Viability Assessments and Section 106

The problems with section 106 agreements are primarily that they are negotiable and transferable. The fact that developers are able to negotiate their way out of what is agreed at planning (Section 106 agreement)  through ‘viability assessments’ – often claiming the agreed provision of affordable housing is no longer viable – effectively holds projects and councils to ransom. If the developer wishes for the contents to remain hidden, councils are not even entitled to read the assessments they are supposedly making judgement on. Greenwich has now set a precedent in insisting that viability assessments should be made public, so hopefully this will change. This doesn’t change the fact that councils simply don’t have the resources to challenge what are often vast and impenetrable documents – somehow this culture of viability assessments has to change.

And section 106 is transferable. Often – as in the case with Greenwich Peninsula – developers make a deal offering to trade their provision of affordable housing in their development for a project or sum of money which can be spent elsewhere in the borough. If we follow this logic, this does not achieve ‘mixed communities’, but ghettoes of rich and poor in opposite ends of the borough (if not ‘poor doors’). In reality this sum of money gets further and further negotiated and in many cases diminishes to next to nothing (Tottenham Hale for example http://www.insidehousing.co.uk/spurs-given-green-light-to-drop-affordable-homes/6520463.article

As section 106 is not solely about the provision of affordable housing, but a transferable contribution to the local amenity, what might originally have been the provision of 35% affordable housing in the Heygate became the provision of a community leisure centre which would have cost significantly less then the affordable housing, and also at the same time reduces the amount of affordable housing provided. The provision of affordable housing as part of section 106 should not be transferable.

No Guarantees!

The local Authority (Lambeth) makes lots of promises, but none of these are as yet legally binding. All of these promises can be reneged upon (as in any scheme) subject to a ‘viability assessment’. Further down the line, if the scheme is no longer financially viable, they will not be obliged to follow through necessarily with building ANY homes for council rent. It remains to be seen as to whether a certain percentage of homes assigned as council/ social rent, if specified in the planning document, can be altered at a later date. This has seen in the case of the Nothing Hill Housing Trust at the Aylesbury, where ‘Affordable’ and Social’ were grouped together under ‘Target’ and the result was the same overall number of target rents, but less ‘social’ and more ‘affordable’.

Special Purpose Vehicle (SPV)

An SPV is a mechanism by which a council can acquire a loan for building projects.

It is effectively setting up a subsidiary company which creates an ‘arms length’ organisation for the council. How these companies then relate to the future management of the estates is unknown.

Because the estates will not be owned directly by the council, the tenants will no longer be council tenants, so this is effectively a stock transfer.

For stock transfers, council tenants have to vote in a ballot as to whether they want to be transferred. However, for the purposes of ‘regeneration’ the stock transfer via SPV does note require a ballot.

It has been suggested that –  given that this is one of very few means by which a Local Authority is allowed to borrow money – this is simply a means for the LA to acquire money to pay off some of its debts, and not fundamentally as a means to provide more housing.

Consultation Process – co-operative council

Lambeth is a co-operative council (link) , so is ‘obliged’ to consult with its residents.

As well as consulting them on the nature of the demolition and regeneration, should they not consult them on the initial decisions leading up to that?

(from Lambeth’s October 2014

Draft Principles for Estate Regeneration

Lambeth Council is committed to making sure that all council tenants and homeowners live in good quality homes. For the majority this can be achieved through the Lambeth Housing Standard (LHS).

For some estates, particularly those with poor design or construction the LHS may not be enough.

Regeneration can mean redevelopment, refurbishment or a mixture of both.

Estate regeneration can be an opportunity to address social issues and provide much needed additional homes at a council rent as well as improving the quality of housing.

Inevitably estate regeneration is going to make residents feel anxious about what might happen to their homes and communities. We will be open and honest about the advantages and disadvantages regeneration can present.

Lambeth is a cooperative council – this means we do things with you, working together. This document provides a set of principles – a guarantee of what you can expect. It sets the basis for more detailed agreements on individual estates.

COPRODUCTION

The Council will give all local residents the opportunity to coproduce options for the future of their

homes and the estate by:

 Agreeing a vision for the future of the estate & being clear about what is and isn’t possible

 Listening to what local people think about the place, their homes and sharing information about the condition of their estates

 Enabling local people to take part in the project at the level they choose

 Establishing a project team to ensure that all residents are fairly represented and have the opportunity to get involved

 Providing clear and open information to all residents throughout the process including information packs and manuals

 Providing access to specialist independent advice and offer guidance so that residents can make informed decisions

 We will discuss and agree essential ‘meanwhile’ works

 We will be clear about the timescales involved. Regeneration is not a quick process.

 The Council will ensure that the commitments of the Regeneration Principles are reflected in the final scheme

 There will be a council officer to liaise between residents and the contractor

 Council officers will work with residents in line with Lambeth’s Cooperative Council ethos and ways of working

 Consultation with residents will begin once there has been a recommendation from the Cabinet Member for Housing to consider regeneration on the estate

 Residents will be encouraged to take an active role in the monitoring of quality and progress both of building works and service provision including resident liaison, programme of moving home, quality of works/build

 The Council will keep continuity of staff where possible