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Community Ownership Review - Report of The Expert Group
Annex b
The Gateway process
Each stock transfer needs a challenging but realistic project plan in which dates and deadlines are expected to be met. The timeline shows that it should be possible to get from entry onto COP to completed transfer within a period of 2_ to 3 years. However there are many specific factors in relation to individual transfers which will mean that each transfer will need its own detailed project plan agreed by all stakeholders at this early stage.
Gateway 1
At this point the LA should gain access to the Community Ownership Programme and from this point should be supported by Communities Scotland. The COP should be a tightly managed programme where deadlines will be clearly set out and realistic.
LAs seeking to join the COP should be expected, at the point of entry, to be able to demonstrate
- the political support of elected members for the move to community ownership
- the capacity and skills within the management team to deliver, or robust plans to put this in place
- evidence of tenant involvement in the development of the proposal and a commitment to develop a joint communications strategy
- a broad financial assessment of their proposal set out in their outline business case.
More detail on these criteria should be provided in the revised transfer guidance.
It is recommended that LAs planning partial transfer as well as those planning whole stock transfers should be eligible for entry onto the COP providing they meet the criteria set out. At this stage proposals for partials should also need to demonstrate they comply with the additional specific criteria identified for partials' eligibility - i.e. part of a coherent strategy for the entire stock to reach the SHQS and no more expensive than whole stock transfer, except to the extent that additional regeneration benefits can be achieved.
Gateway 2
The key input for Gateway 2 would be the LA's fully developed and fully costed business case for transfer, reflecting the outcome of stock condition surveys, structural surveys, with an estimate of the transfer price based on a price model with agreed assumptions. The proposal should be sufficiently developed to allow the Scottish Executive and LA to make a VfM assessment and to form the basis for RSL to put forward bids to become the receiving landlord.
It is at this stage that the basic shape of the overall proposal would be established. In particular, the local authority's proposal would need to be based on the "data book" of assumptions provided by the Scottish Executive, so that the overall value for money and price to be paid for the stock can be confirmed.
Some of the key policy choices would be made at this stage: the balance between refurbishment and replacement of properties, timescale for upgrading of the properties, customer service standards etc. These should be based on the best available information at the time, which should include up to date stock condition surveys, and environmental assessments.
It is at this stage also that the public sector funding package for the transfer would need to be established. Apart from debt write-off and related breakage costs, the proposal will need to cover funding requirements if the stock has a negative value, estimates of set-up costs, and requirements for demolition and new build funding directly related to the transfer.
The presumption should be that the public sector funding package agreed at this point, as part of the Scottish Executive's VfM analysis, would be the upper limit on funding.
Against this background, the local authority's proposal will need to explain how risk will be managed in order to live within the funding package. This will mean:
- Identifying the key risks both to the overall project and to the financial assessment.
- What mechanisms will be put in place to manage these risks, and to make any adjustments necessary to maintain the affordability and VfM of the proposal.
Scottish Executive guidance will need to make clear what needs to have been done by Gateway 2 in terms of the stock condition survey, environmental surveys etc. Model warranties/indemnities should be developed which are acceptable to all stakeholders including funders. The approach being adopted to indemnities including wording should be incoorporated at a broad level in the funding prospectus while retaining sufficient scope for negotiation to reflect the individual circumstances of each transfer - however broad agreement should be reached by Gateway 2.
The completed transfer proposal from the LA should show how the proposals link to its regeneration strategy LA should also demonstrate the process for identifying the receiving landlord which could be to establish a new organisation or to select an existing RSL, or RSLs, through a competitive tendering process. Tenant involvement in this decision would be expected.
At this point the LA would gain access to regeneration funding. Where regeneration includes demolition and new build the LA will be required to identify not only the future investment budget but the risk factors associated with the plans and how the potential costs of those risks would be met if they materialised.
Gateway 3
Ballot to take place following completion of landlord's business plan and approval by LA and Scottish Executive. The business plan should be consistent with the transfer proposal agreed at Gateway 2, with any material divergences explained. The receiving landlord would need to demonstrate that the business plan was fundable, based on the advice of their financial advisors. Any matters of fact that could lead to changes in the Business Plan should be clearly identified and explained. Post successful ballot project management of transfer to begin to pass from LA to RSL.
Gateway 4
Transfer takes place following completion of post ballot administration including closure of legal and financial aspects of the transfer, together with the development and registration of purchasing RSL.
CHART A: TRANSFER DECISION GATEWAYS, KEY TASKS AND MAIN ELEMENTS OF EACH TASK
SUMMARY OF COMMUNITY OWNERSHIP TASK GROUP REPORT
The principle objectives of the Community Ownership Task Group were to:
- Define clear lines of accountability for the delivery of the new Community Ownership Programme (COP);
- Agree the division of responsibilities between HAAR Group and Communities Scotland for the development and implementation of Community Ownership policy.
The main recommendations were as follows:
Roles and responsibilities
The Task Group:
- recommended that the HAAR Group should retain responsibility for the development of Community Ownership policy, the overall management and allocation of the Community Ownership budget and the preparation of recommendations to Ministers at key stages in the transfer process.
- recommended that Communities Scotland should have responsibility for the delivery of the Community Ownership Programme, including supporting councils and RSLs, and appraising transfer proposals.
- recognised the key role of Communities Scotland Regulation & Inspection in deciding on any new RSL's fitness for registration, including assessment of the acquiring landlord's Business Plan.
Case teams
The Task Group recommended a case team approach in progressing transfer proposals. Council specific case teams, led by Communities Scotland, will provide the various CS and SE interests described above with a focus for liaison, discussion, decision making and implementing the actions required to maintain progress through to completion of the transfer. The case teams will provide guidance to the main parties to the transfer and ensure that difficulties or matters requiring policy decisions are dealt with in an effective and consistent manner. They will provide an assessment report to the HAAR Group at each of the key stages. The HAAR Group will, in the context of the available resources, then make recommendations to Ministers.
Membership of the case teams may vary over the life of each team. Staff from Community Ownership Initiatives (COI), the CS Area Team and Regulation & Inspection will form the coore membership, with representation from HAAR Group, SE technical staff, Press Communities and Press Communities Scotland, as appropriate.
The Task Group further recommended that an appointment should be made at senior level, directly accountable to the Communities Scotland Chief Executive, for the delivery of the Community Ownership Programme and the management of the case teams. It is possible that this role could be extended to include delivery of the Scottish Housing Standard.
Communities Scotland R & I have very specific responsibilities as Regulator but also will contribute as a member of the case team for each transfer. As Regulator, they will be responsible for decisions on any new RSL's fitness for registration, including assessment of the acquiring landlord's Business Plan, R&I involvement in the case team must not cut across these responsibilities. Working within the case team, they will monitor a new landlord's progress towards registration and keep the case team informed of any issues arising that may impact on this progress and how they will be managed.
This case team approach will
- provide a continual loop through policy development to implementation
- provide both councils and RSLs with a single point of entry to the Executive
- distinguish the roles of the three key Executive functions (ie HAAR Group, CS and R&I), whilst also ensuring consistency of advice and decision making.
Gateways
The Task Group recommended there should be a series of clearly defined Gateways in the development of a transfer proposal. These are described below.
Gateway 1 - Pre COP activity up to acceptance on the Programme
The case team (led by CS) will provide support to councils in preparing their strategic option appraisals within the Local Housing Strategy process. Where a council applies to join the COP, the case team will assess the submission and provide a report to HAAR Group where, in the context of the available financial resources, recommendations, to Ministers will be made. In the interests of a smooth transition HAAR Group will continue to take the lead with those councils already actively considering participation on the COP until the point at which they are accepted on the COP.
Gateway 2 - Detailed business case and identification of transfer vehicle
Once on the Programme, the council will develop a detailed business case for transfer and associated regeneration activity, together with an estimate of the COP funding required. The CS case team will provide support throughout - on the preparation of the business case, on regeneration planning and R&I on new landlord options. At the end of this process, the case team will provide a report to HAAR Group, where, in the context of the available financial resources, a recommendation to Ministers will be made. HAAR Group will advise Ministers on the allocation of funding for the delivery of each council's proposal and the management of that allocation will lie with Communities Scotland.
Gateway 3 - Development of the new landlord's business plan, early regeneration activity, leading to application for "in principle" approval and a successful ballot
The CS case team will provide advice and support to the council and to the acquiring landlord, designed to ensure that the final submission will satisfy the Executive's VfM and appraisal requirements. The Area Team will assess and support the commissioning of early action projects to be undertaken by either the council or the acquiring landlord. Where a new RSL is being established, R&I will support the development of the new organisation and undertake its own evaluation of the business plan as part of the registration process. Following receipt of the assessment report from Communities Scotland, HAAR Group will be responsible for recommendations to Ministers on "in principle" consent to the transfer proposal required to enable the council to undertake the statutory consultation process, including tenants' ballot.
Gateway 4 - Disengagement, completion and consent
This stage will focus on the legal, financial and consultation requirements of concluding the transfer, as well as the detailed disengagement activities required by the council. The case team will allocate experienced resources to support the council to complete these activities and, particularly through R&I, will increasingly support the RSL as it finalises its business plan, formalises its funding arrangements and moves towards satisfying any outstanding conditions of formal registration with Communities Scotland. Following receipt of the final assessment report from Communities Scotland, HAAR Group will complete its VfM assessment and seek Ministers' formal consent to the transfer.
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