Partnership Power:Delivering Affordable Rental

Housing

Dr Tony GilmourBuilt Environment Design Professions

2 June 2010

Presentation Overview

• Background – the brave new world of affordable rental housing

• Partnerships in action – City West Housing case study

• Conclusion – the power of partnerships

Know Your Social Rental Housing

• Public housing run by state agencies

• Rents based on 25% household income

• Most tenants don’t work

• Several high-rise and single tenure estates

• Community housing run by non-profits

• Rents range from 25-30% household income up to 75% market rent

• Virtually all tenants work – ‘key workers’

• Mixed tenure/income neighbourhoods, well designed buildings

Rise of Community Housing Providers• Historically, non-profit community housing (‘housing

associations’) dominant – philanthropy, tenant cooperatives etc.

• Mid 20th Century pre-eminence of large volume public housing

• 1970s+ International trend for state coordination/funding of community housing. Public housing becomes ‘residualised’

• 1980s+ Market forces brought into community housing, and move to mixed funding models internationally (slightly later in Australia)

• 1990s+ More complex relationships and partnerships. Stock transfers, joint ventures, use of planning system, ‘nation building’

• Commonwealth Government aims to move community housing shares of social housing from 10% to 35% by 2014

Funding Affordable Rental Housing• National Rental Affordability Scheme (NRAS) launched

2008 with aim to build 50,000 new ‘key worker’ type homes over 5 years

• Competitive bidding for funding to encourage best schemes. No allocation quotas per State or Territory – who are the winners?

• NRAS available to for-profit and non-profit bidders

• Modest level of funding: $8,000 pa for 10 years ($6,000 from Commonwealth, $2,000 State/Territory)

• Need for other ‘levers’ to make schemes work – bank loans, land contributions, planning assistance, tax breaks for developers

• NRAS encouraging further growth of community housing providers. Coupled with greater regulation, NRAS leading to a more professionally managed and commercial sector

Case Study: City West Housing, Sydney

City West Housing – Original Scheme

• Non-profit organisation established by NSW Government 1994 to deliver affordable housing in newly-gentrifying Pyrmont/Ultimo

• Commonwealth contributed $50m – Better Cities Program. NSW Government adds 4% of local public land sales ($7m)

• Developer contributions generated from levy on all commercial and residential schemes in the area under SREP 26. Could be in cash or housing, though in practice all in cash - $14m by 2003

• No on-going subsidy for affordable rental accommodation. Rents set at between 25% and 30% of household income

• 450 units produced in area. City West were the largest developers in Australia of new affordable housing until late 2000s

• Tenants must live or work in designated areas and earn between $29,094 and $80,180 household income

City West Housing – Capital Costs

Source: Milligan et al. (2004)

Grants, 42%

Land sales levy, 15%

Higher income tenants, 10%

Non-profit tax savings, 16%

GST exemptions, 7%Developer

charges, 10%

Zetland

Pyrmont

Green Square

City West Housing – New Directions

• From 1998, City West area of operation spread to Green Square

• City of Sydney ‘Green Square Affordable Housing Scheme’ aims for 479 homes for low/moderate income households over 20 years

• Uses inclusionary zoning. Either 3% of residential floor area should be affordable housing, or if payment in cash - $121 per square metre (separate levies for non-residential schemes)

• Use of National Rental Affordability Scheme (NRAS) incentives

City West Housing – Partnerships

• Integrated working between Federal, State and Local Government

• Developers involved through use of the planning system, and on project delivery

• Design professionals assist masterplanning, environmentally sustainable design etc.

• Tenants actively involved in management decision making, especially existing units

• Professional board: solicitor, planner, developers, accountant, social policy expert

• No links with the main state public housing agency - Housing NSW

Conclusions

Partnership Power

• Affordable rental housing delivery increasingly involves partnerships across public, private and non-profit sectors

• Use of partnerships for affordable housing mirrors solutions to other ‘wicked’ urban problems – Green Square, Barangaroo, heritage etc.

• Move to complex affordable housing delivery models, and integration of housing with other social/economic urban objectives is increasing the role of built environment professionals

• Contemporary BEDP staff need a broader range of skills in finance, risk and partnership working, not just core competencies

• Increasingly important role of professional bodies, consultants and universities in building and sharing knowledge

Partnership Power:Delivering Affordable Rental

Housing

Dr Tony Gilmourtony@elton.com.au

www.tonygilmour.com