Communal Aerial Upgrade Consultation - Norwich City Council

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12. In line with the Government policy of rent restructuring it is proposed that any new contract and costs result in a specific service charge to dwellings which are connected to a communal system and that the cost is no longer pooled across all tenants. This charge would be eligible for housing benefit. Options 1 Integrated Reception System (IRS) Capital Budget Option (outright purchase) 13. Based on an estimated price of £194 per home outright purchase cost of an IRS system would be £1,922,500 (note this cost includes contractors overheads, project management costs etc). An annual maintenance agreement would cost approx £118,000. The same system but including Sky+ would be £2,170,000 (again this cost includes contractors overheads, project management costs etc), with the annual maintenance agreement costing £138,600. The works could be phased over more than two years, giving an annual budget of approximately £1 million per annum depending on which option is adopted. This would have to be found from the existing Housing Investment Capital budget, at the expense of an existing programme, as no further funds are available. 14. Tenants would not be liable for installation costs but would face a specific weekly service charge for maintenance of between £0.23 and £0.27 depending on the option chosen. Leaseholders and freeholders would be liable for the one off installation cost and an annual maintenance fee. Option 2 Head End Upgrade 15. Head End upgrades are cheaper and at £50 per home would cost £495,000, or close to £250,000 per year over two years. This is a more affordable option. A contingency budget of £50,000 a year would also be required for any additional wiring upgrades. 16. The option offered by NTL to upgrade the head end on a rolling programme would cost nothing, but would take up to 5 years to complete as upgrades will only take place as systems fail. There would be an undoubted increase in charges for tenants and leaseholders with ntl currently pressing for an annual increase of almost 30% on current charges.
17. Table 1 - Outright purchase potential charges Option Total cost Cost per dwelling Maintenance Annual Cost per home Sky £1,922,500 £194 £12 £0.23 Sky + £2,170,000 £220 £14 £0.27 Head end upgrade ntl upgrade Estimated £211,560 £ 495,000 £50 0 0 Option 3 Leasing an Integrated Reception System. £21.00 £0.41 Maintenance Weekly cost per home 18. The alternative to using capital to procure the works is through a lease agreement where the cost of the upgrade work is paid for by the service provider who then leases the service back to the Council. With most major installers strategic partnerships can be entered into over a period of 10 years or longer. In this way the capital cost is met by the service provider and the IRS service is leased. 19. The costs and charges of leasing are illustrated below. This charge would be recovered from leaseholders in their service charge and set up as a weekly service charge for tenants. As previously noted this weekly service charge would be covered by housing benefit, which will mean that in adopting this option we will not be increasing the financial burden on those tenants on benefit. Companies are reluctant to offer a lease option for a head end upgrade that also includes maintenance of the existing wiring and fittings. 20. Table 2-Leasing option potential charges Option Total cost Annual Cost per home Weekly Cost per home Sky 10 years £460,000 £47.00 £0.90 Sky 20 years £305,000 £31.00 £0.60 Sky + 10 years £520,800 £53.00 £1.00 Sky +20 years £347,200 £35.00 £0.68 21. Another financial consideration is whatever system is adopted, unless an extension of the existing contract is negotiated, the Council will have to buy the existing system back from NTL. A price has not been given, but is unlikely to exceed £20,000.
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Communal Aerial Upgrade Consultation - Norwich City Council

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