AGENDA ITEM NO.

10

REPORT TO: Executive Board

REPORT NO: CHPPO/75/09

DATE: 14 July 2009

LEAD MEMBER: Councillor Mark Pritchard

(Housing & Planning)

LEAD OFFICER: Chief Housing and Public Protection Officer

CONTACT OFFICER: Fred Czulowski (Tel 315401)

SUBJECT: Caia Park Residents Panel Application for

Tenant Management Organisation (TMO)

WARD: Cartrefle/Smithfield/Queensway/Whitegate/
Wynnstay

1. PURPOSE OF THE REPORT

For Executive Board to determine whether to support Caia Park Residents Panels
application for Welsh Assembly Government (WAG) funding to examine the possibility of
setting up a Tenant Management Organisation (TMO) under the Right to Manage.

2. EXECUTIVE SUMMARY

2.1 Caia Park Residents Panel was set up to examine the options for achieving
WHQS through a tenant led stock option appraisal. A report was presented to
Executive Board on 31 July 2007 (Report No. CHPPO/92/07) with a request from
Caia Park Residents Panel for the Council to support their application for a Tenant
Empowerment Grant (TEG). Although the Council did not support this request, the
WAG granted funding for this study.

2.2 The Caia Park Residents Panel appointed Consultants (Open Communities) to
undertake a project to test the opinion of Caia Park on a number of issues. A
report was presented to Executive Board on 3 February 2009 (Report No.
CHPPO/03/09) with the findings of their work.

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2.3 Following the completion of the initial project, the Residents Panel wanted to carry
out further work to examine the viability of a partial stock transfer in Caia Park with
the aim of achieving the Welsh Housing Quality Standard (WHQS).

2.4 At the Executive Board, Members expressed concerns about the possible impact
of this proposal on Council tenants and staff alike, as well as the potential
implications for the Housing Revenue Account (HRA). Members agreed not to
support Caia Park Residents Panels application for a WAG Tenant Empowerment
Grant, which would have enabled this project to continue.

2.5 Following this decision the Caia Park Residents Panel have now taken the
decision to examine the possibility of setting up a TMO on Caia Park. A letter
requesting the Councils support in their application for WAG funding to carry out a
pre-feasibility stage of the Right to Manage process has now been received
(Appendix 1). The application for funding requests the support of the Local
Authority for the Group in its intention to pursue its Right to Manage.

3. RECOMMENDATIONS

3.1 That Members agree not to support Caia Park Residents Panels application
for WAG grant funding to pursue the Right to Manage.

REASONS FOR RECOMMENDATIONS

The application for WAG grant would enable tenants of Caia Park to have the opportunity
to investigate the options for residents to be involved in the management of their homes.
However, the introduction of a TMO would have a detrimental impact on the Councils
objective in developing options to deliver WHQS.

Andy Lewis
Chief Housing and Public Protection Officer

4. BACKGROUND INFORMATION

4.1 Caia Park has over 5,000 properties, 2,608 of which are Council properties. There
are a number of community activities currently taking place. Within the area there
are six tenants and resident groups each representing their community. These
groups work alongside Communities First and the Caia Park Residents Panel.

4.2 The Panel undertook a project to test the opinion of the Caia Park Community on a
number of housing and environmental issues. Prominent among these issues was
the fact that the Council is unable to bring its homes up to the WHQS by 2012.

4.3 The group approached the WAG through the Chartered Institute of Housing (CIH)
Cymru for advice. Discussions with the CIH Cymru resulted in a successful
application for a TEG from WAG to fund the project. Open Communities, as
project consultants, carried out a series of meetings, door to door visits and sent a
questionnaire to tenants and residents living on the Caia estate. This was
reported to Executive Board on the 3 February 2009 (Report No. CHPPO/03/09).

4.4 The report compiled by Open Communities concluded that:

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 - the local community of Caia are concerned about the fact that the Council are
unable, under current financial restrictions, to bring its homes up to WHQS by
2012
- local community representatives feel that the wider Caia Park community are
now ready to examine the possibility of a tenant led initiative to break the
impasse of the Council not being able to achieve the WHQS

4.5 Members of Executive Board on the 3 February 2009 decided not to support the
request for the Caia Park Residents Panel to undertake further work to examine
the viability of partial stock transfer for Caia Park to achieve the WHQS.

4.6 The Residents Panel have now taken the decision to examine the possibility of
setting up a TMO. Open Communities, as their Consultants, are in the process of
applying for funding from WAG to carry out the pre-feasibility stage of the Right to
Manage process. The application for funding requests the support of the Local
Authority for the group in its intentions to pursue the Right to Manage.

Right to Manage Tenant Management Organisations (TMOs)

4.7 There is no WAG guidance for TMOs. The WAG has stated that Authorities in
Wales should follow guidance issued by the Department for Communities and
Local Government. This guidance on the Right to Manage provides advice about
developing a TMO. Tenant management is a form of housing management in
which the tenants in an area take on the responsibility of providing some or all
housing management tasks on behalf of the Council.

4.8 TMOs operate in both Housing Associations and Local Authorities but only
Council tenants have a legal right to manage. The landlord still owns the
properties and in the case of Local Authority housing, tenants remain tenants of
the Council but the TMO becomes a partner with the Council in providing services
to the local community. To take over management, the tenants must set up a
properly constituted organisation called a Tenant Management Organisation
(TMO). The responsibilities of the Council and the TMO are negotiated and set
out in a management agreement.

4.9 TMOs may take different forms. They all have to be incorporated either as an
Industrial and Provident Society, or a company. They normally have a committee
or board elected by members which oversees the management of the estate and
the running of the organisation.

What does a TMO DO?

4.10 Some TMOs decide to take over most of the day to day management of their area
whilst others concentrate on particular functions. Typically a TMO may be
responsible for:

- cleaning and caretaking

- collecting rents and chasing arrears
- day to day repairs and maintenance
- dealing with anti social behaviour
- employing staff to carry out these functions
- letting houses to new tenants
- major works
- ensuring tenants are informed and listened to
- managing and controlling the budget for management and maintenance
- services to leaseholders
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 - statutory consultation

4.11 Tenants do not have to undertake the tasks above themselves. They can employ
staff, use Council housing staff that may be seconded to the TMO or employ a
managing agent. A TMO will be paid by the Council for taking on the job of
managing houses. If a TMO takes on repairs it will need to pay its own repairs
team or other contractors to carryout those repairs. A TMO will be paid
Allowances. These will be calculated in accordance with statutory guidance.
These will be closely linked to what it costs the Council to provide the same
services.

4.12 Tenants may be interested in setting up a TMO because they want to see their
homes and the area where they live improved. Sometimes local communities feel
they can do things more effectively than a larger landlord. It can take two to three
years to set up a TMO, from the initial idea to taking over responsibility for
managing the area. The key stages and timescales for setting up a TMO are
detailed in Appendix 2 and are summarised below:

Right to Manage Process

4.13 There are 3 key stages in the Right to Manage process:

i) Pre feasibility or options study

ii) Feasibility or initial feasibility study
iii) Development or full feasibility study

i) Pre Feasibility

4.14 Before entering the Right to Manage process, help is usually available from
independent advice agencies which can be found from the Communities & Local
Government Approved Persons List, to ensure that the requirements of the
Regulations are met and help tenants serve a Right to Manage Notice on the
Council. This is usually achieved through an Options Study or, where there is a
strong established group, a Pre Feasibility Study. Consultation would need to take
place with the wider community to see if there was support for the Caia Park
Residents Panel to look at a TMO. A public meeting held on the estate would
need to be arranged and if there was support, tenants would examine it further.

Constitution

4.15 Once an interested group has been established they must adopt a constitution. To
be recognised, a TMO must have a constitution which meets the conditions set out
in the Right to Manage Regulations:

- the area to be covered must be specific

- any tenants may become a member of the organisation
- it must be made clear that the organisation will not discriminate on grounds of
race, sexuality, disability or religion
- the business of the organisation is decided and organised either through the
membership at general meetings or by a committee or board of directors
elected by the membership

4.16 The TMO must show that at least 20% of Council tenants in the area are members.
If these conditions are not met the Local Authority can refuse to accept a Right to
Manage Notice.

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4.17 Once a constitution is adopted there must be a decision made on the Right to
Manage. The decision must be made democratically. In order to find out if
members support this proposal there is a need to do one of three things:-

Vote on resolution at a General Meeting of the organisation

Carry out a confidential door to door survey
Carry out a ballot of members.

There is a need to show both that a majority of tenants (including leaseholders),

who are members of the organisation and take part in the poll, support the
proposal and that a majority of secure tenants, who are members and take part in
the poll, are in favour. However, it is good practice to ask all tenants (including
leaseholders) who live in the area whether they are in favour. If there is a vote in
favour, a copy of the Notice must be delivered to each household affected by the
ballot.

ii) Feasibility

4.18 Once a Right to Manage Notice has been served there is usually a feasibility study
carried out to ascertain the management options. This may involve appointing an
agency to conduct the feasibility study, looking at options for greater involvement
in more depth, choosing a preferred and viable option and carrying out a test of
opinion of Council tenants and leaseholders to find out whether they support the
idea. If the feasibility study shows that a TMO is feasible and there is a vote in
favour of a TMO by the majority of tenants who vote, a TMO development
programme begins.

iii) Development

4.19 There is a need to decide what sort of TMO is required and which functions are to
be managed. There is a need to negotiate a Management Agreement with the
Local Authority which must:

State the jobs that the TMO will undertake and which ones the Council will
continue to carry out
Set out how the TMO will carry out its jobs (policies and procedures)
Set out performance standards
Set out how the Council will monitor and support the TMO and what will
happen if things go wrong

4.20 The Council will then arrange a ballot of all Council tenants living in the area
asking whether or not tenants support the proposal for a TMO. In order to
proceed, there must be a positive vote by the majority of eligible voters (Council
tenants and Leaseholders). If tenants do not vote then this is counted as a no
vote. It is usually harder to achieve such a positive result compared to a stock
transfer ballot. If there is a positive vote the TMO can then enter into a
management agreement with the Council. The TMO will then appoint staff or
agents and take over management.

Funding for Setting up a TMO

4.21 Funding for the pre feasibility and feasibility stages is provided by the
Government. It is only in the development stage that Councils are asked to
contribute. The Local Authority makes a 25% contribution to the development
grant and 75% is funded from WAG.

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Advantages & Disadvantages of a TMO

4.22 Competency levels of the Board members abilities are also very important to any
TMO being set up and these should be assessed both on an individual and group
basis. These competencies need to be tested and training needs to be central to
the culture, not only in setting up but as an ongoing concern. There are
advantages and disadvantages in setting up a TMO. Advantages of TMOs
include:- local accountability; local control; tenant empowerment. Disadvantages
include:- Loss of economies of scale; increased overhead costs, which can lead
to higher costs; fragmentation of service provision. A TMO does not bring any
additional capital investment.

Arbitration

4.23 Setting up a TMO is a long and complex procedure. Where problems and
disputes arise at key points and cannot be overcome through negotiation, the
TMO or Council can seek arbitration. The Chartered Institute of Arbitrators have
set up a Procedure and a panel of arbitrators. This is not a free service. The
outcome of the arbitration is binding on both parties.

5. CONSULTATION

5.1 Officers of the Council met with Open Communities and some members of the
Caia Park Residents Panel on the 17 June 2009 to discuss their proposals. The
Residents Panel would like the Council to support their request for funding to
explore whether the tenants want a TMO.

5.2 The Residents Panel were updated on Wrexhams current position in looking at a
stock option appraisal. The Panel agreed to keep Officers of the Council updated
on progress. Open Communities have provided a letter summarising the right to
manage process. This is attached at Appendix 3.

5.3 Information on TMOs has also been provided to the Local Members for Caia Park
to keep them informed of Caia Park Residents Panels proposals. A meeting with
the Caia Park Local Members took place on the 19 June.

Officer Comments

5.4 If a TMO is established the potential impact on Council services is considerable

with up to 25% of the Council housing stock being managed outside of Council
services. This would not only impact on the Housing Service but would also affect
the support services within the Authority.

5.5 The Council is currently reviewing options to achieve WHQS through the Tenant
and Member Partnership, with financial consultants being employed to look at all
options available to the Authority. The proposal to develop a TMO, at this time, is
not helpful in developing a whole stock option which is the preferred route for
Officers.

6. SCRUTINY COMMITTEE COMMENTS

6.1 This item has not been reported to Scrutiny Committee.

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7. IMPLICATIONS

7.1 Policy Framework The Housing (Right to Manage) Regulations 1994 allow
tenants or residents organisations to set up TMOs.

7.2 Budget There would be budget implications if a TMO were set up which would
include the duplication of housing management costs and a contribution of 25%
towards the cost of the development grant. These costs would have to be funded
by the Housing Revenue Account.

7.3 Legal There would be significant resource implications for the Council and staff.

7.4 Staffing If a TMO was set up there would be implications for Council staff.

7.5 Equalities/Diversity The report at this stage does not present any equality or
diversity implications

BACKGROUND PAPERS LOCATION WEBSITE INFO

The Guide to the Right to Manage Communities and Local http://www.communities.g

February 2007 Government ov.uk/housing/housingma
nagementcare/tenantpart
icipationempowerment/ri
ghttomanage

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