1 Joint Venture Principles in PracticeAlan Gough Watford Borough Council Gareth Lewis Watford Community Housing Trust

2 Joint Venture “A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance.” Wikipedia

3 Partnership “A partnership is an arrangement where parties, known as partners, agree to cooperate to advance their mutual interests.” Wikipedia

4 Initial Drivers Existing strategic relationshipRecognition of the political landscape Increasing homelessness and out of borough placements Need for immediate action

5 Why the J-V? Shared objectives to:Primarily to enhance the quantity of affordable housing Increase housing supply of all tenures Generate income to support core objectives Recognition of the potential contributions of each Formalise the principle of a long-term relationship Not project specific

6 Potential ContributionsPolitical and Board drive to achieve Adjacent assets producing a “marriage value” Funding through on-lending Development delivery skills Essential back-office support

7 Structure (1) Hours in darkened rooms with lawyers and tax accountantsProtect regulatory positions – use of subsidiaries Ensure parity of risk and reward Maximise tax advantages

8 Structure (2) Two Companies Hart Homes (Watford) Ltd (RentCo)Holds all rental property Holds shared ownership property Hart Homes (Watford) Development LLP (SaleLLP) Develops for market sale Develops on behalf of RentCo Why two companies?

9 Company Structure – Hart Homes (Watford) LtdWatford Borough Council Watford Community Housing Trust Clarendon Living Ltd Hart Homes (Watford) Limited

10 Structure – Hart Homes (Watford) Development LLPWatford Borough Council Watford Community Housing Trust Watford CommercialServices Ltd Clarendon Living Ltd Hart Homes (Watford) Development Limited Liability Partnership

11 Governance Partnership – equally shared risks and rewardsRentCo – 2 Directors from each SaleLLP – 2 Corporate Representatives from each Chair Rotates annually – no casting vote Council Cabinet and Clarendon Living Ltd Board have oversight

12 Why it works! Shared agenda Open and frank dialogueWillingness to work at it Mutual respect Honesty

13 Outputs First Council/Trust Board papers January 2016Companies registered January 2017 First project to site February 2017 40-bed Temporary Accommodation facility 36 flats for affordable rent

14 Outputs (cont.) Second project in design - 80 homes all tenuresShared trust enabled scheme design/tender/commencement at risk WBC able to trade commercially through WCS

15 Lessons Learnt Invest the time to work together on principles and detail Recognise the need (and cost!) of specialist advice – many pitfalls! Do not underestimate the time needed for set up – particularly bank accounts Robustly test the business case for the J-V Ensure consensus and equality of understanding Welcome challenge!

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