the national affordable housing consortium years: new fte · each portfolio is unique and will have...

Social Housing Capital Investment Fund Working Group (SHCIF)

The National Affordable Housing Consortium – Celebrating 7 Years: 2009‐20163,500 New Homes plus 150 in the pipeline & $1.3 Billion in private investment. 21,000 FTE Jobs created by NAHC Activity: Saving Tenants $17m per year

Social Housing Capital Investment Fund Working Group (SHCIF) 2


Social Housing Renewal and RecapitalisationFinancial Model ‐ Townsville Case Study


SOCIAL HOUSING CAPITAL INVESTMENT FUND

INDEPENDENT WORK GROUP

Griffith University

NAB Capital Finance Solutions

Industry Super Australia

National Affordable Housing Consortium

Serco International

Chaired By Ian Winter [ AHURI]


CONTEXT & ASSUMPTIONS

A Financial Model that can be used by a variety of agencies across a range of social housing portfolio’s which canbe adjusted to capture those differences and the assumptions put in by the agency, along with scenario testing.

Finding a way to use current resources better [ ie Assumes no new resources]

Focussed on attracting new capital investment, drawing on and translating operational and demand side subsidiesinto reliable income streams

Working within a reformed Federal arrangement. [ Trying to address view of ‘cost shifting’ State to NPF [CRA] withissue of adequacy of investment and how subsidy may facilitate capital investment]

Just one set of ‘tools’ to work alongside others [ Complements and enhances traditional renewal approaches]

Focussed on the lack of institutional grade opportunities

Enables a variety of Governance opportunities from outsourcing, to State sponsored SPV [ ALMO ] to new hybids


Some issues typically affecting existing social housing in Australia

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Less public finance available for maintaining,

upgrading or growth

1/3 mismatch between Supply and Demand

Ageing Stock of current Social Housing Stock

A big gap between Social, Affordable and Market Housing

High needs intake; Demand for more housing and more

sophisticated services and support

Higher Environmental ExpectationsDemand for higher

Liveability/Disability standards


Net Recurrent Spending by StateTrend decline in public funding

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Source: AIHW (unpublished) National Housing Assistance Repository


Approximately 1/3 of the Stock is Mismatched for NeedResulting in higher operating costs, less effective human services

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Source: NSW Auditor‐General’s Report to Parliament


The Majority of the Stock is 20~50 Years OldOlder stock is more expensive to maintain and less matched to current need

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Source: Social Housing In NSW: A discussion paper for input and comment (Nov 2014)


Intake is Dominated by High Need TenantsResulting in a declining rent base, a need for more specialised housing

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Social and Affordable Pathways are missingLower rates of exit due to lack of affordable housing supply and optionsNo opportunity for co‐investment with social housing tenants

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Renewal concept – Uplift of Densification

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1 2 3 4 5 6



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New Dwelling

New Dwelling

New Dwelling

New Dwelling

Community

park/ garden or building site for future dw

elling

New Dwelling

New Dwelling

1 2 3 4

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New Dwelling

New Dwelling

New Dwelling

New Dwelling

Community

park/ garden or building site for future dw

elling

New Dwelling

New Dwelling

1 2 3 4

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Surplus Land becomes available to grow the portfolio or create affordable housing pathways

Social Housing Capital Investment Fund Working Group (SHCIF) 16Properties of Low Value to the Portfolio identified for Renewal

Social Housing Capital Investment Fund Working Group (SHCIF) 17Relocation of Tenants to Create Vacancy for Renewal Projects

Social Housing Capital Investment Fund Working Group (SHCIF) 18Construction of New Social Housing at Higher Density

Social Housing Capital Investment Fund Working Group (SHCIF) 19Neighbourhood Renewal and Placemaking; Improves Amenity and Community Values

Social Housing Capital Investment Fund Working Group (SHCIF) 20Selected Surplus Properties Developed for Sales for Shared Equity and at Market; Increasing Diversity and Creating Pathways

Social Housing Capital Investment Fund Working Group (SHCIF) 21Renewal Process Extending into Medium and Higher Densities

Social Housing Capital Investment Fund Working Group (SHCIF) 22Neighbourhood Develelopment and Placemaking Continues to Create Diverse Amenable Communities


FINANCIAL MODEL

TOWNSVILLE CASE STUDY


The Financial Model

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The model will capture The input assumptions including

• revenue and operating cost, • the age and condition of the assets• location factors and • renewal value uplift potential

The outputs will enable sensitivity and scenarios about • no change, and • future development options for the portfolios.

The outputs will model future development, investment and improvement of the portfolio compared to no‐change status quo, and have the functionality to explore sensitivity and various funding and development scenarios.


Each Portfolio is unique and will have unique characteristicsSome assumptions and factors affecting the model

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Development• Design, Construction and Approval Costs• Land Value• Density Factors

• Demolishing for Renewal• Rebuilding

• Market Value• Marketing and Sales Costs• Product Mix

• Product Type and Design (SDU)• Shared Equity• Affordable Sales at Market• Social Housing

• New Building/Renovation• Infrastructure Charges• Neighbourhood development/external costs

Workflow• Sequencing of Development• Vacancy Management and Costs• Sales Rate• Construction Time/Rate• Prefabrication• Social Enterprise

Finance• Interest rates• Finance Structure and Establishment Costs• Usage/Non‐usage Cash Management• Hedging/Insurance/Contingency• Security Requirements• Equity Investment Requirements

Portfolio• Condition of the Properties:

• Age• Materials• Size• PSI

• Maintenance Backlog and Depreciation


2235 Lots3395 Units

Social Housing Units

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1501 Lots3395 Units

Social Housing Units

734 Lots169 New Additional Social Housing Units 746 New Affordable Housing Units

Renewal OutcomesExisting Portfolio

Renewal & Matching Process Densification Active Asset Management

Renewal and Growth


Financial Summary

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Financial Summary


Using current State Deficit Funding & CRA

CAPITAL PROGRAM Total cost of Capital Program $255m plus $5m project management costs [$101m is social housing renewal] Total revenue $240m Peak Debt $30m Gap $15m + $5m = $20m

OPERATIONSRevenue $718mCosts $634mMeeting outstanding capital $20mSurplus $22m

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Operating cost assumptions

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All scenarios assume a continuing State subsidy as well as availability of CRA.

While this may provide certainty to the State as to the amount of the subsidy, the renewal program is designed to maximise the social housing outcomes and not to transfer the cost onto the private sector.

For any particular year, the condition of the portfolio will depend on the starting age and condition of the propertiesthrough the life of the project


No Renewal (Scenario 1) compared to Renewal and Growth (Scenario 2)Stock condition, matching to need and environmental outcomes greatly improved

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Combined Cashflows from Operations, Capital Renewal and Interest on finance funding diagram

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A dollar for a dollar matching co‐contribution between Commonwealth Rent Assistance and State Subsidy

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$1 for $1 matching ruleExtra profit generated would be funded to increase more Social Housing


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