In November 2017 Horowhenua District Council sold its pensioner housing portfolio to Compassion Housing to improve service levels for its tenants.
Compassion Housing provides a wrap-around service including regular nurse visits and pastoral care, as well as managing and maintaining the units.
Compassion Housing is an experienced elderly housing provider and part of the Sisters of Compassion – it is a registered community housing provider and has been providing non-denominational community housing for 18 years in a similar portfolio in Lower Hutt.
When the sale went through, the average age of the 115 housing units was almost 40 years and renewing them was expected to cost $4.3 million in the next 20-25 years. The portfolio also included 1.1 hectares of land in Waimarie Park in Levin. This land is available for building more social housing if demand grows. Alternatively that land could be sold to fund more social housing development elsewhere in the district.
The Community Housing portfolio was sold for $5.25 million with the express intent of retaining the portfolio as community housing for the elderly. Had it been sold on the open market it may have attracted a higher price, but Council was keen to provide security of tenure to its ex-tenants and ensure the housing remained available for the elderly in the area. The tender accepted was the best of those supplied and higher than an independent market valuation which took into consideration the properties would remain as social housing.
The sale reduced Council’s debt, removed the future liability for upgrading or replacing housing units and reduced operational costs now and into the future.
Following the sale, several complaints were made about the process. The Office of the Auditor-General investigated and found the claims were unfounded. The report found that the process was properly managed, with consultation at all appropriate stages. The only part of the process that wasn’t open to the public was the final decision on who to sell to, which was conducted in-committee because of commercial sensitivity – a standard practice in all councils.
How big was Council’s community housing portfolio and what condition was it in?
- 115 units distributed across eight complexes, approximately 97% in Levin, with others in Foxton and Shannon.
- Portfolio value (book value) $7.191 million. Average age of portfolio 39.7 years. Up to 50-60% would need replacing in the next 20-25 years at a cost of about $4.3 million.
- 1.1 hectares of land adjacent to Waimarie Park – held for the further provision of affordable housing.
- A $5.2 million outstanding loan.
Why did Council sell its community housing?
A review of Council service levels showed the community housing portfolio wasn’t sustainable in the medium-to-long-term without significant operational and capital expenditure.
Central government requirements mean only community housing providers can apply for capital grants to fund building and access income-related rent subsidies for tenants.
Community housing providers can provide a higher level and range of service to tenants than Council could, because that is their area of expertise.
Has the sale caused a change in criteria for those who seek social housing accommodation?
No, a condition of the sale is that the housing remains for its intended purpose, which is affordable rental housing for older people and those with a disability.
How do people apply to live in a Compassion Housing home?
Visit Compassion Housing’s website for details, or you can apply through the Ministry of Social Development.
How did Council select a preferred purchaser?
Council initiated a Request for Proposal process to select a preferred purchaser – six interested parties registered their interest and three proposals were received. A condition of participation was for those organisations to be a registered Community Housing Provider, or have the ability to become a registered Community Housing Provider before the transfer.
Proposals were considered by an evaluation panel, which assessed them against a range of different evaluation criteria, including tenancy and property management capabilities, strength of management and governance structures, financial capabilities and ability to forge links in the Horowhenua community. All these factors provide a level of confidence that the successful purchaser will be able to maintain and grow the community housing service. In addition, a strong emphasis was placed on price, because it was not Council’s intention that the transfer should be subsidised by ratepayers.
The preferred purchaser was invited to make a presentation to Council and elected members made the final decision on the sale.
Does Council have nothing to do with community housing now?
Council is committed to taking a leadership role in advocating and facilitating for wider community issues with regard to accessibility and affordability of quality housing – as evidenced by our Community Housing Forum that was established in 2019.
Compassion Housing is eligible, as per Council’s rates remission policy, for a 50% rates remission. This will occur for a period of 13 years and thereafter a 25% rates remission will apply.
Did Council consult?
Yes. Community Housing is a strategic asset of Council as identified in Council’s Significance and Engagement Policy and therefore Council was required to consult with the community.
The consultation document was adopted by Council. A month-long consultation process was undertaken in Horowhenua. Council advertised the consultation process, informed tenants of the process and regular media coverage of the issue occurred. The results of the consultation were presented to Council for consideration. Upon consideration Elected Members agreed to proceed with the sale of Council’s social housing portfolio to a Community Housing Provider.
Alongside this, and as part of the Request for Proposal process, Council again consulted with tenants, to ensure their views about what makes a good community housing landlord were taken into account.
Has the process been audited?
Yes, the Office of the Auditor-General examined the process and found concerns about the sale process were unfounded.