Council delays decision on Summerhays St social housing
A decision about who is going to build and manage new social housing in Palmerston North’s Summerhays St has been put on hold while the city council considers whether it should set up a trust or council-controlled organisation (CCO) to do the job.
The city council owns an 8200 square metre site that used to be the Terrace End Bowling Club, and the property next door, and decided in October last year that it would be used for social housing.
Latest estimates are that it could accommodate around 35 new units, at a cost of about $25 million, which is $7m more than the council allocated in its proposed longterm budget for the project.
An early timeline suggested work on detailed design could start in July, with building completed by June 2027.
The council was last week expected to make a decision on how to achieve a result.
The three options were to contract a firm to build the units that would remain in council ownership and control, to get a partner to fund the build with the units then purchased by the council or a third party on completion, or to find a partner to develop and manage the whole complex.
Some 16 groups lodged expressions of interest on the various options, and those proposals were to have been considered with the public excluded to allow negotiations to go ahead.
But instead of choosing a partnership option, councillors supported mayor Grant Smith’s recommendation to seek further information on whether setting up a trust or CCO to manage the council’s social housing portfolio, including Summerhays St, would be a better solution.
Smith said the council had considered setting up a housing CCO several years ago, and had decided to keep the function in house.
But he said there was a lot more maturity in the housing provider industry now, with several other councils using the CCO or trust model.
Smith said for the amount of money involved, it was a huge decision, and it made sense to slow down and ensure the council made the right call.
Cr Lorna Johnson, a strong promoter of council-provided social housing, said the CCO model was worth exploring, as none of the other options met all of the council’s goals. She said recent experience with developing the Papaioea Place complex had proven the council could successfully build and operate social housing.
However, it was expensive to operate. With rents restricted to 25% of tenants’ income it did not cover all of the ongoing costs, and needed a large injection of capital up front.
Johnson said she could see why some people might consider handing the whole project over to another organisation to fund, build and operate made sense financially. However, she was not convinced it could be guaranteed the units would remain as social housing in future and not be released to the private market.
Cr William Wood said engaging a partner to fund and organise the building and future management was the option he preferred.
He was concerned the council’s reputation would be at risk by delaying a decision on which partnership model to go with after asking for expressions of interest.