Brief for Hidden Homes Options Appraisal Consultancy work

Background

The Royal Borough of Kensington and Chelsea owns a large portfolio of land and property holdings which extends to 10% of the land footprint of the borough. Excluding parks it owns 220 acres. This includes 9,347 Council homes, 407 commercial lettings and 141 operational properties.

Part of the Council’s duty as a local authority is to manage the housing stock which is managed as the Housing Revenue Account (HRA). It is part of the Council’s plans to provide an additional 600 homes from the adoption of the London Plan. This plan will also require the provision of 200 new affordable houses over the next 10 years.

The Council’s stock is managed through the borough-wide Kensington and Chelsea Tenant Management Organisation (KCTMO) set up as an independent company in 1996. The KCTMO has responsibility for advising on asset investment for all of the Council homes and commercial properties. The KCTMO is a key partner and has a major role in working in partnership with the Council to produce the strategy for development and regeneration.

The Council is seeking to develop options to meet its aspirations via the infill development of a range of sites within its existing HRA stock throughout the Royal Borough. These sites may range from the infill of undercrofts to deliver as few as two or three units of affordable housing, to larger scale Greenfield and brownfield site developments. Developments may include commercial as well as residential in various tenures.An assessment of potential sites has been initiated, and forms part of an ongoing process for the Council and its agent for the management of the HRA portfolio, the Kensington and Chelsea Tenant Management Organisation (KCTMO).

The Council’s goal in developing these sites is where possible to maximise the number of additional affordable homes that we create, but also create a more mixed tenure in some areas where there is already a predominance of affordable homes. The council will consider all opportunities to maximise both capital receipt from disposals and revenuereceipt from commercial or residential development which can be used to further fund the Council’s initiatives.

The Need for Options Appraisal Consultants

The Council needs to be assured that it has considered a full range of funding options in order to maximise the benefits of any development and minimise the costs to the public purse. In a changing funding environment, this requires an assessment of the most appropriate as well as the most up-to-date models of delivery, and requires the appropriate expertise to analyse the market and deliver a succinct report and recommendations.

Objective

The Council would now like to work with KCTMO to develop a menu of options for the funding and procurement of the potential developments, so that we can choose the most appropriate route for development in each case.

The Council wishes to procure a piece of desk top consultancy work that lays out for consideration the range of factors influencing the costs, delivery timetable, unit outputs, tenures and ownership of new developments that may result on these sites. A final report should be delivered which provides a set of recommendations regarding the options available.

The Council is expecting to receive quotations in the region of £10,000.

Scope of requirement

The study will be limited to those properties in Council ownership whether freehold or long leasehold within the Council’s Housing Revenue Account. The properties are all within the Royal Borough’s boundaries.

The options appraisal should deliver an assessment of the following:

  • Funding streams– includingconsideration of:
  • HRA grant – its availability and restrictions,
  • S106 commuted sum funding – noting the potential of and the restrictions upon of this funding source, and the balance of benefit between on-site delivery of affordable housing, and the availability of commuted sums to invest in a range of schemes.
  • S106 off-site affordable housing funding – how we may best prepare a site to be suitable for location of off-site affordable housing, and what proportion of funding may be relied upon from the donor site,
  • Council borrowing – capacity, terms, and application of this,
  • Investment of surpluses by Registered Provider partners,
  • Cross-subsidy from market housing development,
  • Receipt from disposals – which may be on alternative sites,
  • Revenue stream from commercial lettings, etc.
  • KCTMO independent funding capacity
  • Any other appropriate funding source not listed above
  • Delivery Structures – including, but not limited to,consideration of:
  • direct delivery by building contractors appointed by the Council and supervised by a Project Manager,
  • delivery through KCTMO,
  • delivery through a development agent such as a local Registered Provider,
  • Joint Venture with a private developer,
  • freehold disposal to a developer with a covenant securing a proportion of affordable housing,
  • leasehold disposal to developers with a similar covenant, etc.
  • Procurement Issues – including, but not limited to, consideration of:
  • the delivery cost to the Council of different routes to delivery
  • the fees, resourcing and procurement costs of different routes to delivery
  • how the Council best protects, retains, and improves upon its assets for the long term, given that this is regarded as a priority
  • the legal and financial limitations within which the Council’s HRA stock is operated,
  • the legal and financial structures, and governanceauthorities and consents, required for the different delivery routes
  • the risks associated with the different delivery routes, and how these may be mitigated

Outputs required

  1. The Council requires a fully evidenced report upon the requirements outlined, with a set of recommendations as to the most cost-effective, timely and beneficial means of development that the Council can consider undertaking.
  1. This will require research with the Council’s Housing, Planning, Corporate Property, Legal and Finance teams, and with the KCTMO. It may also require research with the Council’s key Registered Provider partners, the HCA, the CLG, and the GLA.
  1. A menu of options should be proposed from which the Council can select for each potential site, with a matrix for analysis of site characteristics and other factors to aid decision-making.
  1. The findings and recommendations should be presented verbally and in writing to Council officers and Councillors as necessary, in draft and in final form, for feedback and for information.

Timetable

The Council requires this work to be completed by the end of October 2011, with a view to the Council taking decisions on the future of sites by the end of the calendar year. It is anticipated that the successful consultant will be appointed on 19th October 2011.

Expertise

The appointed consultants are to demonstrate their suitable expertise and experience within their organisation in the fields of

  • Construction cost consultancy
  • Housing development finance
  • Urban regeneration
  • Residential development
  • Valuation

Performance Measures

The consultants will arrange for an appropriately qualified and experienced person to attend meetings with the Council’s Hidden Homes Project Team and any other meetings as required.

All assessments are carried out to the agreed timetable.

Reports are clearly written so that the advice given can be understood by all those working on the project.

Performance Monitoring

The Project Manager will agree a detailed schedule of dates with the consultant initially at the project initiation meeting, although this may be amended by mutual agreement at a later date. The Project Manager will keep a record of any failure of the consultants to attend meetings as required.

The Project Manager will read the report and written advice for quality. Where any issues arise, the Project Manager will discuss this with the consultants in a timely fashion with the intention of satisfactorily resolving the issue. The Project Manager will be responsible for keeping notes of any such meetings, and any agreed actions arising.

The Project Manager will provide a post contract assessment of the consultants.

Project Team

The project team supervising this work will be drawn from the Council’s Housing and Corporate Property Teams, and the TMO.

Response to the brief

Consultants are asked to respond to this brief (by completion of the Request for Quotation Document) by noon on Monday 17th October, identifying in their submissions:

  1. Their approach to the study
  2. Expertise and experience of the consultant team carrying out this work
  3. Similar projects undertaken in last 3 years
  4. Their fee for undertaking the study

Further Information

Parties who are interested in participating in this project should email:

to request further documentation. Deadline for Expressions of Interests is Wednesday 12th October.

Please note the submission deadline of Monday 17th October (12 Noon).

The deadline for Clarification questions is Wednesday 12thOctober (12 Noon).