APPENDIX1 MG/PPS/SCC01
Paul Longshaw
Strategy And Planning Manager
Housing Services
Strategy & Regeneration Division
Salford City Council
Crompton House
100 Chorley Road, Swinton M27 6ES

Dear Paul,

SALFORD CITY COUNCIL - REVIEW OF MANAGEMENT OF NON-HOUSING ASSETS

1.0INTRODUCTION AND PROJECT BRIEF

1.1Plus Property Solutions (PPS) have been commissioned by Salford City Council (Housing Strategy) to carry out a review of the asset management strategy and operational framework employed in the management of the Council’s non-housing assets. PPS have been asked to prepare three reports in the completion of the review, as follows:

  1. Report in relation to the management of the Council’s non-housing assets across Salford
  1. Report in relation to the management of the Council’s non-housing assets specifically in the Little Hulton area
  1. Report in connection to the management of shop units across Salford.

1.2This report is in relation to the management of the entire Council’s non-housing assets across Salford.

Detailed reports covering Little Hulton and Shop Units (see 1.9 below) are attached at Appendices 1 and 2 of this Main Report respectively.

1.3 Salford’s Housing Revenue Account (HRA) has a substantial portfolio of non-housing assets, comprising mainly shops and garages. The total Open Market Value (OMV) of these assets (based on a valuation carried out in 2002) is £11,523,379

Salford City Council considers that in terms of the stock options appraisal, an accurate analysis of the non-dwelling assets will aid future investment decision making.

1.4 A stock condition survey of the councils housing portfolio was commissioned in autumn 2003 and a Final Report was issued in February 2004. The council possesses a detailed database that includes a 17% surveyed sample of council housing stock. The City Council wish to build on this information and it was also considered to be timely that a full review of the management of the council’s related assets was required. The Business Planning Team therefore recommended the need for such an independent review by Plus Property Solutions (PPS).

1.5 It is understood that the City Council is now at a key stage of the Stock Option Appraisal process. They are about to embark on phase three consultation. The current HRA model assumes the non-dwelling assets will be retained. It is vital that quality information is available on the income generated and value of the non-housing assets for a full analysis of how these assets impact on the stock options. This report will highlight approaches to the management of the non-housing assets that will impact on all the housing-owned assets within the local authority and consequently inform the decision making process in relation to stock options.

1.6 Salford City Council currently own and manage approximately 500 units of non-housing assets including:

  • Shop units
  • Administrative buildings including housing offices
  • Vacant Land
  • Community Centres
  • Freeholds on land occupied by a variety of buildings
  • Car parks

The key objectives of the review were to:

  • Review the existing asset management strategic and operational framework
  • Include recommendations for the future asset management process
  • Benchmark and appraise the asset management process against other organisations
  • Clarify the current valuation of the related assets
  • Create a framework to enable strategic and operational decisions around asset retention or disposal
  • Ensure that retained assets are managed and maintained properly and effectively
  • Allow consideration of ways to increase revenue income and/or reducing revenue costs.

1.7At the outset of this review, it was agreed that a financial valuation of the non-housing assets would be not be included within this report. These will need to be carried out in conjunction with detailed option appraisals of specific non-housing assets to ensure accurate information is available at the time of investment decision-making.

1.8In the completion of this Review, discussions have been held with other local housing organisations that have had similar experiences in dealing with non-housing assets and some examples of good practice are highlighted at Appendix 3 of this report.

1.9As part of the review, PPS were asked to specifically report on the following two specific areas of detail:

  • Management of the non-housing asset in the Little Hulton area (see Appendix 1)

The reason for identifying Little Hulton in particular as a pilot area is that there is a wide range of non-housing assets in the area that have raised particular problems. It was considered useful to focus on the management of assets in this smaller area, to assist in the consideration of operational management issues across the whole of Salford.

  • Management of the shop portfolio (see Appendix 2)

The shop portfolio has been subject to a separate review due to significant resident, staff and councillor concern about problems associated with the shop units including void properties, unsightly shops and anti-social behaviour.

CONTENTS

1.0Introduction and Brief

2.0Executive Summary

3.0Key Findings and Conclusions

4.0Recommendations

5.0Action Plan

6.0Methodology of Review

7.0Position Statement

8.0Strategic Context

9.0Current Asset Management Practices

10.0Performance Management and Benchmarking

Appendices

1Report 2: Review of Non-Housing Assets in Little Hulton

2Report 3: Review of Management of Shop Units

3Case studies

4Option Appraisal Process

5Identifying Assets at Risk

6Option Appraisal Matrix

2.0EXECUTIVE SUMMARY

This section serves to provide a summary of the conclusions and key recommendations arising from the Review.

2.1Conclusions

  • The management of the non-housing assets lacks a strategic framework and as a result is reactive and uncoordinated.
  • The key areas of risk relate to the management of the shop units and underused land.
  • The current budget is not sufficient for the effective management of non-housing assets and does not allow for a strategic approach to investment decision making.
  • The management of non-housing assets has been given a low priority by senior management in recent years.
  • There are issues of poor communication between departments and organisations, which have a negative impact on the management of non-housing assets.
  • The management of non-housing assets is not currently carried out in a holistic manner and does not tie together to various strands that encourage sustainable communities.
  • The teams of staff involved in the management of the non-housing assets are experienced and committed to the work they do.
  • The current collation of information on the assets (both in terms of property and tenants) is an insufficient basis on which to base final investment decisions.
  • Where investment decisions have been made, there is an inadequate audit trail to confirm why decisions have been made.
  • There is a lack of clarity about the aims and objectives of the management of the assets and about the roles of individuals and teams.
  • Stakeholders, residents and tenants have not historically been involved in the management of the non-housing assets.
  • Managers do not implement Performance Management Procedures consistently.

3.0KEY FINDINGS AND CONCLUSIONS

This section serves to bring together the findings from each of the sections addressed within this Review in a coherent and systematic manner. Section 9 of this Report illustrates examples of Best Practice as identified within organisations that operate locally to Salford.

3.1Key Findings

  • There is a lack of strategic direction in the management of the non-housing assets.

There is no reference in the strategic documents produced by the local authority of the purpose of holding these assets. The question as to whether these assets are held for investment purposes, or to further the regeneration of communities, or possibly a combination of these is not tackled.

  • There is a lack of a strategic framework around which the non-housing assets are managed.

The approach to management is ad-hoc and reactionary, rather than as a result of a considered and holistic framework with clear objectives and outcomes.

  • There is a lack of a cohesive approach to the collation of up-to-date relevant information about the assets that would allow sound investment decisions to be made. For example, the following information should be readily available;
  • Up-to-date property condition surveys
  • Tenant profiles
  • Cost implications of retention, including repair costs, administration and staff time
  • Rent received and arrears
  • Information on the social issues around asset i.e. are there problems with anti-social behaviour?
  • Regeneration Proposals for the area
  • Market conditions in the area

Collation of this information would also allow for local Performance Indicators to be established and compared with other organisations. It would also mean that staff would be able to compare assets within the local authority (for example, to establish which shop parades were performing best and which were marginal from a range of indicators including property and financial performance and also in terms of social factors such as nuisance or tenant satisfaction levels).

This information would inform investment decisions not only when carrying out detailed option appraisals, but also when considering, for example, internal repairs carried out to prevent tenants leaving or when properties have been vacated.

This information should be readily available to staff carrying out the day-to-day management of the assets so that decisions are based on the best up to date information available.

The compilation of information about non-housing assets needs to be reviewed as it has been noted that the information held on the asset register does not tally with the information held on the HRA.

  • There are communication problems between Housing Strategy and Development Services at an operational level and inconsistencies in the approach to joint working.

For example, there are instances of excellent co-operation between departments on regeneration initiatives such as in the areas of Langworthy and Seedley, and Higher and Lower Broughton. In these instances, Development Services worked alongside Housing Strategy and other departments to produce Action Plans for the area. However this has not been applied consistently across the borough (see Shop Portfolio report at Appendix 2 for examples).

There is also a lack of communication in day-to-day operations between the two departments which, according to a number of staff, has deteriorated since the formation of NPHL in 2002. Prior to this, regular meetings were held between the departments but this has not happened for over a year, resulting in lines of communication being made difficult. It has also been noted by some staff that changes in personnel have not been communicated and staff are unclear about the roles and responsibilities of individuals and who to contact if there is a problem.

  • There is a lack of community involvement in the decision-making processes regarding non-housing assets.

Decisions made about assets within local authority estates have not involved residents and stakeholders but have often been the result of ward councillor or tenant approaches.

These decisions have sometimes been carried out without consideration of the full information, resulting in inappropriate investment in assets that are not viable in the longer term (see Shop Portfolio report at Appendix 2).

  • The budget available is insufficient to enable the effective management of the non-housing assets. There is currently no budget available for capital investment in the assets.

Problems highlighted with particular assets cannot be resolved because there is currently no budget available. For example, possible options for problem shop parades have been identified and considered, but no action taken due to the lack of available funds.

The budget of £60,000 for the shop portfolio is insufficient for the day-to-day repairs currently being reported. Staff within Development Services report that only essential repairs are carried out. A strategic approach, which looks at the longer term and identifies those assets that are worth investing in terms of day-to-day repairs and major works (such as security work) is lacking.

  • The staff resources available for the management of the assets are insufficient to progress a strategic approach.

The staff structure does not allow for the most effective management of the assets since the separation of Housing Strategy and Development Services makes lines of communication difficult and the roles and responsibilities of individuals and departments is unclear.

  • There is a lack of ownership within the organisation of the management of the non-housing assets.

The corporate profile of non-housing assets is low and not given priority in terms of resources.

  • Managers implement the Performance Management procedures in an inconsistent manner and some staff do not appear to have regular reviews linked to targets and outcomes.
  • The formation of NPHL has generated some problems in the management of non-housing assets by making communication links between teams more difficult.

For example, the reporting of repairs to upper flats above shop units has been highlighted as a particular problem (see Little Hulton report at appendix 1).

  • Staff within both Housing Strategy and Development Services are committed to their work, experienced in their roles and appear to welcome the opportunity to work together to make changes to drive continuous improvement.
  • Key Areas of Risk

The key areas of risk associated with the management of the non-housing assets have been identified as;

Shop units

  1. The management of shop units can have a positive or negative impact on the image of an area. For example, in Little Hulton there has been significant investment in the housing stock and environmental works over recent years that have vastly improved the appearance and image of the area. However, there are a number of shop parades that detract from this investment as they are unsightly and cause problems for the communities in terms of anti-social behaviour.
  1. The shop units can be costly to retain in terms of repairs and staff resources.
  1. Shops can create real problems with local communities in terms of anti-social behaviour and crime. This might include anti-social behaviour around the shop units themselves which in turn leads to low demand for residential units around the shops and a climate of fear at night in the area.
  1. The support that these units can give to achieving the corporate objectives should not be underestimated. On some local authority estates these units are the only local shops and the loss of these units can have a big impact on local communities and may impact on regeneration initiatives and the quality of individual’s lives, particularly the elderly who may find it more difficult to reach shopping facilities further afield.

4.0RECOMMENDATIONS

The following recommendations have been carried forward into the development of a 12-month Action Plan, which is provided in section 5. This Action Plan is intended to be a realistic and achievable programme for the Council to implement.

4.1Key Recommendations

These first three recommendations have been identified as the key ‘cornerstones’ that must be carried out initially if the supplementary recommendations provided in 4.2 are to be effective.

  1. Formulate area teams led by the Housing Strategy department, including representation from Development Services and New Prospect Housing Management.

The aim of these teams is to formulate a strategy for each area that takes account of all factors and recommends solutions that are specific and attributable to individuals. This holistic approach will ensure that the non-housing assets are considered as part of the wider community issues.

  1. Involve local communities in the management of the housing assets.

This will include links with stakeholders especially the police on issues of anti-social behaviour. Management the assets must be seen against the background of relevant strategic documents particularly the Crime and Disorder strategy and the Neighbourhood Renewal Strategy.

  1. Senior management should prioritise the management of non-housing assets and ensure this is adequately resourced.

Additional funding sources should be researched. Local benchmarking should be introduced and targets set for each area in conjunction with priorities agreed with local residents and stakeholders. These need to be linked to departmental, team and individual targets.

4.2Supplementary Recommendations

The following supplementary recommendations each play an important role in the successful management of the Council’s non-housing assets.

They will be supported by the key recommendations in 4.1 above and will provide the asset management framework that will enable proper and effective asset management of the non-housing assets

  1. Ensure information systems allow for the collation of up-to-date information on a range of issues that provide a basis for sound decision-making and risk analysis.

This should include:

  • Condition surveys of properties
  • Cost of retention
  • Arrears
  • Regeneration proposals

  • Results of local consultation
  • Tenant satisfaction levels
  • Likely future shopping trends in the area
  • Local property market
  • Housing Demand and Sustainability
  • Tenant profile
  • Feedback from other initiatives
  1. Ensure the aims and objectives and role of the area teams are clear and that the strategic context is key to the establishment of the remit of the team.
  1. Establish clear performance management procedures that link directly to the targets and outcomes of the area team.
  1. Ensure that the purpose of holding (retaining) non-housing assets is established and that the definition of different assets is made clear.
  1. Establish links with other organisations that are experiencing similar issues in the management of non-housing assets to exchange ideas and information.
  1. Challenge existing management arrangements. Specifically, the management of void (for disposal / review) flats and maisonettes above shops should transfer from NPHL to Development Services department of Salford City Council to ensure smooth management of these buildings.
  1. Ensure each area team produces an achievable Action Plan for all non-housing assets.
  1. It is recommended that an ‘Underused Land Strategy’ be developed which takes account of all land now deemed to be underused due to demolition of housing.
  1. Establish a clear Service Level Agreement between Housing Strategy and Development Services.
  1. Establish local performance indicators. For example, the levels of voids and arrears in the shop units.
  1. Establish clear lines of communication between Housing Strategy and Development Services at an operational level, including regular focused meetings between teams and individuals.
  1. Ensure remit of the Area Teams include:
  • Provision of area strategy, based on sound information and local consultation
  • Regular updating and collation of information
  • Creation and maintenance of clear lines of communication between local authority departments, stakeholders, and residents
  • Local targets and Performance Indicators established and monitored on a regular basis
  • Points of contact to resolve issues of concern
  • Option appraisals of assets including full risk analysis as appropriate.
  1. Establish straightforward and systematic Option Appraisal methodology, including risk analysis, for establishing action on assets such as problem shop units.( See appendix 4,5 and 6 for examples)

5.0 ACTION PLAN