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CCC Long Term Plan Submission 2021

OUR CONCERN

It doesn’t matter who you talk to in New Zealand, everyone will agree with you that shelter is the most basic and important issue that faces us in 2021. 

The New Zealand government as sent a very clear message that housing was a problem in its 2017 election campaign by committing to build 100,000 homes within 10 years.

In March 2021 the government changed a number of rules around housing tax regulations in an attempt to address the runaway housing market.

The media would have us all believe there is a ‘housing crisis’, we don’t agree.  Many New Zealanders don’t have a problem at all, the equity in their homes is ballooning, others have incomes that can sustain rising rents.  What we do have is a crisis for those on the bottom rungs of the housing ladder.

The Christchurch Probation Service and Salvation Army tell us, and we agree, that the single biggest driver of reoffending in New Zealand is housing.  When people don’t have good shelter many different things happen which end in crime. 

Under a previous government, a ‘war on drugs’ was declared.  This meant that Housing New Zealand tenants were evicted and not allowed to return, acceptable levels of methamphetamine contamination were set so low that many homes were closed, and massive amounts of money spent on remediation and testing. 

We believe that the net result was tipping ‘fringe tenants’ into the private market, where they declared was on landlords.  The private market push back was to tip a massive amount of housing stock into the short stay housing market, from which it will likely never return, while putting tenants in jail or on the streets.

A massive amount of damage has been done in all markets and is now going to take considered effort to repair.

WHAT IS THE CIVIC ROLE

It is our view that Christchurch City Council has a very significant role to play in the Christchurch market, which will also influence the national marketplace.

The council’s role must be to influence the bottom rungs of the ladder for the benefit for the wider community and play a role in protecting the private market from the ‘fringe tenant’ community who clearly need much more than a traditional “mum and dad” landlord, they need the combined resource of a council with a $400 million dollar housing resource and $13 billion dollar asset base.

The councils new Social Housing Strategy is to be commended.  It is a foundation stone by which council staff can be agile in their approach to making an extensive and positive impact for the benefit of the Christchurch and country wide community.

At present the council is being to ‘risk adverse’, not making enough use of civic resource, not trading in the market and not dedicating enough resource to supporting the community to improve the bottom rungs of the housing market.  It has ventured into unwise ‘pet projects’ while not engaging in reasonable market dynamics.

It’s our view that elected members have become so frustrated at the lack of action that they have been endorsing ‘borderline silly’ projects just to attempt to make a point.

WHERE TO FROM HERE?

Become Aggressive!

The council has to review every land asset it has and make more use of those assets to support housing.

Trade in the market.

It is not the councils role to become a major housing owner.  It is the councils role to influence the housing market to ensure that good housing exists for the benefit of its rate payers.  This means that council needs to: Buy up housing that is at end of life and redevelop such and then resell that asset back into the market, either directly or via partners.

The council must work with more partners in the “Community Housing Provider” (CHP) market.  It must seek out more CHP partners, built and rise up those partners.

It must deliver ‘competition’ in the Christchurch CHP market to keep OCHT and others accountable and competitive.

It must also ensure that the social housing market has more provider choice for the tenant community.

The council must borrow more money, more quickly, and deliver more housing and improvement to help address the current social housing waiting list (sitting at roughly 1,900 at time of writing)

The council must empower the community to join the journey.  We agree that social housing should be kept “off the rates budget”, but that doesn’t mean “kept from rate payer contribution”.  The CCC is a very mature, strong, powerful and stable civic entity.  It must use that security to the advantage of people who would like to invest into social housing but need the security of knowing that it is backed by a quality team of resources.

Stability in the rental market

Stability in the long term rental market is delivered by the availability of quality housing.

Some elected members, represent massive property holdings, may will see the council as competing with those interests, are they considering that without competition, they are not being held to account and their customers are now actively and aggressively attacking them via many vectors, costing every rate and taxpayer more.

The council needs to review the style of housing it delivers in its current program.  The OCHT CE tells us, and we agree, that the style of housing they have is not appropriate for a range of social housing tenants, specifically prison reintegration, but clearly not limited too.

The council must put in motion a project to invest in a range of housing solutions, one and two bedroom, 5 and 6 bedroom (which is where the highest demands are).  Some of this housing simply needs to be urgently purchased in the open market while others need to be build.

The council needs to become much more diverse in the range of borrowing it makes to fund such projects.  While it is ideal to borrow at OCR +25 base points (and sell to CHP’s at +40 base points), this is NOT acceptable in the market while also addressing the level of work that needs to be done and accepting the interests of a retail commercial banking sector that under pins most borrowing and property security in New Zealand at present.  Our view is that the council needs to be involved in at least $1.3 billion dollars of the market, that is to much to only load on the LGA fund and to much direct market influence in the banking sector.

The council still has to much property that is not being used quickly enough for the benefit of a growing community.  Our observation is that the council does not have enough resource on staff to effectively manage the level of resources it has, so those resources are sitting idle while some in our community sleep in cars and motels.

The council must recognise the importance that housing quality and presentation has on mental health.  In 2019 it took us months to have rubbish removed from the Poulson Street complex.  Some complexes still need cosmetic updates that are well over due.

The council must keep front of mind that while a typical council worker is gone from their home for 9 hours a day and elected members may be gone from their homes for much longer, social housing tenants may not leave their front door for days on end (which is more time inside than a prison inmate spends inside, even on full lock down).  Employers pay for keeping workers warm for 8 hours a day while workers only need to think about home heating for 12 hours a day (assuming time away from the home is not just spent working).  Complex social housing tenants must heat their spaces 24 hours a day.

While council has improved the heating choices for many it needs to grow the amount of housing stock more quickly, as our population grows and ages, than the current 100 units that OCHT has committed to at present.

Christchurch has a cold climate compared to Auckland or Northland.  However we also have a very much richer and wealthy community too, and more access to low cost energy.

CLIMATE EMERGENCY!

In this decade we have to pivot in social housing.  As a council, you have the capacity to take a housing lead, influence and make a much more significant difference than you currently are. 

You are the city wide leader (if not the national leader) in housing complex development. 

Every new complex has to be installed with solar energy that offsets the power costs of every tenant.

Some complexes need to be designed with ‘complex heating’, that like a retirement home, keeps the entire complex at a living temperature no matter the actions of the tenant. 

HOW MUCH HOUSING SHOULD CCC PRODUCE

At the time of writing there are more than 1900 on the social housing waiting list.  We understand this doesn’t mean that we actually need 1900 new homes delivered this next year.  We understand that some of these people need to be housed in flatting situations, making better use of existing stock.

However CCC needs a much more powerful leaver on the housing market in Christchurch to benefit the whole community, at present it doesn’t have that.  It does in transport, it does in power, it does in telecommunications, it doesn’t in housing, yet housing is the most important of all of those.

We have called for 8,000 total CCC social homes.  Given the city has 174,000 rating units, 65% home ownership nationally, and a growing population, we don’t think this is unreasonable.

We would like to see council raise up to $1 billion dollars in the market to support this vision.

CCC needs to build with more partners and build a more extensive range of products.  Not everyone wants to work with OCHT to work with CCC.  We believe that those working with OCHT also need employment choice while continuing to work with CCC.

CCC needs to urgently raise $400 million to support its building program in the current/next LTP term. 

CCC needs to target a “1000 bed per year” program in this LTP.  (That’s 10,000 beds over 10 years or a mix of 1, 2, 5 and 6 bedroom homes, which is where the current demand is.)

OVERALL OBJECTIVE

The over all goals and KPI’s of the council should be:

  • Make effective use of every asset our community has
  • Support the elected government objectives to provide a stable housing market by protecting the market from ‘fringe tenants’ (by spreading the burden of those folk equally across the whole community).
  • Deliver CHP/Social Housing Provider choice in the market
  • Keep rents stable by ensuring that rental tenants have a choice
  • Deliver a quality level that sets a city wide bench mark as the minimum standard that our community will accept for shelter.
  • Work with the commercial money markets to their benefit.

WHO ARE WE

oursocialhousing.nz is a special interest website created by Don Gould and Stephen McPakie to present information to the community about Christchurch social housing.  It’s focus started with data from the Christchurch City Council but has grown to included others.

We have also presented a host of articles on market and data analysis with views on social housing in our city.

You should review our web site:  oursocialhousing.nz

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FIRE THEM ALL – GET NEW MANAGEMENT – HOLD THEM TO ACCOUNT – SELL IT OFF

Recently we’ve had some frustrated tenants posting their frustrations on our Facebook posts and criticize our response to OCHT Facebook posts. These posts are often accompanied by naming both current and past staff from both council and the trust, something that has bothered me but I’ve let it lay mostly quietly.

Some folk pointed me at Tenancy Tribunal judgements, which was more than interesting, so tonight I thought I’d write some response to those call outs along with an update on some on going conversations I’ve had over the past year or so.

JUST SELL IT!

I’ve read calls to just sell the whole housing business to someone new a few times. I know how that game works and I also know it never ends well for the customers, mostly ends well for the sales folk and some times the investors, just ask rate payers about the million dollars spent to “not sell CityCare”.

As I’ve written in the past, I haven’t typically got involved in lobbying on such small projects as this. My experience and interest has been in the telecommunications industry where the companies are worth billions and have millions of customers. I’ve watched for decades as telcos buy and sell customers, build massive infrastructure, lure in new customers with hot deals then turn up the heat to drive ARPU as high as they can before either selling to a competitor, listing on the stock market or destroying the products with over subscription, leaving loyal customers who have build investment on top of networks to swim with the sharks.

SO I RANG BRUCE…

I rang Bruce Rendall at CCC because I recalled that we’ve had many conversations in New Zealand about selling public housing in the past and thought he’d have a better memory for it than I do, I was right…

2021-03-16 12:03 Bruce wrote:

“Yesterday you asked about the possibility of overseas ownership / operation of social housing.

This has been considered before (eg https://www.stuff.co.nz/the-press/news/93889766/three-groups-shortlisted-take-over-social-housing-in-christchurch)

The council turned its mind to this matter in 2017.  While it did not formally set a policy, the below extracts from an aborted public consultation process gives some ideas of the Council’s thinking in 2017:

A Christchurch community housing provider will bring local knowledge and experience to managing the properties and assisting the tenants. A local provider will bring greater understanding of the distinctive issues in the Christchurch social housing market resulting from the earthquakes and subsequent rebuild. They will have established relationships that will help achieve results more efficiently and quickly than a new entrant to Christchurch.”

FIRE THEM ALL!

If you know anything about employment law in this country there is nothing simple about letting people go.

I loved Donald Trump in the TV series the Apprentice. Who doesn’t just love the ‘idea’ of being the big man boss and being able to shout down a big board room table “You’re Fired”… bit of irony when the American public did just that at their last election, but we’re not in the US and civic housing isn’t a TV show, it’s a community with real people, some who live in the houses, others who’s jobs it has been to keep those homes in the best state as they can even if they’re not always the best people for the job in a constantly changing market place, in a city brought to its knees by a massive earthquake just 10 years ago.

A while ago, the mayor took me aside and commented that the housing unit wasn’t all that happy. Many had moved to OCHT, some had been left behind and many weren’t as happy as anyone would like.

GET NEW MANAGEMENT

As I said, employment law isn’t so simple as TV shows make it look, but one thing you can do is move the business around and let people make their own choices, and that’s exactly what’s happened.

Recently the ‘major maintenance’ moved from CCC to the trust for the property with the trust. I’m told that will mean that $5 million dollars of work will translate closer to $6 million dollars of value based on historic assumptions.

While the remaining civic staff were invited to apply for new roles in the trust, none did, effectively leaving 1 in the council dealing with social housing specifically.

Some of the structures are still a bit frustrating. Stephen comments that he has 5 points of contact depending on what he needs. I see both sides of this. Give the tenant a single point of contact and all they’re going to say most of the time is “Please hold caller while I check with …” while having 5 different departments means you some times bounce from place to place to get anything done. Personally I don’t know anything about the trusts IT systems but I suspect they have a problem with a poor job work flow, queuing and reporting system.

HOLD THEM TO ACCOUNT!

I was directed to Tenancy Tribunal judgements, so I had a little look. The TT don’t publish all it’s history only a two or three year snapshot, but it is searchable. When I looked, there were about 167 judgements published, so I haven’t read them all.

Before I get to the detail, I’d like to point out that the OCHT social media team invited me to attend a tenants briefing a while back where tenants were introduced to a range of agencies, including the TT. The trust has a vehicle so that tenants who have a dispute can get a resolution service to support them before they go to the TT and a service that will pay the $25 dollars it costs a tenant to go to the TT. I’ve never seen anyone in the private market get that level of support to take a case against them. That’s like ringing the guy you want to sue and asking them to pay for your lawyer and them saying “sure”.

I started with a few cases brought by the trust. The common theme in those was people who had skipped rent, though there were a few bizarre ones. In one case the tenant has been sent to prison and he was being chased for the cost of changing locks as he hadn’t been able to return every key, the trust lost that one.

I quickly moved on to the cases brought against the trust, after all, this was about holding them to account not chasing down tenants for unpaid rent. I think there were 12 cases out of 167, so it didn’t take to long to review those.

The most bizarre of those was a tenant, who won $200 in the judgement, after OCHT staff and a contractor entered their unit by mistake. That judgement would have cost the trust at least $5000 because the case had to be investigated which frankly would have been time consuming and expensive.

$200,000 TO COLLECT RENT… IS THAT WORTH IT?!

One theme that did show through from the TT judgements is that I suspect the trust is spending at least the cost of a new unit a year just chasing rents, and that’s before I consider the cost on the state for TT staff.

I didn’t do the math and compile a detailed list of payments from the judgements, nor have I bothered to ask the trust what it’s judgement recovery rates is.

What I did note was a common theme of two staff who appear to be camped at the TT offices each week.

On holding to account, this is an issue that I raised with board members. It’s just a false economy to chase some of these funds once the tenant has moved on, in some cases to jail.

It raises the question of just writing that debt off like so many private landlords do and investing energy in providing more quality housing at a lower cost.

IN CLOSING

My review of civic housing in this city is that it’s taken a massive change in the past 5 years to the overall benefits of tenants while not directly costing rate payers more, though also not making any return for their share in civic resources, though housing people who make end up costing our community more in other ways if we demanded more return.

Stephen’s campaign to get proper heating and cooling came across the line because he personally held the trust to account by telling his story in a very public space. He shared personal information about himself and his situation that many would not have. For his efforts thousands of people got $16 million dollars allocated.

Between Stephen and myself we held the council and trust to account to deliver that work, in spite of Covid 19 lock downs, that heating made it in place for last winter.

The suggestion that this portfolio should be sold is just silly. The idea has been canvased and the correct call has been made which is in both tenant and Christchurch interests.

Following the last civic election, the OCHT board has some extremely competent civic members on it right now, people who take our calls, who we can have very frank and blunt conversations with, without fear of being hung up on and blocked from communications.

Frankly I get better response from Bruce Rendall at CCC, Bob Hardie at OCHT and elected/appointed civic board members than I’ve ever seen in the telco sector. To suggest these guys aren’t open to being held to account is just silly, they are.

Finally, Stephen and I built this website, Mr Google shares it before it shares the trusts website. I get calls and emails from the police, corrections and others looking for tenants and support, we clearly have a voice, and if a broke tenant who was living in a car and a random member of the public can get a voice so can anyone who cares to put in a sensible effort.

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OCHT DOESN’T HAVE ENOUGH CASH TO BUILD FASTER

https://www.facebook.com/NicolaWillisMP/posts/1075263449617564

This is the Ōtautahi Community Housing Trust. They say they could build twice as many houses immediately if the Government made one small policy change. – Nicola Willis MP – 22 March 2021

Recently I’ve been accused of not being critical enough on OCHT. Frankly I found that accusation a bit unfair and I think there’s at least one board member who will agree…

This post on Facebook by National party housing spokes person Nicola Willis, just made my head explode.

You see, I sat with trust CEO Cate Kearney and her policy lead a while back and talked about her plan to target 100 homes a year being the limit of their capacity, now I hear it could be 200 homes but they’re just lacking the funds to do it.

This does my head in because I have every idea just how much cash there is in the market right now. I could point to half a million in private capital which could translate to $10 million with bank borrowings.

I was calling Bruce Rendall, CCC’s head of property on an other issue not long after and he was very quick to point out that the council has been working on a number of other options to help the trust secure more funding (that was the day I wished I recorded calls or simply asked for more detail via email) and I suspected he’d seen the same post from Willis and had been expecting someone’s call, if not mine.

Cr Phil Mauger is on the OCHT trust board, understands property development well and got the thick end of my tongue later in the week….

I pointed out that in the 9 months that public officials have been “dithering in process” (and please note that I don’t hold Bruce to account for this, he is but one cog in a system that is the job of elected members to control the pace of) Williams Corporation, the biggest housing developer in Christchurch by numbers, have raised $65 million in the private market and delivered over 300 new builds in city (let’s put that in perspective, two kids and their mums v’s the capacity of a council with a $13 billion dollar value).

Phil pointed out that Matthew (WC) pays significantly more for his money (10%) than OCHT/CCC. He’s right! However, Matthew’s customers don’t pay much more once the build is complete and they have keys.

In my view, the trust has become greedy and expects everything for nothing (well 0.4% while the rest of us are paying 4% and Matthew is paying 10% is just about nothing). When a chief plans a menu they understand that the spuds are cheap while the meat cut will be expensive.

CCC held an engagement meeting on the updated social housing policy draft which I attended. Bruce commented in conversation that treasury simply hadn’t allocated enough funds to meet policy demands in the CHP sector (or something like that, again, must record conversations!… that’s what real reporters do!).

My view is that government has given ‘us’ as much money as they’re going to. I suspect that the banking sector is looking at how the government has been handing out ‘free money’ via the LGA fund in direct competition to its retail business to take customers from its borrowing business to build competing assets on state land while using public funds to find the customers (the 22,400 on the social housing waiting list) and is getting more than grumpy.

Frankly the more I look at the housing market and the LGA usage, it looks like a race to the bottom with the banks winning (quite happy to take some short term losses) with private market renters taking the biggest whack as they can’t get IRRS rents and soaring property values are driving their rents through the roof.

Elected members are always very quick to point out that social housing is ‘off the rates budget’ but never venture to understand if the community would like to use its ability to develop an investment opportunity such as we’ve done with power, airports, ports and other community assets. Civic housing is currently a $325m dollar asset, and elected members are pleased that it’s “off the rates budget”, guys, it should be delivering 10% ROI (in fact much more given the land assets we have).

There’s an opportunity here for the wider community, I’ve written about this before, it’s time to stop the dithering, pick up the pace, be willing to pay for the meat, not just the spuds, and work as a whole community!

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PART TWO – Are We Critical Enough of OCHT?

Following on from Part one – https://oursocialhousing.nz/news/are-we-critical-enough-of-ocht/

I have been so busy recently I hardly have time to follow up. Rhombus on Acheson is now open following months of hard work by the team, a restored community asset in Mairehau and I’ve been busy site clearing at my own home for a craft studio for Joanna (my wife) and building a ‘boys space’ in the loft. So I kinda owe Bruce Rendall (HEAD OF FACILITIES PROPERTY AND PLANNING at CCC) a bit of an apology because this post has been very slow in coming, unlike his response to my last post (which I personally invited).

Bruce offered some corrections to my last post, so I rang him and said that rather than just correct my post I would share his email. We also had an interesting conversation about social housing ownership issues, but that will be the subject of my next post…

I’d like to point out that I emailed Bruce at Friday, 12 March 2021 10:42 PM and he responded Monday, 15 March 2021 12:40 PM. I point this out because there is a constant narrative that CCC are poor to respond to queries and that EVERY staff member in the building is useless and should be replaced, which is simply untrue, unfair and frankly angers me some days. I’m not going to claim that Bruce is perfect, hell I have no idea, I hardly know this guy, but he is a very constant and consistent voice on social housing and spokes person in the media who engages and response quickly (frankly faster than I do!)

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Just a few points:

1st paragraph:  The statement “so housing tenants could address the government IRRS” could confuse.  Tenants can’t access the IRRS, however, certain social landlords can.  Tenants benefit through paying Income Related Rents (see https://www.workandincome.govt.nz/housing/live-in-home/live-in-public-housing/index.html) and the landlord receives a subsidy (The IRRS)

1st paragraph: The sentence be interpreted as me saying that CCC was underinsured.  This isn’t something  that I’ve researched so I can’t make this statement.  I’d also suggest that there were quality and financial sustainability problems before the earthquakes (I have done some research on this and would point to some of the work around the proposed 2008 rent increase).  It might be better to stop at “poor”.

2nd Paragraph:  This paragraph is a bit confusing.  OCHT needs to be a separate entity (https://legislation.govt.nz/regulation/public/2014/0116/latest/DLM6013922.html) if it is to be eligible for IRRS.  Staff have worked hard to ensure that Councillors, tenants and the community understand that OCHT is a separate organisation, independent of Council (despite the requirements of public sector accounting).  Council cannot direct OCHT or require it to do anything outside of the contractual requirements contained in the lease and loan documents.  Council’s role is no longer a social housing provider – rather we are a property owner, with a commercial lease that allows OCHT to provide social housing. 

2nd Paragraph: Yes, the legislation could change but I don’t believe that this is likely to be for the reasons stated.  I would suspect that the Government would be more focused on how the community sector can grow social housing through the provision of new builds.  OCHT is showing that it is contributing in this space (eg https://www.stuff.co.nz/life-style/homed/real-estate/124522429/more-new-homes-are-being-built-in-christchurch–but-theyre-getting-smaller).  

There are a couple of typos as well – fowl (foul) and woka (waka)

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MY TAKE ON THIS…

I did correct the typos. Thanks Bruce for the feedback!

D