Part 1
REPORT OF THE STRATEGIC DIRECTOR OF HOUSING AND PLANNING
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TO THE LEAD MEMBER FOR HOUSING
ON 17th November 2005
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TITLE: Progress report on Tenant Management Organisation arrangements in the
city
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RECOMMENDATIONS:
That the Lead Member for Housing
1. Notes the contents of the report
2. Approves the use of a new Modular Management Agreement (MMA)
3. Approves the suggested arrangements for the future management of Tenant
Management Organisations (TMOs).
4. Supports an exception to standing orders under part 4 Section 7.2 of the council’s
constitution for the continued employment of a Managing Agent – (CDs, client
services) to provide housing management services to Appletree Court.
5. Approve in principal planned repair costs of up to £50,000 in the financial year
2005-2006.
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EXECUTIVE SUMMARY:
Support for the TMOs is essentially a housing management function. However when
the management agreement with NPHL was drawn up no provision was made for
this. The Housing Strategy and Renewal team have been supporting and managing
the TMOs in the interim. This arrangement is likely to continue up until 2006-2007 by
which time it is intended that a new regeneration focussed ALMO will be launched
and will manage the stock within Central Salford. At that point in time new
management arrangements will need to be in place.
In addition to the above, in August 2005 ODPM produced new guidelines for TMOs
the main part of which was concerned with a need to develop new Modular
Management Agreements (MMAs). The guidance recommends that this, new MMA,
is used by all landlords, including new and existing TMOs.
In headline, the key changes within the guidance are
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The MMA has been updated to reflect practical experience and new legislation
The MMA is much shorter and clearer with detailed procedures moved to
schedules (which replace the former appendices).
Statutory guidance on the contents of the schedules is set out in separate
guidance
The revised MMA allows TMOs and councils to agree arrangements for council
staff to work for the TMO for a fixed period/fee
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The revised MMA emphasises the importance of effective TMO support and
development and effective liaison with the council.
The revised MMA clarifies leaseholder management responsibilities in a new
chapter.
The revised MMA strengthens TMOs as organisations. TMOs can adapt and use
a new Model Code of Governance to help them operate as effective, democratic
and accountable organisations.
The revised MMA includes an updated, simplified arbitration procedure.
The revised MMA strengthens measures for dealing with poor TMO performance.
Where there is a serious breach, the MMA enables the council to end the
agreement.
The guidance on Calculating Allowances and Start-up costs has been simplified
and made easier to use.
No timescales, to implement the new arrangements, have been prescribed by
ODPM. However, it would seem timely to develop the new MMAs with our TMOs,
and have them in place no later that April 2007. This will align with our investment
strategy and this date will allow a realistic period to discuss and negotiate changes
with the current TMOs
ATC was formerly managed by a TMO, this agreement ended in February 2005.
Since that date the property has been managed on behalf of the Council by CDs
Client Services, which is part of the Plus Housing Group Limited, one of the largest
regional housing association groups.
Prior to the set up and launch of the regeneration focussed ALMO we need to
continue with management arrangements for Appletree Court.
CDs’ performance has been more than satisfactory. In these circumstances it is
suggested that we continue to employ this organisation until the long term
management of Appletree is finalised.
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BACKGROUND DOCUMENTS:
1 Example MMA
2 MMA guidance note from ODPM
3 Housing Option Information Leaflets and booklets
If required, available from contact officer, Kevin Keech 793 2008
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ASSESSMENT OF RISK: Medium
Prior to February 2005 Housing Services had a Management Agreement with all
three TMOs: Windsor and Albion; Appletree Court and New Barracks. These were
agreed several years ago.
Problems with the service provided by the Appletree TMO led to the agreement being
reviewed and terminated in February 2005.
ODPM have now produced a new MMA. It is a requirement that groups established
as a result of the Right to Manage legislation use the new MMA. This applies to
Windsor and Albion and any new groups.
TMOs established prior to 1994 are not obliged to use the new MMA but are strongly
urged to do so. This applies to New Barracks
If we implement the new MMA arrangements across the city, this will mitigate our
risks.
CDs are an experienced and professional provider of housing services and well
placed to fulfil the council’s responsibilities. As a registered social landlord CDs are
regulated and monitored by the Housing Corporation and the Housing Inspectorate.
They have a strong track record in housing management. In addition, they have a
history of working with tenants groups and TMOs.
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SOURCE OF FUNDING:
Group Accountant Joanne Hardman has commented: The allowances paid to the
TMOs are funded through both the HRA and the Housing Repairs Account.
Traditionally, TMO allowances have been uplifted by the same % as the Housing
Subsidy payment to the City Council. The impact of the new allowances will need to
be built into budget assumptions for both the HRA and Housing Repairs Account as
soon as possible.
We will ensure that the accountancy team continue to be involved through the
implementation period.
LEGAL IMPLICATIONS:
One of the reasons ODPM has produced the new MMA is that changes in primary
legislation mean that certain arrangements are no longer lawful. These aspects of the
agreement must be changed and the recommendation from ODPM is that the new
MMA is adopted as a whole.
Solicitor Paul Scott has been asked to comment on this report. We will ensure that
the Customer and Support Services continue to be involved through the
implementation period.
Advice on procurement has been sought from Colette Hilton and Terry Harrison in
the Financial Support Group. Financial Support Group have expressed concern
about an on going rolling contract that would amount to £50,000 in the first year and
possibly more after that. They could countenance a proposal to negotiate a contract
for six months (which would take us beyond the conclusion of the Pendleton master
planning) and tender after that when the situation is more clear.
COMMUNICATIONS IMPLICATIONS
It is unlikely that the implementation of a new MMA will be of general interest to
customers, partners or to the general public. However failure to implement correct
procedures and to communicate them to interested parties may produce adverse
publicity. We will ensure that this is considered throughout the implementation period.
PROPERTY: No.
HUMAN RESOURCES: No
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CONTACT OFFICER:
Kevin Keech
Tel 0161-793-2008
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WARD(S) TO WHICH REPORT RELATE(S):
All Wards
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KEY COUNCIL POLICIES
Housing Strategy Statement 2004-2006
Housing Stock Options Appraisal – May 2005
HRA Business Plan 2005 – 2035
Tenants Compact 2000
DETAILS
1. Background
1.1 support for the TMOs is essentially a housing management function. However
when the management agreement with NPHL was drawn up no provision was
made for this. The Housing Strategy and Renewal team have been supporting
and managing the TMOs in the interim
1.2 Prior to February 2005 Salford had a Management Agreement with all three
TMOs: Windsor and Albion; Appletree Court and New Barracks. The
management agreements with these groups were developed several years ago.
1.3 In August 2005 ODPM produced new guidelines for TMOs the main part of
which was concerned with a need to develop new Modular Management
Agreements (MMAs). The guidance recommends that this, new MMA, is used
by all landlords, including new and existing TMOs
2. The New Modular Management Agreement (MMA)
2.1
In order to delegate management responsibilities the Council is required to
seek permission from ODPM, known as Section 27 approval.
2.2
For section 27 approval, landlords need to have MMAs in place. ODPM have
reviewed the process and have produced a new, more robust, MMA for use
with TMOs. ODPM published new MMA guidance in August of this year and
strongly recommended that all TMOs and Landlords adopt this.
2.3
The MMA regime is not new, it was first introduced in 1994. The reviewed MMA
now reflects current best practice and learning from that date. The new MMA
also takes into account changes in primary legislation
2.4
The main changes to the MMA and the guidance are concerned with
strengthening the governance and effectiveness of the TMOs and facilitating a
more productive relationship between the TMO and the Council. They are:

The MMA has been updated to reflect practical experience and new
legislation on the allocation of housing, leaseholder management, best
value, equal opportunities etc. It also takes on board new requirements for
dealing with anti-social behaviour in relation to housing management.

The MMA is much shorter and clearer with detailed procedures moved to
schedules (which replace the former appendices). This makes the MMA
more flexible by allowing for local variations in policies and procedures to be
negotiated and agreed in schedules. This should make it easier to update
management agreements when procedures and arrangements need to be
changed.

Statutory guidance on the contents of the schedules is set out in separate
guidance ('Guidance on Schedules') which accompanies the revised MMA.
Councils and TMOs are expected to negotiate and agree their schedules in
accordance with the statutory guidance and incorporate them into their own
agreements.

The revised MMA allows TMOs and councils to agree arrangements for
council staff to work for the TMO for a fixed period as a way to build positive
relationships and help TMOs through transition when they first take over
management. A guidance note explains how to introduce and manage this,
based on good practice.

The revised MMA emphasises the importance of effective TMO support and
development and effective liaison with the council. Regular monitoring
through arrangements agreed by both parties should improve
communication and provide better support for the TMO after it goes live.
Monitoring extends to all aspects of finance and performance indicators and
reflects best value principles, with an emphasis on on-going TMO training.
Councils have a role in providing access to in-house training and a training
report must be presented at the TMO's AGM.

The revised MMA clarifies leaseholder management responsibilities in a
new chapter. This should remove present confusion by separating out
leaseholder and tenant issues and simplify negotiations.

The revised MMA strengthens TMOs as organisations. TMOs can adapt
and use a new Model Code of Governance to help them operate as
effective, democratic and accountable organisations. TMOs are expected to
publish their own Code of Governance, based on the Model, together with a
new Code of Confidentiality.

The revised MMA includes an updated, simplified arbitration procedure. It is
also open to either party to request the other to explore whether the dispute
could be settled by mediation or some other form of alternative dispute
resolution.

The revised MMA strengthens measures for dealing with poor TMO
performance. It enables the TMO, with the council's support, to implement
an improvement plan before a problem becomes a more serious breach.
The council should only pursue breach action if the TMO fails to take action
or performance doesn't improve.

Where there is a serious breach, the MMA enables the council to end the
agreement. However, the revised MMA provides a new option for dealing
with serious problems involving a TMO's financial management,
organisation or governance. This enables the council to intervene
temporarily to provide additional support and work with the TMO to remedy
serious problems rather than simply end the agreement.

The guidance on Calculating Allowances and Start-up costs has been
simplified and made easier to use. The basis for calculating allowances has
not changed but the allowance the TMO Committee receives for its training,
communications and administrative support has been uplifted and changed
to flat rate of £5,000 per TMO, plus £10 per property. This should ensure
more equitable treatment for all TMOs.
2.5 Details of the changes and a summary of each chapter of the revised MMA are
set out in the background documents.
3. Appletree Court
3.1 Problems with the service provided by Appletree TMO led to the agreement
being reviewed and terminated in February 2005.
3.2 In December 2004 Lead Member approved the appointment of CDs client
services as the council’s managing agent for a period to March 2006.
3.3 The appointment of CDs to manage Appletreee court was for a period pending
the conclusion of the stock options study and the Pendleton master planning
exercise.
3.4 The stock options study has now been signed off by GONW. The outcome of
the master planning is expected to be concluded in August 2006.
3.5 CDs’ performance has been more than satisfactory. In these
circumstances it is felt that the most appropriate course is to continue to
employ CDs as managing agents until other proposals for the long term
management of the block are finalized .
3.6 Therefore it is proposed that officers are authorised to negotiate a
rolling contract with CDs which will provide maximum stability within a
changing context but also allows for the flexibility to address the
outcomes of the Housing Options Study and the Pendleton master
planning.
3.7 In a six month period management costs would be approximately
£50,000.
3.8 One of the reasons the Council reviewed the management services
provided by the TMO to Appletree Court was a concern as to the level
and standard of repairs service provided by the TMO. Consequently a
repairs audit was undertaken.
3.9 This audit identified a number of problems. Some jobs had been done
incorrectly to such an extent that they presented a potential hazard,
others had not been done to the required standard, whilst an under
spend by the TMO had resulted in the general appearance of the
property falling below standards.
3.10 Any work necessary to ensure the health and safety of tenants was
carried out immediately. Other urgent work has been remedied through
the day to day repairs budget.
3.11 This has meant that the expenditure on day to day repairs has
increased. The most cost effective course of action would be to identify
an amount in the 2006-7 capital works budget to bring the block up to a
reasonable standard. It is estimated that a figure of no more than
£50,000 will be sufficient to address the works required.
4. Consultation With TMOs
3.1 The Options Development Team have been consulting with the current TMOs on
the new regime and the potential impacts. Both current TMOs have agreed to
adopt the new MMAs and an implementation plan is being developed with them.
This will involve detailed discussions and negotiations. Therefore, the timetable
for the implementation of the new agreement needs to be realistic.
3.2 ODPM have not prescribed a timescale to implement the new MMA
arrangements. However, it would seem timely to develop the new MMAs with our
TMOs, and have them in place no later that April 2007. This will align with our
investment strategy and this date will allow a realistic period to discuss and
negotiate changes with the current TMOs
4.1 Future Management Arrangements of TMOs
3.3 Both of the current TMOs are located in central Salford. The proposal for these
two TMOS are that they fit within a Regeneration focused ALMO. Therefore,
future support arrangements will need to be developed in this context.
4.2 Monitoring and Support Arrangements of TMOs
5.1 At present the TMOs provide monitoring information to officers within the council
who also provide support and liaison with the TMOs.
5.2 Support for the TMOs is essentially a housing management function. Therefore
the new organisation(s), as determined by our investment strategy, will in the
future manage and support the TMOs. .
5.3 The current arrangements, i.e. Housing Services, management support and
monitoring will continue until the establishment of the regeneration ALMO
6. Recommendations
6.1 That we develop an implementation plan to introduce the new arrangements,
including the new MMAs with both Windsor and Albion and New Barracks no
later than April 2007. This will need to be reflected within the Directorate Service
Plan.
6.2 That, the new organisation(s), as determined by our investment strategy, will
manage and support the current and new TMOs.
6.3 The new organisation developed in Central Salford will have such arrangements
built into the future Management Agreement.
6.4 That cds be appointed on a six month rolling contract until the establishment of a
regeneration focused ALMO. The cost of this contract for a six month period will
be approximately £50,000.66.That an amount of £50,000 be identified in the
2006-7 capital works budget to bring Appletree Court up to a reasonable
standard.
Report Prepared By K Keech - Principal Officer Options Delivery
Report Review by P Longshaw Options Delivery manager