PERTH AND KINROSS COUNCIL. Housing & Health Executive Sub Committee - 9 January Council House Building Perth & Kinross Submission

Transcription

1 PERTH AND KINROSS COUNCIL 2 09/18 Housing & Health Executive Sub Committee - 9 January 2009 Council House Building Perth & Kinross Submission Report by Executive Director (Housing & Community Care) ABSTRACT This report outlines the proposed submission to the Scottish Government for subsidy funding to support the development of a local authority new build affordable housing programme. 1. RECOMMENDATION It is recommended that the Housing & Health Executive-Sub Committee: 1) Approve the content of the Proposals Submission to be submitted to the Scottish Government (attached). 2. BACKGROUND The Council s Executive Officer Team considered draft proposals on 18 December 2008 and since that meeting further work has been undertaken to complete the submission. During this work, it has been essential that any case prepared for submission to the Scottish Government meets best value criteria. 2.2 The key issue is that the building of council housing must contribute to meeting the SOA target for affordable housing targets, ie, it must add value to the RSL programme by ensuring that wherever possible the Affordable Housing Investment Programme (AHIP) available for RSL s in Perth & Kinross is fully utilised before building any council houses. 2.3 In addition the overall priority for the council is that all 7,500 council houses meet the Scottish Housing Quality Standard by 2015 and that the building of council houses does not prevent this from being achieved. 2.4 Both these issues have to be addressed and the resulting rent levels for council houses in Perth & Kinross must remain affordable, ie there is limited scope for prudential borrowing as this could push the rent levels up beyond the Scottish average. 2.5 In achieving the programme for build it is also essential that best value is achieved in procurement and use of land and this is addressed in the proposal. 5

2 THE PROPOSAL 2.6 The proposal is for 26 family houses on two sites. 20 houses in Methven and 6 houses in Letham, partially on the lock up garage site and partially on land belonging to Letham Primary School. 2.7 At this stage the Methven proposal is for 20 houses - 10 x 4 apartment, 5 person - 9 x 4 apartment 6 person - 1 x 5 apartment 8 person with ground floor bedroom The site is owned by the HRA and has planning permission for a development by GS Brown. The 20 houses will not occupy the whole HRA site and will not hinder the eventual development of the GS Brown site which is very important in terms of achieving housing and affordable housing targets in the future. 2.8 A new planning application will be required as the layout and number of houses has changed but this will not present a problem for the Scottish Government as the site already has planning permission for the GS Brown development. 2.9 The Letham proposal is for 6 family houses on the site off Fortingall Road which is presently the site of former lock up garages owned by the HRA. It will also involve the acquisition of a strip of land from the Letham Primary School but it does not have any major impact on the green space available to the school. This has been confirmed by both The Environment Service and Education & Children's Services. However the planning application will be the subject of comments from Sport Scotland re potential loss of playing fields The proposal is for 6 family houses. - 4 x 4 apartment, 5 person - 1 x 5 apartment, 6 person - 1 x 5 apartment, 8 person 2.11 Apart from the issue re loss of open space, there are no significant development constraints. It does however require planning permission and the sale of a strip of land from Education & Children's Services to the HRA. 6

3 3 FINANCIAL IMPLICATIONS 3.1 The present proposals are costed at 3.611m excluding land costs. Estimated maximum subsidy from Scottish Government - 26 x 25,000 = 650,000 Contribution from 2 nd Homes Discount Money to be finalised once contribution to RSL s for 2009/10 and 2010/11 is determined to maximise their contribution to affordable housing targets. Rent from the 26 houses is not pooled and used to fund prudential borrowing. This will minimise impact on HRA ability to meet Scottish Housing Quality Standard. Possible capital receipt from sale of Muirmont Crescent, Bridge of Earn - 300, It should be noted that if the Scottish Government funding is not forthcoming, the funding package and viability of the project will need to be reassessed. 4 CONCLUSION 4.1 The attached submission will be made to the Scottish Government by 12 January 2009 deadline for 26 houses to be built and completed by 2010/11. If Scottish Government funding is not forthcoming, the funding package and viability of the project will need to be reassessed. Dave Roberts Executive Director (Housing & Community Care) Contact Officer: D Roberts, Executive Director (Housing and Community Care), Perth and Kinross Council Contact: Ex

4 8

5 Perth and Kinross Council Local Authority New Build Housing Proposals Submission to Scottish Government 12 January

6 Contents Page 1. Introduction 2. The Strategic Planning Context 3. Housing Needs and Requirements in Perth and Kinross 4. Our Procurement Approach Appendices 1. Perth and Kinross Local Housing Strategy Perth and Kinross Strategic Housing Investment Plan Perth and Kinross Tenant Participation Strategy 4. Site A - Methven site plan 5. Site B - Letham, Perth site plan 10 2

7 1. Introduction 1.1 Introduction 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 the Perth and Kinross Council and its partners. 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. It outlines how our submission proposals meet the eligibility criteria in that our proposals: Are consistent with the investment priorities of the Local Housing strategy and Strategic Housing Investment Plan. Contributes to meeting local significant levels of local unmet housing needs (e.g. pressured area status designation, high levels of homelessness and high demand pressure ) Have effective and robust procurement methods alongside robust delivery arrangements that are being developed or are in place already. Are consistent with Perth and Kinross Council s existing decentralised stock management and maintenance approach and contribute to reducing average per unit management costs. Demonstrate that available resources are in place to fund new the houses. Resources shall not be diverted from supporting the delivery of the Council s Scottish Housing Quality Standard Delivery Plan or retention of stock Business Plan. Consistent with design requirements for Housing for Varying Needs and Buildings Regulations. Consistent with relevant legal and regulatory requirements. Can be on-site within a year of agreeing funding allocation. Are not completed already or in Council ownership. Council has agreed the scope and is committed to funding for the projects. 11 3

8 1.2 Background The Scottish Government announced in April 2008 that it planned to invest 25M to new council house building. On 12 November 2008, the Scottish Government announced details of the process, eligibility criteria and timescale for local authorities to make a submission. Six overarching principles govern the allocation of resources: the Council has the ability to manage the new stock effectively; the Council has prudential borrowing capacity and/or uses other financial resources; the required subsidy for any proposed development from the Scottish Government will be less than 25,000 per home; the area has housing need and new homes will contribute to the Council meeting its 2012 homelessness target; the Council can demonstrate that it has well developed plans to ensure delivery of the proposed new housing; and the number of units that are built is maximised within the resources available but not at the expense of having to compromise on design quality. 1.3 Our Local Authority New Build Housing Proposals Summary Perth and Kinross Council is confident that our proposals meet the above mentioned principles and supporting detailed eligibility criteria. The creation of new housing within existing neighbourhoods is intended to address identified housing need for social rented accommodation within the specified locations. It is the aim of the council to achieve balanced and sustainable communities and the provision of affordable rented accommodation which is accessible, sustainable and energy efficient will assist the council to achieve this. Table 1: Perth and Kinross Council Local Authority New Build Proposals Unit nos./size/location Site A - Rorrie Terrace, Methven No. Units Apartment Size Person Nos Total 20 units Site B - Fortingall Place, Letham, Perth No. Units Apartment Size Person Nos Total 6 units 12 4

9 It is also an objective of the council to utilise gap sites and areas of vacant land to bring these areas back into productive use for the benefit of the community as a whole. In so doing, the use of such sites will not only address identified housing need but also improve the environment in a sustainable and productive fashion. Our proposals are for two developments totalling 26 units. Units shall be of semi-detached or terraced type back and front door family housing. Two sites have been identified; one in Methven for 20 houses and another one in Letham, Perth for six houses as a first phase. Details are shown in table one. Table 2: Perth and Kinross Council Local Authority New Build Proposals Total Development Capital Costs (2008/09 prices) Unit Nos. 26 Works 3,218,000 Consultancy fees 362,000 Local authority charges 25,000 Site investigation 6,000 Total 3,611,000 Unit cost 138,885 Average cost/m 2 floor area 1,231 For 26 units in first phase, average unit costs are 138,885. Figures are based on realistic comparable costs, supplied by other developing Registered Social Landlords, for the projects identified in the Strategic Housing Investment Plan. Total development capital costs are estimated at 3,611,000. Funding sources and capital expenditure are shown in table three. Table 3: Perth and Kinross Council Local Authority New Build Proposals Capital Expenditure Profile (2008/09 prices) Funding Source Scottish Government 25,000 per Unit Year 2008/ / / / ,000 - Prudential Borrowing - - 1,280,000 - Council Tax Income on Second Homes 20, ,000 1,370,000 81,

10 2. The Strategic Planning Context 2.1 Scottish Government s National Housing Priorities To ensure everyone has access to suitable housing, the Scottish Government has published Firm Foundations: The Future for Scotland s Housing'. It sets out the Government s vision with regard to housing that includes: An increased supply of housing across all tenures, all of which is delivered on the basis of higher environmental and design standards. More choice of housing that those on lower incomes can afford. Housing developments that contribute to the creation of sustainable mixed communities. Social housing that provides better value for public expenditure. The Scottish Government s vision of a Scotland that is greener, safer, smarter, healthier, wealthier and fairer is aligned with the Council s priorities. The Perth and Kinross Council Corporate Plan and Perth and Kinross Community Plan align with the Single Outcome Agreement. 2.2 Local Policy Context The Perth and Kinross Council Corporate plan identifies as its number one priority that individuals and communities have the right to live in good quality, affordable homes, suited to their needs, in safe and secure communities. In particular our proposals contribute to the Single Outcome Agreement national outcome number 10 We live in well designed, sustainable places where we are able to access the amenities and services we need. Additionally our proposals contribute to Perth and Kinross Council s Single Outcome Agreement which highlights as priority a local outcome number 14 of our people will have better access to appropriate and affordable housing of quality. The Perth and Kinross Local Housing Strategy aligned with the Community and Corporate Plans sets the strategic vision, aims and objectives and actions to support them for Perth and Kinross for housing and related matters. Our proposals as part of the Local Housing Strategy and Strategic Housing Investment Plan link with other national and regional influences and the detailed local strategic context. The Local Housing Strategy and Strategic Housing Investment Plan play an important and integral role in the Council s priorities. Local Housing Strategy objectives are fully consistent and aligned with corresponding Perth and Kinross Community Plan, Perth and Kinross Council Corporate Plan, related partner plans and the Single Outcome Agreement. 14 6

11 2.3 Partnership Processes Employed in Developing Our Proposals The implementation and monitoring of our proposals as part of the Strategic Housing Investment Plan will be overseen, on an ongoing basis, by a multiagency Local Housing Strategy Steering Group with representation from key services within the Council, Scottish Government, NHS Tayside, Registered Social Landlord representation and will sit under the umbrella of the Perth and Kinross Community Planning Partnership. The Local Housing Strategy Group is chaired by Perth and Kinross Council s Housing and Community Care Services and is a key element in the Perth and Kinross community planning structure. Partner involvement and consultation on the Council s proposals for affordable housing is a continuous process. Events take place with a variety of stakeholders to ensure that all our partners and stakeholders have their say in developing priorities and associated actions. Perth and Kinross Council has hosted and took part in a number of events and processes. Specific events and processes linked to the proposals for affordable housing included: Consultation on development funding joint priorities and the Strategic Housing Investment Plan with Registered Social Landlords and the Scottish Government. Consultation on development priorities with elected member/officer working group on affordable housing. Involvement of corporate Affordable Housing Working Group in progressing development opportunities. Local Housing Strategy theme consultation seminars with a wide range of stakeholders (e.g. Registered Social Landlords, private developers, housing support providers) to raise awareness of Local Housing Strategy priorities. Monitoring and evaluating related strategies (e.g. Local housing Strategy, Tenant Participation Strategy and Homelessness Strategy). A corporate Affordable Housing Working Group enables the contribution of other council services towards increasing the supply of affordable housing. This Group reports to a elected member/ officer group specifically focusing on issues experienced in bringing forward affordable housing projects with a view to wherever possible assisting overcoming any issues arising. This proposal has been approved by the elected member/ officer Affordable Housing Working Group and the Executive sub-committee of the respective Housing and Health Committee of Perth and Kinross council. Consultation on wider issues is achieved through regular liaison with private developers and Scottish Water organised by planning services. Discussion on the wider agenda of the development plans for the strategic planning authorities have taken place through meetings organised by Perth and Kinross Council planning services. Perth and Kinross Council tenants are consulted upon and involved in decision making procedures on an ongoing basis. The Council invests heavily in tenant participation through its Tenant Participation Strategy. The Perth and 15 7

12 Kinross Tenant s and Resident s Federation plays an invaluable role in helping to shape Council policy and priorities. A wide range of information and consultative mechanisms are available to tenants to become more aware and involved in informing Council policies. Details of our Tenant Participation Strategy can be found at appendix Equalities The planning and delivery of good quality housing and appropriate information, advice and support services in Perth and Kinross embraces the principle of equal opportunities, following the lead of the Council s Corporate Equalities Scheme. Perth and Kinross Council Housing and Community Care Services has an Equalities Action Plan which aims to ensure that all housing and related services take positive steps towards the equalities agenda. This means that Perth and Kinross Council will strive to encourage equal opportunities and diversity, responding to the different needs and service requirements of people regardless of sex, race, colour, disability, age, nationality, marital status, ethnic origin, religion or belief, sexual orientation or gender reassignment. The council s approach to meeting the housing needs of people with particular needs focuses predominantly on a supported living approach which seeks to enable individuals to live independently within their own homes integrated within existing communities. For future provision for particular needs it is envisaged that this need will be met mainly within housing for varying needs mainstream developments. The Council s approach is to enable integrated developments to assist individuals with community care needs to live independently with appropriate support rather than develop specialist schemes. Our proposals will strengthen this approach to integrated community care housing. 2.5 Strategic Environmental Assessment The Environmental Assessment (Scotland) Act 2005 places a legal requirement on local authorities to assess public policies, plans and strategies showing their potential impact on the environment. A Strategic Environmental Assessment (SEA) ensures that environmental issues are considered by decision makers alongside social and economic issues. Following advice from the SEA Gateway, a pre-screening report on the content of the Strategic Housing Investment Plan, of which these proposals are part, has been submitted for the consideration of the relevant authorities. 16 8

13 3. Housing Needs and Requirements in Perth and Kinross 3.1 Structure of Local Housing System Perth and Kinross Council covers an area of 5,286 square kilometres. While approximately one third of the population in the area lives in Perth and 60% live either within Perth or within a commuter village just outside Perth, throughout the rural area there are a number of sizeable settlements with a historical status of being the former county towns. Five self-contained Local Housing Markets (LHMAs) exist in Perth and Kinross. These are shown in table four below. Table 4: Local Housing Markets in Perth and Kinross Name Greater Perth Eastern Highland Strathearn Kinross Source: Perth and Kinross Council LHMA Perth and the surrounding area (including Methven and Letham) Blairgowrie and Eastern Perthshire Pitlochry, Aberfeldy and the Highland Perthshire area Crieff, Auctherarder and the Strathearn area Kinross and Kinrosshire 3.2 Existing Local Authority Supply The most common size of local authority dwelling is three apartments which accounts for 44% of stock. Around 35% is one or two apartment size. Four apartment sizes make up around 20%. Very few numbers of five or more apartment size stock remain. Perth and Kinross Council s stock profile has been significantly affected by the Right to Buy, with a very high proportion of pre-1980 stock sold with larger sized and house type dwelling proving to be popular with purchasers. Table 5: Perth and Kinross Council Stock Profile by LHMA/Size, 31/3/08 LHMA / Apt. Size 1/ Total Eastern Greater Perth 1,695 2, ,739 Highland Kinross Strathearn Total 2,627 3,390 1, ,573 Source: Perth and Kinross Council 17 9

14 3.3 Local Housing Needs and Demand The Local Housing Strategy emphasises that there is a high level of need for additional affordable houses throughout Perth and Kinross. A housing needs information framework for provision of additional affordable housing is set out in the appendices to the Local Housing Strategy. This framework details that 60% of the funding available for affordable housing should be invested in the Greater Perth LHMA. Our development proposal sites are both within this LHMA. Our proposals are fully aligned with the investment priorities of our Local Housing strategy (appendix 1) and Strategic Housing Investment Plan (appendix 2). The high levels of housing need in Perth and Kinross are demonstrated in the 2006 Scottish Government commissioned report Local Housing Need and Affordability model for Scotland Update by Professor Glen Bramley of Heriot Watt University. This report provided robust estimates and forward projections of housing need linked to affordability. Bramley estimates that Perth and Kinross has a need for an additional 540 affordable houses per year, among the highest levels of any local authority area in Scotland. At present the Council has commissioned an independent Local Housing Need and Demand Assessment using Scottish Government guidance. It is anticipated that high levels of affordable housing need shall be demonstrated. This follows the Council s previous Housing Needs Assessment carried out in 2003 which assessed the need for additional affordable housing throughout Perth and Kinross for the five year period up to The level of need in the housing market areas throughout Perth and Kinross is summarised in the Table six below: Table 6: Affordable Housing Need in Perth and Kinross, A B C D E F LHMA Backlog Need for Social Rented Newly Arising Need for Social Rented Social Rented Lets Addition al Need for Social Rented (A+B-C) Need for LCHO Total Affordabl e Housing Need (D+E) Eastern Highland Kinross Greater Perth 540 2,980 2, Strathearn

15 A B C D E F LHMA Backlog Need for Social Rented Newly Arising Need for Social Rented Social Rented Lets Addition al Need for Social Rented (A+B-C) Need for LCHO Total Affordabl e Housing Need (D+E) Total 950 4,485 4, ,370 Source: NFO Social Research and DTZ Pieda Consulting/Perth and Kinross Council This shows that significant and ongoing levels of unmet affordable housing needs exist across Perth and Kinross, particularly in the Greater Perth LHMA which includes Methven and Letham. As tables seven and eight show, across all LHMAs in Perth and Kinross, there are high levels of demand pressure. This is the number of households requesting Council housing compared to annual turnover. As Perth and Kinross Council stock has very low turnover rates, (2007/08 average was 4.9%), the limited supply of new tenancies contributes to high demand pressure. In all LHMAs demand pressure is higher than the national average, which is typically in a ratio of between four and five. Table 7: Demand Pressure in Perth and Kinross by LHMA, 2008 LHMA Eastern Highland Kinross Greater Perth Strathearn Perth and Kinross WL 1 st Area Preference Aug 08 Source: Perth and Kinross Council. NB WL = waiting list Vacancies 2007/ Demand Pressure Ratio , , Table 8: Demand Pressure in Perth and Kinross by Proposed Development Areas, 2008 Area Methven WL 1 st Area Preference Aug 08 Vacancies 2007/ Demand Pressure Ratio Letham Source: Perth and Kinross Council. NB WL = waiting list 19 11

16 It should be noted that in the two particular areas in which concerns our proposals, higher than national average demand pressure exists. Table 9: Demand Profile by Property Size in Perth and Kinross by Proposed Development Areas, 2008 Area 2 Apt. 3 Apt. 4 Apt. 5+ Apt Methven 57% 31% 31% 0% Letham 54% 30 14% 2% Source: Perth and Kinross Council. Whilst it is acknowledged that demand for local authority housing is balanced towards two and three apartment sizes in the proposed areas of development, actual provision of the larger properties, of which are the focus our proposals, are in the shortest supply. Therefore the highest relative imbalance in supply is in the larger sized properties. 3.4 Homelessness The Council faces significant challenges in respect to homelessness. In year 2007/08, the most recent full year figures show, that there were a total of 1,178 homeless presentations made to Perth and Kinross Council. Of these, the Council had particular responsibilities to 758 unintentionally homeless households eligible to access permanent accommodation depending on their priority status. With low levels of social rented housing, the Council s ability to provide both temporary and permanent accommodation is significantly tested. As table 10 shows the overwhelming majority of unintentionally homeless households require housing in the Greater Perth LHMA. Although over half of all unintentionally homeless households are single persons, there are large numbers of single parent and other households with children requiring larger family housing in Greater Perth LHMA. Table 10: Unintentionally Homeless Profile by LHMA and Household Nos. Type 2007/08 LHMA/ Household Type Single Parent Single Person All Adult HH with Children Total Eastern Greater Perth Highland Kinross

17 LHMA/ Household Type Single Parent Single Person All Adult HH with Children Total Strathearn Total % Total 26% 57% 7% 10% 100% Source: Perth and Kinross Council HL1 Dataset 2007/08 Increasing demand on the Council s ability to meet its statutory duties will occur as the Council s responsibilities are expanded due the impact of implementing wider legislative and responding to social and economic change including: the impact of removing the priority need criteria by 2012; the suspension of the local connection test; amendments to the intentionality criteria; the impact of a shortage in affordable housing options; the impact of inward migration by migrant workers on the demand for housing; and the impact of implementing section 11 of the Homelessness (Scotland) Act Perth and Kinross Homelessness Strategy has been supported each year by Local Outcome Agreements (LOA) which detailed activities and priorities for each year along with projected timescales, identified resources, and performance indicators. The main issue in tackling homelessness is the adequate supply of affordable housing in order to meet the Scottish Government s high level outcomes. Perth and Kinross Council and its partners have made significant strides in addressing the causes of homelessness. Much recent progress has been achieved in tackling homelessness. For example: Rough sleeping is very low; Research into the housing needs of Gypsy travellers was completed providing a better understanding of current and projected housing needs and preferences; Tayside Health Board continues to fund Central Health Care to provide much needed specialist primary health care to excluded people, including homeless people; A Private Sector Leasing scheme has been established which increases the pool of temporary accommodation by using private lets; Section 5 referrals to Housing Associations are working well; An advice service to landlords and tenants (actual or potential) is now advertised on the Perth and Kinross Council website and is being well used; 21 13

18 A wide range of housing support services aimed at sustainable resettlement are provided to people living in their own tenancies or in other specialist accommodation with support; and Prevention of homelessness learning activities is promoted in schools and youth groups. Our track record speaks for itself in demonstrating our commitment to preventing and addressing homelessness. Our proposals will assist us to achieve even more progress toward the Scottish Government s outcomes that: No-one need sleep rough; Existing homelessness becomes more visible; Sustainable resettlement is secure for people who become homeless; Fewer people become homeless in the first place; and The duration of homelessness is reduced. 3.5 Pressured Area Status The Scottish Government has recognised the significant local housing needs and demand pressures by granting pressured area status to much of the Perth and Kinross. This includes much of the local housing market in which our proposed developments are to be developed (i.e. Greater Perth) and specifically the area of Methven where we are proposing to develop 20 units). The Scottish Government has designated parts of Perth and Kinross as pressured areas. The designation is effective from 1/2/07 and last for five years. The effect of the designation is to suspend the Right to Buy for some Council tenants in the designated areas. The areas that have been designated are in the LHMAs as follows: Greater Perth Local Housing Market Area Abernethy, Abernyte, Almondbank, Chapelhill, Collace, Balbeggie, Bankfoot, Bridge of Earn, Dunning, Forgandenny, Glencarse, Harrietfield, Guildtown, Inchture, Invergowrie, Kilspindie, Kinrossie, Leetown, Longforgan, Luncarty, Methven, Pitcairngreen, Saucher, Scone, St. Madoes. Highland Local Housing Market Area Aberfeldy, Acharn, Birnam, Calvine, Dull, Dunkeld, Fearnan, Glenlyon, Kenmore, Killiecrankie, Ballinluig, Grandtully, Logierait, Blair Atholl, Kinloch Rannoch, Pitlochry, Weem

19 4. Our Procurement Approach 4.1 Our Development Proposals Approach Scottish Government policy is that all procurement should be on the basis of value for money (VFM) and not lowest price alone. The selection of the most appropriate procurement strategy, and the appointment of consultants and contractors, should therefore be on that basis. Robust mechanisms specific to each project will be developed to evaluate the quality and price (whole life cost) components of each bid in a fair, transparent and accountable manner. Selection and award procedures will comply with EU procurement and Perth and Kinross Council contract rules where these are applicable. The key factors which were considered when selecting our procurement approach were: in-house resource availability and experience; project size and complexity; importance of timescales and possible phased completion requirements; importance of quality and issues surrounding whole-life use of the facility; and availability of funding (in addition to setting and agreeing the budget for the project). For both Site A and Site B, Perth and Kinross Council shall employ a single stage competitive tender approach. Design and project management shall be undertaken by Perth and Kinross Council s own in-house experienced Design Team provided by the council s Property Services. Our in-house design team will fully develop the design prior to going out to tender and will have responsibility for: Development and monitoring of project plans. Production of design briefs for each of two sites, including consultation with all relevant parties, (e.g. Planning, Transportation, and Scottish Water). Preparation and appraisal of tenders as well as selection of contractor. Working with the contractor to complete design and cost plan, and help ensure all relevant consents are secured. Provide project management support during the construction period, up to and including handover, including attending site/design team meetings and close liaison with the Clerk of Works. Budget monitoring and financial planning/projections. The contract will be with a main contractor who will have responsibility only for the construction works. This type of contract will provide a reasonable degree of cost certainty at tender stage. Price certainty and transfer of risk to the main contractor will be achieved at contract award. The advantages of this approach include: 23 15

20 A high level of quality in design and construction is achievable as the scope of the work is prescribed on an input basis. Perth and Kinross Council retains direct relationships with design team and main contractor. Changes to the works can be evaluated on the basis of known prices obtained in competition without necessarily excessive cost or time implications. This is our preferred approach at this time. However the Council is exploring a possible alternative approach to procurement at Site A which would could possibly provide greater efficiencies. Site A at Methven is allied to the private development of adjoining land therefore it is possible that the Council could adopt an alternative approach for procurement for this site. This could be by entering into a partnership arrangement with a contractor who proposes to develop the adjoining land thus maximising benefits to both parties by utilising and sharing infrastructure serving both sites. This may spread the cost of infrastructure works over a greater number of units thus bringing the benefits of scale to the Council works. A partnership arrangement would include establishing design standards, space requirements and affordable and sustainable energy standards in line with, or exceeding, Housing for Varying Needs standards and negotiating and agreeing costs aligned to existing or better market figures. In order to achieve a sustainable approach to development the council is keen to promote local employment and training initiatives within capital projects such as new-build housing. Prospective development partners may be required to submit proposals that demonstrate how they will incorporate and facilitate local employment and training opportunities in the delivery of the proposed developments. Tender costs will be benchmarked against information available with data available from local housing associations including projects recently procured in open competition. 4.2 Resources Required for Our Development Proposals The cost of developing housing to meet Local Housing Strategy priorities varies depending on the area and/or type of housing required. The cost of developing new provision in high pressure areas is more expensive due to higher land values. However increasing provision in these areas remains the highest priority due to the acute shortage of rented accommodation and the impact that this shortage has on the council s ability to meet housing need and Scottish Government s homelessness targets

21 In some parts of Perth and Kinross, as well as a shortage of affordable housing, there is a lack of housing choice, in terms of type or tenure. In such areas the council undertakes an option appraisal to assess the long term viability of the stock and the need for re-provisioning to provide a better housing mix to meet for needs and aspirations. To help us achieve these aims our proposals are set out in table 11. Table 11: Perth and Kinross Council Local Authority New Build Proposals Unit nos./size/location Site A - Rorrie Terrace, Methven No. Units Apartment Size Person Nos Total 20 units Site B - Fortingall Place, Letham, Perth No. Units Apartment Size Person Nos Total 6 units Our proposals are for two developments totalling 26 units. Units shall be of semi-detached or terraced type back and front door family housing. Two sites have been identified; one in Methven for 20 houses and another one in Letham, Perth for six houses as a first phase. Table 12: Perth and Kinross Council Local Authority New Build Proposals Total Development Capital Costs (2008/09 prices) Unit Nos. 26 Works 3,218,000 Consultancy fees 362,000 Local authority charges 25,000 Site investigation 6,000 Total 3,611,000 Unit cost 138,885 Average cost/m 2 floor area 1,231 For 26 units in first phase, average unit costs are 138,885. Figures are based on realistic comparable costs, supplied by Registered Social Landlords, for the projects identified in the Strategic Housing Investment Plan. Total development capital costs are estimated at 3,611,000. These development costs do not include exclusions such as: 25 17

22 Unknown abnormalities in site conditions. Exceptional service upgrades beyond site boundaries. Contributions to infrastructure beyond site boundaries. Archaeological investigations. Any specialist consultancy fees. VAT. The anticipated capital expenditure profile is shown by year alongside funding sources details in table 13. Table 13: Perth and Kinross Council Local Authority New Build Proposals Capital Expenditure Profile (2008/09 prices) Funding Source Scottish Government 25,000 per Unit Year 2008/ / / / ,000 - Prudential Borrowing - - 1,280,000 - Council Tax Income on Second Homes 20, ,000 1,370,000 81,000 The assumptions that have been used to calculate funding requirements include that the subsidy available is 25,000 per house from the Scottish Government. No allowance has been made for inflation in development costs. In addition to the Scottish Government subsidy funding used to deliver our proposals, Council Tax income from the reduction of discount for empty and second homes fund will be employed alongside prudential borrowing. The council currently raise approximately 1.0M per annum Council Tax income from the reduction of discount for empty and second homes, which is employed for investment in the provision of affordable housing. The council has a healthy balance and wishes to use the fund flexibly to maximise affordable housing investment. It is the Councils intention to use prudential borrowing to fund the balance required. It is estimated that this will be required in 2010/11. The Council are confident that the rental income generated less the direct costs of these new units will be sufficient to meet the loan charges associated with the borrowing. Our proposals complement the Affordable Housing Investment Programme, funded by the Scottish Government, of which the Perth and Kinross notional annual allocation is 14.0M

23 4.3 Our Rental Strategy As tables 14 and 15 show Perth and Kinross Council s rent structure compares favourably with other local Registered Social Landlords operating in Perth and Kinross, particularly for larger sized properties which form our development proposals. The 26 units shall be part of the overall Council standard rent policy. Rents shall be not be pooled with other Council rents. The prudential borrowing serviced by rental income on the 26 properties shall not affect existing Housing Revenue Account budgeting which supports the delivery of the Council s Scottish Housing Quality Standard Delivery Plan nor retention of stock Business Plan. Table 14: Comparable Registered Social Landlord Rents in Perth and Kinross, 2008/09 Registered Property Size Person Nos./Annual Rent ( ) Social Landlord 1/ PKC* 2,333 2,473 2,473 2,576 2,576 2,771 Perthshire HA 2,492 2,616 2,741 2,803 2,928 3,052 Hillcrest HA 2,063 3,133 3,488 3,839 4,200 4,230 Kingdom HA 2,795 2,866 3,021 3,296 3,511 - Fairfield Co-op 2,721 2,847 2,973 3, NB PKC = Perth and Kinross Council. *Average rents Table 15: Comparable Registered Social Landlord Rents in Perth and Kinross, 2009/10 Registered Property Size Person Nos./Annual Rent ( ) Social Landlord 1/ PKC TBC TBC TBC TBC TBC TBC Perthshire HA 2,592 2,721 2,851 2,916 3,045 3,175 Hillcrest HA 2,681 3,259 3,627 3,992 4,368 4,339 Kingdom HA 2,905 3,140 3,376 3,651 3,730 3,757 Fairfield Co-op 2,857 2,989 3,122 3, Housing Management Services Perth and Kinross Council Housing and Community Care services has a business network of offices across the local authority area serving our tenants and other clients. The offices have dedicated professional housing officers and assistants to oversee the management of our housing stock. Our neighbourhood services are decentralised and main contact will be with the local area team and in particular the local housing officer

24 In addition each area has a property inspector who will be available for advice on repair issues. General repairs are reported direct to our dedicated call centre via the Repairs Finder booklet and work required will be scheduled via the Job scheduler online and an appointment offered. All our housing management information is held in our Northgate Integrated Housing Management System. This includes integrated comprehensive management information stock data base including condition surveys, gas servicing records etc. Site A - the proposed 20 units in Methven will managed by the City Centre South Area Team based in Perth. Site B the proposed 6 new units in Letham will be managed by the Letham local housing office. Local teams in course report to the Area Housing Manager who in turn reports to the Estates Manager and then Head of Housing Services. Our proposal for a total of 26 units will be managed effectively through our existing structures with little impact on our supervision and management 2008/09 costs of 970 per unit with our proposals having a minor positive impact on overall per unit costs with a reducing per unit management cost effect. 4.5 Development Control and Related Planning Issues Our proposals satisfy a range of development control and related planning issues. These include: Both sites are in Council ownership and are in close proximity to all services and to the local roads networks. Planning Approval (subject to Section 75 Agreement) has been granted for the site A at Methven, although some modifications, or a further submission, may be required due to variations to the layout and the mix of house types. Work is underway to seek planning approval in outline for site B (Letham). Both sites are in Council ownership and full title has been confirmed. Sites are primarily green field sites with no development on either. There is no known encumbrance over either site and the in-house design team are currently working up design proposals for each. There are no issues with educational establishment catchment area capacity. An outline plan is included for each site. (Site A - Appendix 4, Site B appendix

25 4.6 Consistency with Legal and Regulatory Requirements Our proposals meet key legal and regulatory requirements and this is demonstrated below. The layout and design of all homes will satisfy the principles of: All construction will comply with current Building Standards (the Technical Standards which are the relevant standards for compliance with the Building Standards (Scotland) Regulations 1990, as amended). Barrier Free Housing complying with the standards specified within Housing for Varying Needs A Design Guide. Secured by Design achieving certification from Tayside Police. Design of all homes will seek to achieve the principles of sustainable design as outlined in The Sustainable Housing Design Guide for Scotland (published in 2000 by The Stationery Office on behalf of Communities Scotland). Design of all properties will be designed to have an internal floor area that is no less than the space standards set out in Scottish Housing Handbook, Bulletin 1 Metric Space Standards and be in accordance with the design principles of Housing for Varying Needs, A Design Guide, Part 1: Houses and Flats. Any roads are to be constructed to adoptable standards and accord fully with the Council s Roads Design Requirements. Proposals will make every effort to comply fully with the Council s Minimum Space Standards for Space Around Dwellings. In line with the Council s Energy Policy the aim is to design particular elements to achieve energy usage targets 20% lower than current Building Regulations. In addition the proposals: Procurement is in accordance with EU rules as well as Council contract rules and requirements. Planning and Building Control consents have been or are in the process of being applied for. Are in accordance with Government guidelines for new build housing in Council ownership. Land ownership titles have been checked and are in order for both sites

26 4.7 Anticipated Delivery Timescales A provisional timeline with milestones is shown below. Milestone Start Finish Approval to proceed 2 Mar 09 2 Mar 09 Design development 2 Mar Apr 09 Revised planning application (if required) 17 Apr May 09 Probable cost 20 Apr 09 1 May 09 Report to committee To suit committee cycle Planning referral (if required) 1 Jun Jun 09 Building warrant 6 Jul Aug 09 Prepare tender information 17 Aug Oct 09 Prepare tender documentation 26 Oct Nov 09 Tender issue 23 Nov Nov 09 Tender return 23 Nov Dec 09 Tender report 22 Dec Jan 2010 Tender acceptance 29 Jan Jan 2010 Contract run in 1 Feb Feb 2010 Start on site 1 Mar Mar 2010 Construction period 1 Mar Feb 2011 Contract completion 18 Feb Feb Risk Management and Constraints Risk management is the process of identifying, gauging and responding to risks in a particular programme or project, for example project cost, schedule or quality. Risk management planning establishes a consistent approach to programme and project risk management. There are three elements, these are risk identification, risk assessment and risk control. As with any long term financial plan, there is a need to keep the projections and assumptions used under constant review to ensure that the level of investment that has been assumed can actually be delivered. The main potential risks, or variables, that have to be managed include: Development constraints. Financial assumptions. Infrastructure constraints. Planning constraints. Legal procedural constraints. Table 16 shows potential constraints and associated mitigating actions. Table 16: Identified Constraints and Possible Mitigating Actions Constraint Funding lack of certainty Mitigating Actions Effective liaison with Scottish Government to 30 22

27 Constraint regarding future investment levels Mitigating Actions prioritise projects and progress site acquisitions to enable projects to be pulled forward if required. Funding reduction in grant levels Reassess funding package and explore use differing resources. Work with Scottish Government to progress efficiency agenda. Work with Scottish Government to ensure sufficient flexibility in system to recognise higher development costs in certain areas and/or house types. Ground condition problems/ abnormal costs Site Investigation at early stage. Ensure land values reflect remediation costs. Scottish Water connections Access/ Planning issues Early discussions with Scottish Water to identify constraints. Early discussions with planning services regarding road layouts/school catchment areas etc. Effective internal liaison arrangements within the council. Ensure Affordable Housing Policy procedures are robust. Affordable housing is part of larger development reducing ability to bring forward site Carefully consider the timing and possible phasing of developments to make realistic assumptions on when affordable housing will proceed 4.9 Conclusion We conclude that Perth and Kinross Council s proposals for a new build programme of 26 houses meets the Scottish Government s grant funding eligibility criteria in that our proposals: 31 23

28 Are consistent with the investment priorities of the Local Housing strategy and Strategic Housing Investment Plan. Contributes to meeting local significant levels of local unmet housing needs (e.g. pressured area status designation, high levels of homelessness and high demand pressure ) Have effective and robust procurement methods alongside robust delivery arrangements that are being developed or are in place already. Are consistent with Perth and Kinross Council s existing decentralised stock management and maintenance approach and contribute to reducing average per unit management costs. Demonstrate that available resources are in place to fund new the houses. Resources shall not be diverted from supporting the delivery of the Council s Scottish Housing Quality Standard Delivery Plan or retention of stock Business Plan. Consistent with design requirements for Housing for Varying Needs and Buildings Regulations. Consistent with relevant legal and regulatory requirements. Can be on-site within a year of agreeing funding allocation. Are not completed already or in Council ownership. Council has agreed the scope and is committed to funding for the projects