Wednesday, 27 March 2019

Questions (286)

Eoin Ó Broin


286. Deputy Eoin Ó Broin asked the Minister for Housing, Planning and Local Government the full cost of the first tranche of PPP social housing units the contract for which was signed with Comhairle in March 2019; the full cost of the contract over the lifetime of the PPP; the cost of the monthly availability agreement paid to Comhairle; the cost per unit of accommodation provided; and the way in which these costs compare to the public sector benchmarking exercise carried out by DCC, the NDF and his Department in advance of the tendering process. [14335/19]

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Written answers (Question to Housing)

The Social Housing PPP Programme involves an investment with a capital value of €300 million. It is to deliver 1,500 social housing units in total, via three bundles. The first bundle, which comprises six PPP sites, will provide 534 units in the Greater Dublin Area. Two of the sites are located in the Dublin City Council area with one each in the County Council areas of South Dublin, Kildare, Wicklow and Louth.

The Social Housing PPP Programme is being delivered through the ‘availability’-based PPP model. Under this type of contract, the PPP project company, as the private partner, designs, builds, finances and maintains public buildings on sites provided by the State, in this case through the local authority. Payment is made by the State only once construction of the buildings is complete and the units are ready to house tenants. The payment comprises a monthly ‘availability’ and performance-based payment (or unitary charge) made over the term of the 25-year contract.

Land provided by the local authority is made available by way of a licence. Ownership of State land is not transferred to the private partner PPP company. Tenants allocated to PPP units will be nominated by the local authority, in the normal manner, from the local authority social housing waiting list, in accordance with that local authority’s allocation scheme. Each respective local authority therefore retains tenant nomination rights, and is to be the contractual landlord, with the same differential rent arrangements applying.

The contract for the first bundle of the Social Housing PPP programme was awarded to Comhar Housing Consortium on 19 March 2019.

The total capital construction cost for Bundle 1 is approximately €120 million in nominal terms. This includes the construction of the 534 homes, the associated site works such as roads and play areas, and community facilities at the Ayrfield site. This equates to approximately €225,000 per unit, inclusive of ancillary works. The total cost is in line with the programme estimates, which aims to deliver 1,500 units under a €300m investment programme.

The full value of the contract, the duration of which includes the construction period plus a 25-year operating period, is estimated in nominal terms at €301 million (exclusive of VAT and including a forecast of inflation). Over the lifetime of the contract, this equates to an average of approximately €1m per month, (exclusive of VAT and inclusive of an allowance for inflation), or approximately €1,900 per unit per month. This cost includes all maintenance, operating, lifecycle, tenancy management and financing costs. Service provision that is included in the contract includes building and asset management, waste management, security, void management, tenant helpdesk services, and the provision of community development services. At the end of this period the units are handed over to the relevant local authority.

The estimated full value of the contract, as outlined above, is due to be published as part of the Contract Award Notice in the Official Journal of the European Union, as is standard practice under European procurement procedures. In addition to the full value of the contract, the State will be liable for payment of VAT on the capital construction costs, as well as utility connection charges for each unit.

No unitary charge payments are required to be made until the homes are constructed and available to house tenants, at which point the 25-year operating period commences. As with all availability-based PPPs, the monthly unitary charge is subject to both the availability of the homes and the performance of Comhar in the provision of services.

In accordance with the Department of Finance Guidance “Value for Money and the Public Private Partnership Process”, value for money testing was carried out at different stages of the procurement process for the project. This included a comparison of the winning tenderer’s bid with the Public Sector Benchmark and I can confirm that in this case that the winning tenderer’s bid was lower than the Public Sector Benchmark. However, as the Deputy will be aware, given the commercially sensitive nature of the detailed information and financial calculations included in the PSB, it is not possible to reveal the specifics of this at this time.