Funding 500 500 Council New Build Phase 4 0 390 157 Year Item 2011/12 2012/13 £000' £000' Assumed Increase in Council Tax Reserve Balance (1,000) (1,000) Balance at 31 March (619) (679) • Prudential Borrowing – Following the application of Scottish Government Subsidy of £1,170,000 and £390,000 of anticipated income from Council Tax on Second Homes Reserve there will be a requirement to fund the remaining £3,163,318 from prudential borrowing. The annual loan charges will be approximately £205,000 on the new borrowing. This can be met from the net rents generated on the new properties of approximately £87,000 with a further contribution of approximately £118,000 per annum from the Housing Revenue Account. The overall funding strategy is summarised in table 3. 5.3 The funding strategy assumes the continuing receipt of approximately £1,000,000 per annum of Council Tax income on Second Homes Reserve. It also assumes that there will be no change to either the Council’s current policy on Council Tax discounts for Second Homes or Council Tax as a funding mechanism for local government. Whilst the risk presented by these assumptions is currently considered acceptable, the Committee are advised that should it not prove possible to realise this income or should costs increase beyond the above estimates then any shortfall in funding will require to be contained within the Housing Revenue Account budget. Table 3: Perth and Kinross Council Local Authority New Build Proposals, Sites A- D, Capital Expenditure Profile (2011/12 prices) Year Funding Source 2011/12 2012/13 2013/14 Total £ £ £ £ Scottish Government Subsidy @ £30,000 per 0 1,170,000 0 1,170,000 Unit Council Tax Income on 0 390, 000 0 390,000 Second Homes Prudential Borrowing 278,130 2,867,718 16,470 3,163,318 Total 278,130 4,427,718 16,470 4,723,318 6. COUNCIL CORPORATE PLAN OBJECTIVES 2009-2012 The Council’s Corporate Plan 2009-2012 lays out five objectives which provide clear strategic direction, inform decisions at a corporate and service level and shape resources allocation. The following are relevant to this report: 158 (i) A Safe, Secure and Welcoming Environment. (ii) Healthy, Caring Communities. (iii) A Prosperous, Sustainable and Inclusive Economy. (v) Confident, Active and Inclusive Communities 7. EQUALITIES ASSESSMENT 7.1 An equality impact assessment needs to be carried out for functions, policies, procedures or strategies in relation to race, gender and disability and other relevant protected characteristics. This supports the Council’s legal requirement to comply with the duty to assess and consult on relevant new and existing policies. 7.2 The function, policy, procedure or strategy presented in this report was considered under the Corporate Equalities Impact Assessment process (EqIA) with the following outcome: Assessed as not relevant for the purposes of EqIA. 8. STRATEGIC ENVIRONMENTAL ASSESSMENT 8.1 Strategic Environmental Assessment (SEA) is a legal requirement under the Environmental Assessment (Scotland) Act 2005 that applies to all qualifying plans, programmes and strategies, including policies (PPS). 8.2 The matters presented in this report were considered under the Environmental Assessment (Scotland) Act 2005 and no further action is required as it does not qualify as a PPS as defined by the Act and is therefore exempt. 9. CONCLUSION The purpose of this report is to seek approval for a proposed submission to the Scottish Government’s ‘Innovation and Investment Fund’, for subsidy funding, to support the development of 39 local authority new build affordable units. DAVID BURKE Executive Director (Housing and Community Care) Note: No background papers, as defined by Section 50D of the Local Government (Scotland) Act 1973 (other than any containing confidential or exempt information) were relied on to any material extent in preparing the above report. Contact Officer: Stephen Rankin, Ext. No. 76174, Email: [email protected] Address of Service: 5 Whitefriars Crescent, PERTH, PH2 OPA Date: 19th May 2011 159 Stephen Rankin 160 Perth and Kinross Council ‘Innovation and Investment Fund’ Proposals Submission to Scottish Government 31 May 2011 1 161 Contents Page 1. Introduction, Strategic Planning Context and Proposals 3 Summary 2. Ability to Manage the Stock 11 3. Affordability and Financial Issues 13 4. Housing Needs and Homelessness in Perth and Kinross 20 5. Our Delivery Plan and Procurement Approach 25 6. Delivering the Maximum Number of Homes 31 7. Risk Management 33 8. Contact Details 34 9. Conclusion 34 10. Summary Proformas Sites A – D 36 11. Annex A - Sites A – D Site Plans 40 12. Annex B - Scottish Local Authority New Build Financial 44 Proforma Appendices 1. Interim Perth and Kinross Local Housing Strategy 2009-12 2. Perth and Kinross Strategic Housing Investment Plan 20010-15 3. Perth and Kinross Homelessness Strategy 2009-12 4. Perth and Kinross Tenant Participation Strategy 2009-12 2 162 1. Introduction, Strategic Planning Context and Proposals Summary 1.1 Introduction This is the Perth and Kinross Council’s submission to the Scottish Government for subsidy funding to support the development of a local authority new build affordable housing programme through the 2011/12 Innovation and Investment Fund.