Proposal to sell the Palmer St pensioner housing complex
Waipa District Council is proposing a major new investment in pensioner housing.
Public submissions closed at 5pm, 14 April 2017. Council will hear verbal submissions on 2 May 2017 (or as early thereafter as possible) and a final decision will be made in June this year.
Council's current pensioner housing activity
Council provides 131 pensioner housing units in eight complexes throughout the district and currently has 138 tenants.
In 2014 Council reviewed its pensioner housing policy and made it clear that it is absolutely committed to providing and growing its pensioner housing stock, both now and in the future.
This is particularly important for Waipa as the district is facing an aging population which means the demand for affordable pensioner housing will undoubtedly increase.
The pensioner housing service provided by Council is a self-funded activity which means all costs of the service are covered by tenants' rents. Rents are in line with current market rental rates which means they are not subsidised by ratepayers. All income from rents remain in the activity and any surplus funds are held in reserve for future needs of the activity.
Palmer Street pensioner housing complex
The Palmer Street complex is one of Waipa District Council's pensioner housing complexes located in Te Awamutu. It is Council's biggest complex and includes 36 units. There are currently 34 people living in this complex. There are some ground subsidence issues at this site and for a number of years maintenance has been deferred while options for rehabilitation and upgrade have been fully considered.
Neighbouring the Palmer Street complex is Freeman Court which is a supported independent living complex owned by Habitat for Humanity Central North Island. Habitat for Humanity is an organisation solely committed to providing affordable housing for communities.
What is being proposed
Council is proposing to sell the Palmer Street complex to Habitat for Humanity. The complex will be sold at current market value (at the time of sale) and estimates suggest the complex could net Council $1.7 - $1.9 million. This revenue would be used to build approximately 12 new pensioner housing units on a separate site/s in or around Te Awamutu and Kihikihi in the 2017/18 financial year.
Habitat for Humanity is committed to providing affordable housing and sees the Palmer Street complex as a great opportunity for them to expand their present Freeman Court complex and offering. As a charitable organisation, Habitat for Humanity has access to funding that is not available to Council. They are experts in affordable housing and as such they are better equipped than Council to carry out the necessary rehabilitation and upgrade work.
Habitat for Humanity's stated vision as an organisation is A world where everyone has a decent place to live, which aligns well with Council's commitment to well maintained and affordable pensioner housing. There are no known conflicts of interest in the transfer of the Palmer Street pensioner housing asset from Council to Habitat for Humanity.
Habitat for Humanity's rent figures are dependent on their tenants' situations but normally fall within a targeted range of 25-30% of the tenant's gross income. Under no circumstance will the rent exceed current market rent.
Benefits for current tenants if the sale goes ahead
There are numerous benefits for current tenants including:
- Tenants can choose to stay in their current unit if they wish.
- Rents will remain at or below market rate.
- Tenants will have access to a wider range of services offered by Habitat for Humanity, including meals and activities, that Council cannot provide.
- If a tenant becomes unable to continue living independently in their Palmer Street unit they will have the opportunity to more easily transition into the greater level of care provided at Freeman Court.
- Habitat for Humanity would improve the standard of the current units.
- If tenants prefer, they will be offered a priority place at any of Council's other pensioner housing units, including the brand new units to be built in and around Te Awamutu and Kihikihi using the proceeds of the sale.
Protections in place
If the sale takes place Council will ensure that tenants and community interests are protected through the inclusion of special conditions (covenants) in the sale and purchase agreement. These covenants will provide for:
- Lifetime tenancy for current tenants subject to their ability to continue to live independently and compliance with the provisions of the Residential Tenancies Act.
- Restrictions on the use of the site to ensure it continues to be utilised for housing for the elderly.
- A first right of refusal for Council to repurchase the site should Habitat for Humanity ever want to sell it.
Why the changes are being proposed
The sale is being proposed as it offers significant benefits to current and future tenants and provides a much-needed boost in the total availability of pensioner housing in the district.
Waipa District Council is committed to providing pensioner housing in the district and in 2014, also committed to increasing our housing stock to cater for the district's aging population. The sale is one way we can achieve this while improving conditions for current tenants.
Options & financial implications
Funding of the pensioner housing activity is ring-fenced which means all costs are covered by unit rents and no funding comes from rates.
There are two options to consider:
Option 1 (proposed option):
Sell the Palmer Street pensioner housing complex
The sale of the Palmer Street complex is estimated to provide Council with between $1.7 to $1.9 million in sale proceeds. This revenue would be used to build approximately 12 new pensioner housing units on a separate site/s in or around Te Awamutu and Kihikihi in the 2017/18 financial year.
There is currently $2.6 million included in the 10-Year Plan 2015-25 for rehabilitation and upgrades at the Palmer Street complex. If the sale proceeds, this budgeted upgrade money would instead be spent on building further pensioner housing units over the next three years.
In total, this option means there could be around 29 new Council-owned pensioner housing units available in the Waipa district, together with Habitat for Humanity making significant investment in the Palmer Street units.
Option 2 (status quo):
Retain the Palmer Street pensioner housing complex.
If Council retains the Palmer Street complex, the budgeted $2.6 million will be used to rehabilitate and upgrade the current units as previously planned and the opportunity to free up and secure new funds for expansion of the portfolio would be lost.
Where to from here
Submissions closed at 5pm, 14 April 2017. Council will hear verbal submissions on 2 May 2017 (or as early thereafter as possible) and a final decision will be made in June this year.