Greens push affordable housing vision for Marrickville Hospital Site
The Greens on Marrickville Council have submitted two Notices of Motion which will test Marrickville Council’s commitment to addressing the inner west affordable housing crisis.
The Notices of Motion, which will be debated at Council’s 19 February 2013 meeting, call on Marrickville Council to actively pursue options to deliver affordable housing on the Old Marrickville Hospital site and to establish an Affordable Housing Committee, to drive the implementation of Council’s affordable housing policies on the ground.
Copies of the Notices of Motion are below. For more information or to get involved in the campaign to increase affordable housing in Marrickville contact Greens Councillor Sylvie Ellsmore on 0403 977 213.
- Council affirms its commitment to the delivery of affordable housing on Council owned sites proposed for development.
- In light of Council’s commitment to the inclusion of affordable housing at the Old Marrickville Hospital site (as adopted by Council at its 4 December 2012 meeting), Council undertake urgent further modelling on a range of affordable housing options for the site, focused on precincts C, D and E;
- The modeling report/s will include:
- Options to deliver affordable housing on the site while maintaining a high level of Council control, including through the maintenance of freehold ownership by Council and/ or long term leasing arrangements;
- Options for engaging private contractors to develop the site that do not require the majority of land at the site to be transferred to a private developer;
- Examination of successful models for the delivery of affordable housing which have been implemented in other Council areas; and
- Any modeling previously commissioned by Council regarding affordable housing at the site.
- The modeling report/s will also include examination of financing options including but not limited to:
- Debt financing;
- Design and construction contractual arrangements whereby Council commissions a developer to develop the site, but maintains ownership, control and/or some form of ongoing, long term revenue stream from the site;
- Mixed residential models whereby a percentage of resident housing is developed and initially rented at a market rate, but converted over time to low income, social and/or community housing;
- Advice on possible financial benefits and risks for Council from retaining ownership of land and/or dwellings on the site; and
- The availability of grants and tax incentives for development undertaken by Council or a community housing provider, to deliver affordable housing on the site;
(noting that a number of these options are not mutually exclusive).
- Consistent with existing Marrickville Council policies and plans, and legislative requirements:
- the modeling report/s will identify potential community housing providers that Council could partner with to develop affordable housing at the site;
- Council will develop and implement strategies to encourage community housing providers to either participate in the EOI process, or otherwise partner with Marrickville Council outside the EOI process, to deliver affordable housing at the Old Marrickville Hospital site; and
- in order to prepare the modeling report/s Council staff and interested Councillors will consult with relevant stakeholders including successful community housing providers, developers that have a proven track record for delivering affordable housing and expert bodies.
- As per funding for the EOI process underway for the Old Marrickville Hospital Site, funding for these activities is to be drawn from the Property Reserve, and where possible costs minimized by use of publicly available information about the operation of successful affordable housing projects in other local government areas.
- Consistent with Council’s resolution of 4 December 2012 affordable housing is to be included as part of the full community consultation which will be undertaken about the options being considered for the Old Marrickville Hospital site.
- Council establishes a Standing Committee entitled the Affordable Housing Committee.
- Council nominates two elected Councillors as Co-Chairs of the Committee.
- The Terms of Reference for the Committee will be to:
- Support Marrickville Council in its efforts to ensure that the Marrickville Local Government Area remains a diverse, inclusive and accessible area to live;
- Monitor and take action to implement Council’s Affordable Housing Strategy and other relevant actions, policies and plans related to affordable housing, with affordable housing defined to incorporate low cost, social, community, essential worker, student and Indigenous housing, and boarding houses;
- Facilitate Marrickville Council working with other Councils, community housing providers and residents to develop and promote best practice models for maintaining and increasing affordable housing in the LGA and across the inner west;
- Facilitate Marrickville Council’s support for and development of partnerships with community housing providers in order to advance substantive affordable housing projects and proposals;
- Undertake research and consult with organisations with experience and expertise in affordable housing including the Centre for Affordable Housing and larger community housing providers;
- Undertake research and develop strategies for the use of Council’s planning and development powers and controls to protect and increase affordable housing; and
- Promote affordable housing through a range of means including working with residents and other stakeholders with an interest in affordable housing.
- A priority action for the Committee will be to ensure development and implementation of significant affordable housing on the Old Marrickville Hospital site.
- The Committee will meet bi-monthly, with the option for additional meetings, working groups or forums to be held to advance urgent projects; and
- Meetings of the Committee will be open to the community, and active steps will be taken to encourage participation from stakeholders with an interest in affordable housing.
BACKGROUND to the Notices of Motion
Marrickville residents experience a high rate of housing stress, with an increasing number of low and moderate income families and individuals being forced out of the inner west by high rents and housing prices.
Only 18% of residents believe that housing in Marrickville is affordable and renters are under particular stress, with rents in the LGA rising more than 50% in the last five years.
95% of low income renters experience housing stress and there is a low level of social housing properties available for residents in the area, despite the high level of demand.
Affordable housing remains a key area of concern for residents. In the recent Marrickville Community Survey 2012 housing affordability was nominated by residents as one of the top five issues facing the Marrickville area over the next 5 years.
Council owned land – the Marrickville Hospital site
The Old Marrickville Hospital site has the potential to provide significant, long term financial and social benefit to the residents of Marrickville LGA. It is the one of the largest, and potentially most profitable, Council owned sites in the LGA, and the only Council site which is currently being considered for large scale residential development.
However Council can only realize the full financial and community benefit from the site if Councillors are provided with the full range of properly costed options, which are consistent with Council’s policies, plans and public commitments to residents.
This Notice of Motion aims to ensure that full investigations are undertaken about the potential for affordable* housing to be included at the Old Marrickville Hospital site, beyond just options relating to Public Private Partnerships, which have a dubious record of delivery for Government and the community, and the sell-off of public land.
It calls for a report which builds on initial investigations of a range of potential funding options and examples of successful not for profit housing arrangements (some of which are as outlined below) which have the potential to deliver affordable housing for the residents of the Marrickville area and/ or long term revenue streams.
Particularly at this time, when Marrickville Council is in a sound financial position and has the potential to take a long term view of the best way to realise income from its assets, the sell-off of the Old Marrickville Hospital site without full exploration of the options would be short sighted and potentially financially irresponsible.
Marrickville Council’s commitment to affordable housing
Marrickville Council has committed to take action to address the growing affordable housing crisis in the inner west through a number of plans and policies, including through its overarching ten year Marrickville Community Strategic Plan – Our Place, Our Vision 2012, which sets the direction for Council and its spending priorities.
As outlined in Marrickville Council’s 10 year Community Strategic Plan:
The diversity of the Marrickville community is strongly related to the affordability of housing, as rising housing costs mean that many people cannot afford to live in the area. The lack of affordable housing makes it particularly difficult for people from the following groups to live in the area: younger and older people; single parent families; people with a disability; Aboriginal and Torres Strait Islanders; people from culturally and linguistically diverse communities; and workers on lower incomes.
Affordable housing targets in the Community Strategic Plan include (at Key Result Area 1):
1.8 Marrickville provides affordable housing options to meet the needs of its community (and will)
(a) Pursue planning controls that support existing and new supplies of affordable housing
(b) Build effective partnerships to deliver affordable housing initiatives and
(c) Ensure that boarding houses provide clean and healthy living environments.
In 2009 Marrickville Council adopted a comprehensive Affordable Housing Strategy with the aim of retaining and facilitating the creation of affordable and accessible housing in the Council area.
The Affordable Housing Strategy’s objectives include increasing the stock of affordable housing for households with very low, low and moderate incomes through actions such as:
- investigating the feasibility of affordable housing on Council owned sites proposed for development (Strategy 1.8),
- supporting the expansion of the social housing sector (Strategy 1.7) and
- investigating emerging funding opportunities and incentives for the development of public housing (Strategy 1.4).
More information about Marrickville Council’s Affordable Housing Strategy 2009-2011 can be found at https://www.marrickville.nsw.gov.au/community/social_planning_and_services/affordable_housing.html?s=418322425
Other nearby local Councils which have developed and acted on their affordable housing strategies include:
- Leichardt Council
- Ryde Council and
- City of Sydney Council.
The Old Marrickville Hospital Site – Cnr Marrickville and Livingstone Roads
Marrickville Council purchased the old Marrickville Hospital site on the corner of Marrickville and Livingstone Roads nearly 20 years ago, with the intention of building a library and civic centre. Plans were delayed while Council concentrated on other urgent projects such as the creation of the Tempe parklands and the construction of the new Annette Kellerman Aquatic Centre and Waterplay Park.
Planning and community consultation around the development of the site as a library and civic centre began again in 2011, and in 2012 community consultations were undertaken to select a Master Plan for the site. The current Master Plan includes a library, civic centre, park and underground car park at the front parts of the site (Precincts A and B – Marrickville Road). Preliminary works are currently being undertaken on the site. For more information about the status of the project see http://www.marrickville.nsw.gov.au/council/major_projects/newlibrary.html?s=721688542
To date there has been limited planning in relation to the remainder of the site (Precincts C – E), which has the potential to be developed for community, commercial and/or residential purposes.
4 December 2012 Council decision for the Old Marrickville Hospital Site
At its meeting on 4 December the Council reaffirmed its commitment to build a new Marrickville Library, while opening the door to moving the library to a location and changing other aspects of the site, such as replacing the planned park on the corner of Marrickville and Livingstone Roads.
A majority of Councillors also voted to put the site out to public tender – through an Expression of Interest (EOI) process. This could potentially include a Public Private Partnership (PPP) to delivery the Library/ community hub and the sell off of part or the entirety of the land to a private developer.
The 4 December 2012 Council decision included requirements that (at Item C1212(1) Item 2): (6) “development proposals for residential are to include affordable housing at the rate of at least 4% of total units” …
Affordable housing on the Old Marrickville Hospital Site & PPPs
It is understood that Councillors had previously been provided with limited modeling for affordable housing on the Marrickville Hospital site, and that this modeling has focused on PPPs.
It is understood that in March 2012 the former Marrickville Councillors were provided with an estimate of the income which Council could raise from the sell-off of precincts C-F of the site (ie the precincts not including the location of the proposed location for the library and park under the Master Plan) to a private developer, while donating part of the land to a community housing provider to deliver some affordable housing dwellings on the site, over which Marrickville Council would maintain some long term control.
This form of equity transfer contractual arrangement would see a PPP for the delivery of some affordable housing, but ultimately the sell off and loss of any longer term income stream from a current Council asset (the Old Marrickville Hospital) to Council.
While there are some examples of such a model successfully delivering affordable housing, in other local government areas, one of the risks from this model is ensuring that the social aspect of the development is actually delivered, and to a standard that meets community expectations. There are numerous examples of PPPs which have seen Local Councils and governments lose out, or have led to protracted legal proceedings.
The recent experience of Leichhardt Council, which undertook a PPP to develop its new library, should note serious caution for Marrickville Council, and is but one example of the challenges of enforcing social commitments from a developer, once Council has given away the underlying asset (the land).
The Italian Forum in Norton Street Leichhardt was chosen by the then Leichhardt Council as the appropriate site for a relocated, large modern library and was to be funded and fitted out as part of a Public Private Partnership.
However, between 2001 and 2003, acrimonious negotiations and court cases occurred before the developer would honour their commitment to pay for the fitout. During that period, the library site (underneath the Forum and out of sight of passers-by and intended users) sat vacant.
The negotiated sum was a compromise from a difference in perceptions: Council believing the developer would contribute something like $800,000 and the developer believing it would be more like $400,000 – for below what was needed for a proper fit-out. The Council settled the case for $500,000 (total fit-out cost $2.3 million).
Other financing options
This Notice of Motion proposes that Council explore the availablity of financing options beyond the sell-off of the site to a private developer in exchange for cash which can be used by Council for other purposes.
Another example a model which could be adopted could be a design and construct contractual arrangement whereby Council maintains 100% equity in the site, and commissions a developer via a design and construct contract.
Council may then decide to lease all units, sell some at market, and lease some retail space, to create ongoing income. A proportion of the housing units can be transferred to a community housing provider for affordable housing purposes (in perpetuity).
The disadvantage of this model is that risk rests with the Council which would have to manage a contract for a major multi-million dollar development and incur a significant cost in the short term. The advantage is that the Council captures all future potential revenue and profitability from the site due to equity retention, and thus gains a perpetual revenue stream (assuming that the residential and retail units can be tenanted or sold) which will cross subsidise the development.
This kind of model could be debt financed – meaning that Council could borrow to fund the construction of the housing at the site, and pay off the debt over time, using the income from rents or the sell-off of a percentage of the houses.
Council could choose to adopt a mix of low income and market rental, increasing the percentage of affordable rental housing over time as the debt is paid off. This option potentially increases the net worth of Council over time by maintaining the land and development as a Council asset, and provides future Councils with a wider range of options to deal with housing affordability.
Some other potential financing options and/or models which could be investigated include:
- Accessing superannuation savings. It is noted that the Federal Minister Simon Crean is currently investigating ways to encourage super funds to invest in local government infrastructure through super funds (see the Local Government Infrastructure Financing Review report at http://www.regional.gov.au/local/lgifr/index.aspx).
- Housing Supply Bonds. These are an avenue to encourage investment in affordable housing advocated by Shelter and Australians for Affordable Housing (see report available at http://www.ahuri.edu.au/publications/p30652/).
- The inclusion of low cost housing specifically for first home buyers. Recent studies have shown that first home buyers tend not to buy new apartments, especially in high rise, as a result of resistance from banks to lending where apartments are small and poorly constructed, though this is the kind of development encouraged by current State affordable housing planning instruments which are applicable in Marrickville.
Developing a partnership with a community housing provider
Council has the option not to enter into a design and construct contractual arrangement with a private developer, but instead with a community housing provider with a proven track record of delivering and managing community housing.
The EOI decision of Council of 4 December 2012 was flexible – in that it does not require that the entire site be part of a competitive EOI. The option for Council to deal with part of whole of the precincts C-F through an alternative arrangement, such as a partnership with a community housing provider, is left open.
Council could consider an arrangement with a large, established community housing provider to build and run a mix of affordable housing on the site, with the housing provider carrying the debt (ie providing a cash injection up front for Council) in exchange for a long term lease to the community housing provider (for example 50 years) after which time Council would regain full control of a developed site capable of delivering revenue streams. Such models seek to maximize Council’s broader social vision and goals, rather than short-run income. This might be considered more appropriate for a public institution that is not designed to maximize revenues, but social good.
Examples of affordable housing that works
Some examples of successful community housing models run by community housing providers and developed in partnership with local Councils are outlined below.
It is noted that these models accommodate different levels of need. Some models are co-located with community services to support high needs residents, while others focus on “essential workers” – that is they provide stable, low cost housing to allow low income or essential workers to keep living in the LGA, when they would otherwise be priced out. The type of affordable housing impacts significantly on the cost and potential income of different models.
- City West is a not for profit company which delivers affordable, long term housing in the inner city. City West undertakes developments itself, funded through borrowing against its existing housing portfolio, rental income, government grants and other income, including a development levy that applies to development in Pyrmont, Ultimo and Green Square. It also received significant start-up funding from the former Building Better Cities Program. It provides a mix of very low, low and moderate income housing, for persons up to a gross household income of $89,471 pa. Using this model City West has been able to fund the construction of multiple, new multi-storey community housing in the inner city which are paid off over a 25 year period or so (similar to an average house mortgage). Once paid off profits are reinvested in developing more housing projects. The City West model encourages access by residents to other community services, but primarily focuses on housing. Some of its properties have a small number of very high needs residents. For more information about City West see http://www.citywesthousing.com.au.
- Canada Bay Council’s Affordable Housing Program. As a result of voluntary planning agreement with a private developer, Canada Bay Council now owns 24 dwellings located within the North Strathfield and Concord West area and has made them available to ‘key workers’ i.e. eligible people working in the City of Canada Bay LGA and permanently employed in the employment sectors listed below in the City of Canada Bay or surrounding regions:
- Employment Sectors
- Health Services
- Public Primary or Secondary Education
- Emergency Services
- Public Transport
- City of Canada Bay Council Employee
- Manufacturing and
Council has appointed St George Community Housing to manage these units. For more information about Canada Bay Council’s affordable housing program see: http://www.canadabay.nsw.gov.au/resident_services/living_in_canada_bay/affordable_housing_program.html.
- Yarra City Council: Yarra City Council is an inner Melbourne Council which has both a detailed Social and Affordable Housing Strategy and a Social and Affordable Housing Implementation Plan, to ensure that its goals of increasing affordable housing are realised within Council’s limited resources. Council initiatives include:
o an Affordable Housing Development Fund which used Council funds to enable a housing association to leverage finance for affordable housing units; and
o an affordable housing development at 239 Brunswick St, where Council used its asset as the owner of the property to partner with a housing association to build affordable housing units. The four-storey building with 14 studio apartments was constructed by Yarra Community Housing after Council granted them a 40-year lease of the property in 2009. This project received funding approval under the Australian Government’s Nation Building Economic Stimulus Plan. The façade of the new building was amended from the original plans to retain heritage elements.
For more information visit http://www.yarracity.vic.gov.au/services/Community-Planning/Social-and-Affordable-Housing-Strategy-/
- City of Port Phillip Housing Program and the Port Phillip Housing Association: This Melbourne Council had a significant program housing undertaken, with Council taking on the role of developer or working with an external developer to create new affordable housing. Ownership of Council’s 12 community housing projects (valued at $36 million in 2006) was transferred to the Port Phillip Housing Association (PPHA) though a trust arrangement in 2006. The trust arrangement ensures that the housing remains affordable housing, and for the benefit of low income residents or persons with a connect to the area, in perpetuity. The PPHA maintains the existing housing stock and grows the availability of social and affordable housing through new projects.
Examples of projects developed by Council include:
- ‘The Regal’, St Kilda – including a partnership with a private developer (49 units for singles in a rooming house)
- ‘Inkerman Oasis’, St Kilda – involving a partnership with a private developer that delivered the community housing and a package of design objectives (28 units for older persons, families, singles, youth and persons with a disability mixed with private housing)
- Liardet, Port Melbourne – air space development over a community centre (6 units for singles)
- Excelsior Hall, Port Melbourne – recycling of a historic hall for community housing (15 units for singles in a rooming house and persons with a disability and their carers)
- Woodstock, Balaclava – air space development of community housing over replacement public car parking (31 units for singles in a rooming house and a person with a disability)
The ‘airspace developments’ involve the Council subdividing land which it owns, so that a separate title is created for the air above existing buildings. Council then works in partnership with a community housing provider to develop a project for new affordable housing, and once the terms of the project are agreed transfers the title (ie for the air above the building & the right to build in that space) to a community housing provider. For more information see http://www.portphillip.vic.gov.au/former-portphillip-housing-program.htm.
Further case studies can be found in the University of Western Sydney’s Urban Research Centre’s study Models of Affordable & Sustainable Housing for Local Government, Final Report 2008, including:
Case study 1. City of Port Phillip: Inkerman Oasis Development. High-level Council involvement
Case study 2. Brisbane Housing Company Ltd: Kelvin Grove Projects. Revamped arm’s length model
These are but some of the range of options which Council should explore before determining what should be done with the Old Marrickville Hospital site.
Establishment of an Affordable Housing Committee
Affordable housing remains a priority issue for Marrickville Council. Marrickville Council has recently undertaken considerable work with local residents and community groups around boarding house regulation and reform, but unlike neighbouring Councils such as Leichhardt Council Marrickville Council does not have a standing committee focused on housing issues to support Council action on affordable housing.
In 2009 Marrickville Council adopted the comprehensive Affordable Housing Strategy 2009-2011. In 2010 affordable housing was included as one of the priority areas for action under the Marrickville Community Strategic Plan (at 1.8, under Key Result Area 1). However these plans have not translated into an increase in housing affordability in the area. The affordable housing crisis in the area continues to worsen.
The establishment of an Affordable Housing Committee would ensure that Marrickville Council’s affordable housing aspirations are translated to specific projects on the ground, and are targeted in areas where Marrickville Council has powers and resources to meaningful contribute to maintaining and increasing affordable housing. It is not proposed that the Committee would replace any current forums or committees established to advance boarding house issues, but instead compliment work already underway.