Minutes:
Ms S Naylor, Project Manager, Mr D Weiss, Head of Business Transformation and Programmes, and Ms A Melvin, Principal Accountant (Projects), were in attendance for this item.
1. Ms Naylor introduced the report, which set out the history and context of the Excellent Homes for All project, how it relates to the KCC Strategic policy Framework, the process and timetable for awarding the contract and progressing the project and the reason for asking the Cabinet to agree the delegated authorities set out, the use of the designated sites and to approve the required Authority annual contribution. There are currently two shortlisted bidders, and the preferred bidder will be appointed in October 2012.
2. Ms Naylor, Mr Weiss, Ms Melvin and Mr Ireland answered questions of detail, explaining the following:-
a) as the project was already part-way through the procurement process when the Treasury reviewed and reduced the level of PFI credit (a grant payment which covers construction of a project), the changes which could be made to the project were limited, but some small changes were made to the design and use of communal areas;
b) nomination rights for places are shared by the County Council and its District and Borough Council partners. The contractor running the sites can express a view but cannot override Councils’ nominations;
c) the contractor will need to comply with the rents influencing regime when setting rents and service charges. The KCC will ask for rents and service charges to be fixed at an affordable level;
d) although the contract term of the PFI scheme is 25 years, the land ‘hand back’ period (ie the period after which the property will be handed back to the KCC) is 99 years;
e) PFI is based an outputs and not inputs and it is not possible yet to say how a building contractor will meet environmental concerns (eg in terms of including solar panels, low-flush toilets, etc) but the KCC has specified the need for the buildings to meet the BREEAM ‘Good’ standard, or the Code for Sustainable Homes Level 3; and
f) units will be a mixture of single- and double-occupancy, to avoid couples having to be separated when only one partner needs support. Keeping couples together is vitally important in terms of their mutual support and emotional wellbeing. If one partner dies, the Housing Association will consult the surviving partner and work with them to decide on whether to stay on in the double-occupancy unit or move to a single-occupancy unit, when one becomes available. In this respect, the arrangements are the same as those which apply for Local Authority tenants.
3. Comments and views expressed by Members included the following:-
a) the stated cost per unit is very high and does not seem to represent good value for money. The KCC does not seem to be paying a fair or reasonable price. Officers explained that the unit cost also covers the other facilities provided in a development (such as an on-site shop, restaurant and services for residents’ use) as well as the costs of building in features which can adapt to meet residents’ future mobility needs. The buildings are required to have a minimum of 60 years’ life. It is important also to take into account the spectrum of service needs being met by the scheme and the comparative costs of alternatives, such as residential care. It also covers ongoing maintenance.
b) the explanations above did not convince the speaker that the KCC is paying a fair or reasonable price. To have to justify this spend to the public will be difficult. Officers explained that the Treasury had looked at the costs very carefully and had been satisfied that they represent good value for public money; and
c) media coverage of past PFI projects has not been good as costs have risen dramatically during the contract period. Officers explained that some schemes are better than others but as Kent’s current schemes are run by not-for-profit organisations, registered social landlords, etc, they are confident that the Kent schemes are better value than some other ones. The unitary charge will be fixed for the duration of the contract period.
4. Mr Gibbens commented that he had also been sceptical of the value of PFI projects in the past and is still sceptical of PFIs for schools and hospitals, because the requirements for those services in 25 years' time cannot be known at the outset. Building an Extra Care Sheltered Housing Scheme using PFI is not the same as people will always need housing, even if not at the exact same level of extra care. Extra Care Sheltered Housing is a very good way of meeting the future needs of Kent’s ageing population, but building for the future does not come cheaply. He invited Committee Members to visit an Extra Care Sheltered Housing Scheme.
5. RESOLVED that the decision to be taken by the Cabinet, to agree the delegated authorities set out in the report and the use of the designated sites, and to approve the required Authority annual contribution, be endorsed.