Gloriana Thurrock Limited - EELGA may 2016...Gloriana Thurrock Limited Matthew Essex Head of Regeneration and Assets 13th May 2016 Thurrock •Target of 18,500 new homes to support

Gloriana Thurrock Limited

Matthew Essex

Head of Regeneration

and Assets

13th May 2016

Thurrock

• Target of 18,500 new homes to support 26,000 new jobs (2001-2021)

• Housing delivery rates have never been good enough. In 2005 there were c.1,000 completions. In 2009 it was c.75!

• 8,000 consented homes not built• Housing development was generally of poor quality and was

increasingly in the green belt – moving away from town centre locations and reducing the benefit to our wider regeneration ambitions

• Recognise that securing a range of good quality housing was critical to supporting aspiration for more high value jobs

• Recognise the clear link between good quality housing and improved health outcomes

An appetite for Growth

• Proximity to London and connectivity to the capital and wider south east

• Capacity within the General Fund to borrow• Significant asset base within both HRA and General Fund• Growing capital project capacity within the Authority• Clear focus on delivering real change within our Growth Hubs

– particularly within Purfleet, Grays and Tilbury• A strong demand for housing

• Necessity breeding innovation – we needed to be able to generate our own capital and revenue flows

Strengths on which to build

• We wanted to get more directly involved…

• Increase housing supply rates across all tenures in response to local needs

• Encourage improvements in housing design and construction• Provide local labour and contracting opportunities• Support our regeneration ambitions by bringing forward the

right mix of housing in the right locations• Maximise the value of Council assets and borrowing capacity

• Prove to the private sector that good quality housing has a value in Thurrock

Genesis of Gloriana

Options:• HRA, Leasing, Development Partner or General Fund?

Clarity of control and risk:• Wholly owned – so separate but no third-party stakes or

interests

Clarity of funding:• General Fund borrowing – use of prudential

Clarity of purpose:• About housing but not HRA housing - no secure tenancies• About development and growth – a catalyst but not a

competitor

Gloriana: Why a Wholly Owned Company?

Gloriana: Company Structure

GlorianaWholly Owned

Company

Shareholder(Council represented by

General Services Committee)

Directors (Council Staff):Corp. Dir. Env. and Place

Head of EnvironmentSenior Financial Officer

SecondedThurrock Staff(as required)

Agency Agreements with Council

Gloriana is a lean organisation – most functions & services provided by Council as agent

Gloriana: Commercial Structure

Thurrock Council (GF)

Prudential Borrowing Issued

share capital

Loan funding

Loan and equity funding

Loan repayment and interest

Wholly Owned Housing Company

Loan repayment and interest and distributions

Land

D&B contractorM&M contractor

(HRA)

Construction contract

M&M contract

Private for sale housing

Shared Equity Properties

Affordable Rent properties

Rental income and open market sale receipts

Sale receipts

Sale receipts

• Established in 2014/15 with a Business Case for 350 homes

• Operates alongside our AHP, JVs and other GF activity – it is not the only show in town

• One project on site – St Chads in Tilbury. First of 128 new homes completing in October 2016

• Second project in planning – 80 units in Grays

• Pipeline is growing. Two further sites in feasibility which could deliver a further 300 units

• c.£50m currently deployed - anticipated return (debt and equity) is c.£18m

Achievements so far

• Consultants need close management and direction – there is no limit to what you could spend looking at options

• Governance, Governance and…Governance

• You need an answer for the inevitable: “But I’m a Councillor…”

• Building is relatively easy, development is less so

• Skills mix is critical – do you even know what/who you need?

• You will make mistakes and they will cost you money

• Principles are great but they don’t always generate a return

Lessons learned (to date…)

• 1% reduction in Council rents means that Gloriana is increasingly our preferred/default development route – it will do more than we originally thought possible

• Council land is available now but it will eventually run out –Gloriana needs to mature to be able to viably develop where it has to acquire land

• The ability to use Gloriana alongside other programmes –Estate Regeneration and Starter Homes etc

• Why just housing? Increasing opportunities around commercial and mixed use schemes

Opportunities and challenges ahead