DD2108 Funding for St Michael’s Centre Community Right to Build

Type of decision: 
Director's decision
Code: 
DD2108
Date signed: 
28 March 2017
Decision by: 
David Lunts, Executive Director Housing and Land and Interim CEO of OPDC

Executive summary

This Director Decision seeks approval to provide an additional £15,493 in grant funding to St Michael’s Centre, a youth club and registered charity based in Fulham, to cover an identified project funding shortfall.  The requested amount is in addition to the Community Right to Build grant of £54,000, which was previously awarded to St Michael’s Centre under DD 1374 through the Build Your Own Home – The London Way funding programme for the purpose of preparing a planning application for its community and housing development proposals up to the point of submission.

 

Decision

That the Executive Director of Housing and Land agrees to increase the grant allocation of £54,000 that was previously awarded to St Michael’s Centre under DD1374 through the Community Right to Build funding stream of the Build Your Own Home – The London Way funding programme by £15,493, bringing the total grant allocation for this project up to £69,493.

 

Part 1: Non-confidential facts and advice

Introduction and background

1.1    The Localism Act 2011 introduced a new procedure known as a Community Right to Build Order, through which communities could take control of delivering the development they want in their area.  To assist community groups to bring forward their own development proposals under Community Right to Build Orders, HM Government agreed to make available £20.5 million of national resource funding.  This would allow community-led developments to proceed without the need for a conventional planning application.   

1.2    On 27 June 2012, MD 1018 approved the Greater London Authority’s (GLA) proposal to the Department of Communities and Local Government (DCLG) to administer and operate a reasonable allocation of the aforementioned funding in London.  DCLG allocated £8 million to the GLA for the purpose of supporting proposals to bring forward Custom Build Housing and community-led development.  Subsequently, on 17 July 2012, the GLA launched its Build Your Own Home – The London Way funding prospectus, which was comprised of two funding streams: a Custom Build Housing capital funding pot of £5 million and a Community Right to Build revenue funding pot of £3 million.  In addition, MD 1018 delegated authority for these two funding streams to the Executive Director of Housing and Land.     

1.3    The GLA’s Community Right to Build funding stream was originally restricted to community groups seeking to develop a Community Right to Build Order up to the point of submission.  However, DCLG later extended the funding to community groups seeking to pursue the traditional planning application route.  

1.4    Successful applicants for this funding are eligible to receive grant (paid out in tranches) once each of four milestones has been achieved.  The four milestones cover the entire process a community organisation would need to undertake in order to apply for a Community Right to Build Order or a traditional planning application.  A funding payment is triggered for each of the following key milestones:
•    Milestone 1: Body corporate established;  
•    Milestone 2: Initial proposals developed, project eligibility established and outline feasibility study produced;
•    Milestone 3: Detailed proposals developed;
•    Milestone 4: Valid application for a Community Right to Build Order or traditional planning permission submitted.           

1.5    On 7 September 2015, DD 1374 allocated a grant of £54,000 to St Michael’s Centre (SMC), a youth club and registered charity based in Fulham in the London Borough of Kensington and Chelsea, under the Community Right to Build funding stream.  The original long-stop date for the project to complete was 31 March 2016, but given that GLA funding was only approved six months prior to this, consent was given to extend the long-stop date by one year to 31 March 2017.  While SMC is on track to achieve its Milestone 4 and draw down its final grant payment by this project long-stop date, it has identified a project funding shortfall of £15,493.  SMC’s proposal at the time of seeking its initial GLA grant was to refurbish its community centre, however, after undertaking site investigations and a feasibility study, it was later determined that it would be more beneficial to rebuild the centre; this led to an increase in the level of design work required, resulting in increased design costs and the funding shortfall for which grant is sought.  Given that SMC is a very small charitable organisation, it does not have sufficient financial resources to cover this funding gap itself.  Continuing with the project could have serious implications for the future of the charity and the continuation of their work in the area.  Therefore, it has requested that the GLA awards SMC an additional grant to cover this funding gap.  This will increase SMC’s total GLA grant allocation to £69,493. 

 

Objectives and expected outcomes

2.1    The purpose of the GLA’s Community Right to Build funding stream is to provide assistance to community-led groups interested in delivering community aspirations for development in their local area.  As agreed under DD 1374, SMC is in the process of drawing down the final tranche of its GLA grant of £54,000, in order to develop a traditional planning application.  SMC plans to redevelop its existing two-storey Victorian building into a day nursery for the local community; provide a revitalised and more appropriate leisure or teaching space for its existing youth club; as well as two new affordable homes and one new market home.  To date, SMC has drawn down £40,593 of this grant; £29,000 against Milestone 2 and £11,593 against Milestone 3.  No funding was attached to Milestone 1, given that SMC was already an incorporated body at the time it applied for GLA funding.  The remaining grant of £13,407 will be drawn down by SMC no later than 31 March 2017.      

2.2    The total cost to SMC of preparing and submitting a planning application for the project proposal outlined above, is £93,449.  Once the grant SMC was awarded under DD 1374 is deducted from this cost, there remains a total project funding shortfall of £39,449.  

2.3     Paragraphs 4.66 and 4.67 of the Build Your Own Home – The London Way funding prospectus stated that organisations would normally have to fund any additional costs from other resources and that no further funding would be made available in respect of additional costs.  However, the GLA takes the view that, exceptionally, it will provide additional funding to SMC and that it is justified in doing so given the circumstances of the case as set out in this decision and for the following reasons: 

2.3.1     SMC is only seeking an additional £15,493 in GLA grant to assist with this identified project funding gap and is meeting the rest of the £39,449 shortfall itself.  The GLA’s funding to SMC remains in line with the value for money eligibility criteria set out in the funding prospectus – in particular, that community groups should contribute at least 10% of the estimated costs of developing the proposal up to the point of submitting a Community Right to Build Order or planning application.  The remaining £23,956 cost (26% of the total project cost) will be met by SMC.  This is only possible as the architects, who remain highly confident that the project will achieve planning permission, have agreed to allow SMC to pay their fee after planning has been achieved through an overage agreement.  

2.3.2     Habitat for Humanity (HfH), appointed by SMC to manage the project, has confirmed that full project costs have now been incurred.  A breakdown of the full costs SMC will be drawing down grant against, accompanied by invoices evidencing incurred costs relating to the previously awarded grant of £54,000 and the additional grant of £15,493 sought, have already been provided to the GLA, in advance of the project long-stop date of 31 March 2017.  GLA officers have assessed the breakdown of costs and are satisfied that they are reasonable and all associated with the process of obtaining the planning permission.

2.4    As the Build Your Own Home – The London Way funding programme closed for bidding in January 2015, it is not possible to draw the grant requested from the Community Right to Build funding stream.  Instead, the Assistant Director – Policy, Programme and Services has agreed in principle, subject to obtaining this Director Decision, that this additional grant funding can be taken from the Housing and Land directorate’s operational budget.   
 

Equality comments

3.1    The likely potential equalities impacts of this decision have been considered with regard to the most recent iteration of the Mayor’s Equalities Framework; Equal Life Chances for All, agreed in June 2014 under MD 1349.  This decision will not materially alter the likely potential impacts of the previous decisions (MD 1018) on those with protected characteristics.  These decisions were made having regard to previous iterations of the Mayor’s Equalities Framework and implemented Mayoral strategies, notably those relating to housing, planning and economic development, which have themselves been subject to an equalities impact assessment.

 

Other considerations

a)    Key risks and issues

As with any funding programme there is a risk of insolvency, fraud or misappropriation.  This is mitigated by paying the funding in arrears following the achievement of each relevant milestone and against evidence of appropriate and incurred expenditure.  It should also be noted that the GLA has a well-established relationship with HfH, who has successfully managed a number of Community Right to Build projects through to completion.  Therefore, this risk is deemed to be minimal.    

b)    Links to Mayoral Strategies and Priorities

SMC’s proposal accords with the Mayor’s aspiration to see more community-led housing projects delivered in London, as stated in the Home for Londoners: Affordable Homes Programme 2016-21 Funding Guidance which was published on 23 November 2016.  Although only a modest number of homes are proposed to be delivered, SMC’s project will contribute to the Mayor’s long-term aim for half of all new homes to be affordable.   
 

Financial comments

5.1.    This decision requests approval for a grant funding of £15,493 under the Community Right to Build programme to St Michael’s Centre to cover the project funding shortfall.

5.2.    Community Right to Build funding for this financial year has already been fully allocated, hence, the above expenditure will be covered from Housing & Land’s Management & Consultancy budget and will be expended in 2016/17 financial year.
 

Planned delivery approach and next steps

Activity

Timeline

Approval of this DD

27 March 2017

Manual accrual of additional 2016-17 GLA grant to SMC

3 April 2017

Delivery End Date

31 March 2017

Project Closure:

31 March 2017

 


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