REDWatch Submission on Draft RWA Affordable Housing Contributions Plan 2006

REDWatch welcomes the opportunity to comment on the Affordable Housing Contributions Plan 2006.

REDWatch notes that Premier Morris Iemma has previously indicated that affordable housing was one of his three social policy priorities, along with mental health and services for people with disability. The RWA, as a government body, is in a key position to address affordable housing in Redfern Waterloo.

REDWatch welcomes the RWA’s recognition that the contraction in affordable housing in the area is a major issue which the RWA needs to address through an Affordable Housing Plan and associated Contributions Plan.

REDWatch is concerned however that the Redfern-Waterloo Affordable Housing Program, which was foreshadowed in the RWA Built Environment Plan as a companion to the Affordable Housing Contributions Plan, has not been released simultaneously with the Contributions Plans.

REDWatch recommends that the Minister should not approve the Affordable Housing Contributions Plan or the Contributions Plan until the Affordable Housing Program has been released and considered by the community.

The brief overview in the Draft Contributions Plan does not go into detail about the make up of different types of public and private housing options available in the area. The role of public housing is totally missing from the draft’s overview.

The RWA itself plans to double the area’s population but maintain the current number of public housing tenants. The RWA’s changes alone will have a significant impact on the proportion of affordable housing in the area when expressed as a percentage of private housing stock, unless the RWA has a robust affordable housing programme to counter the effect of the changes they propose to introduce.

The increased densities resulting from the overlapping Green Square Redevelopment will further decrease the proportion of affordable housing places in the area. Other redevelopments in the area on sites not zoned state significant will further impact on the level of affordable housing. None of these known impacts on the future levels of affordable housing have been included in the RWA’s brief overview of the problem that this plan seeks to gain levies to address.

In addition the figures, showing the easing of housing stress as a result of the contributions plan, may be misleading as they only indicate what would happen if the entire contribution was applied to either buyers or renters, instead of the more likely outcome based on a proposed mix of rental and purchase expenditure which has not been made available.

Without an assessment of the changing affordable housing needs and how this might be addressed, it is impossible to accept the proposed contributions levy as anything other than a figure chosen so it “does not impose a major disincentive for future investment in the area” (Plan page 15).

REDWatch is concerned that the RWA has entered into an agreement on the CUB site for an affordable housing levy of around 3% and yet is only proposing a 1.25% levy on areas over which it has responsibility. REDWatch notes that 3% is also in line with what is proposed on residential developments in Green Square which overlaps the RWA operational area.

REDWatch notes that according to the NCOSS submission on the Draft Affordable Housing Contributions Plan “that the relevant Better Cities Agreement between the NSW and Commonwealth Governments sought to ensure that affordable housing comprised 7% of the final total dwelling stock in Ultimo Pyrmont.”

REDWatch also notes that arrangements for Ultimo Pyrmont included an additional levy on state government land sales which the RWA has not offered in its proposal.

Further we note that “NCOSS has repeatedly argued for a target of at least 10% of new housing in redevelopment areas and growth centres to be dedicated to affordable housing. We [NCOSS] believe this is the minimum required to produce a diverse and socially sustainable community that is home to a range of household types, ages and incomes”. REDWatch understand the 10% figure was adopted by South Australia in 2005.

We are aware that in redevelopment programmes similar to that being under taken by the RWA, in other counties especially in the USA, affordable housing of 10-20% is not uncommon and in some cases goes up to 35%.

Without adequate supporting analysis of what is required for the area to provide housing mix and affordability across the range of rental and purchase options required for the area, it looks like the RWA has just picked a figure, that in the words of the draft, “could relieve housing stress to some extent” (Plan page 15) rather than seriously address affordable housing need in Redfern Waterloo.

As the RWA is modeled on the Sydney Harbour Foreshore Authority and the development proposed by the RWA involves the sale of government land and possible Commonwealth involvement under the Commonwealth State agreement on Redfern-Waterloo, REDWatch contends that the RWA Affordable Housing Programme target should have properly been compared with Pyrmont Ultimo rather than the South Sydney Section 94 Plan.

REDWatch is of the view that at a minimum 7% percent of the total dwelling stock should be affordable housing in line with Ultimo Pyrmont and preferably that the RWA should aim for 10% of the total post re-development housing stock being affordable housing in line with the NCOSS target.

What is of considerable concern is that the RWA Affordable Housing Contribution Plan itself acknowledges that the 1.25% proposed is low but does not see this as unreasonable! It does not specify why it should not be higher.

The Draft states “Research indicates that affordable housing contributions are generally pitched at levels greater than 1.25% of total floor space of development. Hence a levy of 1.25% of total gross area of development to be applied to new development in the Operational Area for Affordable Housing is not considered to be unreasonable.” (Plan Pages 14-15). The argument in the Draft simply asserts the rate is not unreasonable, not that it is reasonable.

Unreasonableness in this context seems only to be considered from the perspective of potential developers rather than from those who are under housing stress in the area and for whom the RWA also has responsibilities.

There is a clear need for an Affordable Housing Strategy for the area to be developed and spelt out before the RWA commits itself in a Contributions Plan to potential developers.

Such a strategy should fully investigate the current housing mix and affordable housing need as well as address existing market and policy trends that will impact on the area. It must then put forward a viable proposal for addressing the future need for affordable housing in the area and explain how other affordable housing announcements, such as those connected to the CUB contributions, Aboriginal affordable housing, affordable housing levies and federal contributions will be used to address the area’s affordable housing needs.

REDWatch contends that the RWA has to do far more about affordable housing than substantiate that:

“The total development contributions which are intended to apply to these sites under this Plan and the Redfern-Waterloo Authority Contribution Plan for public amenities and services is estimated to be within a range comparable with the contribution rate which currently applies under the South Sydney Section 94 Contributions Plan”.

The RWA is was established as a NSW Government Authority with a charter to address the area’s social issues including affordable housing in a way that the council’s contributions plan was not. However, even on a comparison between the RWA contribution plans and the South Sydney’s Section 94 Contributions Plan, REDWatch contends that the RWA position cannot be defended.

REDWatch pointed out in our submission on the RWA Draft Contributions Plan, that the Plan takes $15 million of developer contributions and uses them to address the problems caused to the area near Redfern Station by NSW Main Roads.

If this work was paid for by the NSW government, as we contend it should rightly be, then even in a comparison with the South Sydney Contributions Plan there would be an extra $15million allocated to affordable housing and community facilities than is currently proposed. If this money was all applied to affordable housing, it would increase the contributions planed by 42% over that currently proposed by the RWA’s Draft Affordable Housing Contributions Plan – this equates on the RWA figures to almost 32 extra affordable housing units.

If the RWA was able to leverage this $15 million with contributions from the Federal Government, as it has proposed for Aboriginal housing then it could deliver 64 affordable housing units instead of paying for mitigation of some of the impact of state main roads on Redfern station.

If the funds from the sale of government land at North Eveleigh were applied to affordable housing, rather than to relieving the NSW government of paying for the upgrade of Redfern Station, then an even greater impact could be made on the affordable housing requirements of the Redfern Waterloo area.

REDWatch is concerned that the RWA Affordable Housing Contributions Plan Work Schedule currently involves no plan to leverage the developer contributions with Commonwealth funds as has been proposed by the RWA as being possible for Aboriginal housing.

The interaction between the Affordable Housing Program, the Contributions Plan and the Affordable Housing Contributions Plan provide a clear argument as to why all three documents should have been available for public comment together rather than released individually.

REDWatch is further concerned that the current Draft Affordable Housing Contributions Plan provides no information on how the RWA proposes affordable housing will operate. The Draft Plan refers to both rental and purchase models. While there are rental models well established that the RWA may intend to adopt, there are no such well established purchase models. Before REDWatch can support such a scheme, the way in which equity is split and how the model can assist not just the initial purchaser, but subsequent users of a purchase scheme need to be fully explained.

In addition the RWA needs to make clear how such schemes would be administered and how ongoing administration and depreciation costs would be met in the scheme proposed.

It is REDWatch’s view that such information, which should be contained in the RWA Affordable Housing Programme, should be available and publicly debated prior to the RWA committing to a Contributions Plan for developers.

REDWatch is also concerned that the Contributions Plan does not seek to encourage affordable housing units to be delivered by developers within their developments, but encourages developer levy funds to be expended elsewhere. REDWatch contends that the RWA should encourage all developments to incorporate affordable housing within their developments rather than fund the RWA to establish affordable housing enclaves.

REDWatch encourages the RWA to formulate the Contributions Plan so that affordable housing units are included within developments in an agreed manner. Developers, who generally wish to pay the affordable housing levy rather than incorporate housing stock in their developments, should only be allowed to do so by paying a significant additional loading on the levy.

Overall REDWatch is disappointed with the lack of detail on what the RWA propose for affordable housing as well as the grossly inadequate level of Affordable Housing Contribution proposed by the Draft Redfern-Waterloo Authority Affordable Housing Contributions Plan 2006.

REDWatch urges the RWA and the Minister to release their Affordable Housing Programme for public discussion and not to approve the Draft RWA Developer Contribution Plans until after the Affordable Housing Programme has been considered and debated within the community.