The scrutiny committee received a copy of the presentation given by the Head of Community and Customer Services.  He explained about the new joint housing venture with Watford Community Housing Trust and the new companies, Watford Commercial Services Ltd, Hart Homes (Watford) Ltd and Sale LLP.  He informed members about the structure of each of the companies and the council’s relationship with each of them.  He added that the Deputy Managing Director, Nick Fenwick, had replaced him as a director and board member for Sale LLP and was an additional director for Watford Commercial Services Ltd. 

Following several questions from Councillor Martins, the Head of Community and Customer Services informed members that should there be a deadlock when making a decision, the articles of association would cover this matter.  He would ask the Head of Democracy and Governance to confirm this and the extent of the council’s liabilities with Sale LLP.  The business plans for each of the three businesses had been approved by Cabinet in November.  Each development scheme would need to stand on its own merits.  Any profits generated from a scheme would help fund affordable homes elsewhere.  The main aim of the venture was to ensure the introduction of new affordable homes in the Watford area.

Councillor Johnson, the portfolio holder responsible for housing and property, added that it would be necessary to have some property available at market level to enable affordable housing.  The town needed more affordable housing.  There was a political accountability.  Decisions would be reported to the council’s Property Investment Board. 

Councillor Khan commented that there needed to be a democratic oversight.  He noted the comment about the Property Investment Board.

Councillor Johnson added that information would also be presented to the Major Projects Board. 

Councillor Khan continued that scrutiny was important and there needed to be members’ input.  He said that Budget Panel was available to look at the financial aspects of schemes.  He asked whether ‘Right to Buy’ was applicable to the homes developed through this venture.

The Head of Community and Customer Services advised that properties would be developed within the borough and outside, as close to the borough as possible.  It would be necessary to consider the accessibility of developments outside the borough.  Each project had to be presented to the Property Investment Board.  The two organisations did not want to limit themselves to only developing properties within the borough.  In response to the comments about ‘Right to Buy’, he explained that under the current legislation this would not be applicable to properties owned through Hart Homes Ltd. 

Following a question about the risks to the council and trust, the Head of Community and Customer Services stated that each had a 50/50 stake.  For example, if the trust provided the land, then the council would provide the equivalent financial stake.  Any profits from developments may be added to capital or revenue accounts; it would depend on which company had generated the profit.  In response to a question about his role as a director, the Head of Community and Customer Services explained that he had been appointed by the council to Hart Homes Ltd and Watford Commercial Services Ltd.  The council could nominate someone else to replace him at any point.

Councillor Johnson responded to Councillor Rindl’s question about potential losses and the viability of schemes.  He stated that he would prefer that development schemes contained 100% of affordable accommodation.  However, it was necessary to ensure that schemes were financially stable.  He hoped that schemes would generate more than 35% affordable accommodation, as this should be the baseline.  The venture would need to do all it could to provide more affordable homes.

The Head of Community and Customer Services confirmed that the company would always aim for more than 35%.  Information about winding up the company would be included in the articles of association.  He was unsure whether there was any risk to the local council taxpayers, however if there were any problems there could be a reputational risk for the council.  He advised that officers had taken time to ensure the business plans were robust. 

Councillor Khan repeated that it was important that councillors had a role in seeing what was happening.

Councillor Johnson stated he was passionate about housing and encouraged councillors to get involved where possible.  He suggested they could attend the Housing Policy Advisory Group and get involved in the process.

It was agreed that the Head of Democracy and Governance would be contacted about the articles of association and asked for information about the council’s liability.

RESOLVED –

that the presentation be noted.