Thank you the opportunity to comment on this Strategy.
REDWatch is pleased to note that the SMDA has
confined itself to Affordable Rental Housing rather than contemplate the
affordable home ownership options previously floated by the RWA. REDWatch had
major concerns about how affordable home ownership would operate on a perpetual
basis.
REDWatch notes the Strategy on exhibition “will
form the policy basis for a review of the Redfern Waterloo Authority Affordable
Housing Contributions Plan, 2006 that will occur as part of the Redfern
Waterloo Urban Renewal Study under the SEPP (Urban Renewal) 2010”.
We welcome the release of the draft Strategy
prior to any review of the 2006 Affordable Housing Contributions Plan. REDWatch
has long argued that the 2006 AH Contributions Plan should have been proceeded
by a strategy / policy document.
REDWatch is concerned however that the
document seems focused only on the contributions plan element and does not set
out what the SMDA proposes in its affordable housing strategy for either
housing size mix or tenant mix.
The Strategy proposes changing the average AH
dwelling size from 100sm to between 80 – 85 sm but it provides no indication of
what this means for the stock created. A decision to provide an increased
number of affordable boarding house type rooms for example would reflect in the
average unit size, alternatively the plan could be proposing to cut 15-20sm off
each unit on the basis that AH should be smaller than normal housing so it can
be delivered more cheaply. It is not clear what the SMDA proposes. It has all
the signs of still not having looked closely at the areas needs for AH size / mix but rather working from a
standard contributions plan estimate with the detail to be worked out later.
REDWatch is of the view that the SMDA must do the work to assess the mix of AH
sizes needed and then work out what the contributions plan will buy in total
units.
A proper strategy would identify the
affordable housing needs of the area in terms of household type, and propose a
distribution of dwellings across one, two and three bedroom dwellings
accordingly. Construction of smaller
dwellings will increase delivery against benchmarks based on dwelling numbers
but may not meet the demonstrated need for affordable housing in the area. In the absence of detailed demographic data
around those in housing stress, including household size and type, it is
impossible to form a view regarding an appropriate distribution of dwelling
sizes. If development focused on the KPI
of proportion of affordable dwellings in total dwellings, then an
unsophisticated response would lead to construction of bedsits or similar to
maximise performance, but may not meet priority local need.
REDWatch is very concerned that the document
is in effect silent on what the mix of Household Income bands the SMDA proposes
for its AH when it says the “mix should be determined on a case by case basis,
taking into account the need to create social mix by through the allocation of
dwellings across a range of income bands, in consideration of the demand and
waiting lists existing within the precinct in which the housing is situated”.
On a basic level the AH definition simply
adds in the option for AH to also have moderate income households in addition
to the income levels covered by “social housing”. We find this lack of detail
about what the SMDA propose for their AH very concerning. The SMDA needs to
clarify what it proposes for its mix of Affordable Housing and provide an
evidence base in support of that mix based on demographic analysis of those
households in housing stress., both a present and in the future.
Generally, the most cost efficient way of
providing ‘affordable housing’ is to target single person households at the
upper end of the moderate income band thereby maximising rents and maximising
dwelling yield. However this is unlikely
to reflect the real need for affordable housing in inner city markets such as
City of Sydney. The evidence generally suggests that the majority of those in
housing stress are very low and low income renters, who are the most likely to
be in ‘severe’ housing stress (paying more than 50% of gross household income
on rent), and to be displaced from the area in a gentrifying market. Again, the
strategy needs to be informed by a demographic analysis of those households in
housing stress with regard to income distribution, and ensure dwelling mix
reflects the proportional distribution of very low, low and moderate income
households to be effective and equitable.
While the Affordable Housing Policy context
material in section 3 is useful background there is no assessment of what the
SMDA thinks of the issues thrown up or the different possibilities. This also
applies to section 6 where it specifies what City of Sydney Council proposes as
far as other planning mechanisms that can be used to protect and facilitate AH,
but provides no indication of whether the SMDA plans to go down a similar
route. REDWatch would be concerned if some of these measures were used in
relation to short term – 10 year AH land banking.
Section 3.1 deals with the Affordable Rental
Housing SEPP and notes that it only requires property to be used for AH for 10
years. There is no indication as to if the SMDA propose to use this mechanism
to deliver some AH. REDWatch has requested clarification from the SMDA
regarding its proposed use of the 10 year provision since the AH Strategy
release, the silence is concerning. REDWatch is strongly of the view that AH
delivered by the SMDA must be delivered in perpetuity regardless of ownership type of the property – perhaps by conditioning the title and
that the land banking mechanism inherent in the ARH SEPP is not an acceptable
way to address the areas long term AH requirements.
The model chosen by the SMDA seems to be one
that promotes AH separate from the developments that fund AH through
contributions even though Appendix 1 says it can be provided in kind. The SMDA
should explore options for encouraging developers to include AH within their
developments rather than encouraging developers to pay out to have no AH on
their site.
The largest contribution to the SMDA AH fund
came from a legislated removal of AH contributions from the CUB site
(formalised under a VPA) in favour of them being placed in Redfern Waterloo.
Ironically Frazer’s last year received NRAS funding for 828 dwellings in the
Frasers Property site on Broadway. The SMDA affordable housing strategy must
encourage developers to build AH within their sites for vesting to AH
providers. This is also consistent with the strategy’s position that AH should
not be concentrated in one place.
One major oversight in the strategy is that
it makes no recommendation about priority being given to people who have a
connection to the area other than aboriginal people. This is an accepted AH
principle and it is important in areas where people are being driven out by
higher rents, where children cannot afford to live near parents or people are
pushed out of long term public housing if their income becomes too high. The
Strategy needs to include preference for those with links to the area. Given
the long and tortuous path expected for the Social Impact Assessment REDWatch
does not believe this should be left until the final SIA. It should be a
principle of SMDA’s Affordable housing strategy to be implemented alongside all
the others.
We note that the City of Sydney AH targets
for growth to 2030 are that AH should make up 18% of growth to provide a target
of 7.5% of all residential units. Like many areas it is not clear if this is
SMDA policy or just part of the context. REDWatch wants to underline the
importance of significant AH in new development in inner city areas with large
conservation areas that will yield little new AH. We assume the SMDA is not
signing up to the City Council’s targets otherwise the contribution rate would
need to be a lot higher to deliver 216 units on North Eveleigh rather than the
61 proposed.
REDWatch is very concerned at the maths in
the section 4 table on Current Affordable housing targets. It is simply
misleading to have a table purporting to show Current AH Dwelling Targets in
Redfern Waterloo without also showing the loss of 700 public housing units the
SMDA propose to have removed from Redfern Waterloo. The Strategy does not
indicate what the rules will be for this 700 units which it excludes from its
own calculations.
REDWatch welcomes the SMDA’s proposal to
place some levy on private development sites within the BEP2 area in addition
to whatever arrangements might be made between HNSW and the developers for
contributions towards renewal of public housing and the provision of the 700
units.
There are other concerns regarding the AH
targets. There seems to be little or no
substantiation for the contribution level other than that “the 1.25% affordable
housing levy was determined having regard to achieving sufficient funds for the
relief of housing stress to some extent while at the same time not presenting a
disincentive for future potential development”.[1] The only substantiation is that the number is
similar to that for comparable developments.
Dwelling yields are then back calculated from the levy and assumptions
regarding dwelling size.
This is the reverse of a proper
evidence-based approach, which should start with dwelling need and then
determine the ability of the development to deliver affordable housing (based
on balancing the cost impost on purchasers of the levy, reduction of developer
profits and the public benefit associated with affordable housing), and thereby
determine an appropriate levy.
An evidence-based assessment of the
appropriate levy would consider the opportunities for profit associated with
the redevelopment (based for example in uplift in value of land through
rezoning or intensification of development opportunities) and provide for
redistribution of some portion of profit above a normal level to the community for public goods such as
affordable housing. A normal profit is generally calculated 10%, which is
generous.
The strategy does neither assessment (need or
net benefit), so that the levy and hence the amount of affordable housing to be
provided appears to be arbitrary. The community potentially misses out an
important benefit from this land, and there is no way of assessing from the
current documentation what the quantum should reasonably be.
REDWatch will welcome a full review of the
population projections in the Redfern Waterloo Urban Design Study. The pro-rata
distribution of the Metropolitan Plan increase into Redfern Waterloo is clearly
inadequate. The table in section 4 shows the SMDA delivering 5500 new dwellings
in BEP1 & 2 areas out of a total of the 7,930 projected for Redfern
Waterloo. On this basis all the developments elsewhere in Redfern and Waterloo
between 2006 and 2036 will only account for 2,430 units! We would be surprised
if this number had not already been delivered in Waterloo since 2006 given the
change between 2001 and 2006.
Table 5 is also of concern as it shows
“Frasers” as part of the AH contribution from Redfern Waterloo. This is incorrect as this is “double
dipping”. These dwellings are part of
the affordable housing contribution of a separate development, however they
have not been delivered within the development.
If the table is read properly, then the affordable housing contribution
from the development is 2.12%. The only
substantiated target appears to be the 18% developed by City of Sydney. The proposal by the authority is one ninth of
this target.
The costs shown above Section 6 are also of
concern. $200,000 is likely to represent
the construction cost of a typical dwelling, while $472,000 is probably based
on the sales price which will also include a land component. It is of concern that the SMDA is not clear
on the basis on which the levy will be converted to units, that is whether it
will be at the marginal cost (the construction cost) or whether the builder
will make profit from the levy or use it to amortise his land costs. Again,
this should be made transparent.
Section 2.3.1 also talks of “low occupancy
rates of social housing dwellings” this is ambiguous. We have been assured by
HNSW that places are not left vacant for significant periods of time and
occupancy is quite high. This may be referring to the mismatch between unit
size and number of people supposed to be living in the premises leading to a
lower person per unit figure that that for private developments. We urge some
caution however because there is a lot of under-reporting of occupancy in
public housing for fear of benefit loss which makes the statistics quite
unreliable. If the paper means small
household size, then it should say so.
While we recognise that Student Housing is
excluded from what the SMDA proposes it is incorrect to say it is catered for
by the market. Very few people can afford the rents any longer to share in
inner-city terraces or to pay the fees for rooms at Urbanest. There remains a
need for low cost student housing and a successful model in the form of STUCCO
Student Housing Cooperative exists in Wilson Street. STUCCO made a submission
to BEP1 setting out their interest in expanding to a refurbished building on
the North Eveleigh site. This form of low income student housing should be
considered by the SMDA as it is an important part of the housing mix required
in the area and it is not met by the market.
REDWatch has concerns re the use of the
phrase Social Housing. This phrase has changed in its meaning and application
from its historic usage as a descriptor for government owned infrastructure
used as affordable long term rental housing commonly referred to as Public
Housing. The current usage of the phrase Social Housing covers collective
reference to the former Public Housing sector [which is now fixed term rental
to special needs category tenants], the Community Housing sector and more
recently the Affordable Housing sector. REDWatch believes that there needs to
greater clarity given on each occasion the term Social Housing is used. This
confusion is evident in the Draft BEP 2 where the overall Social Housing stock
level remained constant whilst 700 units of Public Housing disappeared.
In closing REDWatch requests the SMDA to set
out much more clearly its position on AH policy. Some specific areas include
the provision of a substantive evidence base based on an assessment of the
quantum and demographics of those in housing stress to support dwelling
targets; the provision of detailed economic analysis around construction costs,
market prices and profits to substantiate the proposed quantum of levies; and
an assessment of social housing need and delivery in all sectors of the social
housing spectrum as this is the target group most likely to be in housing need
in an inner city market and least likely to be catered for in such a
development.
Thank you again for the opportunity to
comment on this strategy and we hope the final document will be stronger as a
result.