Following is part 3 of an edited transcript of the Surround Sound on Housing: affordable/sustainable/disruptive held on 5 December in Sydney.
- See the overview article by Lynne Blundell: Funding affordable housing – how do we do it?
KEVIN BRAKE, NATIONAL BUSINESS LEADER – MOBILITY ORIENTED DEVELOPMENT, ARCADIS
Pat Fensham:
Kevin Brake, come up to the hot seat and give us a quick run-down of your work in transit-oriented development, or mobility-oriented development.
Kevin Brake:
So I’ve spent half my career in Sydney and half in Portland, Oregon. In Portland I worked for the Portland Development Commission. The model in Portland around urban renewal is around using value capture, which is essential tax increment finance, that’s a publicly issued bond used to fund infrastructure to create value uplift in certain urban renewal areas.
But in Portland the urban renewal agency puts about 30 per cent of that tax increment towards affordable housing. But the way that they’re structured is essentially a variety of funding sources. You have contributions of land from the government, from the local government, you have federal tax credits that have been discussed quite a bit. But really the key in Portland to unlock affordable housing is through partnerships and a variety of funding sources that really aren’t just dependent on public investment but on a contribution from the private side as well.
One of the issues we really need to consider as we’re looking at investing in so much infrastructure in Sydney, is how are we going to get a better link between the transit investment and the public benefit that can be delivered from that.
The North-West rail link was mentioned. Carmen and I worked on that together. These infrastructure projects aren’t just about moving people. It’s about creating public benefit. It’s about unlocking land and creating jobs. But what we’re seeing is a bit of a disconnect between the land development potential and the transit investment.
So I think we need to get a bit better about how we’re leveraging our transit investments to get public benefit,, to assure the affordable housing is delivered as part of the projects.
HOT SEAT: VIRGINIE FAOUR, SENIOR ASSOCIATE, ORIGINATION AND TRANSACTIONS TEAM, CLEAN ENERGY FINANCE
Pat Fensham:
Virginie Faour is a project finance specialist at the CEFC. Tell us about the CEFC’s work in this housing space.
Virginie Faour:
To give you an overview, for those who do not the Clean Energy Finance Corporation, we act as a catalyst for investments in clean tech business, so that can cover renewable energy, but also energy efficiency. So very applicable towards social and affordable housing.
For us, we really look at improving standards in terms of construction standards and energy efficiency of the houses, to be able to fund these projects. Which is very important because social and affordable houses, you have very vulnerable tenants who can’t really pay for expensive energy bills. So it’s important to provide them with accommodation that has high standards. So this is the work with community housing providers over the past few years, and hopefully there are more projects to come.
HOT SEAT: ALEX SYMES, BIG WORLD HOMES
Pat Fensham:
Okay, Alex Symes. Alex is from Big World Homes. Tell us what Big World Homes is.
Alex Symes:
I suppose it’s a reaction to talking about affordable housing, and trying to actually create a prototype. It’s not seen as a large-scale change to financing, taxation, amenity, but it is seen as an intervention into unused land that currently exist across lots of urban sites. With an off-grid tiny house system that potentially can be something that’s not fulfilled within the housing market at the moment.
So what Big World Homes is, is a flat-pack DIY off-grid tiny house system that’s made out of CNC plywood and lightweight cladding materials and insulation, that someone can put together themselves. And what we’re trying to do with Big World communities is take unused sites such as ones UrbanGrowth or Frasers might actually have and create transitional housing so that people who are currently always in a renting cycle will be able to afford their first home after three-or-four years of living in a pop-up community and then be able to get into the transitional housing model.
Pat Fensham:
Steve Driscoll, is this a model on the radar for UrbanGrowth. How can UrbanGrowth mandate innovation through its renewal projects.
INNOVATION AND WHAT PEOPLE ARE PREPARED TO SHARE
Steve Driscoll:
You can’t mandate innovation. That’s the thing about it. It happens because the rules don’t allow it. That’s the very nature of innovation. So Alex’s idea actually came out of something UrbanGrowth sponsored a number of years ago associated with our Central to Eveleigh work, where we got a bunch of young people we don’t normally hear from in our typical consultation processes, and asked them, “Tell us about housing. If we’re going to be doing some more housing in Central to Eveleigh, can you give us some ideas about things you might be interested in?” And Alex’s Big World Homes idea was the love-child of that union.
But we heard other things in those series of events, which Jo Jakovich, who’s also here, helped organise. The notion of the sharing economy, and what people were actually prepared to share in a house. We thought we kind of understood some of this stuff, but what people were prepared to share if it meant they could get a toehold in a place that they valued was really quite astounding.
So notions of Big World Homes and that sort of stuff certainly has a place in our work, and if we can encourage that to happen, trial it, perhaps – it’s not without its challenges – but if we can trial that sort of stuff then that’s a good result.
Pat Fensham:
Nigel, are you surprised at all by the market of products able to be sold? Have you pushed that envelope far enough? Where are you going to go with this stuff?
Nigel Edgar:
Look I’m going to give a pretty conservative response, although I will say we’ve done a lot of work with Landcom over the years, and more recently UrbanGrowth NSW, where we’ve introduced affordable housing on projects, and we’ve run them 10 years ago, and they’ve been very successful. We have a property management vehicle that does that.
In North West Sydney 10 years ago the expectation of a lot size by the public was 1000 square metres. Now we’ve got people in Blacktown buying dwellings on 120 sq m in size, in walking distance to the train station. And they’re really happy to have shared amenity. It’s all about liveability these days.
The expectation of the market is shifting. Where we used to build predominately four-bedroom homes, we’re doing a lot of three and two-bedroom product, and also one with fonzies. The market will adapt very quickly. It’s about getting the shackles off for the innovation.
The CEFC helped Australand a few years ago in establishing the first blackwater treatment plant in Sydney. That’s now up and operational and is providing discounted water, both potable and recycled, to our customers. We had innovation at Central Park when it came to energy. There’s lots of opportunity for embedded energy in this marketplace. We just need the flexibility through regulation to work our way through some of those pathways. So we’re embracing it.
HOT SEAT: NICOLE GERSCHEL, SMART URBAN VILLAGES
Pat Fensham:
The inertia is often in the regulation, isn’t it, rather than the developers. Nicole from Smart Urban Villages. We’re hearing some interesting things around innovative housing product.
Nicole Gerschel:
Thanks, before I go onto the innovative housing, I will say it is around regulation. I also am part of the strategic and environmental team with Ku Ring Gai Council, and I do think it is down the regulatory and legislative requirements to provide land release around transit-oriented development where we’re getting maximum uplift.
The second project, though, is Smart Urban Villages, which is why I’m here tonight. I want to congratulate Nightingale for creating an innovative model that really is disrupting the housing sector – similar to Smart urban Villages.
We do have a response looking at new ways of bringing community infrastructure, affordable housing – which isn’t just about the rental price point, it’s about affordable living – introducing sustainable design into our everyday cities, so bringing the concept of eco-villages into our metropolitan cities, where we have access to transportation, good employment opportunities, but we can leverage shared economy, where we can basically remove the need for mortgages by integrating the European model of long-term leasing.
So to create a surety for investors and giving the surety to residents that they have a home for life, and they can invest and build within the community, and get those added benefits that we see that enhance not only the cost of living but long-term lifestyle as well as bringing a really new housing choice to the market. So that’s Smart Urban Villages.
Pat Fensham:
Have you got investors?
Nicole Gerschel:
We are looking at sites at the moment and we are soon to be securing our first round of investment. Here for conversations if anybody would like to come and talk.
HOT SEAT: ABDUL KHAN, ASK PROPERTY
Tina Perinotto:
Abdul Khan is working on a project I think is remarkable. Tell us about the Vertical Villages.
Abdul Khan:
We’re working on a project which is basically a vertical village. The concept arises from the old English village situation, where generally there were about 400 residences which were totally integrated. So all the support services were within that village.
What we’ve done is turned around and looked at whether they can be vertically integrated into a green village. In other words, it can be totally sustainable, but a lot of the services are provided in there, including affordable housing. Disabled housing is a major issue, especially for young people – there is nothing out there. The problem there is that you’ve got disabled housing without the family support.
So we want to provide the whole range of housing types that will allow the families to live there.
I work in the north-west part of Sydney and one of the problems we’re finding is a lot of people, my age, have a great deal of resistance to going into a retirement village. They would prefer to live in a place they can age in, that can be converted into fully disabled house if necessary, wheelchair accessible, but it needs to be designed from day one.
Listening to the conversation, one of the things that I need to question is, we seem to be dealing with either social housing or ownership. But we’re not dealing with the moderate income housing, which I think someone brought up as key worker housing. Which is ownership. We need to find mechanisms to deliver that as well. To me it’s seems like that’s finance driven. The superannuation funds need to take part in it.
There are facilities out there they can invest in that will deliver ownership to these people if we’re given sufficient leeway in the planning stages, which I think Nigel mentioned in talking about the uplift, which then allows you to deliver perhaps 20 per cent below market value.
So the project I’m working with, which will consist of somewhere around 250-260 apartments, cuts across every SEPP there is, which is a major issue with the councils, who can’t get their heads around it, because it includes disabled housing as well as retirement or over-55s housing, normal housing, and moderate income housing. And it is green. Seriously green. We hope to be able to get to the point where they can operate off the grid. Generate sufficient power on there to be able to do that.
HOT SEAT: DOMINIC SULLIVAN, PAYCE
Dominic Sullivan:
A couple of things. I’m from a property developer who’s done one of the first integrated medium-density projects in Sydney at a place called Riverwood, which many of you are aware is an old housing estate, still is, but is indicative of a lot of land holdings across Sydney, which there’s severe, chronic disadvantage. It must have seemed like a good idea 40-50 years ago to put people without advantage all in one spot and expect them to prosper.
When we came to the task of redeveloping an old housing estate, people said we were mad. You’d never be able to sell private units in the middle of a public housing estate. Well we proved them wrong. And it really does come back to the issue of liveability and social inclusion.
And what we’ve been able to demonstrate is we can create markets where people thought there couldn’t be markets. It’s important because one of the largest land holders in Sydney is of course the state government, and there is enormous opportunity to create affordable and social housing on their stock holdings already, using the private sector equity and capital.
What I’d like to say tonight is two of the greatest advocates that haven’t been recognised duly enough have been former prime minister Kevin Rudd, who showed what leadership could do in direct investment from the federal government in social housing; and the current [NSW] minister for family and community services Brad Hazzard, who is probably one of the few ministers in living memory who has come up with a plan to create thousands of new social and affordable houses across Sydney.
What we’re saying as the private sector is we’re more than happy to partner with the government to realise that vision of trying to deal with the backlog – the 60,000 social dwellings required in NSW – and also the 100,000 backlog we believe in affordable housing. And it’s going to take some big ideas, big innovations, big vision and a lot of capital to actually bridge those gaps.
It’s no one sector in this room who’s going to be able to find the solution. It’s going to require collaboration and partnership. And a lot of good will. Chris Johnson had some great concepts about how we can incentivise the private sector to deliver real, long-term affordable housing in Sydney. And not just by the hundreds but by thetas of thousands. And he should be congratulated for at least trying to come up with some concepts that have a viable opportunity for success in Sydney.
All of us owe it to the future generations and to those struggling to be accommodated in Sydney to come up with those innovations. So on behalf of the private sector, we’re happy to be here to listen to these ideas, because of lot of these ideas will come to fruition sooner rather than later. We’re actively looking at areas such as shared equity, micro-apartment living.
There’s great idea out of London which sees smaller units being sold to first homebuyers below market in a closed fund where those people can share in capital growth, but can only sell to another first homebuyer.
It’s non-investor. And I don’t know why these products are not being trialled in Sydney right now. We believe they would be successful and they should be successful. But we need cooperation from government, from council, private sector and not-for-profit sector to make these products, these innovations, a reality.
LOOKING FOR THE UBER OF HOUSING
Guy Luscombe, Architects Johannsen + Associates:
This whole thing has been run by developers. And I think there’s nothing wrong with it, and I applaud developers, because they’re the ones who have the model, and they’re the ones who are going to make this happen, because obviously there’s a huge need for this to happen. My concern is we’re talking about hacking housing, and yet we’re not actually hacking housing, we’re just talking about developers doing different forms of housing.
I’d like to see a little bit more robust debate about how – and we started to talk about it with Nightingale and Smart Urban Villages, although it was a big plug for their model – that’s okay – but I think we need to start to think in different way. We need to say, how are we going to address this actual affordability issue. It’s not just about affordability.
It’s about what do people want. It seems to me we’ve got to try to work with individuals. To put a plug in for my situation, we’ve actually got a group of people together, just interested residents that want to try to say, “We don’t like the way things are at the moment. What can we do about it?”
That’s real hack. Where is the Uber of housing? I think there are a few things about the Uber of housing. We don’t accept the models that exist at the moment. We need to look at different models.
I think developers are part of it but I think also the people who are actually buying the housing need to be at that table as well. There are the community groups, there are other groups, but we need to have much more of a discussion about this, and not be told “Oh, that’s not going to work. That’s not viable.
The developers need to have the fiduciary overlay because they need to make a return to their investors.” Sure that’s going to happen. That has to happen. That is a reality. But where is the hack?
Jason Twill:
David Scandol [of The AGEncy Project in Balmain], can you share? Because there’s people in this audience who are part of that group and I’ve heard them speak, and what they want is beautiful, and they are people living right down the street.
David Scandol:
I’m part of a group of about 80-odd residents, mostly from the inner city. And we’re looking at our aged care, and we are looking at what’s available at the moment and going, “Not really keen on that.” And we’re exploring options about co-housing, which is originally where we talked to Jason, and trying to find a better way to live lightly on the planet, rely on each other as opposed to relying on the government is one of the things we’d like to do, and explore some different options that might be available for our aging, because there’s an awful lot of us coming. There’s millions of people who are going to retire in the next 20-odd years.
Tina Perinotto:
Can I just say as well that we’ve come across a lot of incredible innovation and ideas and a lot of them haven’t seen the light of day tonight.
We also haven’t even touched on building construction methods, prefabrication and timber. There’s an enormous story just in building materials that promise to transform the way we do housing including the cost structures. There are people here working on really disruptive innovation, in terms of how fast you can construct, how you can slash the cost of building, because a lot of the cost is in building.
I think the sharing economy is infiltrating with Nightingale and also with the community groups represented here that might not care about having their own private laundry. You can share that; you can share community gardens. Car parking, and more. It’s been touched on, and it’s there to be explored and fostered. This is just the beginning. I didn’t even know these people were out there until we started researching. I was actually gobsmacked at how much amazing stuff is going on. I think we need more discussion, and we need to collaborate with the developers as well, and find ways to fund it, because you can’t do it all on your own.
Pat Fensham:
And on that note, I’d like to thank Tina and everyone for participating. It has been an amazing discussion. We could keep talking forever. I’m like Tina. I’m really surprised by the different models out there, and the different aspirations and the different projects occurring. It’s really inspiring, and often with these things well ahead of where governments and institutions are at. Thank you very much for attending.