Dáil Éireann Debate, Tuesday - 26 April 2022
613. Deputy Eoin Ó Broin asked the Minister for Housing, Local Government and Heritage the way that the approval process by his Department for approved housing body, capital advance leasing facility, Housing Finance Agency-funded social housing projects differs from the approved housing body and capital assistance scheme funded social housing projects and local authority Social Housing Investment Programme funded social housing new build projects. [19466/22]
View answer614. Deputy Eoin Ó Broin asked the Minister for Housing, Local Government and Heritage the difference between his Department's approval process for local authority Social Housing Investment Programme construction social homes and local authority Social Housing Investment Programme turnkey social housing developments. [19467/22]
View answerI propose to take Questions Nos. 613 and 614 together.
All funding provided to Approved Housing Bodies (AHBs) to support social housing is made available by my Department through local authorities who, as the statutory housing authorities, are the decision makers in relation to the suitability of a proposed social housing project. Local authorities are required to evaluate that any social housing project, including those by AHBs, reflect housing need, that the properties comply with regulatory requirements and that the objectives of creating and maintaining sustainable communities are met.
In recent years, the main source of funding to AHBs for social housing delivery is through borrowings and support from local authorities through the Capital Advance Leasing Facility (CALF) and Payment and Availability (P&A) programme. AHBs enter into a P&A agreement with the local authority and make the relevant properties available for social housing.
Applications for P&A-CALF funding are made by AHBs directly to my Department, following a consultation with the local authority. The application to my Department normally consists of a completed application form and a financial model for the capital cost, income and operational costs projected over the P&A term.
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. On the financial aspects of a CALF application, the Housing Agency undertakes an independent assessment to analyse the capital costs, projected income and projected expenditure against a standard set of assumptions agreed with the Department. The appropriate level of CALF is determined by reference to a projected minimum Debt Service Coverage Ratio (DSCR). Debt-service coverage ratio (DSCR) is a measurement of the cash flow available to pay current debt obligations.
Detailed approval, payment and performance monitoring arrangements are in place across all Departmental funding arrangements, including those supporting AHB activity. Following approval, letters of sanction include detailed terms and conditions relating to payments, and onward payments to AHBs are issued to the local authority and Approved Housing Body. 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.
All payments are made to AHBs by local authorities and my Department recoups these costs to local authorities.
Accelerated CALF payments may also be approved by the Department for projects 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. 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.
Social housing construction projects funded by my Department for local authorities under the Social Housing Investment Programme and for AHBs under the Capital Assistance Scheme (CAS), must like all publicly-funded construction projects, comply with the Government’s Capital Works Management Framework (CWMF), the objectives of which are to ensure greater cost certainty, better value for money and financial accountability. To ensure alignment with the CWMF, these projects progress through a four stage approval process as part of the broader pre-construction process undertaken by the local authority. The four stages are:
Stage 1 – Capital Appraisal submission to establish the business case;
Stage 2 – Pre-planning submission and cost check;
Stage 3 – Pre-tender approval and cost check;
Stage 4 – Tender approval.
My Department and local authorities also operate a single-stage approval process for construction projects up to €6m in value, while Design and Build approaches are also used which can save time in relation to design, procurement and construction. The majority of local authority public housing projects are developed using public works contracts.
Local authorities also acquire social housing through a turnkey arrangement with developers through funding under the Social Housing Investment Programme. The Department’s approval procedure for turnkeys is generally a single stage evaluation and approval with submissions being made by way of a Capital Appraisal. Unlike the public works contract for a CWMF construction project, a turnkey contract can be a simple ‘Contract of Sale’. However, there are general procurement principles which apply and, in particular, the local authorities must comply with obligations for transparency and equal treatment, as well as clarifying for my Department‘s assessment and approval, that the turnkey proposal meets housing need, is suitable in terms of typology and sustainable community principles, is compliant with regulatory requirements and represents value for money.
I have recently published a new Design Manual for Quality Housing and also a Review of Pre-Construction Processes undertaken in cooperation with the local authority and AHB sectors. These recent initiatives are important in the work to improve the quality, cost-effectiveness and pace of delivery of social homes.
