Joint Committee on Housing, Planning and Local Government díospóireacht -
Tuesday, 18 Jun 2019

Affordable Housing: Discussion

Chairman

At the request of broadcasting and recording services, members and visitors in the Public Gallery are requested that for the duration of the meeting, mobile phones be turned off completely or switched to airplane mode. It is not sufficient to put phones on silent mode, as it maintains a level of interference with the broadcasting system.

The next item is on affordable housing and I welcome to the meeting Mr. Paul O’Neill and Mr. Gerard Cahillane of the National Development Finance Agency and Mr. Jim Baneham, Mr. Daragh McCarthy and Ms Catriona Lawlor of the Housing Agency,.

I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

I call on Mr. O'Neill to make his opening statement.

Mr. Paul O'Neill

I thank the committee for the opportunity to speak to today’s meeting. I am head of financial advisory at the National Development Finance Agency, NDFA, and I am responsible for the agency’s financial advisory roles in the housing sector. I am joined by my senior colleague, Mr. Gerard Cahillane, deputy director. To assist the committee in its discussion on the topic of affordable housing, I welcome the opportunity to address its questions and give it clarity on the nature of the NDFA’s role in the schemes currently under way.

The NDFA is providing financial advice to a number of local authorities seeking to develop housing schemes on their lands. Its role is twofold. First, it is to undertake financial modelling in respect of potential schemes. This work is undertaken pre-procurement to assist each local authority in determining tenure mix options for the sites in question. It also provides financial advice during the procurement phase. This entails providing advice on the tender documentation and development agreement contracts, undertaking financial robustness assessments and performing the financial evaluation of submitted tenders.

On affordable housing specifically, the NDFA is assisting Dublin City Council and Fingal County Council on a number of schemes under way. These are O’Devaney Gardens in Dublin 7, where final tenders have been received, with 20% proposed for affordable purchase; Oscar Traynor Road in Coolock where dialogue with short-listed candidates has commenced, again with 20% proposed for affordable purchase; St. Michael’s Estate in Dublin 8 where outline design is under way, with 70% proposed for affordable rental; and Ballymastone, Donabate, County Dublin, where dialogue with short-listed candidates has commenced, with 20% proposed for affordable purchase.

All policy matters relating to affordable housing fall under the remit of the Department of Housing, Planning and Local Government. The NDFA has no role in determining affordable housing policy. Our objective is to assist as many local authorities as possible in support of housing delivery across the country. In relation to affordable housing, this is taking the form of affordable purchase and affordable rental.

I trust this clarifies the extent of the NDFA's involvement in affordable housing to date and we look forward to assisting the committee this morning.

Chairman

I thank Mr. O'Neill and call on Mr. Baneham from the Housing Agency to make his opening statement.

Mr. Jim Baneham

We are pleased to be here to assist the committee in its examination of the issues facing us in relation to affordable housing.

I am accompanied by my colleagues Mr. Daragh McCarthy, who is a researcher and Ms Catriona Lawlor, who is a senior staff officer.

The agency's vision is to promote the building of sustainable communities. Critical to this is that everyone is able to live in a good quality and affordable house. This morning I intend to focus on two areas relating to affordable housing. These are affordable purchase housing and cost rental housing.

It is widely recognised that there is a need to address housing affordability issues faced by low to middle-income households, particularly in Dublin and other main urban areas. As a general rule, housing costs should be below one third of a household's income and in the long term, below one quarter of income. Households on very low incomes may require social housing or other housing supports to meet their needs. Other households with higher incomes have adequate means to purchase or rent at market prices.

The new affordable housing purchase scheme aims to target lower to moderate-income households living in areas of the country where housing affordability issues are greatest. The scheme lowers the initial purchase cost of a home, making it more achievable for low to moderate-income households to access homeownership. The new scheme follows the commencement of Part 5 of the Housing (Miscellaneous Provisions) Act 2009. The first set of regulations under this legislation were commenced in March, allowing local authorities to establish a scheme of priority under section 85 of the Act.

An important feature of the new scheme is that the discount offered to purchasers, which will be up to 40% of market value, will be retained by the local authority as equity in the property. When this equity is repaid the moneys can be reused to provide more affordable housing. While the local authority stake in the home must be repaid in full, households will have a large degree of choice about the timing of the repayments of these repayments.

Cost rental and the Vienna model have been the subject of a lot of discussion recently. This is a model of rented housing where the rents charged are linked to the cost of delivering, managing and maintaining the properties. This differs from private renting where rents are set by the market, which may lead to high rents in high-demand areas. In cost rental, rents are not driven by market demand and are more stable over time. This is expected to result in rents that are more affordable for lower to moderate-income households. It is also different from social housing where the rent paid by these households is linked to income levels. Cost rental has the potential to deliver secure and more affordable rental accommodation for lower to moderate-income households. Over the longer term, as cost rental homes are delivered at scale, cost rental is likely to have a stabilising effect on the broader private rented market.

With regard to the importance of affordable rental accommodation, one of the primary aims of the national planning framework under Project Ireland 2040 is to encourage compact growth in our towns and cities. Up to 40% of future housing development is to be built within or close to built-up areas, using infill and brownfield sites or publicly owned lands. Housing densities need to be increased to make public transport and other infrastructure more viable, reduce urban sprawl and make our communities more sustainable. Building affordable, secure and well-planned rental accommodation is critical to achieving these goals. Households can be offered the choice to live in secure and affordable accommodation within walking distance of local amenities and with access to good public transport.

In recent years, more households are renting and are doing so for longer, either by choice or because they cannot afford to buy or have yet to find a home to purchase. Cost rental could be an attractive form of tenure for these households. A steady support of secure, affordable accommodation is also a key element underpinning our economic competitiveness.

There are a number of essential elements which must be put in place to ensure that cost rental housing is affordable. These include the provision of land at no or low-cost, designing good quality housing to achieve reasonable delivery cost with long-term maintenance in mind, a State contribution to development costs and the removal of infrastructural constraints, and we have the serviced sites fund to do this, and the availability of low-cost, stable finance that is paid back over a long period of time, often over more than 40 years.

I will now discuss the Enniskerry Road pilot cost rental project, which is the result of collaboration between Dún Laoghaire-Rathdown County Council, the Housing Agency, the housing associations Respond and Tuath Housing, and the Housing Finance Agency. Financial support is also being provided through the Department of Housing, Planning and Local Government. The project includes 50 cost rental homes and 105 social homes, a community centre and green spaces at Enniskerry Road, Stepaside, Dublin 18. The site is near a wide range of amenities, public transport, public facilities, schools, health services and local community and sports groups.

The cost rental homes are being funded through the provision of grant funding for site infrastructure works under the serviced sites fund and a long-term loan facility using competitive European Investment Bank, EIB, rates through the Housing Finance Agency. The land has been provided by the Housing Agency at no cost. Following the completion of the development, expected in late 2021, tenants will pay €1,200 per month to live in a two-bedroom home. This rent is based on the cost of delivering and maintaining the homes and is significantly below market rent for similar homes in the area. The objective is to reduce the rental cost closer to or below €1,000 per month in future developments. Additionally, the homes must remain in cost rental use for at least 70 years to help ensure the value of the State’s investment is passed to future tenants.

The Housing Agency has also provided three additional sites for development to the Land Development Agency and is setting specific requirements for the provision of long-term cost rental housing on these sites. The first two of these will be in Skerries in Dublin and in Naas, County Kildare. In both cases delivery will be for developments of approximately 200 homes, which will be a mix of social housing and cost rental housing.

These projects will provide valuable lessons for the development of a national cost rental sector in Ireland and help to determine what structures and supports should be put in place at the outset of these projects to achieve cost rental housing that is affordable to a wide range of households. We need to learn from these early projects and adopt a long-term approach to cost rental. There is much more information we can provide on affordable housing and we are happy to answer any questions members may have or to provide further details as required.

Deputy Eoin Ó Broin

I thank the witnesses for the presentations. A number of us on the committee today are looking to get into the detail of the projects from the Housing Agency perspective. I know the Enniskerry Road project is being developed now. Without straying into policy areas, we also want to try to get a handle on some of the financial modelling on which the National Development Finance Agency, NDFA, has been advising. I will start with a couple of technical questions.

The key to this is how we make the purchase or rental units genuinely affordable and part of our difficulty arises because there is not a clear definition of what we mean by "affordable" that is agreed by all actors. We should relatively soon have the affordable housing schemes for purchase agreed by local authorities. That has not yet happened and we have no scheme yet for the affordable or cost rental initiatives to know how affordability is defined. It is a bit of a movable feast.

One of my concerns about the Enniskerry Road project is that entry-level rents are not affordable for a large cohort of people at whom this kind of housing is targeted. Affordable cost rental is aimed at people who are above the thresholds of eligibility for social housing but are priced out of the market. The €1,200 figure is a high rent. It might seem to be not as high as the very excessive rents but it is very high and any household earning €45,000 or €55,000 would be paying well above a third of its net disposable income if that is the rent being charged. There is a problem in that.

I am not asking witnesses to argue for or against this but I would like to understand how the figure is derived from the financial modelling. Loans must be paid but as the witness indicated, in other European countries they are paid over 40 years or longer. I assume that here the loan would be paid over a shorter period, which is one of the reasons the entry-level rent is set so high. Are other costs mixed into this? Has Dún Laoghhaire-Rathdown County Council added costs for works already completed on the site, for example? Is the cost just derived from loan financing and management or maintenance? Do other costs push up the entry-level rents?

I ask a purely hypothetical question of the NDFA that does not stray into policy. If, for example, we looked at a model with entry-level rents from €700 to €900, which would relate to the Housing Agency's definition for the cohort of people with household income of between €45,000 to €65,000, how would it be modelled? Would it just be a longer loan term or would EIB loans be mixed with soft loans from the State, for example? Would it be looking at an upfront capital contribution from the State? What are the options? I am not looking for the witnesses to state a preference but we would like a read on the matter.

There is a serviced sites fund available for the Housing Agency so will that fund be accessed for the Enniskerry Road project to try to bring down its cost? If a type of loan like a capital bank loan facility were available to approved housing bodies, as there is with social housing, it could deal with the loan period issue.

Have these options been discussed with the Department and has any progress been made?

Will the delegates, please, explain how the equity stake will work in the case of the affordable purchase scheme and serviced sites fund. Is it set at €40,000 or €50,000? Will it be index linked with inflation or other factors? I would like to know because there is a lack of clarity on the matter elsewhere.

Will the delegates, please, explain the densities proposed by the Housing Agency? I am broadly supportive of the proposition and the planning framework for the national development plan. In order that people in Dún Laoghaire or Dublin city will understand the sites involved, from and to what densities are we moving?

Why stipulate a period of 70 years? I like the covenant idea as it is the right way to go, but I do not understand why one would set a time limit. Given that it is a public asset, I would have thought the time limit would be indefinite or open to regular review. Will the delegates, please, explain the rationale behind setting a time limit?

Mr. Paul O'Neill

On the modelling we have considered to date, the Deputy is right. There are different options and levers available to the State to make rents as affordable as possible. In the case of St. Michael's estate, we looked at long dated loans and having a portion of them interest only, for example. It is really about looking at the levers available to the State. We analysed them to make the product as affordable as possible without considering the private market and the additional equity requirements and returns, etc. We are considering this measure from the point of view of the State and how we can, potentially, deliver this model. To date, we have not modelled a subsidy or an upfront contribution. The Deputy is right that those aspects would contribute to a reduction in rents, as would, potentially, the serviced sites fund mentioned by him.

Deputy Eoin Ó Broin

Let us say the Government wants to reduce rents to between €700 and €900 equivalent to rents in cost rental projects in other European capitals. Is that financially possible without a subsidy by stretching a loan over a longer period or mixing a European Investment Bank or EIB loan with a soft loan from the State?

Mr. Paul O'Neill

Yes, it is possible. The one condition is, without going through a procurement process and with no other construction costs, there are requirements in terms of apartment numbers at the core, car parking bays, etc. It obviously does have a driver and the cost has an impact on the funding needed for the project.

Mr. Jim Baneham

The questions posed by Deputy Ó Broin have a number of elements, all of which I intend to cover as best as I can.

The initial question was how had we arrived at a figure of €1,200 in rent. At the beginning 155 dwellings were designed to be built on the site. The site is rocky and located on the side of Ticknock Hill or Three Rock Hill in the Dublin hills. Therefore, it has some issues in how it would be developed. The genesis of the scheme is as follows. Part 8 planning permission was granted in 2007 and included car parking and underground car parking spaces. If one were to start with a clean sheet of paper, one might not necessarily include such parking spaces, but they were included and there are certain costs associated with same.

On the overall scheme, the cost of the tender, including VAT, is €45 million, which is significant. There was a process engaged in with Dún Laoghaire-Rathdown County Council in which certain costs were stripped out, while others were pared back. I understand the county council will bear some of the costs. Because of its nature, the scheme presents certain challenges. Unfortunately, there is an issue with eradicating Japanese knotweed, while I have referred to other bits and pieces. The cost of the scheme must be funded over a long period.

The Deputy asked if the loans had to be paid down over a short period of time. The loan period with the Housing Finance Agency, HFA, is 40 years, which is unique in this context and is a significant element in keeping costs down. The cost per unit is quite high in that scheme, even allowing for the fact that we have been able to access serviced sites funding, which was another part of the Deputy's question. Serviced sites funding is being allocated to the scheme. Dún Laoghaire-Rathdown County Council was successful in getting an allocation of €4 million of Exchequer funding towards that. Taking that into account and just looking at the 50 units which are cost rental units, because only they are eligible for the affordable element, the cost per home or apartment is still around €260,000. The units are apartments which, by their nature, are expensive, there are issues with the site and they have to be managed over a long period of time.

I do not want to stand on anyone's toes in terms of the cost modelling but the long-term maintenance of those apartments, that is, keeping them in good condition over the long term, has been included in the modelling. At periodic points over the 40-year model, allowance has been made for significant works to be undertaken to upgrade properties. That is included in the rent. Ignoring something like that could lead to problems down the line but that issue was not ignored. In terms of the operational costs of the approved housing bodies, AHBs, involved, they looked at their costs and reduced them a little. They took about 25% off their normal operational costs. Again, it is an area that is somewhat unknown for them because they have not managed cost rental housing per se in the past. There were a number of different aspects involved in bringing costs down. The three main elements involved in bringing the quite sizeable capital costs down were the serviced sites fund, which was €4 million over the 50 units; the 40-year cost of finance delivered by the HFA; and economies that were delivered by the AHBs in terms of paring back various costs. While it would be nice to have a lower rental cost per unit, quite a lot of work went into getting it down to €1,200.

Moving on to other issues raised, the question of using a capital advance leasing facility-like loan for cost rental has been discussed. There has been interaction with the Department on that as a possibility. Indeed, the Housing Agency's first paper on that possibility dates back to 2015. There have been various iterations of cost or affordable rental models over the last number of years. At the moment, the main tool that can be used to reduce costs is the serviced sites fund and that is what is being proposed at the moment. The next question related to clarity on the equity charge in the affordable purchase scheme. I will try to explain it simply. If the equity at the outset is 25% and that equates to €70,000 in terms of the price reduction today, it stays at 25% so as costs go up, it is indexed to market prices rather than inflation per se. If the price of that house in ten years' time has gone up by €100,000, the equity stake has gone up by €25,000. Basically, that is the way it works.

The Deputy also asked a question on densities. I am not a planner so I am not the most competent person to talk about densities. That said, I did a few quick calculations relating to Enniskerry Road. The density there is about 55 per hectare.

Deputy Eoin Ó Broin

Fifty-five?

Mr. Jim Baneham

Yes, 55 per hectare or 22 per acre.

Deputy Eoin Ó Broin

55 what?

Mr. Jim Baneham

Dwellings. It is a seven acre site, roughly.

Probably post the national planning framework we will be looking to increase the density from that level on a site like the Enniskerry Road. In terms of the restrictive use covenant of 70 years that has been put into the deed of transfer, there was a lot of back and forth in respect of the legal transfer of the site. It was quite complicated for various reasons. This might not be a great answer to Deputy Ó Broin's question but it ended up at 70 years. In hindsight, we would like it to be longer. The main lease that is currently in effect with the two approved housing bodies, AHBs, is a 150-year lease. In future, we would link the two of them and have a longer covenant in terms of their use. I think I have covered all the questions.

Deputy Darragh O'Brien

I thank both witnesses for their presentations. I will comment on the rental issue before I deal with affordable purchase. In both presentations we are talking about getting a pilot project up and running which was announced in 2015. We need to put the project in that context. If we are going to deliver cost rental in real terms that will make a significant difference to people, we cannot continue at the pace we are going at present. When one looks at the rental costs on the daft.ie report on rent affordability, one sees why this is crucial, particularly in Dublin as well as throughout the country.

In areas such as Walkinstown, Crumlin and Drimnagh, the average rent is approximately €1,427 per month. To purchase a home, if one were able to get a mortgage for a home of the same value, it would be about €710 per month. One is looking at a difference of just over 100%. That is an example of how broken the rental market is. That brings me back to affordable purchase. A major part of resolving the crisis will be allowing people to be able to buy their homes. I will revert to Mr. Baneham on the criterion for the affordable purchase scheme. That scheme itself has not been fully agreed but I would be interested to get Mr. Baneham's opinion on it.

The National Development Fiance Agency, NDFA is assisting the local authorities on the following schemes, O'Devaney Gardens, Oscar Traynor Road, St Michael's Estate and Ballymastone. Has the NDFA concluded its financial model and its work on that scheme with the local authorities? I know the local authorities are engaging in the tender stage. Is the NDFA happy that its financial model is completed or is it open to further change? I ask Mr. O'Neill that in the context of the presentation. If I take Ballymastone in particular, there is mention of 20% proposed for affordable purchase. My understanding is that there is 20% social housing element in that scheme as well. That is not mentioned in the presentation so I ask Mr. O'Neill to clarify the position. Also in all of these schemes there is a Government model - one that my party does not agree with - which is that, effectively, we are looking at selling the remainder of the land. In the case of Ballymastone, 60% of that estate will be private development. In St Michael's estate, 70% is proposed for affordable rental and then there is the remainder of that site. The Oscar Traynor Road site has been a long time on the go at this stage, 20% of which is proposed for affordable purchase. What is happening to the remainder? What does the financial model allow for that part of the site?

I ask each of the witnesses about the interaction of their agencies with the Land Development Agency, LDA, which is not set up on a statutory footing as of yet. We are still awaiting the legislation to see how that agency will operate. I know that Mr. Baneham of the Housing Development Agency has mentioned to the LDA specifically the areas of Naas in County Kildare and Skerries in County Dublin, which are effectively additional sites for development. What is the LDA telling the Housing Development Agency what it wants to do with those two sites? Cost rental housing has been mentioned. Is that cost rental housing for delivery based on the Enniskerry Road pilot scheme? Do we wait to see how the pilot scheme works when it gets up and running before we start to deliver the other cost rental schemes? When one considers rents of €1,200, I understand the rent that can be charged is just below market rate, which is not a great deal below market rate in many of these areas when one looks at the daft.ie report for the fourth quarter.

If this cost rental accommodation is delivered at €1,200 a month, while it is welcome that it is less than the market rent, in many areas it will not be significantly less. That is particularly the case in the areas where the accommodation is being built. Perhaps the model needs to be looked at with reference to the term of the loan or subvention.

On the affordable purchase scheme, when do the agencies, particularly the Housing Agency, see the first affordable house actually being delivered? This is a source of great frustration for me. I do not want the delegates to stray into a policy area, but the negotiations to increase the serviced site fund to €310 million over three years took a lot of time to complete. It was not just to allow for a reduction in cost but also to establish the scheme. I know that the four local authorities in Dublin have accepted and approved broad criteria for the scheme, but is Mr. Baneham happy that they are clear enough to allow him to cost it properly?

As I have pointed out before, the income threshold for affordable housing for couples has been set at €75,000. That is a good combined income, but in many instances two people with decent jobs will have a combined income above that threshold. They then find themselves in a situation where in Dublin they pay on average 40% of their net take-home pay in rent, if they are lucky enough to be able to rent. Based on average income, a single person in Dublin pays rent equal to 58.8% of his or her net take-home pay. That is based on the daft.ie report for the last quarter and does not take recent increases into account. Nearly 60% of such a person's take-home pay goes on rent. That is why it is really important that we give people other options in the areas of affordable rent and particularly affordable purchase. The income threshold for an individual is €50,000, which is fair, but the threshold of €75,000 for a couple will knock many out of the affordable purchase scheme. The Department tells me that this matter is under review by the Department of Finance. Will Mr. Baneham advise me on how far he believes it has progressed?

Is there a willingness to move above the threshold of €75,000 or even to allow for regional affordability in the same way as it is allowed for under the housing assistance payment scheme, to which I will turn? Could discretion be allowed at the level of the local authority on the basis of income levels and purchase prices in the relevant area? The affordable housing scheme on which he has worked and which worked previously would allow for an equity stake. Under that scheme it should be possible to sell houses for between €160,000 and €210,000, although they would be mainly sold for €210,000 to €230,000. When does Mr. Baneham foresee the scheme being established across the country, particularly in areas in which there are issues of affordability such as in Dublin, Cork, Galway, and Waterford? These issues are spreading across the country.

Mr. Jim Baneham

Again, there is a range of elements to the Deputy's questions. His first comment was on the pace of the project on Enniskerry Road. It did take a long time. Ideally, it would have been completed more quickly.

On other schemes to deliver cost-rental accommodation, something the Deputy mentioned with reference to the Land Development Agency, it is not intended that everything will stop while results from the Enniskerry Road project are awaited. How long should one wait after the scheme is operational as there is a need to press on? That is definitely the aspiration of the Land Development Agency and the Housing Agency.

On the Deputy's more general point about the affordability of rent and mortgages, in many parts of Dublin renting is certainly more expensive than obtaining-----

Deputy Darragh O'Brien

It is approximately 89% more expensive, which is significant.

Mr. Jim Baneham

It varies.

Deputy Darragh O'Brien

That is the average across Dublin.

Mr. Jim Baneham

To move on to the question of interaction with the Land Development Agency, at least three sites will be transferred to it by the Housing Agency.

One of them is in Skerries; one is in Devoy Park in Naas, very close to the local authority offices, while the other is a large site in Balbriggan, which is more complicated from a planning perspective. We have had extensive interaction with the Land Development Agency and have a shared vision of how these sites should be developed. The sites in Skerries and Devoy Park in Naas are of a manageable size. Approximately 200 dwellings will be developed in each case, with a mix of social and cost rental housing. Both sites will be retained in some form of State ownership. It is intended that the transfer of the sites from the agency will include various covenants which will place restrictions on how they will be developed into the future.

Deputy Darragh O'Brien

I will clarify my question as I might not have put it well enough. In the absence of legislation governing the Land Development Agency, are the transfers being made in principle? What is the interaction? Have the sites been physically transferred?

Mr. Jim Baneham

They have not been physically transferred.

Deputy Darragh O'Brien

They cannot be physically transferred until-----

Mr. Jim Baneham

There is a legal entity in place.

Deputy Darragh O'Brien

The Land Development Agency is not a legal entity.

Mr. Jim Baneham

Yes. The-----

Deputy Darragh O'Brien

That is what I am trying to get to. We are talking about transferring land and responsibility to an entity that has no legal authority. That is not the Housing Agency's fault. The position is that the Housing Agency is in discussions with an entity that has been set up in skeletal form by the Government, but it is not yet a legal entity.

Mr. Jim Baneham

I think that is correct. That is my understanding of it.

Deputy Darragh O'Brien

Is that not a concern?

Mr. Jim Baneham

I suppose there is a precedent for it. When the Housing Agency was set up, it did not have a legal form for a period of time. We took a similar route when our agency was set up. We have been assisting in some of the stuff the Land Development Agency has been doing on corporate governance.

Deputy Darragh O'Brien

Is there a concern about delivering on these sites? The Housing Agency could be going ahead and doing it. I know that in the case of the site in Skerries, the local authority was pretty much ready and had a master plan. Now in one sense we are stopped because the Land Development Agency is not a legal entity and does not have legislation governing it.

Mr. Jim Baneham

I understand that issue should be dealt with in the next number of months, subject to things happening in the Oireachtas. If I may leave it to one side-----

Deputy Darragh O'Brien

I am sorry; I just wanted to-----

Mr. Jim Baneham

The land has not been transferred. It will be transferred with conditions and constraints.

Deputy Darragh O'Brien

Okay.

Mr. Jim Baneham

The Land Development Agency which will have to operate on a commercial basis has welcomed the constraints on the basis that they will make transactions commercially more simple. The affordable purchase scheme is based on the 2009 Act.

Deputy Darragh O'Brien

Yes; it goes back to the original Act.

Mr. Jim Baneham

It was passed by the Oireachtas approximately ten years ago. It was not implemented for a period of time because it was felt during the recession that there was not as much of an affordability issue. It was implemented more recently. The regulations are not complete. I believe that at a recent meeting of the committee the Minister undertook to make the remaining regulations available by the autumn of this year.

Deputy Darragh O'Brien

I will explain the purpose of my question. The four Dublin local authorities have in principle adopted the broad criteria for a scheme because each of them wants to have an affordable purchase scheme in its area. Does the fact that the scheme has not been concluded make it difficult to cost it? That is what I asked. There is no final scheme. Mr. O'Neill has spoken about schemes such as the Ballymastone scheme. I referred to whether the financial model had been concluded because I am aware that the final scheme has not been concluded.

Mr. Paul O'Neill

We are in the procurement phase of all of the projects. The modelling generally feeds in before the procurement phase is reached. It depends on the tenure mix with which each local authority decides to go. The Deputy is right in what he says about what the affordable element will look like after the procurement stage has been finalised.

The way we help local authorities and structure the competitions in terms of the evaluation we undertake is by making the social or affordable housing costs as keen as possible. Local authorities take various views of the cost of affordable housing being bid for by developers or the prices being set by a local authority. Differing approaches are being taken in that regard.

Deputy Darragh O'Brien

In the absence of the final model of affordable purchase, each local authority is deciding what it deems to be the affordable model for the schemes.

Mr. Paul O'Neill

Yes. That is certainly a good point.

Deputy Darragh O'Brien

It is probably not ideal.

Mr. Paul O'Neill

No.

Mr. Jim Baneham

The Deputy asked about income limits and referred to the income threshold for affordable housing for couples being set at €75,000. There was discussion of it being an income limit, but it has not been enacted and is not in regulations. The legislation is more flexible in how it describes the way in which income limits are calculated. There is a degree of complexity. I might ask Mr. McCarthy to explain a little about it because it is not a one-size-fits-all policy. That is how it is described in the legislation. Obviously, it must be enacted in the regulations. Mr. McCarthy may provide more detail in that regard.

Mr. Daragh McCarthy

Section 84 of Part 5 of the Housing (Miscellaneous Provisions) Act 2009 articulates an affordability standard. It refers to mortgage payments not consuming more than 35% of the net annual household income and outlines what the notional mortgage payment would look like. Such a payment has a 90% loan-to-value ratio and is based on the average purchase price a first-time buyer would pay in an administrative area. That is the flexibility element to which Mr. Baneham referred. It does not lend itself to strict national income limits.

Deputy Darragh O'Brien

That is helpful. I thank Mr. McCarthy.

Mr. Jim Baneham

The regulations have yet to be finalised. Based on the legislation, we expect that the limit in Dún Laoghaire-Rathdown will not be the same as that in County Roscommon.

Senator Victor Boyhan

I thank the representatives for their presentations. I will be brief. I thank Mr. O'Neill for his very concise three-page report which is one of the shortest that has been presented to the committee. He referred to his experience of working with Dublin City Council and Fingal County Council, but he did not mention South Dublin County Council or Dún Laoghaire-Rathdown County Council. Has he been involved with the latter two councils or is he doing any work with them? Perhaps it is optional and they do not require the assistance of the National Development Finance Agency, NDFA. As I do not know how it works, I ask him to touch on how the NDFA interfaces with county councils.

Deputy Darragh O'Brien raised the issue of the Land Development Agency not being a legal entity. The Government indicated that it required at least 30% of land released from central controlled bodies to be utilised for affordable housing. In addition, it stated provision woull be increased by the 10% Part V properties and could be further increased through co-operation with landowners. The importance of the Land Development Agency and its relationship with other bodies, including local authorities, is critical. There is a suggestion legislation dealing with the Land Development Agency will shortly be brought through the Houses, which is very important and must be welcomed. Great fanfare accompanied the launch by the Government of the Land Development Agency, with the allocation of €1.25 billion which was to be used to quickly develop 150,000 new homes. There was great excitement and press releases were issued. Of course, that took place in September 2018 and progress has been slow since. I send that broader message to Members of the Houses.

Mr. Baneham referred to land in Enniskerry that was provided for the Housing Agency at no cost. However, there was a substantial cost attached to that land. Is he aware of the initial cost of it? The suggestion in a one-line throwaway remark that it was given to the Housing Agency at no cost is correct because there was a cost somewhere along the line. When considering the unit cost of properties, we must bear in mind the overall cost of a site.

Yes, there were constraints. I acknowledge that the Housing Agency did a lot of work and everyone involved helped to pare back the cost substantially, which fed into the delays. However, I welcome the fact that we are now going to see units there. Perhaps the witnesses could talk about the acquisition costs and tell us again the cost of each of the residential units.

I refer to the developments in Skerries, Dublin and Devoy Park in Naas. Again this concerns the role and function of the Land Development Agency or other State interests. That ultimately will determine the outcome. For example, I refer to the 30% requirement I mentioned, the additional 10% accounted for by Part V properties and the additional units that will become available through the co-operation of landowners. That is all critical. The Government has major landbanks and resources. Those belong to the State. We need to maximise their potential for affordable and social housing. While the Land Development Agency has a commercial remit, we have to be realistic about that. Everyone welcomes the mixed tenure and mixed housing which is envisaged. That is important for a range of reasons. However, we need a lot more clarity. Will the representatives of the National Development Finance Agency, NDFA, elaborate on the agency's relationship with the Land Development Agency? The witnesses have told us that the agency has agreed to provide these three sites in Skerries, Dublin and Kildare. On what conditions are these sites provided? The NDFA set specific requirements for the provision of long-term cost rental housing on these sites. What conditions have been set? Will the witnesses elaborate on those? How can the NDFA be sure they will be enforced and adhered to? I ask the representatives to tell us that in the context of Government policy on the use of State lands.

Mr. Paul O'Neill

I thank the Senator. Regarding our role, we are keen to assist and support as many local authorities as possible. We are supporting more local authorities than the number I indicated in the paper, which is focused purely on the schemes that are under way. Regarding the two local authorities which were mentioned, we have done some initial feasibility and viability assessments for Dún Laoghaire-Rathdown County Council. In South Dublin-----

Deputy Richard Boyd Barrett

Which two?

Mr. Paul O'Neill

We have been using modelling to advise on options for the Shanganagh site. Moreover, we are financial advisers to South Dublin County Council on its site at Shankill.

Senator Victor Boyhan

Shankill is in Dún Laoghaire-Rathdown. Does Mr. O'Neill mean Shanganagh?

Mr. Paul O'Neill

Yes, Shanganagh. My apologies. I wish to make a couple of points about our other roles. We have been doing some initial modelling of cost rental uses of sites for the Land Development Agency. Mr. Baneham mentioned Balbriggan. There is also a site in Dundrum.

Deputy Darragh O'Brien

Mr. O'Neill has mentioned Balbriggan. Which Balbriggan site is that?

Mr. Jim Baneham

It is a site called Castlelands, located to the south of Balbriggan.

Deputy Darragh O'Brien

Is the Housing Agency considering using all of it for cost rental properties?

Chairman

We will come back to Deputy O'Brien.

Senator Victor Boyhan

In mentioning Dundrum, is Mr. O'Neill referring to the Central Mental Hospital site?

Mr. Paul O'Neill

That is correct.

Senator Victor Boyhan

Will he elaborate on what the NDFA has done there to date?

Mr. Paul O'Neill

We have undertaken an assessment. The LDA asked us to look at whether the site would be viable for cost rental uses. We have undertaken some initial modelling for the LDA in that respect.

Senator Victor Boyhan

What does the NDFA think?

Mr. Paul O'Neill

Given the area and the rental potential there, cost rental is a viable option for that site.

Senator Victor Boyhan

I thank the witness.

Mr. Jim Baneham

Several questions were addressed to me. I am not competent to talk about certain elements of the Land Development Agency. Some questions are more appropriate for the Land Development Agency itself. However, I can certainly talk about our interaction with it. Before I go on to that, Senator Boyhan asked about the cost of the land on Enniskerry Road. He is correct. It does have a value. There is a cost to the State in providing it for zero cost. A recent evaluation undertaken for our own accounting purposes valued the site at around €8 million. It is being provided for social and cost rental purposes with no additional costs being passed on to the project, but it is worth at least €8 million.

Senator Victor Boyhan

Is that the site value?

Mr. Jim Baneham

Yes. The Senator also referred to the cost of each residential dwelling within the scheme. The overall cost of the scheme is between €53 million and €54 million and this includes construction costs of around €45 million or €46 million, design team fees, contributions to utilities, development levies and a plethora of other costs, some of which are associated with the construction period such as finance etc. This divides into approximately €340,000 per unit, on average. Because of the typology of the site and the dwellings, they are not the cheapest homes that can be delivered.

Senator Boyhan also asked how we might place controls over the transfer of lands. Enniskerry Road was an example of this and we intend to do something similar. As for where we are with the LDA, we do not have a legal document setting out in detail what the constraint would be. Naas is an example of what we want to happen, as the owner of the land. It has capacity for approximately 200 homes, close to the existing town centre and to the local authority offices. There is not much in the way of apartments or rental accommodation in the middle of Naas. We would like to have 10% as social housing, as is required by legislation, with the balance to be cost rental accommodation, meaning the land would be entirely a rental development. The long-term ownership of the site would be kept within a State entity. The LDA is receptive to that and has not raised any objections of which I am aware.

Deputy Pat Casey

Mr. O'Neill said he offered advice to each of the local authorities in the context of site assessment or tenure mix options. Are there any sites where the agency has failed to come to an arrangement that is financially viable in any local authorities? What is his general opinion of the whole procurement process? Is it delivering value for money or is it delaying the delivery of housing? I believe the procurement process is one of the stumbling blocks to the delivery of housing. The four projects we are looking at are all on State land but a significant proportion will be given to the private sector to deliver housing. Is this the correct use of State land? Is it the correct policy? As a State, should we not be able to deliver our housing on our own land? We all accept that cost rental is cheaper than market rent but it is still not affordable, at €1,200 for a two-bedroomed house. Can Mr. Baneham say what measures do we need to take to get it to affordable rent? What are the stumbling blocks in relation to affordability? We can all talk about red tape, regulations, development levies, utilities etc. Is land cost not the single biggest issue challenging us today? What do we need to do about that? Until we face up to the cost of land, we will never get to affordability, either in the context of renting or purchasing.

What do we need to do in relation to land?

Mr. Paul O'Neill

I thank the Deputy. He mentioned land costs but I would add the construction market and construction costs to those as well. The sites we are looking at are viable but the cost depends on the tenure mix and the delivery model, be it cost rental or affordable purchase. To give an example, affordable purchase for apartments may not work because of the requirements relating to the cost of building, whereas the cost rental model, given the rental yields, may be a more attractive model in that respect. It is about looking at the different options.

The Deputy is right that procurement processes probably take too long and we see it across all the delivery models on which we are working. They cannot be avoided, however, and while they are difficult, we try to bring to bear our experience of other delivery models and try to make them as streamlined as possible. There are, unfortunately, set requirements, be they 12, 15, or 18 months longer for procurement delivery on these projects. From a policy perspective, we are advising on various different products and offerings on these sites. We are certainly not saying the sites we mentioned are a panacea or a way to deliver everything. While there is a private element to these sites, the State is getting back a contribution for that private piece which it can use to reinvest.

There is a significant social element to these schemes. To answer the Deputy's question on the social mix, there is generally 30% social housing on these sites as well. Local authorities also specify the nominees for the ultimate purchasers of those sites, which is important. The procurements are not structured in such a way that the private sector or market just runs and develops the private piece as it sees fit. That is the benefit of the procurement process. The sites have to be progressed in line with the aspirations, technical and planning quality, and tenure mix the local authorities have in mind. The local authorities bring that element of control throughout the development process.

Mr. Jim Baneham

The Deputy asked about the passing on of land to the private sector, which relates to the two sites I discussed, and the site on the Enniskerry Road. At the moment, the Enniskerry Road land is in the ownership of Dún Laoghaire-Rathdown County Council, but the arrangement will pass the ownership on to approved housing bodies, AHBs, which are regulated social housing providers. That is an example of land being managed long-term by AHBs. The intention with the other proposals in Skerries and Naas is that their long-term ownership will be controlled by the State and will not be passed on. We have other models, and there has been some interaction with the NDFA on one of them. It relates to market purchases on the site in Westmeath but it could be adopted or rolled out further in respect of affordable purchases, where a developer will undertake a development but the land is only transferred to the ultimate purchaser and the developer does not take possession of it at all. The person who gets the land after the dwellings have been built is the person who is buying the house. There are definitely ways the State can keep control of land into the future and only pass it on to the end user. That is an operational scheme.

There are particular constraints regarding the Enniskerry Road site in terms of making cost rental more affordable. The other sites are more benign in their characteristics and consequently, we are optimistic that we could achieve better results in that regard. The land we are using is from the land aggregation scheme, so the State did pay for it, and in passing the land on at no cost, the State is effectively providing a subsidy. That is the case with the Enniskerry Road site, as well as with the other sites I mentioned.

Where a large parcel of land is being passed on, as with the bigger development in Balbriggan, for instance, it might be deemed appropriate to have a private-purchase element or a price put on it. Alternatively, there might be a commercial element, as it might be deemed appropriate for a parcel of land large enough to have an Aldi, Lidl or other development to have an economic value put on it.

On the broader issue of land, the focus of the Land Development Agency is trying to assemble land from the NDFA, some local authorities and other commercial entities from the State sector. Land values are definitely a significant barrier to affordability. I do not have a simple answer as to how to deal with that, unfortunately.

Deputy Pat Casey took the Chair.

Senator Jennifer Murnane O'Connor

I thank everybody present. Affordable housing is important, particularly now that we are in a housing crisis. The main issue facing us is that of the people who fall between the cracks. They do not qualify to go on the local housing list and therefore are paying up to €1,200 or €1,300 per month and do not qualify for a mortgage. This has left a massive hole in housing, particularly affordable housing. Progress needs to be made as quickly as possible because there are those who have no help and are caught. This is the only area in which we can give back to them.

Mr. O'Neill said the NDFA is providing financial advice to a number of local authorities seeking to develop housing schemes on their lands. He only mentioned four in particular, which are, of course, Dublin-based. I am aware that we are very much focusing on Dublin here but I always feel rural areas need to be considered also. We have 31 local authorities, all of which have landbanks and all of which provide a massive service to everybody. What other local authorities are being dealt with? It is important that we do not focus on Dublin alone. I understand we need to focus on it but, when the notes suggest everything is Dublin this or Dublin that, the rest of Ireland always feels forgotten. As a Carlow person who is always making representations, particularly regarding affordable housing, I believe this needs to be addressed. What other local authorities are being dealt with?

Let me talk in general. One of the major issues is that there are many landbanks around Ireland. Do the delegates often come up against resistance to development? Recently in my area, certain builders were dealing with the approved housing bodies. This is another area on which the Government seems to be focusing, rather than building itself. It seems to be looking to all the approved housing bodies. What can we do better with landbanks through legislation? Is there anything we can do to help local authorities? Is there anything we can do to make this go quicker?

When affordable housing is mentioned, it is felt we are helping those who are not able to get on the housing list or obtain the mortgages they are looking for. Could the delegation come back to me on the landbanks?

We must not have circumstances in which developers have no incentive to provide affordable units. We need affordable units, as we need homes. Are we providing them? What incentives are we providing in this regard? We need to make sure the homes are built and are built really quickly. Could one of the witnesses revert to me on that?

One size does not fit all. Many individuals were speaking to me lately about housing and building houses. We need to consider a broader range and affordability but we also need to give people the option of having an affordable house that they want and can afford. A lady said to me recently she had to move out of Dublin because she cannot afford a mortgage. She cannot even afford an affordable house because she is renting. She cannot afford to rent in Dublin. What we are doing is basing everything on one particular area. Instead, we need to deliver in others. We need to deliver affordable housing in Carlow and other areas where people are crying out for it. The delegates might respond to these points as many of the questions I was going to ask have been answered.

I believe the issue of affordable housing will be of great significance in the future. It is significant for young people starting off. Nurses and teachers, for example, who are paying between €1,300 and €1,400 a month in rent, cannot save and, as a result, cannot get a mortgage from the banks. We need to ensure these are the people who get affordable housing.

Mr. Paul O'Neill

Our statement is focused on the schemes under way that specifically include an affordable purchase or affordable rental piece. We are trying to support as many local authorities as possible. To give the Senator a flavour, we are working with Westmeath, Kildare, Wicklow and talking to Sligo, Donegal, Kerry and Cork county councils. We are trying to stretch ourselves out as broadly as possible. The Senator can rest assured in that respect.

We spoke about affordable policy and when that will come into play. That will happen but the biggest enemy, to me, is time. It is about the length of time to get these schemes to procurement. From our perspective, we are encouraging local authorities, which are looking at sites to start the ball rolling by getting master plans and planning prepared for them. Not only does it de-risk sites, it gets the process up and running as quickly as possible. That is the key message we are giving.

Mr. Jim Baneham

The serviced sites fund is to assist local authorities in terms of subsidising infrastructure. Initially, when this was made available, the first call for proposals was restricted to ten local authorities. It was then broadened to 19 local authorities. It has not been made available to all local authorities, however, including the Senator’s. It is a tool to assist a local authority in being able to make housing more affordable for people in its locality.

The thinking behind the restriction is to concentrate on areas where the affordability issue is at its most pronounced. The Department had a circular in October last year where it sought submissions from local authorities to demonstrate the affordability issues they had in their areas. This allowed the Department to decide whether it needed to broaden this out. It did but, unfortunately, Carlow was not included.

In making housing more affordable, the current tool is the serviced sites fund. We understand there will be a further call and it might be made available to other local authorities.

We are in favour of people having an option to purchase, as well as to rent if the cost rental model gets off the ground and becomes a bigger thing. On incentives to private developers to deliver affordable housing, the legislation is in place with Part V but it is not currently activated. It is focused on social housing.

The agency has some lands in Carlow and will have a meeting with the local authority next week to try to develop them.

Deputy Maria Bailey resumed the Chair.

Senator Jennifer Murnane O'Connor

That is good to know.

Deputy Richard Boyd Barrett

I have to say I find all this mind-bending. I look at a site like Shanganagh and wonder where the hell the houses are. This goes on and on. There are interesting conversations going on about financial modelling but nothing happens. I, along with the people in the area, wonder when this nonsense is going to end. I am trying to get to the bottom of this. I admit I have learned some stuff and thank the witnesses for their presentations. At the end of it, however, I still cannot quite figure out what is the problem in getting people onto a site in Shanganagh where the local people have been screaming for housing for six years.

Mr. O'Neill of the NDFA earlier stated it had some involvement in advising the council on financial modelling.

Can that issue be elaborated on? What exactly is going on?

Reference was made to the site on Enniskerry Road and a cost rental figure of €1,200 a month, which is ridiculous. People who need affordable rental properties but cannot get on the housing list because their income is too high cannot, for the most part, afford to pay €1,200 a month. That will not work for them. All of this work has been done and there is all of this complexity, yet at the end of the day the cost is not affordable for those who need affordable rental properties. I would like to get to the bottom of that conundrum if the delegates have any comment to make about it.

This is ultimately a policy matter, but would the following observation have any relevance? With reference to every single site, the delegates are saying they must take into consideration the particular costs associated with the site, market conditions in terms of rent and the question of what is actually affordable. That is completely the wrong way to go about it as it complicates matters. It means that the position on every single site becomes extremely complicated because one has to take into account all of the different things. Surely it would be simpler to ask what is affordable relative to people's incomes. It is 30% or 35% of income. It is the same in the case of affordable purchase - 30% to 35% of income. We should simply put in the necessary capital, or extend the loans, or provide for a combination of both, to ensure every site will deliver affordable housing with a definition that is universal. In other words, it would not depend on those specific conditions because, if it did, it would not be affordable in many cases because of the particularities of the site, site servicing costs or the cost of dealing with Japanese knotweed. It is ridiculous that the cost of dealing with Japanese knotweed is going to change the level of affordable rent. Do the delegates agree that it is ridiculous? We must say what is actually affordable for the people for whom we are trying to deliver affordable housing, whether for purchase or rent. I would appreciate a comment on that issue, specifically about the site at Shanganagh.

I have two other brief questions. To what extent, if any, is either of the agencies interacting with NAMA on sites? Is it not at all? To what extent, if any, is either of the agencies dealing with the affordable component of private developments where there has been local infrastructure housing activation fund, LIHAF, funding? What is happening is unclear. The State is putting LIHAF funding into strategic development zones and other developments, private developments in some cases and a mix of both in others. There is supposed to be an affordable housing dividend, but it is unclear how many affordable houses we are actually getting for LIHAF funding. It seems to be linked with market conditions. What does "affordable" mean? There does not seem to be clarity on that issue. In the original documents the Government put out, LIHAF funding was to be used to deliver a figure of 40% on any development approved for the provision of such funding to provide affordable housing, but that has vanished. We do not have a clue what we are getting for LIHAF funding.

Mr. Paul O'Neill

In response to the Deputy's query about the Shanganagh site, the NDFA and the county council looked at and considered different options. for example, we looked at the provision of affordable social housing on the site, cost rental and a longer tenure mix of private, social and affordable housing and different mixes within it. It was really about presenting the council with different options which might or might not work. I cannot say much more. It is a number of months since we made that analysis which is now with the council for decision or progression. We have not done anything in that respect for the past few months.

Deputy Richard Boyd Barrett

What rents were defined as being affordable?

Was affordable purchase included as one of the considerations?

Mr. Paul O'Neill

That is correct, yes.

Deputy Richard Boyd Barrett

It was not considered, however, in some models.

Mr. Paul O'Neill

Yes.

Deputy Richard Boyd Barrett

I do not understand how this can be done without having clear definitions of what affordability is.

Mr. Paul O'Neill

It is difficult. We are still trying to progress these schemes. We are waiting for the legislation to come through to see what can potentially work on these sites. From my perspective, on that particular site, cost rental emerged as a really viable opportunity for that site and from the perspective of keeping it in State ownership as well. It ticks a number of boxes.

Returning to the Deputy's second point, there is a distinction between cost rental and affordable rental.

Deputy Richard Boyd Barrett

I know.

Mr. Paul O'Neill

That is something that we are acutely aware of. The concept has to be proven. Mr. Baneham referred to Enniskerry Road as the pathfinde, if one likes, with St. Michael's and Shanganagh, maybe, to follow. We are still in those early days but we are trying to ensure from our perspective that cost rental means affordable rental. That is what we are trying to do.

Mr. Jim Baneham

On the question of affordability, there is an accepted norm of it being no more than 35% of income. That is what it set out in legislation in terms of the affordable purchase scheme. In our opening statement, the aspiration is that this is one's limit at the point of entry for paying one's mortgage or rent and that, over time, that would a become lower proportion of one's income.

In terms of the theory behind affordability there is a good understanding of what we are trying to achieve. Regarding a rent of €1,200 in Enniskerry, I have discussed this on a number of occasions. There are households in that area who will be very keen to access that. They would have to be just a little bit further above the income limits for social housing. For a couple earning a particular income in the region of, maybe, €55,000 at the point of entry, they could still be paying 35% of income, or slightly less. Could we get it lower on another site? Yes, I would hope that we would be able to get it lower.

On the broader point made by the Deputy that the current system that we are trying to operate is based on specific site characteristics and local market conditions and then trying to achieve what is affordable, that is essentially what we are trying to do. There is not what the Deputy might describe as a broad brush approach towards setting a standard across the country and backfilling the funding behind that.

Deputy Richard Boyd Barrett

Yes.

Mr. Jim Baneham

That is not the approach that is being taken at the moment.

It is quite specific to each site and the local market conditions. I am aware that this point has been brought up elsewhere. In the case of the Enniskerry Road location, the neighbouring apartments are much more expensive to rent. There is little risk when putting those on the market but that they will be rented. In other areas €1,200 is more than the market rent so they would not rent there.

I acknowledge that there is a degree, if not quite a lot, of complexity in the way it is being developed at the moment.

Chairman

We will do one quickfire round of questions.

Deputy Richard Boyd Barrett

I have a brief supplementary. From the point of view of just doing this, whatever its political merits, would it not be easier and, as a result, probably quicker from a purely practical point of view, if one did not have to look at everything?

Mr. Jim Baneham

From my previous training as a quantity surveyor I believe the problem would move to another part of the process. That bit might be the easy bit but trying to find the funding to make the rest of it work might be the hard bit.

Chairman

I have just a couple of quick questions before we start the quickfire questions.

The three members in the room are very familiar with the Enniskerry Road site as well; I do not believe the knotweed was the big cost on the site. We can make light of things but that is not the big cost on the site. One is hitting pure granite on a sloping site there, the excavation of which is very expensive. It would set us back a number of years in terms of getting on site if one was to take out the underground parking.

Mr. Jim Baneham

Yes, that would be an issue from a planning point of view.

Chairman

While €1,200 is high for cost rental in that area and I would like the figure to be a lot lower, the reality is that the average rent in that area is in the region of €1,800 to €2,000.

While it is not ideal, I presume that when calculating the figures, one always goes for the lowest rent possible. That would be site specific; other sites may not have the excavation or underground car parking and so costs can come down. There are different variants. While a one-size-fits-all approach sounds amazing, realistically, the problem moves elsewhere.

We are all frustrated at the delays in delivering affordable housing and I understand the complexities involved. Are we now moving in the right direction?

Mr. Jim Baneham

I have been involved in Enniskerry Road for quite a while, as have my colleagues at the back of the room in Dún Laoghaire-Rathdown. I am delighted to say that when I passed by the site at the weekend, although it was not operational, there were two machines on site. They were doing mainly site investigation work and I am happy that this is happening. There is momentum to make it work. Ideally, we would be further down the road with the affordable purchase side of things but it is happening after a period of delay.

Chairman

I have a final question on areas outside Dublin, because as a committee we look not just at Dublin but at the 31 local authorities. For the local authorities where there is natural affordability, is the agency asked to help in any shape or form? Is there a requirement to intervene?

Mr. Paul O'Neill

No. For example, in County Westmeath, we are advising on a site for development in Athlone. There is a natural affordable element to that site but it has only a private and social mix. We are advising multiple other local authorities outside Dublin.

Deputy Eoin Ó Broin

I have a couple of supplementary questions. To labour the point, on the basis of the Housing Agency's own definition of affordability given at the start, and the generally accepted definition, someone would need a monthly net income of €3,650 or a weekly income of €842. I emphasis that because Enniskerry Road will happen; it is on-site. The next big project will be St. Michael's and it seems that everyone in the room is suggesting it would be much better if the rents were lower than €1,200 a month. We need to try to make sure that with St. Michael's, that is achieved. Although St. Michael's Estate in Inchicore does not have the site-specific problems of Enniskerry Road, the European Investment Bank loan is over a much shorter time. The challenge therefore is less to do with the site-specific stuff and more to do with the financing. That is why these contributions are so important.

I have a couple of technical questions about Enniskerry Road. Will the witnesses from the Housing Agency talk us through the management and maintenance formula in order that we can get a sense of what that adds to the tender price mentioned at the start in terms of the overall costs? The tender price mentioned was €45 million. Is that just for construction, is it for construction and site servicing or are other costs built in to that? It gives a unit price of around €300,000, which is substantially above the average cost for apartments built by the state. Is it, as the Chairman suggested, to do with the granite and the car parking or are other costs rolled in?

In relation to Enniskerry Road, and specifically St. Michael's, how do we get the price down? Entry-level rent gets cheaper over time only if one's income rises. For a lot of modest-income workers, their incomes are the least likely to rise sufficiently over time. There is no guarantee that somebody will get much benefit ten years in if their income remains the same. For example, with Enniskerry Road, if the site service allocation had been doubled to €8 million or €12 million, how much would that have allowed the entry-level rent to be brought down? I am exceptionally concerned about St. Michael's. Whatever about the peculiarities of Enniskerry Road, if St. Michael's comes in at €1,000 or €1,200, people will see cost rental as an unaffordable option.

Is it a 25-year EIB loan and will that cause difficulty for entry-level rents? By how much would the maturity of the loan need to be extended to bring rents below the €900 mark? By how much would the serviced sites fund need to be increased? I am not asking for an opinion, but the committee needs to hear the options.

Finally, I would love to see some of those spreadsheets for the different options and I imagine other committee members would as well. I do not know if the agency representatives are in a position to share them with us but, if so, the committee would benefit from sight of them. For example, could we could see the details of the Enniskerry Road development after it is all signed and completed? The more detailed information we have, the better we will understand it. The crucial question with the Enniskerry Road and St. Michael's Estate projects is what it would take to bring the figures down to between €700 and €900 in terms of increased capital or longer loan maturities, especially in the case of St. Michael's Estate.

Deputy Darragh O'Brien

I wish to follow on briefly with a question on cost rental. Let us consider the figure of €1,200 for Enniskerry Road in the context of the average income in Dublin. As a percentage of net take home pay, that figure is approximately 42% for a single earner. It is far above what would be deemed the affordable level of one third, or between 30% and 35%, of net take home pay. That is significant and the agency representatives get the picture from the members that this is a concern when we are discussing a Government scheme of cost rental. The figure is less than Dublin market rates. However, if we take the average throughout all of Dublin, as per the Residential Tenancies Board, we are nearing a figure of €2,000. The view that it is below market rate when the market is so inflated is a problem and I think the agency representatives understand that. That is one point.

I wanted to ask the NDFA representatives specifically about St. Michael's Estate. A total of 70% is proposed for affordable rental housing. Who gave the figure of 70% to the agency? Was that a direction from the Department? Mr. O'Neill might wish to answer that.

I have one final question for Mr. Baneham. He referenced Castlelands, which is a large site in Balbriggan. We found out today that it is not currently with the LDA and is still with the Housing Agency. A master plan was issued and published by Fingal County Council. It is closed for public consultation at this stage but it will come back to the local authority in September. What percentages of rental and cost rental housing are proposed for the Castlelands site? What percentages of social and affordable and private purchase housing are proposed for Castlelands? What is the figure for the total number of units from the perspective of the Housing Agency? I realise that is rather parochial, but it is important because it is the largest site in respect of which there is a proposed transfer to the LDA. Obviously, we must ensure that we take into account the wider issues in the area when we are considering cost rental, affordable and social housing.

Chairman

I am going to Senator Boyhan next. The Housing Agency and NDFA representatives might not have specific answers to some of the questions. That is okay, but they may wish to send them to the committee afterwards and we can then circulate them to members. Senator Boyhan is next.

Senator Victor Boyhan

We all agree that land costs are a barrier to housing affordability. No one disagrees with that and the point is worth emphasising.

Is the Housing Agency still in the business of acquiring lands or properties? If so, is there an inventory of those properties? The agency was involved in the past in acquiring properties. There is always a conflict when State agencies acquire built properties. There can be an issue in terms of affordability, the market and competition. I acknowledge circumstances have changed in recent years but it was an issue with the Housing Agency previously, as was the issue of how the agency acquires property. Is there an inventory of housing sites? Reference was made to a site in Carlow, and that came as a surprise to my colleague. Is there a national inventory of Housing Agency sites and properties? If so, can it be made available to the committee?

Senator Jennifer Murnane O'Connor

Information is crucial in this case. The projects mentioned by Mr. Baneham and Mr. O'Neill are more like pilot schemes for the rest of us to learn from. It is crucial that they are done right and that they give people the opportunity to afford a house. All of us will probably learn lessons from them from now on. They will be pilot schemes for the rest of the country. It is crucial that we get them right.

Deputy Richard Boyd Barrett

Generally, how much does the cost of finance vary and how much does it impact on the final rent in cost rental or, for that matter, the purchase price? What are the different sources of finance and what sort of variability is there in the cost at different times and overall in these projects?

Elaborating on an earlier question, everything that the agency is doing seems to be based on particular sites. It makes me, and others, think that it does not have a remit for dealing with the overall crisis in affordable housing, but only for particular sites. Will Mr. Baneham explain, because it seems quite random? The agency gets particular sites, but why does it get those and not others? How does it fit into some sort of overall plan to deal with the crisis in affordable housing and rental? Does it relate in any general sense to the targets, such as the national housing output targets of 25,000? Is the agency supposed to deliver a certain amount of cost rental or affordable housing as part of that output on a year-by-year basis? If so, what is it? Does the agency select the sites? Does the Government select the sites for it? I am not clear how it fits into a bigger project to solve the housing crisis.

Mr. Jim Baneham

I will return to Deputy Ó Broin's question on the cost of Enniskerry Road and give a bit more detail. The construction cost is €45 million including VAT. That is what was tendered, the bricks and mortar, concrete and so on. Other costs such as fees are outside that. On the operational side, we have a base model with approved housing bodies for how they model and maintain social housing stock. That was the starting point when we looked at Enniskerry Road and where the proposals came in from Tuath and Respond. It is quite similar in that many of the same things happen. One must replace the windows after 20 years or whatever. That type of model was the basis and they have their own operational and overhead costs, etc. That was examined and pared back a bit, particularly in terms of the overhead costs. Things that were not pared back include the replacement of infrastructure, which was left unadjusted. Over time that is a significant element in overall costs, but I cannot give the Deputy a quick figure. I may be able to follow up with something in that regard.

The Deputy asked about what could make a big difference. I was thinking about making a quick calculation but am nervous about doing so.

Deputy Eoin Ó Broin

Go on.

Mr. Jim Baneham

My previous training was as a quantity surveyor so I would be very nervous about doing that as I know the kind of trouble one can get into from giving bad figures. On the serviced sites fund, €4 million over 50 units is €80,000. If that was €120,000 it would definitely make an impact. It would be at least €100 a month. I will have to come back on that. We might come back with a scenario case, where if it was another amount it would have a bigger impact. The length of the loan did have a big impact. Our initial modelling was 25 years and went out to 40 years. For loans longer than 40 years, modelling has been done.

The NDFA has examined modelling on 50-year terms. One can model a loan for any period but one has to get somebody to give the loan. We had to get something in place with the HFA in that regard. Longer loans reduce the cost and the payback per year or month but one has to get a lender to give one the money. We could give examples of that.

With regard to €1,200 being 42% of income in Dublin, I am guessing that may be an individual's income.

Deputy Darragh O'Brien

A single person.

Mr. Jim Baneham

Regarding Enniskerry Road, the aspiration is that two people will probably live in the two-bedroom units, making good use of them. With regard to St. Michael's Estate, the 70%-----

Deputy Darragh O'Brien

Even for a couple in Dublin, the average rent would still be above 30%. That is the benchmark of affordability but I take Mr. Baneham's point.

Mr. Jim Baneham

I might leave the issue of the 70% and St. Michael's Estate to the NDFA.

Deputy Darragh O'Brien

What about Castlelands?

Mr. Jim Baneham

There was a reason we did not mention Castlelands in the opening statement. The matter is more complicated. The master plan certainly moved on the entities. We earmarked that site for 500 or 550 homes. There is now to be at least 700 homes on the site.

Deputy Darragh O'Brien

Five hundred or 550 in respect of cost rental?

Mr. Jim Baneham

In terms of the capacity. When we looked at the site in the past, prior to the current master plan, we envisaged it delivering 500 or 550 homes. That number has increased to more than 700 now, which is good. We have yet to have any meaningful discussion on how the figure will be broken down, however. It is a matter of allowing the master planning process play out and then coming back to it.

Deputy Darragh O'Brien

There is no split.

Mr. Jim Baneham

There is no hard split at this stage.

The next question was on whether the Housing Agency is still buying land or property. We are not buying land. The land we have was transferred through the land aggregation scheme or through the NBA, which we effectively absorbed.

We are buying property. We are buying housing under Rebuilding Ireland. I will not talk too much about that but it is actively happening under the €70 million fund. We also do some specific work for local authorities in regard to homelessness provision.

With regard to getting a national inventory of the agency's land, it is in a couple of places. Rebuilding Ireland has a map on a website and one can look at more than 700 parcels of land owned by local authorities. The Housing Agency's land is a subdivision of that. It is on the website so one can go to any local authority area and see what we have by clicking a little icon. We also have a document. I was just checking our website, which I probably should not have been doing. I cannot find out where it is; it has changed in the past couple of days. We have put on it a strategic development management plan that covers all our lands and gives quite a bit of detail on each site. That is available for anybody to download.

I will let the NDFA talk about the cost of finance.

With regard to the point on there being no joined-up plan, while we consider individual sites, the high-level framework exists under the legislation. The regulations are partially in place and the rest will be in place in the autumn. That is a framework in respect of approaching affordability regarding purchases.

With regard to cost rental, we are at an earlier stage. It is a pilot stage. The policies are still not developed but there will be a framework in place. I hope it will make that a bit clearer in due course.

Mr. Paul O'Neill

Deputy O'Brien asked about the 70%. That would have been decided in discussion with Dublin City Council, which asked us to model on that basis, with the remaining 30% for social housing. We modelled on the basis of 25 years for the EIB. To be open about it, this was done last year. To go back to Mr. Baneham's point about interest for the Pathfinder project, it is looking at it on a longer basis, and that is what we are trying to do too.

It might be helpful for the committee if I go back to the point about timing. In St. Michael's, the design is being looked at; then it has to get planning; and then a developer has to come in. We are talking about years. We are aware of that, and it will be quite some time before we lock in that funding. Our role is to make sure that it is as competitive as possible. That is why we are looking not at the private sector but at what is available to the State, whether through the HFA or the EIB lending directly to local authorities. We look at whatever gives the State the best options.

Upfront capital funding was mentioned as a potential way to reduce the rents. We have looked also at interest-only portions of the debt in recognition that the assets have a capital value at the end of their life as well.

Deputy Eoin Ó Broin

What about the repayments?

Mr. Paul O'Neill

In principle, a proportion of the loan would not be repaid during the 25-year operating period; it would be interest only.

Deputy Eoin Ó Broin

There would almost be a second tranche of repayments after that.

Mr. Paul O'Neill

At the end of the 25 or 40 years, or whatever term it may be, there is an outstanding debt, but the asset has residual capital value at that point.

Deputy Eoin Ó Broin

Does that debt outstanding have to be paid as a lump sum or over a period of time? How does it work?

Mr. Paul O'Neill

That can be flexible; it is to be determined.

Deputy Eoin Ó Broin

Does the EIB provide that kind of loan finance?

Mr. Paul O'Neill

In fairness to the EIB, it would look for an advertising loan. It is more about whether the HFA or others could help.

Deputy Eoin Ó Broin

The State, for example.

Mr. Paul O'Neill

Exactly.

Deputy Boyd Barrett asked about our role. We advise across all different sectors, our focus is not just on housing. We are much more involved in the project space and work with local authorities as projects arise that they want us to be involved in.

Deputy Richard Boyd Barrett

Who would want that involvement?

Mr. Paul O'Neill

Local authorities, or Government Departments and agencies.

Deputy Richard Boyd Barrett

They come to the agency.

Mr. Paul O'Neill

Yes, but we also reach out to them through the national development plan. When we know that projects are coming up, we reach out, to be as supportive as possible.

Deputy Richard Boyd Barrett

The agency is not tied in directly to the implementation of the overall Rebuilding Ireland plan, but is brought in.

Mr. Paul O'Neill

We are a support function.

Deputy Eoin Ó Broin

I have one technical question. To go back to the 25-year EIB loan for St. Michael's, if it had to be paid in full over the 25 years, would that make it difficult to achieve rent below €1,200 a month if the serviced site fund was equivalent to that of Enniskerry Road? Would that be a barrier?

Mr. Paul O'Neill

Yes.

Chairman

I thank all our witnesses for attending. We went on a bit longer than intended, but we can all agree that it was very informative. We appreciate the information they have given us and thank them for engaging with the committee today.

Sitting suspended at 1.04 p.m. and resumed at 1.12 p.m.

Chairman

At the request of broadcasting and recording services, members and visitors in the Public Gallery are requested that for the duration of the meeting, mobile phones be turned off completely or switched to airplane, safe or flight mode, depending on the device. It is not sufficient to put phones on silent mode, as it maintains a level of interference with the broadcasting system.

No. 7 on the agenda is our continued discussion on affordable housing. I welcome to this session Ms Philomena Poole and Ms Catherine Keenan from Dún Laoghaire-Rathdown County Council and Mr. Owen Keegan and Mr. Brendan Kenny from Dublin City Council.

I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I invite Ms Poole to make her opening statement.

Ms Philomena Poole

I thank the Chair and the committee for the opportunity to make this submission. I am joined today by Ms Catherine Keenan who is the director of housing for Dún Laoghaire-Rathdown County Council. Dún Laoghaire-Rathdown County Council has historically been and remains one of the most expensive parts of Dublin, and indeed the State, in which to purchase or rent a home. The county has excellent transport links in the form of the Luas and the DART. That transport infrastructure is one of the key drivers for premium prices.

Dún Laoghaire-Rathdown County Council saw the fastest surge in prices in the capital in July 2018, with prices rising by 9.8%. In contrast, South Dublin County Council saw an increase of just 5.2%. The median price for Dublin as a whole was €360,000 in July, while in Dún Laoghaire-Rathdown County Council it was €527,000. That compares with €320,000 for Fingal County Council and South Dublin County Council.

The affordability problem is therefore particularly severe in Dún Laoghaire-Rathdown County Council and it is very important that the council would seek to maximise affordability on its own lands. The council approved an affordable scheme of priority at its meeting of 13 May 2019. Further regulations are required from the Department of Housing, Planning and Local Government with regard to qualifying criteria and income limits.

Dún Laoghaire-Rathdown County Council has a limited landbank comprising 55 ha, of which 42 ha are available for housing, including the Shanganagh Castle site which is 11.2 ha overall, of which 8.7 ha are for residential purposes. One third of the portfolio is classified as urban infill and is served by public infrastructure and facilities necessary to provide housing. However, a significant proportion of the land portfolio is located on unserviced land. The southern part of the county and adjoining areas in north Wicklow have major water supply and foul drainage network deficits. Proposals for new water supply and sewerage schemes are being progressed through Irish Water. Lands at Old Conna, Rathmichael and adjoining areas in north Wicklow, which have major water supply and drainage deficits, will be serviced as part of the future implementation of the Old Conna-Woodbrook water and drainage schemes which is needed to unlock the development potential of the area. It is expected that analysis of the capacity of the foul drainage network will be completed in late 2020. Irish Water received planning permission in January 2019 to construct the Ballyman reservoirs and associated trunk main. Roads infrastructure in these areas also need to be addressed.

With regard to current projects, I am aware that the Enniskerry Road site was referenced by the Housing Agency earlier today. That scheme is a pathfinder project in Rebuilding Ireland and as such is a cost rental pilot supported by the Department. The project will see the first of the homes delivered under the cost rental model in the country, commencing on site in June 2019 with full completion expected at the end of 2021. The project, which had prior Part 8 planning approval, was developed up to tender stage by Dún Laoghaire-Rathdown County Council for construction of 155 social and affordable homes, a community facility and green spaces, and it is the result of a collaboration between Dún Laoghaire-Rathdown County Council, the Housing Agency, Respond and Túath housing associations, and the Housing Finance Agency. Financial support is also being provided by the Department through the serviced sites fund for the cost rental homes. Respond and Túath will carry out the project as development agents for Dún Laoghaire-Rathdown County Council on land provided by the Housing Agency under the land aggregation scheme. The Enniskerry Road scheme comprises 50 cost rental homes and 105 social homes to be apportioned between Respond and Túath. The homes will be a mix of one, two and three-bedroom properties. All of the 50 cost rental homes will be two-bedroom apartments. The Department intends to develop a national policy approach to cost rental in Ireland based on the learnings from the cost rental pilot in Enniskerry.

Dún Laoghaire-Rathdown County Council is working in partnership with the Loughlinstown Co-operative Housing Society and Co-operative Housing Ireland, CHI, in an innovative approach to housing delivery which will provide for 42 homes, comprising eight co-op and 34 social homes, on lands provided by the council at Loughlinstown Wood. CHI has obtained planning permission for the overall scheme and the project has been tendered. Tender evaluation is currently taking place. CHI has obtained planning permission for the 42 dwellings and is in the process of tendering the contract. CHI will also project manage during construction. On-site construction is expected to commence in quarter 3 of 2019 with completion in quarter 2 of 2021.

In consideration of future projects, the lands at Ballyogan Court are residual lands left over from the construction of the M50 motorway. The proposed development provides for 119 quality dwellings with a mix of home types comprising 52 apartments and 67 houses. Part 8 planning was approved by the council on 7 June 2019. The scheme will be progressed as rapid build and preparation for tender is under way. A serviced sites fund application has been submitted to the Department for the provision of infrastructure associated with the affordable homes. The scheme will provide a mix of social and affordable dwellings for sale, cost rental or both. The number of each home type, size and location will be informed by the outcome of the second call for the serviced sites fund, the financial model and the development route.

St. Laurence’s Park is the current home of Stillorgan library and 16 vacant maisonettes, recently fully de-tenanted, which are in need of extensive refurbishment. The site is adjacent to the Stillorgan Leisureplex and the N11 Stillorgan Road. The library, housed in a prefabricated building, is one of the busiest in the county. The proposal for the development of the site provides for residential development of 89 social and affordable homes and a new library. The scheme will provide a mix of social and affordable housing for sale, cost rental or both. The number of each home type, size and location will be informed by the outcome of the second call for the serviced sites fund, the financial model and the development route.

The council commissioned a revised cost-effectiveness analysis, as requested by the Department of Housing, Planning and Local Government and the Department of Public Expenditure and Reform, which informs the stage 2 application which has been submitted.

The Shanganagh Castle lands are located on the southern side of Shankill. The local area plan, adopted in July 2017, cleared the way for detailed master planning in the area. Residential development is being supported by the provision of substantial new road and rail transport infrastructure under the local infrastructure housing activation fund, LIHAF, and by the National Transport Authority, NTA. Woodbrook-Shanganagh is also a major urban housing delivery site. The Woodbrook-Shanganagh local area plan requires the delivery of a new DART station at Woodbrook, midway between Bray and Shankill, with a cost of between €4 million and €5 million. The NTA’s Transport Strategy 2016-2035 includes the provision of a rail station at Woodbrook. On road infrastructure, there are localised improvements or upgrades required to the Dublin road corridor between the Wilford interchange and the Woodbrook-Shanganagh local area plan lands, which will be informed by the outcome of the NTA core bus corridor study.

A cross-party proposal for 200 social and 340 affordable homes was agreed at the council meeting of 4 September 2017. As part of the development of the project, the need to establish strong governance procedures and protocols is required. A cost-effectiveness analysis in conjunction with a multi-criteria assessment was undertaken on the proposal. The analysis was submitted as part of the stage 1 approval. It highlighted that there were difficulties with affordability, in particular with apartments. The estimated cost of developing the Shanganagh Castle site is approximately €132 million without any affordability subsidy. The executive has been working with the National Development Finance Agency, NDFA, and the Land Development Agency, LDA, to examine delivery options. It is intended that the scheme will comprise a mix of social, affordable purchase, and cost rental. The master plan for the site is nearing completion, and thereafter preparations will commence for planning. It is expected that the project will be ready to proceed to planning in the fourth quarter of 2019.

Dún Laoghaire-Rathdown County Council welcomes the prospect of delivering affordable homes in the county and is working actively in collaboration with the development partners on two mixed tenure sites, which will deliver 50 cost rental homes and eight affordable purchase homes. Future projects at design and planning stages will provide mixed tenure sites with provision for between 400 and 420 affordable or cost rental homes. The number of each home type, size and location will be informed by the outcome of the second call for the serviced sites fund, the financial model, and the development route. The council has already maximised or is at design stages for the bulk of our viable serviced lands. The provision of housing, both social and affordable, on the remainder of council lands is dependent on major infrastructure being in place.

Ms Keenan and I between us will be happy to take questions of this submission.

Chairman

I call Mr. Brendan Kenny to make his opening statement.

Mr. Brendan Kenny

I thank the Chair and the committee for this invitation. We have submitted our statement and reports and are quite happy to go straight into questions.

Chairman

Okay. I call our first member, Senator Boyhan, to speak.

Senator Victor Boyhan

I thank the Cathaoirleach and I welcome in particular the Dublin city manager, Mr. Owen Keegan, the Dún Laoghaire-Rathdown County Council county manager, Ms Philomena Poole, Mr. Brendan Kenny, and Ms Catherine Keenan. Our paths have crossed. I am familiar with them and, I am sure, they are with me.

I acknowledge the enormous work of housing authorities and their personnel, which we do not say often enough and despite what others may say. While many of us are passionate and make strong cases for people who are on social housing lists and are seeking affordable housing, we all have personal experiences and stories and we bring them to the table. In all of that, exchanges can be quite heated but people are always motivated by trying to help others, which is important. On the other side of that is the front-line staff housing, which I acknowledge. That is sometimes lost on me, speaking for myself, but in the heat of the moment we all want to do things. I am constantly being contacted by people outside of Dublin with major issues that go way beyond housing needs. There are complexities around housing needs and homelessness, as our guests know well. I wish to put on the record today the enormous work being done under very difficult circumstances. It is not a nice place to be at a hatch turning people away all the time.

I want to keep to broad brush strokes and am conscious that there are two local authorities here. The one thing that we all agree on is at that the cost of land is a barrier to affordability. Affordable housing is what is on the agenda here today. We are conscious that there are landbanks in both authorities present. I am particularly interested in a number of matters, one of which is that I have been constantly tracking the auditors.

The local government auditor recently appeared before the committee and addressed concerns related to how we documented, mapped and took account of State properties, particularly in each local authority area. What progress has been made in that regard? Is there potential to submit or surrender this land or make it available? I have no ideological hang-up about who builds houses, whether they are public, private, social, affordable or co-operative development. All present accept that we need more housing. We know that the Government has stated that at least 30% of land released from central bodies and local authorities such as those of the delegates should be set aside for affordable housing or developments that have an element of affordable housing, with an additional 10% to be developed under Part V. Where possible and practical and with the co-operation of all parties involved, that percentage could be increased. What are the possibilities in that regard?

I ask the delegates to outline their views on their councils' experiences in interfacing with NAMA in the release of properties that could be made available for affordable housing. Many figures are bandied about, but what are the practicalities? The audits have been undertaken; the councils have looked at properties and properties have been rejected. I do not wish to rehearse these arguments because the delegates know them as well as I do.

On the practicality and affordability of the local infrastructure housing activation fund, LIHAF, I wish to focus on the Cherrywood strategic development zone, SDZ. I do not consider any of the properties in that development to be affordable. I have no difficulty with the fact that it is a private development, but I do not see how affordable houses will be delivered there.

On land banks, IDA Ireland, Irish Rail, the HSE and the port companies hold substantial amounts of land. I am familiar with the port companies in the representatives' administrative areas. Clearly, the councils do not have control over all of these lands, but they have some input in terms of planning and, I am sure, knowledge of them. Do Mr. Keegan and Ms Poole as chief executives see potential in that land or how can we have a multi-focused approach to harnessing some of it? The more land we have, the better. If we can reduce its cost, we can reduce the cost of developing houses and, ultimately, properties to purchase or rent. It goes back to the issue of affordability.

I will finish on that point. I have asked broad-stroke questions which are central to how we can address the issue of land costs and the barriers impacting on affordability.

Ms Philomena Poole

I will take the questions in reverse order. The LIHAF funding for the Cherrywood site referred to by the Senator is €11.39 million. If we were to spread that funding across all of the homes due to be delivered, it would be such a miniscule amount that it would have no substantial impact on affordability. It will contribute to the affordability of 300 homes over the lifetime of the Cherrywood scheme. The LIHAF funding of €11.39 million divided by 300 homes allows us to reduce the cost of these units by approximately €40,000, although the exact figure depends on the size of the unit delivered. We will probably primarily concentrate on smaller units. Work on the town centre has commenced and will be completed in 2021. The LIHAF funding will help to deliver 300 homes over the duration of the Cherrywood scheme.

I think the Senator asked whether land being given for free was a consideration. Dún Laoghaire-Rathdown is something of an outlier in that respect as it is a far more expensive place in which to buy, build, deliver and rent housing than most other local authority areas. For that reason, we will not put a cost on the land against the Shanganagh site. That will bring down the cost of the land further. That is not something every local authority would be in a position to do or that my local authority would be in a position to do across every site. The decision stems from the nature of the county and the urgent need to deliver through that development.

On our discussions with other agencies, developments in counties must be delivered in the round. It is important that we have IDA Ireland lands because we want investment to be able to deliver a range of things. Lands in the public realm are also important, as is land held by the HSE. Some plots of land have the potential to contribute to resolving the housing issue. The Senator referred to the Central Mental Hospital in Dundrum.

Clearly, it will have a dramatic impact when it comes to bear. We are in discussions with the LDA and have certain thoughts on it from a planning perspective. Ms Keenan may be in a position to provide detail on the HRI lands about which we have engaged in discussions. There are no dramatic plots of IDA Ireland land in the county where land tends to be privately owned and there are few large industrial parks where such land may be made available, as may be the case elsewhere.

Ms Catherine Keenan

Elected members approached us about the HRI lands. We had initial discussions with-----

Senator Victor Boyhan

Is Ms Keenan referring to lands held by Horse Racing Ireland?

Ms Catherine Keenan

Yes. We had initial discussions in that regard.

Mr. Owen Keegan

Many of the same considerations apply in Dublin city. We very much welcome the establishment of the Land Development Agency because we recognise that there are substantial lands in public ownership. The Senator referred to Irish Rail. Dublin Bus is another big landowner, as is the HSE. There is certainly scope for those lands to be used more efficiently and some to be released for housing. That would require an agency with significant capital resources. We have engaged extensively with the LDA on particular sites.

The city council has limited land resources in direct ownership. As outlined in our statement, the bulk of that land will be used to provide social housing, which is our primary obligation. We are making land available for affordable housing schemes. The challenge is that if we were to seek to recover the cost of that land, even where we are not proposing to make any charge for it, it would be difficult to produce affordable units because there are constraints on some of the sites in terms of the cost of building generally. Although we can guarantee we can deliver units below market price, that might not match people's expectations in terms of affordability.

Mr. Brendan Kenny

On the mix, schemes such as that on Oscar Traynor Road and the O'Devaney Gardens scheme for which we will be announcing a developer in the coming weeks are 50% private, 30% social and 20% affordable. In St. Michael's estate in Inchicore it is 70% cost rental and 30% social. We are using various models. If land costs are thrown into the pot, it is just not affordable. We work very well with NAMA and took everything it wanted to give us a few years ago, except for two small schemes and we had reasons for not taking them. As Mr. Keegan stated, we very much welcome the Land Development Agency because we have limited land available and it may have the potential to tap into the other lands referenced by the Senator.

Senator Victor Boyhan

Does the council retain the right to nominate people from its housing list and so on for properties in developments such as that in O'Devaney Gardens?

Mr. Brendan Kenny

We will be nominating people for the social housing element.

Senator Victor Boyhan

What about the affordable housing element?

Mr. Brendan Kenny

We will also do so for the affordable housing element. When the affordable scheme is in place, tenants will be nominated by the council. The private developer will sell the other properties.

Senator Victor Boyhan

Is it the case that Dún Laoghaire-Rathdown County Council nominates those who are to receive properties in developments such as that in Shanganagh?

Ms Philomena Poole

On the site in Shanganagh, we are awaiting a cost rental scheme. We believe the income thresholds will be in the range of €50,000 to €75,000, but we are awaiting the parameters from the Department. A group has been set up to develop a cost rental scheme which is in gestation. It will be a few years before we get to that point in Shanganagh, but we should have the scheme in place by then.

Senator Victor Boyhan

It is Ms Poole's desire to have nominating rights for such developments.

Ms Philomena Poole

Yes, absolutely.

Deputy Darragh O'Brien

I thank the delegates for their presentations which follow on from those made to the committee earlier. Ms Poole and Mr. Keegan mentioned the Land Development Agency, LDA, and welcomed its establishment. It was announced in September last year, but no land has been transferred to it. It is not a legal entity and does not have legislation to guide it at this stage. What interaction do Dún Laoghaire-Rathdown County Council and Dublin City Council have with the LDA? Are they identifying land banks? Has the LDA asked them to help to identify land banks held by other agencies such as those mentioned by Senator Boyhan, including the HSE, CIÉ, etc?

In fairness to it, CIÉ is one of the State agencies that is better at using its own land portfolio. I am aware that Dublin Bus is seeking to decamp from some of its depots in the city, which will also help to free up land. Will the delegates address that point?

I thank the delegates for the detailed statement on Dún Laoghaire-Rathdown. The average price in the area is way out of reach of any first-time buyer, even using the bank of mum and dad. The average price - €527,000 - is staggering. What are the delegates' concerns about the demographic trends in Dún Laoghaire-Rathdown as a local authority area in the absence of a workable affordable housing scheme and workable cost rental and affordable rental schemes? I have attended meetings in Dún Laoghaire and have spoken at housing meetings there. I have noted that there is significant concern among those in the area about their inability even to think about ever owning a house or an apartment, let alone anything else. What are the concerns of the local authority about the demographic trend in its area?

The priority scheme for affordable purchase was passed by the four Dublin local authorities, but Ms Poole is still awaiting the specific criteria to be used. Has she had further contact with the Department of Housing, Planning and Local Government on the specific criteria to be used? The delegates from Dublin City Council might answer the same question. My party has made the establishment of an affordable purchase scheme a priority, but we are still awaiting completion of the criteria to be used. The threshold of €75,000 is problematic as confirmed today by the Housing Agency. It is evident from the original legislation that we are not actually bound to a figure of €75,000 for a couple. How close are we to having a real scheme established under which people could apply in each local authority area?

Is there any planning for the delivery of affordable housing in each area? About what numbers are we talking? I acknowledge that the land banks are limited in both cases.

Unless I missed it, there was no mention of how many were waiting on the social housing list in the Dún Laoghaire-Rathdown administrative area. Dublin City Council has a total of 26,000 families between the housing waiting list and the transfer list. It is a staggering number. I am seeking data for the Dún Laoghaire-Rathdown area.

Let me address the implications of not having an affordable housing scheme and the ability to cost. Let us consider the examples of Cherrywood and O'Devaney Gardens, where the affordable housing proportion is 20%. There is no scheme fully in place. How has it been costed with the Housing Finance Agency, with a view to it being put out to tender? Has the local authority decided on the affordability levels? Has it decided on what the subvention will be or the equity stake to be taken by the State? What guidance is the authority being given?

Let me refer to Mr. Kenny's statement on O'Devaney Gardens. He gave figures for O’Devaney Gardens, Oscar Traynor Road and St. Michael’s estate, namely, 140, 160 and 150, respectively. Are these the totals for each estate? The figure for O'Devaney Gardens is 140. Is that the maximum?

Mr. Brendan Kenny

It pertains to affordable housing.

Deputy Darragh O'Brien

It is just the figure for affordable housing figure? It does not include social and private housing. Perhaps Mr. Kenny might clarify the total number for each estate.

Ms Philomena Poole

The Deputy asked about the concerns about demographics. I understand exactly from where he is coming because it is difficult for a first-time buyer in an area such as Dún Laoghaire-Rathdown. I came from a place where it was very difficult to find the second-time buyer. When people upgraded, they moved from the area. Therefore, I do not have a great concern about a younger cohort moving into the county because the affordable housing arrangement will, as we move through it, get us first-time buyers in so far as it can. When people upgrade, that is the county towards which they gravitate. That will give us the intermediate band, as it were.

We have one of the highest older populations in the county. There are people in larger homes who might choose to move, but not necessarily from the area. We have brought in a number of schemes for downsizing, specifically in respect of social housing built in an area to allow people to move out of the family home into smaller, more modern, easier-to-maintain houses. This allows the bigger houses to be given to younger families. Therefore, there are a number of things that we have done to address the issue.

Ms Catherine Keenan

The Land Development Agency is a legal entity, a non-commercial State body. The proposed legislation will make it a commercial State body. That is my understanding. We have had involvement with the agency in terms of our Shanganagh site. We are working with it on how the transfer might take place. We have a proposal for a workshop with the councillors next week to update them on our Shanganagh lands.

An average price of €527,000 was quoted. That is the average price in Dún Laoghaire-Rathdown but it takes into account the market price. It takes into account all the big houses in addition to the others. With regard to achieving affordability on our lands, the price would not be anywhere near the price quoted. It is a question of considering the cost of building and the operational costs. There would be a subvention under the served-sites fund so the figure would not be anywhere near €527,000. That is just a market price.

With regard to affordable homes, the priority scheme is such that the advertisement takes place three months before the houses or apartments are ready. It would be closer to when they are actually being built. Three to six months before that, they are advertised.

We have 4,500 on the social housing list. In reality, however, approximately 1,000 of those households are on other local authority lists, and Dún Laoghaire-Rathdown is their second preference. If they are removed, there are approximately 3,500 on the social housing list.

On affordability, our rough guide is 30% to 35% of income. That is how we look at it at the moment.

Mr. Brendan Kenny

We have a lot of interaction with the Land Development Agency already, although it is not yet fully operational. We are working with it and liaising with it on a number of other State-owned sites in the city. We have asked it to examine a site we own at Cherry Orchard. It has significant potential. It is doing a feasibility study on it. There is a possibility of it developing the site for a full-scale cost rental development. We work very closely with the agency.

Ideally we would like to have a scheme for both cost rental and affordable housing but the current position is not stopping us from progressing. While we will be announcing the scheme in respect of O'Devaney Gardens, we are still two years away from houses being built there. We deem an affordable price to be from €250,000 to €270,000. We have applied for a lands service grant from the Department. If we get that - we are hopeful - we expect that 20% will be in that price range. That is necessary. It is really a matter of construction and construction costs. We believe the O'Devaney Gardens development will work very well, as will the Oscar Traynor Road development.

Deputy Darragh O'Brien

What are the totals?

Mr. Brendan Kenny

The total for O'Devaney Gardens is in the region of 700. The figure for Oscar Traynor Road is 750, or maybe 800, and the total for St. Michael's Estate is 500.

Deputy Darragh O'Brien

I thank Mr. Kenny.

Deputy Eoin Ó Broin

I thank the delegates for their presentations. I have a number of different questions for both councils. With regard to the cost-rental and affordable purchase projects, could the delegates give us the current position in the pipeline in terms of design, planning, procurement, the expected construction dates and, ultimately, expected tenanting? I refer, in particular, to those developments are the most live, including those in Enniskerry Road and St. Michael's Estate, the Ballymun project and some of the more recently announced serviced-site fund projects that have been approved.

We had a very detailed discussion with the NDFA and the Housing Agency on Enniskerry Road and St. Michael's Estate. Given that the Enniskerry Road project is the very first, the pilot, it is an important one. St. Michael's Estate is also important because it is such a large project.

Its success is very important and the committee has a long record of supporting it. The big concern many of us had during the earlier session was how we can bring down the cost of rent. I appreciate that with regard to Enniskerry Road the entry rent is set at €1,200 and while I would like to be able to suggest there could be a mechanism to reduce it, I am not doing so. I have a hypothetical question relevant to the question I have asked Dublin City Council. What would it take to reduce the cost of the Enniskerry Road entry rent from €1,200 to, say, €900? The Housing Agency was very clear about the peculiarities of the site and clearly there is not much more that can be done there. The loan is for 40 years so there is not much that can be done there either. How much extra from the serviced sites fund would it take to reduce entry rents in that project to below €900? Is this something that was looked at at any stage? Do the witnesses have any advice to offer those of us looking at other sites?

In its final comment, the National Development Finance Agency made pretty clear to us that if there is a 25-year European Investment Bank loan and the serviced sites fund allocation is in the order of what it is for Enniskerry Road, the rent will not reduce to below €1,200. It was very straight about that. Clearly its view is that the only way to decrease the rent is through a greater portion of capital upfront or some form of mixed loan finance combining the EIB with the HFA or both, or perhaps having interest-only HFA loans and some restructuring of the capital end of the HFA at the end of the 25 years and so on.

Given the significance of St. Michael's Estate, if we do not reduce the rents it will colour people's view of cost rental at a more general level. This is in no way a criticism of Dublin City Council because I am very supportive of the direction in which the project has gone but if the witnesses were with the Minister or Department or were getting us to raise issues with the Minister and the Department, what would they say is needed that is different to Enniskerry Road to reduce the rents in St. Michael's Estate? If one looks at rent as approximately one third of net disposable income, one is looking at entry rents of between €700 and €900 if it is to capture those people above the threshold for social housing eligibility and, at the top end, with a gross household income of perhaps €75,000 or €80,000. What is needed to decrease those rents with regard to the serviced sites fund or the structuring of the loan or both?

With regard to the eligibility criteria for affordable cost rental, every time I raise this with the Department it seems to suggest it is a matter for local authorities and Ms Keenan very clearly indicated her understanding is that there is a working group in the Department. I know the eligibility criteria are a little way off but I would be interested to hear the views of the witnesses on what they think should be in them. Should there be a lower income limit whereby the only people eligible for affordable cost rental would be those not entitled to social housing? We would have that bottom line, which would mean social housing tenants would not be in an affordable cost rental unit supplemented by housing assistance payment. Is that something the witnesses think would be desirable? At the top end, do they think €70,000 or €75,000, as it is for the affordable purchase scheme, is the right point? Do they believe there is an argument to say it should be increased to €80,000 or €85,000? I am interested to hear the thoughts of the witnesses on this.

With regard to affordable purchase, local authorities have begun to receive awards for the affordable purchase serviced sites fund. The Irish Times has quoted figures from Dublin City Council of price ranges between €116,000 and €237,000. This reporting does not necessarily mean it is accurate but what do both local authorities hope will be the lower and upper end of the price range? I know it is difficult to answer and subject to change because of the cost of construction but I am interested to hear what are their hopes or expectations. We have seen significant affordability in the Ó Cualann project in Ballymun and this could be replicated elsewhere in the city and county, which would be valuable.

We have been speaking about affordable cost rental or cost rental since Deputy Kelly's Social Housing Strategy 2020 and it was mentioned again in Rebuilding Ireland three years ago. There is a lot of frustration in communities, in the House and, I am sure, among the local authorities and their staff at the fact we are still speaking about only a couple of pilots. While I appreciate the number of pilots is increasing, it is nowhere close to meeting the level of need for affordable purchase or rental accommodation that exists.

I am sure both local authorities are aware of the ESRI study that referred to 30% of households having affordability problems with mortgages or rent and people, some of whom spend as much as 40% of their net disposable income on housing, not being eligible for social housing. Crucially, the same report identified that 75% of the lower 25% of income earners experience high housing costs. These are people who are not eligible for family income supplement, housing assistance payment, rent supplement or medical cards. Having 40% of net disposable income going on housing is huge. Given the large volume of need for affordable housing, do the witnesses believe what is in the pipeline is sufficient? Do they have a read in their local authority areas as to what would be an efficient scale? Do they believe we need to move to multi-year targets, not unlike the Rebuilding Ireland social housing targets? Do they have a sense of what they would be in their administrative areas?

Ms Catherine Keenan

With regard to affordable projects, the Enniskerry Road project will be completed at the end of 2021. We hope to have cost rental around that point. In Shanganagh we hope to be on site in 2021. That will take a number of years to complete. It is a large site so we are probably talking about 2024 at the earliest.

Reducing the cost rental will probably require a combination of things. We are speaking about a greenfield site and perhaps rapid build delivery, a serviced sites fund increase, lower borrowing rates and the length of time for the borrowing. In a sense, we are restricted in terms of our lands. We do not have that much serviced land. If we rely on local authorities serviced land to produce affordability there will be a restriction. With regard to affordable rental, if we go up as far as a gross annual income of €90,000, the net income of 35% of that income would be in the region of €1,800. That is a lot higher than the €1,200 for €1,300 we are speaking about. The amount of €75,000 is probably more in line. The Deputy is right that there is an imbalance between people who qualify for social housing and those who cannot afford it and then we have affordable housing. Cost rental could bridge that gap.

Mr. Brendan Kenny

With regard to timescales, the first for us is O'Devaney Gardens. We aim to announce the selected developer before the end of this month. That developer will have to go through a consultation process over the coming months with the aim of going to An Bord Pleanála by the end of the year. With everything going well, we could have a contracted developer on site by the end of 2020. That is the timescale. Oscar Traynor Road is approximately four or five months after that.

Deputy Eoin Ó Broin

If they are on site at the end of 2020, roughly when will it be completed?

Mr. Brendan Kenny

If rapid build is used completion would be within 12 months. Oscar Traynor Road is a few months behind this, with a developer due to be selected in September. We are finalising a provisional framework plan for St. Michael's Estate covering all of the physical issues that have had to be dealt with. That will form the brief for the selection of a full design team, hopefully during July and August and certainly during the summer. It will mean we will have a full design team that will begin work immediately. There will be a strong element of consultation and I hope that by the spring of 2020 the developer will be submitting an application to An Bord Pleanála.

We are into the second stage of procurement in some of the other schemes advertised on the market in Cherry Orchard and Ballymun. We cannot give a real indication of the start date but we are making progress.

With regard to the cost, all of the indications and calculations we are doing on cost rental suggest it will work out at between €1,000 and €1,200 a month, which will be fine for a lot of people but certainly will not be affordable for others. Reducing that will mean an intervention. The non-service initiative may not be sufficient. Perhaps when it comes to borrowing we will borrow over 40 years rather than over 30 or 25 years.

It certainly needs some intervention to bring it down and we are working on that. We are not overly concerned that there is not currently a scheme there. We are doing a great deal of work on it and we hope to be able to make recommendations to Government on it in the coming months.

We are keen to see the income limit for eligibility to be a little higher. It might be a better mix in Inchicore or O'Devaney Gardens. We would like to see the threshold increased to about €80,000 or €90,000.

The article in The Irish Times was clarification on issues on which the developers had expressed an interest. There is no way we will build homes in Ballymun from €160,000. It will be considerably higher than that. It is similar to the point raised earlier. It is the area of €250,000 or €270,000 where people qualify for the national home loan that we are trying to reach. That was just an indication of market values in the Ballymun and Cherry Orchard areas and taking 25% off them. Ultimately, the price will be very much dictated by the cost of construction.

Deputy Eoin Ó Broin

If that is the cost of construction coming from the market now rather than in a couple of years, what could it look like?

Mr. Brendan Kenny

The average cost in the city is expensive. It is around €280,000. Our most recent schemes in Donore Avenue and Dominick Street are between €350,000 and €360,000. If that will be the level of construction, any escalation from that will make it difficult to get affordability.

Deputy Eoin Ó Broin

Therefore, it is that figure minus the discount, whatever the council gets from the serviced sites fund, which would be the sale price, for example.

Mr. Brendan Kenny

If the cost is €360,000 and the council receives the maximum land service sum, which is €50,000, that leaves it at €310,000.

Deputy Eoin Ó Broin

I thank Mr. Kenny. I know that some of these are difficult to answer because they are projects that are not going to happen for maybe one to three years, but it is still important that we get a sense of it.

This might be an unfair question, but I have a specific question on Enniskerry Road for Ms Keenan. If the entry-level rents were to have been reduced, knowing everything we do about the site, the only thing that could have brought the cost of those units down would have been an additional serviced sites fund. I am trying to understand how much extra capital upfront would have been necessary to bring it down from €1,200 to €900. For instance, instead of €4 million, would €8 million or €12 million have been enough? If Mr. Kenny's problem in certain sites comprises loans and the serviced sites fund, then we need a sense of how much would make a difference. It is important that we know if an extra €4 million would not make that much difference. Perhaps Ms Keenan has not worked out those calculations but a ballpark figure would be helpful. After that I have some more questions for Mr. Kenny.

Ms Catherine Keenan

Mr. Baneham answered that earlier.

Deputy Eoin Ó Broin

He was about to answer it and then withdrew from doing so because he had worked out some rough calculations and did not want to commit himself at a committee.

Ms Catherine Keenan

I only have rough calculations myself. The serviced sites fund for Enniskerry Road is already in excess of €50,000.

Deputy Eoin Ó Broin

Yes, it is significantly in excess of that. It is at €80,000.

Ms Catherine Keenan

To be honest, I have not done that calculation. I do not have a figure.

Deputy Eoin Ó Broin

It would be fair to say that it would be a significant increase to reduce the rents by €300 per month.

Ms Catherine Keenan

Yes, it would be.

Deputy Eoin Ó Broin

On rents, there is a broad category of incomes from about €40,000 to up to €75,000. The further up the income ladder, the more able people are to cope with the 30% or 35%, whereas for those hovering at the social housing threshold, it could be quite a large amount. Is any consideration being given to having several bands of affordable or cost rental in a particular development? For instance, in St. Michael's, would it be possible to have two or three bands, depending on where people were in the income scheme, that between the three would cover the full cost recovery but would be somewhat more equitable? Is that administratively complex? Is that something that is being looked at?

I know that Enniskerry Road is a pilot and it is 50 units. However, single people are particularly disadvantaged in the current market. If there are no single person units or the price range is done in such a way that it is only accessible to two-income households, that excludes a very significant portion of people. Is a broader range of household types being examined for future cost rental schemes?

Finally, there is the thorny issue of accountability. I appreciate some of this is not Ms Keenan's responsibility, but some of the timelines she just outlined are incredibly long. I know when one works in the area, one can become accustomed to those but for anyone in an affordability crisis listening to those timelines - Enniskerry Road in 2021, which is the year after next, then Shanganagh is 2024 - they are a long way away. What can be done to reduce that timeline? Are there changes that can be made to procurement or to building type? How can we accelerate these projects? In the case of some, such as O'Devaney Gardens, there is probably not much that can be done to accelerate at this stage, but when new projects emerge are there ways that Ms Keenan could recommend to the committee in which we could get the newer projects up and running and delivered much more quickly? I return to the one question which Ms Keenan and Mr. Kenny did not answer, namely their estimation of the level of need versus the very small number of projects that are currently in the pipeline. If we are delivering very few of these units - and we are delivering them exceptionally slowly - that is not good news for all the people out there stuck with unaffordable accommodation or who are unable to access affordable accommodation.

Mr. Brendan Kenny

We have just over 2,000 units earmarked for affordable housing in the city. There is probably potential for more than that. There are also 1,650 earmarked for cost rental. One problem for us, as identified earlier, will be that our preference has to be for social housing. We have 17,500 on the waiting list and we only have a limited amount of land. There are only certain parts of the city where we can do affordable housing. Trying to get affordable, cost rental and social housing will be a challenge. Those are the numbers but we think there is potential for more.

The timelines are very frustrating. O'Devaney Gardens or the Oscar Traynor site estates are major projects, for example. They were only finally approved by Dublin City Council in January 2017. That is two years ago and we are now ready to go which is not bad compared to other projects. The process of public procurement, design, consultation, cost benefit analysis and so on just has to be done. It is up to us to streamline it as much as possible, which is what we are trying to do. Having frameworks in place, with design teams and contractors does make a difference. Having only been approved in January 2017, their progress is not bad for big projects of their nature.

Ms Catherine Keenan

Shanganagh is a very large site, with 540 units. Because of that, we had to do an environmental impact assessment report. A huge amount of work is involved in that between landscape design, rationales, and all sorts of assessments we must undertake. I think I told another meeting of this committee that this would take about nine or ten months. We are nearing the end of that but when all the investigation work is complete, we now have to do the master plan design element and prepare for planning. It will go directly to An Bord Pleannála for a site of that size, which could take six months to a year. Then we have to go to detailed tender stage. We are no different from the private sector in these things. We must undertake all stages and have the proper governance in place. That is why it takes that long.

I take the Deputy's point about one-bedroom units in Enniskerry Road, however we will have one, two and three-bedroom cost rental units in the Shanganagh proposal. It is also important to say that supply brings down affordability. In Dún Laoghaire-Rathdown we have 23% of the planning activity so that should bring down the affordability costs.

The cost rental model is based on the cost. As others have said, it is based on the tendering process and what those costs come in at. It is somewhat outside our control in that sense. There are other ways that one might look at cost rental. Some countries might do a differential rent type of cost rental scheme but the one that we are modelling is cost rental based on costs.

Deputy Eoin Ó Broin

To return to Mr. Kenny, is Dublin City Council looking at a single rent point, or two or three rent points for St. Michael's or other projects?

Cost rental is based on the cost but the question is the length of time that the cost is paid down. If one pays it over 20 years, the impact on the tenant is significantly different than if it is over 40 years.

I know many of those aspects are not within the control of the witness but given that she is on the front line of delivering the projects perhaps she might have strong views on how that could be improved.

Ms Catherine Keenan

The project at Enniskerry Road is over 40 years. That is a long period and we are still at €1,200. It is complex. Regarding different rounds, at the moment it is €1,200 based on the costs and there is no difference for different levels of income.

Mr. Brendan Kenny

All our considerations so far have concerned that single band. It would be very difficult administratively to implement different bands. We are not considering that option, at least not at the moment.

Deputy Eoin Ó Broin

My two final questions are specifically on St. Michael's. If we take the Housing Agency's definition of affordability, which is about one third of net disposable income, that would mean that for the cohort of people we are talking about entry rents would need to be somewhere in the region of €700 and €900 a month. Do the witnesses share that view and would it be their desire to try to move the rents down into that range? Would the witnesses also be able to give us some more detail about the planned consultation with the wider community, once the work of the design team is complete? I presume that will be sometime around September.

Mr. Owen Keegan

We would agree on the first point. I made a point at the very beginning about one of the difficulties we are facing. Even on sites where we are supplying the land, we are confident that we can deliver below a market price. That does not, however, really meet our concerns as to whether it is affordable. There are real challenges in that respect and that is on sites where we have the land. On sites such as Poolbeg West, which is earmarked for more than 600 houses, we do not own the land. We have negotiated to buy the land from the National Asset Management Agency, NAMA, at well below the market price but it is still a substantial cost. That is proving very difficult. We are very conscious of the difference between being affordable and just being below the market price. That is a major issue. We will be going back to the Department to try to address how we can make these homes affordable as opposed to just below the market price.

Deputy Eoin Ó Broin

This committee works on a collegiate and cross-party basis. Are there things it would be helpful for us to emphasise with the Department to make those prices affordable? I take from what Mr. Keegan is saying that the €700 to €900 band would be much more in line with what would be affordable. We are quite happy, as a committee, to try to put pressure on the Department to achieve that, subject to us agreeing that in private session of course. What is Mr. Keegan's key ask? What does the Department need to do in pounds, shillings and pence to assist with bringing the rents down to the required level?

Mr. Brendan Kenny

As it stands at the moment, some intervention is needed from the Government to bring the rents down to the appropriate level. All of the calculations assume €1,200 per month. We would like to bring that cost down to €700 or €900 and that is going to need some kind of intervention. That may be a need for some kind of subsidy and perhaps something similar to what works at the moment with the approved housing bodies. We are not sure but some intervention will definitely be needed given construction costs in Dublin. We are not otherwise going to be able to produce houses with rental costs in the €700 to €900 band.

Deputy Eoin Ó Broin

Will Mr. Kenny comment on public consultation?

Mr. Brendan Kenny

There will be loads of consultation as soon as the master planning design team is picked. Consultation will start straightaway after that. We have a consultative forum already working in the Inchicore area. It works well. There will be no deficit in the area of consultation during the year and right up to when the master plan is developed.

Deputy Eoin Ó Broin

I have one last question, with the indulgence of the Chair. There were some political difficulties for the Minister at the launch of St. Michael's. There is no need to revisit that. It has, however, created concern in the local community that those political difficulties might cause a delay or perhaps some cooling in the attitude of Dublin City Council towards the project. My understanding is that is not the case, the council is fully committed to this project and it is going to happen, subject to all of the legal requirements. It would be great to get the view of the representatives from Dublin City Council, however.

Mr. Brendan Kenny

We could not comment at all on the political issues.

Deputy Eoin Ó Broin

That is fine.

Mr. Brendan Kenny

We are, however, totally committed to this project. It is essential that the bad history relating to this site is undone and we have not got a great record in this regard either. We have to get it right this time and we will do so.

Chairman

I have one or two comments. I will be parochial, for a moment. It is dramatic where we have come from in the space of two years. That is particularly the case when it comes to delivering social housing.

I concur with the remarks made by Senator Boyhan regarding the staff in both local authorities represented here today. The compassion with which they deal with people is to be commended. I have had many dealings with both local authorities regarding people in very difficult circumstances. We appreciate all that the staff do. Sometimes we hear bad stories but I have not had any experiences like that. I want to acknowledge that.

Regarding affordable schemes, the complexities involved and those being site specific, I think Mr. Kenny mentioned this before. A tight site will mean that the costs of construction will be much higher than at a site such as Shanganagh, which is vast and flat. It does, however, have other complications. It needs services, road infrastructure, a DART station etc. No two sites are ever the same. We can talk about having a range of bands, having one cost and all of the different things mentioned earlier. When it comes down it, however, these issues have to be dealt with site by site, with all of the complexity, or perhaps lack of complexity, involved in that.

Turning to Cherrywood, it was mentioned that there would be around 300 units. The council also owns a site there. I expect there will be delivery on that site also, when development there becomes possible. That will happen on a phased basis. Overall, I acknowledge where we have come from in the space of two years. Much of the detail, under the water, as it were, has been completed and now we are going to see the resultant development. Little emphasis is placed on the amount of work required before building can commence on a site. It can be frustrating how slowly housing is delivered. As public representatives, however, we also have to recognise the level of detailed work that goes into getting a site ready. That work is rarely seen. Those are more comments than anything else and concern the front line staff in particular. They work in difficult circumstances and are rarely commended. We should acknowledge the work they do.

Deputy Eoin Ó Broin

I apologise but I have a final question. Mr. Keegan mentioned Poolbeg. The Bord Pleanála ruling has been delivered and that is helpful. Will he give us as much information as he can on how it is hoped to deliver affordability on that site? The State is contributing significantly to the development of the site, not just via the serviced sites fund but also with additional infrastructural funding. There is still a concern that, even with that significant subvention, house prices will still come in at a high level. What is Mr. Keegan's hope or expectation regarding the ongoing discussions between NAMA and the receiver?

Mr. Owen Keegan

Our hope is that the Land Development Agency, LDA, will take it and deliver the affordable housing. It might be better positioned to do that. There is a substantial gap in funding notwithstanding the contributions from the local infrastructure housing activation fund, LIHAF, and the National Transport Authority, NTA, towards the infrastructure.

Deputy Eoin Ó Broin

That is about €30 million or more for the bridge alone.

Mr. Owen Keegan

We are talking about 600 units. That is a large development so the subsidy per unit is modest enough. It is a difficult site. Even though the land we are in the process of purchasing from NAMA for affordable housing is fully serviced, the nature of the land as a former landfill requires the provision of basements. That will still be needed even if we do it with the parking. It is just going to be very expensive to build those units. In our view, it is essential that we have affordable units everywhere and not just on the outskirts. That, however, is going to pose a financial challenge. We are in discussions with the Department concerning how we can bridge that gap.

Deputy Eoin Ó Broin

How does that work? The receiver controls the site and will not develop it as per the strategic development zone, SDZ, area. Is the receiver going to sell portions of the land?

Mr. Owen Keegan

It was not possible to do a deal with the receiver to give effect to the board's decision. In fairness to NAMA, it has taken control and has negotiated the sale of the land directly to us or our nominee.

Deputy Eoin Ó Broin

That is the land that will be attached to the affordable and social houses.

Mr. Owen Keegan

It will accommodate 600 affordable houses and 150 social houses, and we are acquiring that land.

Deputy Eoin Ó Broin

That is Dublin City Council.

Mr. Owen Keegan

It remains to be decided whether we will deliver that housing ourselves, through a voluntary agency or through the LDA. It will, however, be delivered by a public agency.

Deputy Eoin Ó Broin

Notwithstanding the cost, that puts the council in the driving seat regarding control of the site.

Mr. Owen Keegan

Absolutely. We think that is the better option. It would not be possible to get a receiver to deliver on that.

Deputy Eoin Ó Broin

Has that purchase taken place or is it in train?

Mr. Owen Keegan

It is in train.

Deputy Eoin Ó Broin

That is fine. I thank the Chair.

Chairman

I thank all those attending today.

As always, with this meeting we go well over time because of the level of detail involved. I thank the witnesses for their attendance today.

The next meeting will be at 9.30 a.m. on Thursday, 20 June, when we will have detailed scrutiny of the Local Government (Water Pollution) (Amendment) Bill 2018 and the Social Housing Bill 2016.

The joint committee adjourned at 2.15 p.m. until 9.30 a.m. on Thursday, 20 June 2019.