HFG Estate Company Limited – AGM March 2009
HARROW FIELDS GARDENS ESTATE COMPANY LIMITED
ANNUAL GENERAL MEETING
(At ORLEY FARM SCHOOL, SOUTH HILL AVENUE, HARROW)
SUNDAY MARCH 8th 2009 AT 3:00 PM
DIRECTORS REPORT
TABLE OF CONTENTS
1 HFG ESTATE COMPANY FINANCES 2
2 UPDATE 2
2.1 Overview 2
2.1.1 Delayed Progress 2
2.1.2 Report Contents 2
2.2 Tennis Court 3
2.2.1 Shareholder Meeting held on July 13th 2008 3
2.2.2 Current Information Available 4
2.2.3 Directors’ Recommendation 5
2.3 Landscaping and Controlled Waste 6
2.4 Clarification of HFGEC Legal Issues 6
2.5 Managing Agents 7
2.6 Planning Application 7
2.7 Conservation Area Restrictions vs Covenants 7
2.8 Water Utilities Issues 7
2.8.1 Sewer Lining 8
2.8.2 Flooding 8
2.8.3 Leak at 30 HFG 8
2.9 Speed Humps 8
2.10 Directors’ Indemnity Insurance 9
2.11 Gardening Duties 9
2.12 Repair of Fence along Green Lane Boundary 9
2.13 Tree Maintenance 9
2.14 Private Functions on Amenity Areas 9
2.15 Estate Security 9
2.15.1 CCTV 9
2.15.2 Neighbourhood Watch 9
2.16 General Maintenance 9
2.17 Support for HFGEC Directors 10
3 EXPENDITURE PROPOSALS FOR 2009/10 10
3.1 AGM Process 10
3.1.1 Directors’ Proposals 10
3.1.2 Attendance by Shareholders Only 10
3.2 Summary 10
3.3 Maintenance Fee for 2009/10 £700 (per house) 11
3.4 Other Expenditure 11
3.4.1 Tennis Court: £18,000 11
3.4.2 Landscaping: £0 11
3.4.3 Annual Fun Day £0 11
3.4.4 Skips for Easter £0 11
3.4.5 Borders along Green Lane & JLS Boundaries: £0 12
3.4.6 CCTV Security System: £0 12
3.4.7 Managing Agents £0 12
1 HFG ESTATE COMPANY FINANCES
These will be produced and circulated separately by Philip Brand (Company Secretary) in advance of the AGM for presentation and explanation at the meeting.
2 UPDATE
2.1 Overview
2.1.1 Delayed Progress
In each of the last three years, HFGEC has been faced with extraordinary matters which left us open to potential high maintenance costs. Specifically, these were:
2006: Potential sewer collapse under John Lyon Playing Fields
· This could have costs us as much as £25k according to Thames Water contractors, ClearAway.
· The subsequent investigation revealed that the blockage was due to tree roots. These were cleared and then the sewer was lined along the damaged stretch
2007: Section 59 Notice to remove topsoil
· We were faced with a bill in excess of £20k to remove the offending topsoil form the newly “landscaped” area after receipt of formal notice from the Environment Agency.
· We subsequently appealed this in a drawn out case and no longer have to remove the material.
· This issue has yet to be resolved
2008: Tennis Court
· As costs escalated, we were faced with costs in excess of £25k to repair with no long term guarantees.
· This issue has yet to be resolved
HFGEC’s policy of keeping annual maintenance fees as low as possible, as supported and directed by the shareholders, have meant that many initiatives have been postponed until the actual costs of the above became known and decisions were taken accordingly.
Whether these are a series of unfortunate incidents or a reflection of the age of the estate is difficult to determine. However, the current levels of annual maintenance fee together with the relatively low reserve fund of £6k mean that we will continue to postpone lower priority projects whenever an unforeseen but potentially high cost maintenance requirement is identified.
2.1.2 Report Contents
The Directors have gone to considerable lengths to provide a report that sets down as much relevant detail as possible so that shareholders are fully informed of both general progress and current issues prior to the AGM.
The aim is not only to ensure attendees arrive fully briefed at the AGM but also to give shareholders the opportunity to provide feedback to the Directors prior to the meeting whether additional agenda items or alternative, independently costed, solutions to the issues confronting HFGEC.
This year’s report is longer than usual because it contains details on the sensitive area of our tennis court as well as an update on the various problems we have experienced with the Water Utility Companies.
2.2 Tennis Court
2.2.1 Shareholder Meeting held on July 13th 2008
Substantial work was involved last year in collating estimated costs for the various options open to HFGEC. This culminated in the circulation of an update report and a shareholder meeting where views were sought on the three identified options:
· Remove
· Repair
· Rebuild
The minutes of that meeting are available upon request to Steve Tubby (07802 266356 or ) and progress on the agreed actions since that date is reported below.
2.2.1.1 Legality of Removal of Tennis Court
· A second opinion from Thomas Eggar LLP has reconfirmed that HFGEC would be within its rights to remove the tennis court provided that the resulting landscaping is in keeping with the general appearance of the Estate.
· Therefore the option to remove the court must be considered at the AGM
2.2.1.2 Voting on Options Presented
· This was equally split, at ten votes each, between the repair and the remove options, once proxy votes were taken into account (see minutes of meeting).
· Four shareholders voted to postpone any decision and leave the tennis court unused so the costs could be spread over a longer period.
· Nobody voted to rebuild the court so that the underlying structural problems could be addressed because the costs were viewed as unacceptably high.
2.2.1.3 Insurance against Injuries
· It has not been possible to insure against injuries that could occur on a tennis court already designated as unsafe by the LTA.
2.2.1.4 Shareholders Indemnification of Directors
· Preliminary discussions resulted in this line of enquiry being dropped.
· It is extremely unlikely that shareholders will take joint and several legal and financial responsibilities for any claims arising out of serious accidents on the tennis court. Neither can the Directors delegate legal responsibilities that come with their appointment.
2.2.1.5 Voluntary Additional Contributions by Shareholders
· At the July meeting, some shareholders felt strongly that the tennis court should be retained as a feature or community amenity or because they wanted to utilise it on a regularly. They suggested that they might be willing to make additional voluntary contributions if it would influence the shareholder voting
· There has been no progress on this issue, although we may have an update to present at the AGM if the parties notify the Directors of progress prior to the meeting.
2.2.1.6 Outsourcing
· The Directors explained that the work and subject matter knowledge required for the tennis court meant that they were proposing to utilise external expertise to manage further detailed estimations on the options available to us and the subsequently selected implementation.
· The Directors were asked to make sure that a selection process was undertaken to ensure that any company selected for the tennis court project would also prove adequate to take over as Managing Agents for day to day responsibilities at HFG should the shareholders agree at the next AGM.
· After a detailed review of potential Managing Agents, it was decided to approach Wilson Hawkins to take over the finalisation of costs. They also found it difficult to progress.
· After their initial work, Wilson Hawkins have advised strongly against the basic repair options and that the quotes received for repair are subject to further analysis of the court structure and composition, i.e. costs may increase.
2.2.2 Current Information Available
At time of writing, we are still seeking clarification on several points from Wilson Hawkins. However, while their costs to date are broadly in line with what was reported back in July last year, the repair costs have come down while removal costs have increased:
· Remove £10k to £23k
Final costs will depend upon the agreed approach & volume of “fill” material to be removed which won’t be known until initial excavation begins).
The low cost estimate is from the gardener who proposes to simply cover the court with topsoil.
· Repair (basic) £17k to £30k
3 suppliers have provided similar costs for simply making good the uneven areas and removing cracks. None are willing to proceed without a full resurface.
The variation is because we have had differing advice and costs for the root barrier (a concrete barrier 1 meter deep and 30cm wide) and drainage channels (see below).
Several suppliers have refused to quote given the existing location and structural issues.
· Repair (comprehensive) £40k to £50k
One supplier has also further quoted for stabilising those areas that subsided (at the back and one side of the court) by removing the top 35cm and replacing with a stronger foundation. They will the resurface the whole court.
It still does not address the identified risk of subsidence in the other areas of the court nor offer the guarantees against further slippage offered by the full rebuild option. It will provide more comfort than the basic repair though.
· Rebuild £85k
The LTA consultant estimated the above cost for a full rebuild with 3 “geotextile” layers in the foundations. This would reportedly keep the court from subsiding even if there was further movement on the underlying land.
All the above estimates contain an allowance (10%) for project management and VAT.
There are a number of further issues to be considered:
2.2.2.1 Supplier Guarantees
As originally advised, only the full rebuild will come with any level of guarantee against further slippage or movement.
2.2.2.2 Ongoing Annual Tennis Court Maintenance Costs of £150 p.a.
Given the advice that ongoing subsidence is almost inevitable with the current structure, we must make provisions to collect a tennis court maintenance fee each year in order to avoid another period of closure or a large one off charge to each house.
Based on a prudent four year full repair cycle with occasional minor repairs in between, the annual household contribution towards a further repair would be £150 as this would provide around £20k every 4 years.
It is not anticipated that we will need to repeat work on the edging kerbs or drainage channels or root barrier.
2.2.2.3 Impact of Tennis Court on Property Values
Contrary to our initial assumptions, we have been advised that the presence or absence of a tennis court does not materially impact the value of the properties on the estate. This was the response from both Wilson Hawkins and Stephen J Woodward.
2.2.2.4 Drainage Channels
Wilson Hawkins assert that drainage channels are required to remove the excess water that runs down the hill and under the court and attracts the tree roots.
A provisional estimate of £2k has been included in the upper estimate of both Repair options.
2.2.2.5 Root Barriers
The quotes received include a separate cost for a recommended root barrier to stop roots from growing under the court. We have had a wide variance in the cost for a 1metre deep concrete barrier along the two sides most at risk. One is at £2k while the other is £6k. The higher costs have been included in the upper estimate of both Repair options.
2.2.2.6 Edging Kerbs
All suppliers have insisted on quoting for new edging kerbs because this is their recommendation. These were omitted by shareholders from earlier proposals for tennis court repair. They constitute some £3k to £4k of the above “repair” costs
2.2.2.7 Minimum Repair (“Patch” repair)
Nobody has been located who will quote the minimum repair, i.e. just to level off the sunken areas at side and back of the court and to fill in the dangerous slopes at the edge of the court. This has been the approach adopted over the years given the location and utilisation of the court. While understandable, it has nevertheless contributed to the court becoming unfit for purpose and a Health and Safety risk
2.2.2.8 Economic Environment
The recession may mean that we can negotiate a better deal but this is not available at time of writing.
2.2.2.9 Directors’ Liability
There is some concern that by ignoring the LTA consultant’s advice and repairing the court, any accident as a result of future slippage and subsequent cracking will be the Directors’ responsibility.
2.2.3 Directors’ Recommendation
The Directors’ are mindful of the level of costs, the ongoing delays in finalising the detailed costs and the strongly held views on this subject. The following, non-exhaustive factors are included to help explain the Directors’ recommendation.
2.2.3.1 Factors in favour of retaining the tennis court are:
· It is an amenity for use by residents
· It is an attractive visual feature of the estate when properly maintained
· Even if it has no impact on property values, experience suggests that it may make selling quicker
· Several residents have only purchased their property because of the tennis court facility
· It has potential for development to a multi-sports facility (we already have a basket ball net)
2.2.3.2 Factors in favour of removing the tennis court are:
· Escalating repair costs
· Uncertainty of the repair costs
· Professional advice against repairing given the likely need to repeat the repairs in a few years
· Additional annual costs per household to build a reserve for likely future repairs
· The removal will free up a level of flat lawn to be used as a playing area for the children
· The listed repair costs do not address the poor repair of the surrounding fence
· Limited utilisation of the tennis court
· Management effort required to drive the repair process forward
2.2.3.3 Recommendation to remove the Tennis Court
In light of the above, the Directors are reluctantly proposing that we remove the tennis court and replace it with a flat area of lawn in keeping with the estate.
2.3 Landscaping and Controlled Waste
We committed last year to negotiate the best possible settlement with the source of the “contaminated” topsoil and/or the gardener. After the sale of Uxbridge Skips and the decision to retain Joseph Figuieras for gardening duties, the Directors have taken the view that the costs of pursuing legal action against both or either party are not justified given the likelihood of success, the potential settlement figure and the net loss should we be forced to switch to a higher cost gardener.