Tuesday, 23 July 2019

Questions (2950, 2955)

Robert Troy

Question:

2950. Deputy Robert Troy asked the Minister for Housing, Planning and Local Government the process and stages an AHB in conjunction with the local authority must go through when delivering a turnkey development. [33940/19]

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Robert Troy

Question:

2955. Deputy Robert Troy asked the Minister for Housing, Planning and Local Government the timeframe and level of engagement his Department had with a body (details supplied) and Westmeath County Council in relation to the provision of 32 homes at a site. [33952/19]

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Written answers (Question to Housing)

I propose to take Questions Nos. 2950 and 2955 together.

Under the Government's Rebuilding Ireland Action Plan on Housing and Homelessness, 50,000 new social housing homes are to be delivered by 2021, through local authorities and approved housing bodies (AHBs), using a range of funding streams.

Market conditions in many cases mean that turnkey arrangements are highly appropriate in terms of delivery timescale and cost. Turnkeys are, in the main, homes built by developers on private land under contract for local authorities or AHBs. They are a good source of social housing that can often be delivered quickly, and often in areas where the local authority does not have land. All local authorities actively consider this source in addition to all other delivery mechanisms. These can be projects that are unbuilt but have planning permission in place, that may be unfinished/partially built/under construction, or largely completed but with ‘finishing out’ works to be done.

The Department publishes information relating to social housing construction projects in a quarterly Construction Status Report. This report is a full compendium of live local authority and AHB new-build activity over the period 2016-2021 and includes a table clearly outlining data on all build delivery streams across all local authority areas.

All funding provided to AHBs to support this activity is made available by my Department through local authorities. Indeed, local authorities, as the statutory housing authorities, are the decision makers in relation to the suitability of a proposed social housing project. For example, local authorities are required to ensure that any project appropriately reflects the housing need in that particular area and that there is sufficient need in the area to support the units over time; the properties comply with relevant standards and regulatory requirements; and the objectives of creating and maintaining sustainable communities are being met.

In recent years, the main source of funding to AHBs for social housing delivery, including turnkey projects, is through borrowings and support from local authorities through the Capital Advance Leasing Facility (CALF) and Payment and Availability (P&A) programme. The loan (capital advance) is available up to a maximum of 30% of the value of the acquisition or construction of the dwellings and it is repayable at the end of the term which can be up to 30 years. The balance of the investment required is borrowed separately by the AHB, and in the main, from the Housing Finance Agency (HFA). CALF is targeted at projects where the AHBs does not have sufficient financial capacity in the initial years of a loan to service the debt or may require some up-front capital to secure the lending in the first place. AHBs can only avail of this funding if they enter into a P&A agreement with the local authority for the same period, making the relevant properties available for social housing - providing accommodation for people on the relevant local authority’s waiting list, for the same period of time.

Applications for P&A/CALF funding are made to local authorities by AHBs and normally consist of a completed application form and a financial model showing the capital cost, income and operational costs projected over the P&A term sought, and other relevant supporting documentation.

As with all exchequer-supported projects, my Department as sanctioning authority, assesses each project proposal for suitability as determined by the local authority, value for money and compliance with the various requirements of the funding programme. In the case of CALF applications, the Housing Agency undertakes an independent assessment of the financial aspects of the application.

Detailed approval, payment and performance monitoring arrangements are in place across all Departmental funding arrangements, including those supporting AHB activity. In particular, approvals are undertaken in a defined and robust way consistent with the Public Spending Code and the Capital Works Management Framework; letters of sanction include detailed terms and conditions relating to payments, and onward payments to AHBs. In the case of CALF and P&A supported projects, once approved, the local authority then enters into two agreements with the AHB, as follows:

- The P&A Agreement that will cover the conditions under which the properties will be made available for the term of the agreement; and

- A Capital Advance Agreement (CAA) that stipulates the terms and conditions on which the money is being made available from the State and also stipulates the repayment conditions.

It should be noted that all payments are made to AHBs by local authorities in accordance with the various approval letters, and my Department recoups these costs to local authorities.

Accelerated CALF payments may also be approved by the Department for projects for including turnkey developments. The accelerated CALF can be applied to facilitate site purchases or stage payments to a developer, deposits for properties under construction or for sale and to facilitate the acquisition of homes requiring works, which necessitate access to the properties. In such cases, the milestones may vary depending on the requirements of the project and will be set out by my Department in its approval letter. The local authority will seek an acknowledgement of the associated risk along with details on any mitigation measures to be taken by the AHB.

Details of turnkey projects being advanced by AHBs under the CALF scheme as at the end Q1 2019 are available at the following link:

http://rebuildingireland.ie/wp-content/uploads/2019/06/CSR-Q1-2019-1.pdf.

Once projects receive funding approved status, they will appear on the quarterly Construction Status Report referenced in the link above. The project referred to has not been submitted to my Department at this stage. In order to be of assistance to the Deputy, my Department has made further enquiries and have been informed that the AHB are in advanced discussions with the local authority regarding the project, in line with the CALF process.