Housing bid knocked back
An affordable rental development has been left scrambling to secure funding after it was unexpectly turned down by central government.
Bridge Housing Trust plans to build a 42 apartment complex on the corner of Tristram and Liverpool Streets in Hamilton central that will be made up of one to two bedroom units spread over two buildings. The land is being donated by Perry Group, which currently owns both sites.
However, the development is facing uncertainty after its application to the Ministry of Housing and Urban Development (MHUD)’s affordable housing scheme was denied. Under the initiative, housing providers commit to charging no more than 80% of median rent. In return MHUD pays half the cost of the build.
General manager Jennifer Palmer said it was fair to say they were “really disappointed”.
“We’re not really certain why we were declined. We’ve had a conversation with HUD about it. I think, as usual, they were oversubscribed and had to make some tough decisions, but nevertheless, we were really disappointed.”
The only feedback they received was the project was too big, Palmer says.
Hamilton City Council has weighed in, writing to the ministry to ask them to reconsider their decision. Ten million dollars of the project is being funded by the council’s Municipal Endowment Fund (MEF), an investment fund intended to provide ongoing returns to Hamilton residents. It sits outside the Long Term Plan and doesn’t impact rates.
Council also agreed to a $60,000 loan to be matched by the trust to progress detailed designs and consenting applications. The loan funding is subject to several commercial conditions.
Economic development chairperson Ewan Wilson says this development ticks two boxes – MEF will get a return on its investment but most importantly, it also helps affordable housing, which is a “critical component” of the council’s CBD strategy.
The $10 million has been “ringfenced” in light of the ministry’s decision, giving Bridge Housing a six month extension to secure the additional funding needed to get the development underway.
While there are “multiple irons in the fire”, Wilson says he’s hopeful the Government will reverse its decision.
“I think this fills an important need for the provision of affordable housing, I think it's clear that New Zealand needs additional housing stock. Here's an opportunity that is sort of being co-funded. But ultimately, you know, Wellington has to make their own decisions based on their own criteria and funds available.”
“We are showing certainty in saying we believe in the project. We believe it’s important.”
Mayor Paula Southgate was “surprised” and “disappointed” by the decision.
“Hamilton City is the fastest growing city in New Zealand ... and there are no indications that is going to slow down. To cope with the growth that we’re going to experience and have been experiencing, we need new homes – it’s that simple.
“We need about 1300 new homes every where over the next 10 years just to cope with our growth.”
While the council is cutting its budget “to the bone”, affordable housing remains a priority, Southgate says. “Everyone deserves to be in a dry, safe warm home and at the moment we still have many families in emergency housing.”
“We can’t throttle back on anything that enables us to create good housing and this is one project which has demonstrated through the works they’ve done elsewhere that they can bring about affordable housing.“
Palmer says the trust is working to confirm the remaining finance and – all going to plan – demolition and construction will start towards the second half of the year.
Palmer says they had hoped to do the entire development as affordable rentals but they are now unsure exactly what shape it will take, only that it will still be affordable. “So it might be affordable, freehold sales, we might retain some long term rentals, we might do a variety of things.
“But the underlying point is that it will be affordable, that the Bridge Housing Trust is committed to that – we wouldn't be entering into a development otherwise. So we will find a way to make these sure these are affordable.”
MHUD did not respond to a request for comment prior to deadline.