Le Coin Flats, Ann Street, St. Helier – sale to the Jersey Homes Trust

STATES OF JERSEY

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LE COIN FLATS, ANN STREET, ST.  HELIER: SALE

TO THE JERSEY HOMES TRUST

Lodged au Greffe on 17th February 2004 by the Housing Committee

STATES GREFFE

PROPOSITION

THE STATES are asked to decide whether they are of opinion

( a) to approve the sale of Le Coin Flats, Ann Street, St.  Helier to the Jersey Homes Trust for the

nominal sum of £10, and otherwise on such terms and conditions as may be agreed by the Finance and Economics Committee, for the redevelopment of 7 x one-bedroomed, 14 x 2- bedroomed and 2 x 3-bedroomed flats, with associated parking and amenity facilities;

(b ) to authorise the Attorney General and the Greffier of the States to pass the necessary contracts on

behalf of the Public of the Island.

HOUSING COMMITTEE

Notes: 1.  The Environment and Public Services Committee granted planning permission for the scheme on

28th March 2003.

2 . T he Finance and Economics Committee supports the sale of the freehold of the Le Coin Flats to the

Jersey Homes Trust for the nominal sum of £10. The Committee agrees to provide a maximum sum of £100,000 development subsidy, to be made available from the Housing Development Fund. The Committee also recognises the opportunity cost of not achieving a capital receipt for the land, however, as the site was acquired for social housing development purposes, its alternative market value would not be realised. The Committee expects anticipated growth in rent rebate payments, resulting from the proposal to be met from within the Housing Committee's existing cash limits, and notes that the transfer is in accordance with the Housing Committee's strategy to encourage, where appropriate, the private sector to engage in the provision of social housing.

REPORT

Introduction

The current site contains an early 1960s building comprising 16 x 2-bedroomed flats on 4 storeys. The building is of typical construction for the time; single glazing, cold bridges, timber flat roof, nature of construction, age and dilapidation all of which contribute to a building with serious problems. Outbuildings include a number of single- storey tenant sheds and limited parking and amenity facilities.

The estate was identified a number of years ago as being suitable for redevelopment by a housing trust given the lack of alternative public funding. However, it was agreed that if these sites were to be transferred, they would be with vacant possession. All of the tenants have been re-housed in alternative social rented accommodation.

The Scheme

The Housing Committee commissioned Axis Mason, Architects to prepare a feasibility study for the redevelopment of the site. The approved scheme comprises a new 4-storey building with integral parking and improved amenity facilities. The accommodation will include 7 x one-bedroomed, 14 x 2-bedroomed and 2 x 3- bedroomed flats.

The scheme has been designed to allow for possible further expansion along Ann Street. The Jersey Homes Trust is currently undertaking a development of social rented accommodation known as Clement Court, further along Ann Street.

Jersey Homes Trust

The Jersey Homes Trust is an association incorporated under the provisions of the Loi (1862) sur les teneures en fidéicommis et l'incorporation d'associations for the purpose of providing residential accommodation to persons in need.

The Trust is now a major provider of social rented accommodation in the Island, with recent housing completions at – Victoria Place on the Waterfront, Parkside in Pierson Road, and John Wesley Apartments in Cannon Street.

The contract of sale will include previously agreed clauses which restrict the future use of the site for social rented accommodation and place restrictions upon the onward sale of the property.

Funding

The funding for this project will follow precedent. The Jersey Homes Trust will borrow the capital funding from the private sector, to be repaid over a maximum period of 25 years, subject to the necessary Letters of Comfort being issued by the Finance and Economics and Housing Committees. An interest subsidy will be paid by the States to the Trust on any interest paid above 4% over the period of the loan.

The intention is to sell for the nominal sum of £10, as the anticipated rental income stream will not cover the full cost of the development. A copy of a Debt Redemption Model is attached to this proposition, which gives an indication of the costs of the project. It is for guidance purposes only, as final costs will not be known until detailed design has been completed and tenders received. The detailed financial arrangements are subject to the final approval of the Finance and Economics Committee. The Housing Development Fund will fund any interest and capital development subsidies.

Conclusion

It will be evident to Members that States' capital funding for this and other similar housing developments is not readily available, given the enormous demands on the public purse. However, the Committee needs to ensure that the social rented housing stock is properly maintained and where necessary improved. The Housing Committee has a unique opportunity to achieve this by using private sector funding. Housing Trusts have been very successful in providing social rented accommodation in the recent years and, they continue to be committed to carrying this policy forward, with the support of the Housing Committee on other urban development sites and those sites rezoned in the 2002 Island Plan.

The proposition, if approved, will not have any manpower implications for the Committee, but will affect its revenue budget with regard to the payment of rebate on some, or all of the new units, estimated to be in the sum of £103,084 per annum.

APPENDIX

Name of Scheme : Le Coin Rental Projections

Capital Investment

Expenses as a Percentage of Parameters Rentals

Agents Fees 5.00% Service Charges 3.00% Maintenance 7.00% Voids 3.00% Total 18.00%

Note:

The Debt Redemption Model is an indication of the Trust's ability to repay the loan for the development where the interest rate payable by the Trust is capped at 4%. The Model assumes an average uplift in rents of 3.5% per annum over the period. The States through the Housing Development Fund meets the interest charges above 4% and the Model illustrates the cost to the States if the effective borrowing rate is 6% over the period.