Item 5A Housing Group Strategic Business Plan

Richard Connolly, Managing Director of the Oxford City Housing Limited (OCHL), introduced a report in which the Shareholder was asked to review and endorse the strategic business plan, and to agree schedules for debt repayment and dividends.

A number of threats and challenges were identified, including the continuing uncertainty regarding Brexit and the decision of central government to raise interest rates on borrowing from the PWLB by 1%

Councillor Munkonge joined the meeting at this point.

It was stressed that the strategic plan would need to remain fluid due to the number of external factors which could influence the number of houses which could be built. Planning was cited as one uncertainty (both to the upside and downside).

Nigel Kennedy, Oxford City Council Head of Finance, addressed the Panel regarding the impact of the HRA’s borrowing to the Council and the projected repayment and dividend schedule. It was reiterated that the Council had the ability not to progress with further investment beyond the term of the Medium Term Financial Plan.

The Panel discussed the options for alternative borrowing.

The Panel discussed corporate branding expenses. The costs were explained as supporting the work of the company in a number of different ways, such as maximising revenue potential through the use of CGI imaging for marketing, to support the purchase of land for the later years, to convey what the company’s purpose, and to help internal staff recognise the division between the company and the Council.

Discussion was held by the Panel regarding means of raising the level of energy efficiency in the homes delivered.

Discussion was held over the prevention of slippage in the programme, particularly through planning. A service level agreement with the Council’s Planning department had been agreed, and through the experienced garnered in planning to date a positive relationship had been fostered between OCHL and the Planning department. A significant amount of work was being done in the pre, pre-application phase of developments to ensure that not too many steps were being taken prior to discovering a planning issue in need of resolution, allowing much less work to require redesign.

Item 5b  Quarterly Financial Performance Report

David Watt, Strategic Finance Manager OCHL, introduced a report on OCHL’s financial and other performance. It was noted that there was little to report under operations because only 35 properties were currently in the hands of OCHL, but this would grow as the stock grew. KPIs were in the process of being developed around this area of performance management. The changes made since the previous iteration of the strategic plan were highlighted in terms of the schemes, the number of houses, and the tenure types to be delivered. Financially, how the rate of interest used in the strategic plan was calculated and covenants were addressed.

Scrutiny was provided over the level of build quality in that of the 35 properties realised to date, there had been a complaint. It was agreed that more attention would be given to ensuring the build quality was as high as expected.

Item 5c Addendum to Shareholder Agreement

Lindsay Cane, Company Secretary to OCHL introduced a report recommending that the Shareholder make an addendum to its Shareholder Agreement. The point of the addendum was to make explicit the recognition that by working closely with the local authority different considerations might be brought to bear which would mean returns might not be as high as if they were to run along purely commercial lines.  The Panel supported the recommendation.

Items 5d and 5e Appointment of up to Three Non-Executive Directors and a Managing Director

Lindsay Cane, Company Secretary to OCHL introduced two further reports recommending that the Shareholder appoint up to three non-executive directors, and a managing director in light of the decision of the current managing director not to continue beyond his current contract. Both sets of roles had been scoped and were being advertised. It was hoped that interviews would take place at the end of November or early December for non-executive directors and mid-December for the recruitment of the managing director. One  particular issue raised was in regards to the makeup of those of the Shareholder group who would be involved in recruitment, with a previous recommendation being that it should be the Chair of the Shareholder and Joint Venture Group and one other. Coordinating diaries around the election and Christmas period was proving difficult and it was suggested that a revised make up of up to two members of the Shareholder Group was preferable.

It was AGREED that the following recommendation to the Shareholder and Joint Venture Group meeting be made:

Recommendation 1: That up to two members of the Shareholder and Joint Venture Group be nominated to participate in the recruitment and selection process for i) the recruitment of non-executive directors, and ii) the recruitment of a managing director. Involvement to include membership of the interview panel.[1]