Wednesday, 20 June 2018

Ceisteanna (32)

Aindrias Moynihan

Ceist:

32. Deputy Aindrias Moynihan asked the Minister for Housing, Planning and Local Government if under the local infrastructure housing activation fund, LIHAF, 2 scheme, projects that were approved for LIHAF 1 but that did not progress to construction, such as the project in Ballincollig, County Cork, will be prioritised; and if he will make a statement on the matter. [26866/18]

Amharc ar fhreagra

Oral answers (9 contributions) (Ceist ar Housing)

We all recognise the need for housing, including social and affordable housing. Nowhere is the need greater in my area than in Ballincollig, where prices are continuing to drift up. At this stage the average price for houses being sold in recent weeks has reached €308,000, up from €245,000 last year. There is tight demand for social housing. Housing needs to be made available. Phase 1 of the local infrastructure housing activation fund was supposed to supply houses in the area. It was to provide over 500 houses initially and a further 3,000 afterwards. However, the project has stalled and is not being progressed. Can it be prioritised for the next round of LIHAF?

I thank the Deputy for the question. The aim of the local infrastructure housing activation fund is to increase housing supply through enabling infrastructure such as roads, bridges and parks.

It is now the case that significantly increased funding will be available for enabling infrastructure projects through the new €2 billion urban regeneration and development fund and the €1 billion rural regeneration and development fund announced under Project Ireland 2040.

Local authorities will also be able to apply to the new serviced sites fund, which will support delivery of both off and on-site infrastructure that can unlock local authority-owned lands to deliver affordable homes.

Given the crossover between these funds, I have reviewed whether it is necessary to have a further call specifically under LIHAF. I have concluded, in consultation with the Minister for Finance and Public Expenditure and Reform, that it would be unnecessary duplication to have separate calls under separate funds for the same types of projects. In addition, I want to give further support to local authorities to bring forward publicly owned sites to provide affordable housing under the affordable purchase scheme.

Accordingly, it has been agreed that the funds that had been allocated for the second call under LIHAF will be transferred to the new serviced sites fund. This will increase the Exchequer funding available from €25 million to €75 million over the period to 2021. This funding will help to speed up the development of affordable housing from publicly owned sites and I will issue a call for proposals under the fund by the end of next week.

The four projects that the Deputy referred to can apply for funding through either the urban regeneration and development fund or the rural regeneration and development fund. Calls for proposals under both funds are expected to issue in the coming weeks.

There is clearly extraordinary demand in the area for housing, whether it is delivered through one scheme or another. People have seen the public schemes. The Old Fort Gate scheme has been stalled and the Poulavone scheme of social housing on public ground has also stalled at second stage evaluation. LIHAF was to deliver a large number of houses on privately owned ground. It was going to be a real opportunity for people in the area. Prices have continued to drift up from an average price of €245,000 last year to €308,000 at present. The social housing demand is phenomenal. The house offered on the choice-based letting website this morning will have up to 500 bids before the week is out. Houses are not being delivered currently. We need the schemes to start delivering sooner rather than later, including those on the publicly owned sites to which the Minister has referred. Are the proposals for LIHAF phase 1 in respect of which the need was established going to be transferred and prioritised for further schemes? That would allow an opportunity for housing to come on-stream.

I thank the Deputy for the follow-up questions. LIHAF 1 is about using State money to unlock larger areas of land and housing potential than would have been available had we directly built the houses ourselves. Approximately €200 million will deliver in the region of 20,000 homes. Not every scheme that applied to the fund was successful. There were three successful schemes under LIHAF 1 in Midleton, Carrigaline and Glanmire. As the Deputy knows, there were some particular issues with the Ballincollig bid. That meant the application could not be finalised when I was finalising the projects last year. It was not so much a problem with LIHAF 1 but a local problem that we could not get around at the time.

The fact that we are standing down the possibility of LIHAF phase 2 does not mean we are standing down the possibility of those projects submitted to my Department for funding for the same scheme or for something similar. It is simply that they will now be under the urban regeneration and development fund or the rural regeneration and development fund. These are bigger schemes, with €3 billion between the two funds. That is separate from the €75 million available for affordable housing provision. I will be launching the urban regeneration fund next week. It will be open for applications for three months and will close at the end of September. We will make decisions in October for the first tranche of money to be drawn down from 1 January next year. A total of €100 million will be available next year. Those projects that are shovel-ready will get prioritised. The announcement will be made next week.

I thank the Minister for the information. Clearly, the need was demonstrated in the four areas, including Ballincollig. The council has been looking to advance the project. There was local pressure to get the project going. The council is putting the proposal back in for LIHAF 2. I imagine applications for the other three projects will probably come in as well. Will they have to go back around again and make new applications for the new scheme? Can the Minister prioritise or fast-track them? Clearly the demand is demonstrated in these areas. They already have matching funding in place and would be more advanced than any scheme coming in fresh. Can they be prioritised? What is the Minister's intention to deal with those? Will they be delayed by having to go back around again with a new application?

Two of the concerns I have with the first round of LIHAF are relevant to the second round. Many of the larger funding allocations were granted to developers who do not actually need the funding. These developers have profitable cash reserves and would have proceeded with the developments within the same timeframe without the money. That is in direct contradiction to the original intentions of LIHAF.

Let us consider the detail of the discounts the Department has provided us with. The average prices after the discount at 2017 prices in the private LIHAF Dublin sites are a little under €320,000. However, the 2017 prices are not locked in. Therefore, as those houses are built in 2019 and 2020 we will see house price inflation. Outside of Dublin we see prices at approximately €250,000 on the basis of 2017 prices. Again, in many places these are actually higher than private sector new-builds. The Minister is giving money to developers who do not need it. There is no guarantee of affordability. In fact, in many cases there is no agreement whatsoever on public sites and mixed sites. It is not simply about ensuring that developers on the sites who need the funding get it. If the objectives of the scheme are to be met, it is vital that funding only goes to those who need it and that there is an affordability dividend. In many cases under LIHAF 1 that was not that case.

I will respond briefly to Deputy Ó Broin. I do not agree that the sites would have proceeded had we not put in place LIHAF 1 funding. The State is getting the money back for the investment made. The State is getting far more back in terms of unlocking these sites for housing than it might have gotten had it directly invested the money. If the current inflation trend for house price increases seen in the first four months this year continues, then we will have single digit inflation this year. That would be a welcome development because we saw double-digit inflation during the past 12 months.

I do not doubt the need for houses in the areas the Deputy has identified in his constituency.

If we are to proceed with LIHAF 2, local infrastructure housing activation fund, there will be a need for a new application. The great thing about these projects is that a huge amount of the heavy lifting has been done in putting proposals together and ensuring the other funding required to leverage LIHAF 2 funding is in place. They will have to make a new application for the new funds because there are different weighting criteria and a number of objectives that have to be met. However, an application that is ready to go will be looked at more favourably because we want to ensure the money will be drawn down from the beginning of next year. We have to invest a large amount of money between now and 2027, the lifetime of funds under the national development plan. These applicants will start from a very good position, but they will have to pay attention to the new criteria which will be slightly different from those under LIHAF 2. I have no doubt that, given the progress made under LIHAF 1, they will be in a good position when the applications process is opened.

Will there be any-----

The Minister might have a word with the Deputy.