Community Services Committee Agenda 17 February 1998

Christchurch City Council

COMMUNITY SERVICES COMMITTEE

AGENDA

TUESDAY 17 FEBRUARY 1998

AT 8 AM

IN THE NO 2 COMMITTEE ROOM, CIVIC OFFICES

Committee:

Councillor Garry Moore (Chairperson), The Mayor, Ms Vicki Buck, Councillors Carole Anderton, Graham Condon, David Cox, Anna Crighton, Carole Evans, Ishwar Ganda, Pat Harrow, Lesley Keast and Barbara Stewart.

Principal Adviser	Committee Secretary
Jonathan Fletcher	Kevin Roche
Telephone: 371-1548	Telephone: 371-1536
Fax: 371-1786	Fax: 371-1786

PART A - MATTERS REQUIRING A COUNCIL DECISION
PART B - REPORTS FOR INFORMATION
PART C - DELEGATED DECISIONS

INDEX

PART C	1.	APOLOGIES
PART B	2.	DEPUTATIONS BY APPOINTMENT
PART A	3.	HOUSING FUNCTIONS REVIEW OF OUTPUTS	RR 6889
PART A	4.	REPORT OF THE HOUSING MONITORING SUB-COMMITTEE	RR 6856

1. APOLOGIES

2. DEPUTATIONS BY APPOINTMENT

3. HOUSING FUNCTIONS REVIEW OF OUTPUTS RR 6889

Officer responsible	Author
Director of Operations	Don Hampton
Corporate Plan Output: Housing

The Housing Needs Study 1996 identified a number of issues for review and on the recommendation of the Community Services Committee the Council resolved on 26 March 1997 `That a review of outputs (of the Housing Section - relative to new policy) be undertaken by the Community Services Committee'.

An Officer Project Team was established to carry out the review. The draft report of the Team was discussed with members of the Community Services Committee at a seminar session in December 1997 who recommended some adjustments which have now been incorporated.

The Project Team's report is now presented to the Committee and has been circulated with the agenda.

This report includes research undertaken on Council's current housing policy and a review of the outputs, objectives and performance indicators for the Council Housing activity.

The issues of managing the asset including the most appropriate organisational arrangement to achieve the outputs will be separately considered by the City Manager.

Recommendation:	That the Register of Policy Decisions on Council Housing (Appendix 5.2) be received. That the Policy Document (Appendix 5.3) consolidating the policy decisions included in the Policy Register (Appendix 5.2) be adopted by the Council as current Council Policy on Housing. That the Community Services Committee review current policy at a seminar session in March 1998. That the current historical delineation of Council Housing as Elderly Persons Housing (EPH) and Public Rental Housing (PRH) be discarded and that all Council Housing be treated as one entity. That the Output definitions of the Housing function of the Council reflect the issues identified from the Housing Needs Study 1996. - Policy Advice and Research - Asset Management - Welfare Services - Tenancy Services That the objectives and performance indicators (Section 3.3) listed under each of the Output headings in the report be adopted. That the Terms of Reference for: (a) The Tenancy Criteria Review Team (Appendix 5.4) and (b) The Rent Review Criteria Team (Appendix 5.5) be adopted. That the Housing function of the Council currently known as the Council Housing Section of the Property Unit be identified in future as "City Housing". That the Housing Function Review of Outputs Report be distributed to all stakeholders in the housing review.

Chairperson's Recommendation:	That the above recommendations be adopted.

4. REPORT OF THE HOUSING MONITORING SUB-COMMITTEE RR 6856

Officer responsible	Author
Property Manager	Property Manager, Rob Dally
Corporate Plan Output: Housing

The purpose of this report is to bring forward the recommendations of the Housing Monitoring Sub-committee with regard to a number of projects being evaluated as a means of further implementing the "affordable" housing policies of the Council.

INTRODUCTION

During 1996 a comprehensive review of "affordable" housing needs in the city was undertaken, culminating in a "Housing Needs Study 1996" report being considered by the Council in December 1996.

The Council adopted the recommendations of the report which comprised the vision statement "To contribute to the community's social well being by ensuring safe, accessible and affordable housing is available to people on low incomes including elderly persons and people with disabilities".

Six generic goals and a number of action points were adopted as a means of ensuring the vision of the Council was achieved.

The goals are:

Goal 1 "The provision of affordable housing which is sustainable in perpetuity, and which is not at cost to ratepayers."

Goal 2 "The provision of additional accommodation for single men or women with one child."

Goal 3 "The provision of inner city accommodation for mature single men or mature single women displaced from boarding house accommodation." This goal is not to exclude the provision of such accommodation in other areas of the city.

Goal 4 "To facilitate the provision of additional "home" care for the semi dependent elderly in Council housing so as to extend their independent living."

Goal 5 "The provision or facilitation of accommodation for those deinstitutionalised or otherwise affected by changes in the health system."

Goal 6 "To ensure that the Council's social objectives with regard to affordable housing are clearly articulated to Government and other social service agencies."

The action points for achieving the goals are (with achievements asterisked):

Goal 1 "The provision of affordable housing which is sustainable in perpetuity, and which is not at cost to ratepayers."

To give consideration to a new name for EPH and public rental housing so as to better reflect current practices and to remove the perceived stigma created by the former titles.
To increase all existing EPH rentals by $5 per week for categories 1, 2 and 3 and $10 per week for categories 4, 5, 6, 7 and 8 effective from the first rental period commencing in July 1997 (refer chart Appendix 2).
To require bonds from all new "City Housing" tenants.
To network with Income Support so as to ensure appropriate access by both "City Housing" tenants and all other eligible Christchurch City residents to the Government funded accommodation supplement.

To develop and adopt a policy that sets future "City Housing" rentals at either a percentage of "market rental" or to achieve an agreed percentage financial return on assets employed, by June 1997.

To develop new tenancy criteria (policy) for "City Housing" by June 1997.

To complete a housing asset management plan by March 1997.

To carry out a feasibility study for the joint venture development of Council owned land (eg at Hornby) for integrated affordable housing use, by September 1997.

To bring forward a development plan for other Council owned land suitable for affordable housing by December 1997, and prioritise. Consider rent-to-buy/tenant contribution options.

To acquire additional land from time to time to assist in the achievement of this and other goals.

To seek through the City Plan review process the rezoning of Council owned land for affordable housing.

To institute a programme of landscaping improvements at existing units to enhance their environment.

Goal 2 "The provision of additional accommodation for single men or women with one child."

To identify potential providers by June 1997, in addition to the Council, and encourage the further provision of this form of accommodation.

To enter a joint venture arrangement with the YWCA for the purchase of a suitable residential type property to be operated by the YWCA as a "Women's Refuge", by March 1997. Estimated cost $0.6m.

To identify potential sites for development by the Council for joint ventures with social service providers, by March 1997.

To investigate the purchase of a small block of two bedroom motels or flats in the inner city by March 1997. Estimated cost $0.5m.

Goal 4 "To facilitate the provision of additional "home" care for the semi dependent elderly in Council housing so as to extend their independent living."

To survey the needs of the elderly in "City Housing" and put in place services that will extend their ability to remain independently housed. Target date June 1998.

To enter into discussions with the SRHA, or its successor, and others with a view to a joint venture development of semi dependent elderly accommodation.

Goal 5 "The provision or facilitation of accommodation for those deinstitutionalised or otherwise affected by changes in the health system."

To advise service providers of the resource consent requirements of the Council.

To enter a partnership (lease) arrangement with initially Richmond Fellowship New Zealand and possibly later with other appropriate agencies whereby they will be head lessee of part or whole of a Council housing complex, providing supervised accommodation for persons with psychiatric or other disabilities.

Ensure that appropriate planning procedures are in place to assist in provision of residential housing for those with psychiatric or other disabilities.

Goal 6 "To ensure that the Council's social objectives with regard to affordable housing are clearly articulated to Government and other social service agencies.")

To write to the Minister of Housing seeking urgent attention to the following matters:

The Government acknowledge homelessness is a reality in New Zealand, including Christchurch, and provide a statutory definition of homelessness.
That the Government acknowledge that the policy of requiring Housing New Zealand to achieve a commercial return on its investments while also having social objectives is neither working nor achievable.
That the Government acknowledge that its market rental policies have resulted in a significant increase in private sector rentals and that it therefore consider a return to a differential rental system related to income, or that the accommodation supplement be increased to 100% of the eligible amount and that it be targeted to meet tenants' needs.
That low interest loans for low income first home purchasers be made available through the housing Corporation and that the deposit be income related.
That the Government ensure that:

- Housing New Zealand houses comply with acceptable standards.
- Monitoring of housing standards is enacted.
- Legislation covering issues such as security of tenure is tightened.
- That the Government through its own agencies and in association with the Real Estate Institute promote good practice in the rental market.

That the Government consider joint venture developments/housing projects with the Council, such as low interest loans, on a similar basis to those provided to councils in the past.

To urge the Southern Regional Health Authority, or its successor, to provide adequately for the support needs of all its community based customers, by seeking additional Government funding to enable it to purchase the necessary services.

The most significant achievements asterisked above include:

The Council purchase of a block of central city motels and the long term "partnership" type lease of them to the YWCA for use as sheltered housing for women.
A partnership with the Richmond Fellowship through them taking the head lease of 16 units at Jecks Place for the purpose of "supported" accommodation.

HOUSING DEVELOPMENT FUND

The action points to meet the goals which achieve the vision can be seen at one end of the scale as a mix of process or machinery matters and at the other end of the scale, as the provision of additional affordable housing units.

To achieve the provision of additional housing units the Council has recourse to the "Housing Development Fund" which is really an amalgam of depreciation or sinking fund (which allows for the gradual wearing out of the existing housing infrastructure), and operational surpluses achieved from tenanting and maintaining the housing portfolio. The Housing Development Fund currently stands at $8.4m after the purchase of the Mayfair Motels for YWCA use.

As mentioned above, the depreciation or sinking fund is put aside for the replacement of the existing housing infrastructure once it has worn out or has outlived its useful/functional life.

The use of the Housing Development Fund now for the building of new housing should be seen as the early replacement of existing stock. The effect of using the Fund now will mean that in future years the money spent now will not be available to replace aged stock.

The Council's Financial Accountant advises as follows:

"Attached is a copy of an updated cash flow analysis for the Housing Development Fund based on scenarios provided by the Property and Housing Managers of future capital expenditure to be funded from the account. This analysis shows that the balance of the account will be significantly reduced below the level needed to provide for the replacement of the Council's existing housing stock.

Use of the Funds

You have asked me to comment from a financial management perspective on the use of the funds.

The Fund was set up on the recommendation of the Housing Manager to not only fund improvements to the Council's existing housing stock but also to fund the replacement of the Council's existing housing stock when it reached the end of its economic life. This was consistent with the Council's resolution that the Housing output should be self funding. That is, the Housing output should not be funded from rates revenue. Therefore sufficient funds need to be retained in the Fund to do this.
Several factors result in residential tenancy properties having only limited economic lives. These include:

Technological obsolescence can cause considerably higher costs for maintenance relative to more modern methods of construction.

Technological obsolescence can mean that considerable expense has to be incurred to alter a unit to bring the unit up to a standard consistent with the Council's objective of being a provider of safe, accessible and affordable housing to elderly persons, people with disabilities and people on low incomes. For example, relatively large expenditure may be necessary to provide sufficient power points to enable tenants to safely use the typical electrical appliances found in households today. Another example is where relatively large expenditure may be necessary to provide economical, safe and effective heating through removal of open fires, and installation of clean air friendly heating options coupled with insulation.

Social and demographic developments can mean that the original location or design of units is no longer suitable for tenants in relation to the Council's housing objectives. The relatively high cost of changing the design and layout may not be recoverable through higher rentals.

The changes in the use of surrounding properties can mean that the tenants' environment is no longer healthy and safe.

Conclusion

The application of sound asset management principles dictates that the Council's housing stock should be replaced at the end of its economic life to help ensure that the Housing outputs are provided at the lowest overall cost and to also ensure that the Council provides the appropriate leadership role in the supply of residential rental housing.
For the Council to achieve its objective to, `Separately fund housing administration and maintenance without recourse to general rate income' then the replacement of the Council's housing stock at the end of its economic life needs to be provided from the Housing Development Fund."

NEED FOR ADDITIONAL AFFORDABLE ACCOMMODATION

The Council is a 10% player in the Christchurch residential rental market, providing predominantly bedsit and single bedroom accommodation. Whilst the residential property market is not buoyant; (that is there appears to be sufficient residential accommodation available to meet general needs), the Housing section of the Council is still logging enquiries for affordable accommodation, particularly in its niche area of bedsit/single bedroom units.

In particular, the Council is receiving an increasing level of enquiry from those involved with the health sector.

Current waiting lists are as follows:

EPH:	410
Public Rental:	714

POSSIBLE PROJECTS

Over the past 12 months the Sub-committee has considered a number of projects that will help achieve the goals/action points adopted by the Council.

Some potential project opportunities considered have been abandoned as not fitting the Council's requirements: others included in this report are at a conceptual stage with best estimates of cost.

Because the various projects deliver varying elements of the Council's goals/action points, evaluation of them to achieve some form of objective priortising has been done through a weighted attributes evaluation process where the degree of compliance with the criteria is multiplied by the weighing of the criteria. A general description outlining the scope of the various projects is as follows, not necessarily in priority order:

HORNBY PROJECT - STAGE 1 (REFER CONCEPT PLAN IN APPENDIX)

The Council owns 1.8 ha of land with boundaries on Springs Road, Goulding Avenue and the Main South Road, Hornby. The land is currently zoned Open Space and maintained by the Parks Unit at a playing field level of specification. The land was formerly owned by the Paparua County Council and held for housing/community purposes. The Hornby Community Library adjoins this land.

Because of the need to have community support in reducing open space in this area, James Lunday of Common Ground has prepared a design concept for an integrated housing development on the site following an intensive community consultative process.

A variation to the proposed city plan is currently being prepared for consideration in February 1998. The variation will propose an L2 zoning for the site and with a development generally in accordance with the concept plan prepared by James Lunday.

The concept plan allows for 55 residential units each with their own private outdoor living space whilst retaining 50% public open space on the site. The site density is approximately double that of the surrounding residential neighbourhood.

It is intended that all units be unit titled (for future flexibility), that energy efficient designs/materials be incorporated in the construction and that ownership be a mixture of Council owned (rental), rent to buy, private ownership and perhaps some co-operative housing (land leased, buildings owned by others).

It is proposed that the Hornby project be developed in several stages commencing with a block of approximately 22 single bedroom units (with mezzanine accommodation for grandchildren or care givers), partly fronting on to the Main South road. Costings shown allow for these units to be owned by the Council but other forms of ownership will be explored and indeed the Council will seek capital input from the private sector throughout all stages of the project.

James Lunday is currently detailing the design of these units in conjunction with other drafting work required for the plan variation submission.

Estimated cost to the Council (stage I) $1.5m (total development approximately $6m).

PARTNERSHIP WITH BECKENHAM BAPTIST CHURCH

The Beckenham Baptist Church has a block of land in Beckenham on which it wishes to develop and manage affordable sheltered housing. It has approached the Council to explore partnership opportunities.

The Council has taken legal advice from Buddle Findlay with regard to partnership options and officers have developed the recommended Buddle Findlay option to a stage where the concept has been approved by both parties on a preliminary basis, subject, of course, to full Council approval.

The key elements of the proposed development are as follows:

land leased by the Church to the council for a peppercorn rent: - 25 year term plus three rights of renewal each of 25 years.
the Council builds eight single bedroom units.
the Baptist Church (Trust) provides landscaping/siteworks and chattels.
the Council sub-leases land/buildings to the Trust at a rental below market but so as to provide a reasonable return to the Council (similar to the YWCA partnership).
the lease provides for the Council to agree to rents in line with Council policy from time to time.
the Trust manages the units and provides welfare support.

Estimated cost to the Council $.6m

CECIL PLACE

The Council owns a vacant block of L3 zoned land fronting Cecil Place and Brougham Street - just east of Brougham Courts.

Concept plans have been prepared for a 60 bed development in four three storey blocks. It is proposed to have a mixture of accommodation comprising seven bedroom flats (for those displaced from boarding house accommodation) and two bedroom flats.

It is proposed to have a number of garages, parking spaces, lock-up storage lockers, and an on-site "supervisors" office.

Estimated cost to the Council $2.5m.

INNER CITY TURN KEY PROJECT (a)

A developer/builder has approached the Council with an offer to design/build 18 units (36 beds) on their 1600m² inner city property.

The development would be a mix of four bedroom flats (for those displaced from boarding houses) one and two bedroom flats with two ground floor units designed specifically for the physically disabled. It is proposed that the development be in four stand-alone three storey permanent material modules with each unit complete with floor coverings, washing machine, refrigerator and electric range.

The developer/builder is known to the Council having built several housing complexes over the years.

The location for this proposed development is very central and particularly meets the needs of those displaced from boarding house accommodation east of the Square.

Estimated cost to the Council - land and buildings $2.4m.

INNER CITY TURN KEY PROJECT (b)

A developer/builder, has approached the Council with an offer to design/build 13 only two bedroom units, each with a garage, on land they own in St Asaph Street, Phillipstown.

The units are of permanent material three storey construction and come complete with floor coverings, washing machines, refrigerator and electric range.

Estimated cost to the Council - $1.553m.

BURWOOD HOSPITAL

This partnership opportunity with Canterbury Health was introduced to the Council by Councillor Graham Condon. In essence, it will enable the Council to provide affordable housing on the Canterbury CHE's land at Burwood. It is envisaged that the housing will be of an integrated type, with some additionally meeting the needs of those with disabilities and those who have families requiring treatment at the Burwood Hospital.

Additionally the Paraplegic Foundation of New Zealand (PFNZ) are desirous of selling their existing four unit Milner Lodge accommodation complex built on Burwood Hospital land leased from the CHE. The purchase of the Milner Lodge units by the Council would enable PFNZ to concentrate their resources on other areas of endeavour whilst giving the Council an opportunity to increase its support to the disabled community.

The initial concept for the building of 24 units in a two stage development has been modified at the request of the CHE, to a single stage project comprising 14 units.

In broad terms, the concept is as follows:

The CHE lease land to the Council on a long term basis for a peppercorn rent.
The CHE in return receive from the Council at no cost to the CHE, one or two self care units based on 50% of the commercial net present value (NPV) of the peppercorn lease.
The Council to purchase from the PFNZ at a valuation to be agreed, the four "Milner Lodge" units for the disabled.
The Milner Lodge units to be integrated into the Council's existing housing portfolio.
The lease of the Milner Lodge land to be assigned to the Council at a peppercorn rental, subject to some variations being agreed between the parties.
The Council to build 14 rental units on the Mairehau Road frontage, integrated into the Council's housing portfolio.

The above (amended) partnership is yet to go before the CHE Board for approval.

Estimated cost to the Council -
Milner Lodge Units $.25m
14 rental units $1.3m
Self care unit(s) for CHE $.15m

ARANUI PROJECT

Mayor Vicki Buck has initiated discussion with Housing New Zealand (HNZ) promoting the opportunity for the Council to enter into some form of partnership with HNZ in order to upgrade the Aranui environment.

The concept is for HNZ to sell Aranui houses to the Council at prices which enable the Council to carry out either affordable upgrades/retrofits or demolition/rebuild and so create a new (and higher) level of accommodation expectancy and environmental amenity as a blue print for future Aranui housing development.

The matter of possible purchase of HNZ Aranui properties was investigated some six months ago with Councillor Wright but put aside at that time as purchase costs to the Council did not enable cost effective upgrade options.

It should be stressed that discussions with HNZ are at a very preliminary stage and as such, no firmly agreed concepts or costs are available for evaluating through the weighted attributes process.

It is however fair to say that any involvement by the Council is likely to cost between $.5m (property purchase) and $2.5m (property purchase plus redevelopment).

The Council could also consider further investment in this area (funded from rates) through implementation of neighbourhood improvement type initiatives.

SOUTHPOWER LAND

Councillor Moore has initiated approaches to Southpower Management with a view to registering possible interest in some form of Council or Council/Southpower development of the Packe Street, St Albans, land owned by Southpower.

Southpower have employed consultants to give them property related advice with regards to their future options for this land. Currently no further information is available for the Council's consideration. Accordingly we have no concepts or costs to enable evaluation through the weighted attributes process.

WEIGHTED ATTRIBUTES EVALUATION

The weighted attributes evaluation process enables a reasonably objective evaluation of the various projects based on the level of grading of the agreed criteria multiplied by the weighting (or importance of the criteria in the decision making process) expressed as a percentage of the decision. The percentages achieved by the various criteria are then totalled to give an overall score: the higher the score, the higher priority the project.

The grading is scored as shown below:

Excellent	100
Good	75	Grading can score anywhere in the range 0 to 100 with the
Average	50	grades shown to the left as a guide only.
Poor	25
Inadequate	0

FULL DETAILS OF PROJECTS

The purpose of this report is to prioritise projects in conceptual form rather than to seek full Council approval of fully detailed and fully costed projects.

The project(s) chosen to be implemented will be brought back to the Council in detailed form prior to commencement.

BUDGET ISSUES

The level of capital expenditure on housing projects, (indicated in the cash flow models attached), funded from the Housing Development Fund and not from rates is significantly higher than that shown in the current long term model for housing: this is because that whilst shortfalls in affordable housing were identified late in 1996, projects to meet these circumstances have been reviewed during 1997 and are only available now for final consideration.

Following discussions with the Financial Planning Accountant, two funding options have been advised:

The Community Services Committee can resolve to include the agreed projects as a late bid for the unspecified capital amounts in the 1998/99 budget.
The Community Services Committee can recommend to have the funds to cover the agreed projects added to the capital expenditure budget as it is funded from the Housing Development Fund. In doing this the Committee would strengthen its position by advising that the projects will at least break even or, more likely, achieve an operating surplus.

Recommendation:

That:

Hornby Stage I, and Cecil Place projects be proceeded with in accordance with the attached Housing Development Fund cash flow scenario. A draft cash flow is attached and it is intended a final version will be tabled at the meeting;
The Inner City (a) and Beckenham Baptist Church projects be subject to further discussion with the parties involved but be included in the indicative cash flow for the Housing Development Fund;
Fully detailed project plans for the chosen projects be brought back to the Council as soon as possible.

That the Community Services Committee recommend to the Strategy and Resources Committee Annual Plan Working Party the inclusion of the housing projects, as detailed in the cash flow scenario, into the capital expenditure programme.
That the parties offering to "partner" with the Council be thanked.
That the Council investigate neighbourhood improvement projects in Aranui through the Parks and City Streets Units and make budget allowance for the same in 1998/99.
That a Sub-committee consisting of Councillors Garry Moore, Lesley Keast, Carole Anderton and Patrick Harrow with appropriate officer support further evaluate partnership options with HNZ and report back to the Community Services Committee in due course.
That the Council approve the concept of the Hornby Housing Project, on land owned by the Council, and that the development be generally in accordance with the concept plan prepared by Common Ground and Associates following community consultation.
That any future new Council housing be designed incorporating open plan concepts as appropriate to allow use by those with disabilities.
That consideration be given to high rise construction as a possible option in any inner city housing projects funded by the Council.

Chairman's Recommendation:

That the above recommendations be adopted.