Land Development Agency Bill Committee Debates March 2021
Updated: Mar 29
Joint Committee on Housing, Local Government and Heritage debate - Tuesday, 9th March 2021 - Land Development Agency Bill: Chairman:
" I welcome members and witnesses to our meeting on pre-legislative scrutiny of the general scheme of the Affordable Housing Bill 2020. We are joined remotely by Mr. John Coleman, CEO, Ms Rose Kenny, head of operations, and Mr. Phelim O'Neill, head of property, all of whom are from the Land Development Agency. The opening statement has been circulated to members. I will first ask the witnesses for their opening statement and members will then be invited to address their questions to them. Please keep questioning to five minutes, to include questions and answers."
' Members attending remotely within the Leinster House complex are protected by absolute privilege in respect of the presentations they make to the committee. Members are reminded of the constitutional requirement that members must be physically present within the confines of the place of Parliament where they have chosen to sit, namely, Leinster House or the Convention Centre Dublin, in order to participate in public meetings.
For witnesses attending remotely, there are some limitations to the parliamentary privilege and, as such, they may not benefit from the same level of immunity from legal proceedings as a person does who is physically present. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. The opening statement submitted to the committee will be published on the committee website after this meeting. I now invite Mr. Coleman to make his opening statement.
Mr. John Coleman: I thank the Cathaoirleach, Deputies and Senators for inviting us to appear here today. As mentioned by the Chair, I am joined by my colleagues, Mr. Phelim O’Neill, head of property, and Ms Rose Kenny, head of corporate services at the Land Development Agency, LDA. At my last appearance before the committee in November 2019, I provided it with a progress update on the initial LDA sites and wider progress made since inception. Our engagement with the committee has been very beneficial thus far. I would like to thank the committee for that engagement and for the wider support it has shown for the LDA.
I would also like to take this opportunity to express gratitude to local authorities throughout the country for the quality of their collaboration with the LDA. Their support, knowledge and openness to working together in conjunction with their commitment to delivering an affordable housing sector in Ireland will ensure an improvement of supply in the short term but also much-needed stability to the sector over the long term. I look forward to strengthening this relationship over the coming years and perhaps expanding it to include colleagues in the approved housing body sector.
I would also like to commend and welcome the work undertaken by the Minster and colleagues in the Department of Housing, Local Government and Heritage on the publication of the Affordable Housing Bill 2020. We welcome the publication of the Bill and its relevance to the LDA in supporting new homes provision by introducing new tenures to the housing sector. It is clear that the committee and other stakeholders’ work is making a significant positive contribution towards enabling an affordable housing sector in Ireland. This is an area where the LDA has a key role to play by providing a flow of new homes and making them available to individuals and families through the schemes provided by the enactment of the Bill.
Against the backdrop of affordable housing and the publication of the Bill, I would like to use my opening statement today to give a status update to the committee on the LDA and our plans for the future. The past year has been tumultuous but nonetheless the LDA has continued to make significant progress, both in terms of advancing our various projects and in growing our operational platform. Our staffing platform is operating remotely and effectively, and the transition to online working was relatively seamless, I am glad to say. Indeed, we have seen significant growth in our employee numbers throughout 2020, from an initial 12 employees at the beginning of the pandemic to almost 50 currently.
With regard to nearer-term sites for the delivery of homes, the LDA is currently active on nine sites with a capacity to deliver at least 4,200 homes. In addition to this, we will likely shortly announce the addition of further sites that adds capacity for another 3,000 homes, giving a total delivery capacity of at least 7,200 homes. This will grow continually over time due to our continued efforts to target further opportunities. Of course, the other major element of the LDA’s activity is strategic land management, and the LDA is working on three strategic, transformational areas in our cities that will eventually deliver vibrant new city quarters, including around 13,000 new homes between them. I will elaborate on these in a moment.
We anticipate that construction will begin on our first site, Shanganagh, County Dublin, in the second half of 2021 with expected delivery of homes in 2023. A special mention is owed here to the collaboration and ambition shown by Dún Laoghaire-Rathdown County Council in advancing this project with us. The Shanganagh development will consist of 597 homes and will be 100% social and affordable with 200 social homes, 306 cost rental homes and 91 affordable purchase homes. I am happy to say that we have commenced the contractor procurement process for this project, with contractors currently providing qualification assessment information. This is a very tangible demonstration of real delivery happening from the LDA and we are now much closer to visible delivery, with cranes operating on LDA projects in the very near future.
Affordable housing is the key topic of the committee’s discussion today and our development at Shanganagh represents a major step forward in developing a scale and sustainable affordable homes sector in Ireland. At a rent of circa €1,000 per month for a one-bed apartment, our development in partnership with the local authority at Shanganagh represents a circa 34.9% reduction in the current market rent in that area. For a two bed, at an LDA rent of between €1,200 to €1,300 per month, this represents a circa 27.7% to 33.3% discount on market rents.
While discount to market demonstrates the relative value of cost rental developments to renters, affordability to these households, however, is the key metric. At market rent, a single person earning the median education sector wage of circa €48,000 per annum, would pay circa 52% of their net income on a one-bed apartment in the area at market rent. With the development of Shanganagh the same worker could pay circa one third of their net income in rent – a proportion generally accepted to be considered to be "affordable". This would represent a meaningful difference to the lives of individuals renting in this scheme, freeing up their income to be put to other uses, potentially even going towards a deposit to purchase their own home through future affordable purchase schemes. While our shorter-term delivery has a focus on those areas with an immediate need, we are also working on a number of strategic projects in regional city locations with the potential to deliver thousands of homes, as I have alluded to earlier. In Limerick, we are working with Limerick City and County Council as well as partners in CIÉ and the HSE to deliver the Colbert Station development which is currently undergoing a master planning process and is due to go to public consultation shortly. This will be our third public consultation for the development. In Galway we are working with the city council to advance both the Sandy Road and Dyke Road developments. We have also announced a partnership with Cork City Council for the delivery of the Cork city docklands project.
These strategic areas can collectively deliver around 13,000 homes in mixed-use brownfield regeneration and development areas, and we are currently identifying several other strategic sites in cities throughout the country. Over the longer term, it is the LDA’s role in catalysing and co-ordinating the delivery of these large-scale strategic areas that will have the most impact on the delivery of new and sustainable work-live propositions, where people can enjoy working close to their workplaces and avoid further congestion, pollution and other undesirable effects of long commutes. It will also have a significant positive impact on the balance of our social and economic centres in Ireland. This is one of the key roles envisaged for the LDA by the National Economic and Social Council. While these areas are longer term in nature, the LDA and its partners are keen to catalyse near-term delivery on them to engender confidence and momentum. I am also pleased to report that we have completed extensive work on our forthcoming statutory requirement to produce a State assets database. The database is largely complete as to raw information and is available to the public currently on the LDA website.
The main benefit of this exercise will come from the comprehensive reporting to Government on the potential for development of State land, which will bring a focus to where further opportunities to provide new homes and other development can be unlocked. That concludes my opening remarks. I hope they give the committee insight into the Land Development Agency's progress to date, our future direction and where we can interact with the affordable housing Bill. We will be happy to take members' questions.
Deputy Paul McAuliffe: I thank Mr. Coleman for appearing. We are approaching the end of our pre-legislative scrutiny on the affordable housing Bill so there has been much discussion about it. We wanted to have the Land Development Agency here because this Bill and the Land Development Agency Bill 2021 are key foundation stones for the delivery of affordable housing. I would like Mr. Coleman to talk us through how the LDA will use the tools in the affordable housing Bill to deliver affordability. It is often not discussed in subtle terms outside the House, but outside the House there is a suggestion that the LDA is effectively in the business of seizing land and delivering expensive housing on only 50% of that land, using developer-led planning and profiteering, and there are suggestions that the Land Development Agency Bill should be scrapped. Given that narrative, will Mr. Coleman talk us through the positive elements that he supports in the Bill and maybe answer some of those charges?
Mr. John Coleman: I will answer the last charges first and would like to be clear on this. The LDA's focus is squarely on the provision of social and affordable housing. The LDA is clear about that. Every time we look at a particular site or opportunity, we are working out how we make it more affordable, make sure we deliver in a cost-efficient way, and make sure the housing is affordable for the people and households we are trying to target by looking at their incomes and trying to understand what they can afford to pay. That is supported in many ways in the Land Development Agency Bill and, critically, in the affordable housing Bill which the committee is here to scrutinise. The Land Development Agency Bill supports it in that it will deliver a minimum of 50% affordable housing in addition to the standard 10% of Part V social housing requirement. The critical point is that can be revised upwards depending on the situation. For some of the sites we currently have access to, where affordable housing is absolutely necessary, I imagine the Minister, who can increase the percentage, will require much closer to 100% social and affordable housing on that site. Similar to Shanganagh, I would say 100% social and affordable housing will be required on many sites. The charge that we are going to provide non-affordable housing is wide of the mark, in my view. Our focus is determinedly on social and affordable housing. The Land Development Agency Bill supports that but it is certainly core to the affordable housing Bill.
Moving on to how the affordable housing Bill will work and help the LDA, it will be critical. Two schemes have been proposed which are especially relevant to the LDA. Those are the affordable purchase scheme, where we will make homes on State land available to people at prices they can afford and finance, and, critically, affordable or cost rental. The Bill provides clear direction about how that will evolve and the rules we will have to operate within to deliver cost rental accommodation. That is helpful for us. It provides significant clarity about the future direction. There are more details to emerge through regulations and the scheme. The affordable housing Bill's enactment will be critical to providing the LDA with the direction with which it will deliver the vast majority of its housing output.
Deputy Paul McAuliffe: The last point is about the definition of affordability. The Bill refers to market value. How will the LDA measure affordability? In the regulations that come from the Department, I imagine there will be income criteria and assessments of affordability through ministerial regulation, as well as in the policies of the LDA and the policies of the affordable housing agencies and councils it works with.
Mr. John Coleman: The devil will be in the detail of the regulations. I am sure affordability for the target market will be paramount when those regulations are being devised. All I can say is how the LDA is looking at it. We always start with the families and individuals we are targeting who struggle to afford private sector rents but do not qualify for social housing. They are the people in the middle. They tend to be in the fourth, fifth and sixth deciles of income, broadly speaking. We break down the net income available to those people and try to target one third of their net income, which is much more favourable than market rents, especially in Dublin where someone could be paying upwards of 50% of his or her net income on rent.
Deputy Paul McAuliffe: So the median market value is not the LDA's target?
Mr. John Coleman: No. We will provide a range of properties, including one, two or three beds, and so on, but we try to provide something for the vast majority of people in those middle income brackets to ensure they can afford that payment for their accommodation costs, whether mortgage or rent, every month and leave them with enough money to live their lives and do the other things they need to do.
Deputy Eoin Ó Broin: I confirm I am in Leinster House. I thank Mr. Coleman for the presentation and it is good to see him again. I am interested in teasing out how LDA delivery interacts with the key provisions of the Bill, especially the serviced sites fund, and to a lesser extent the cost rental equity loan.
We know that the first units in Shanganagh will be ready around 2023. Does the LDA have much visibility of its completion pipeline from 2023 onwards, even up to 2025? If things go the way they are currently going, what level of completions will there be in 2023, 2024 and 2025, broken down by cost rental and affordable sale?
Mr. Coleman is on record on a number of occasions indicating the price range for the cost rental, but he has yet to indicate what the price range will be for the affordable purchase, both before and after the shared equity loan element from the serviced sites fund. How close is he to being able to give us information about what the actual purchase price will be, depending on the unit size? I am unclear about how the LDA's financing will interact with the serviced sites fund on a site that is not a local authority site. It is clear for Shanganagh, where there local authority, in conjunction with the LDA, does the planning and uses the serviced sites fund, the LDA is the lead developer and the local authority purchases back the social housing in a turnkey format. How will it work in the Dundrum central sites? Who will apply for the serviced sites fund, if anyone? Where is the financing for construction of the social and affordable housing? Presumably there will be some houses priced for open market sale on that site? Will Mr. Coleman talk us through the financing, such as for St. Kevin's Hospital site in Cork, which is a HSE site? We will start there and I will come in afterwards or in the final round if there is a chance.
Mr. John Coleman: There are three questions. My colleague, Mr. Phelim O'Neill, is the head of our property section and will answer matters about completions. I will start with the last question first. The serviced sites fund is currently targeted at local authority sites and is focused on groundworks, enabling works and infrastructure on the sites. That is where that money will go. It is correct to say and helpful that there was an allocation for Shanganagh. It is important to note that input from central government will ultimately end up as savings for renters and purchasers on that site, so that is welcome. Regarding non-local authority sites, I do not think it has been determined whether the serviced sites fund can apply to non-local authority sites or not.
We are not working on that basis yet because that confirmation is not available. I believe it is still being looked at in the Department but if I can take the Deputy through an example such as Dundrum, he mentioned that there is a mix of housing there including social, affordable and open market sale. I would say the open market sale on that particular site would be very limited, if any, and perhaps none. Obviously, Dundrum is an affordable pressure point. It depends on the progress we make on that site in terms of getting the planning through and, ultimately, our discussions with the Minister and the Department around the affordability levels on that but I would say that is trending very high levels of social and affordable provision.
In terms of the approach to that, for the social piece we would engage in some sort of a contract with a local authority or an approved housing body, AHB, in that when the social properties are built we would deliver those to those organisations for them to operate. That is broadly how we would approach that one. Obviously, we would perform the construction works by dealing with a main contractor to deliver those.
For affordable housing, for instance, cost rental, if the serviced site fund is not available our approach does not change. We still focus on the end user. We still focus on trying to make sure that our costs are covered. It is critically important to make sure that it is sustainable but also that the end user in the household is able to afford the rent. We just have to make sure that our cost engineering, our value creation on the design and the delivery methodology on that site is very finely tuned because at the end of the day we still need to pass on a rent that people can afford on that site. That is our non-moveable piece. On the St. Kevin's-----
Deputy Eoin Ó Broin: Can I cut across Mr. Coleman? How will the LDA achieve that without something like the serviced sites fund, particularly for affordable purchase, for example? Does it have some other mechanism if that fund is not available to it on the non-council sites?
Mr. John Coleman: As the Deputy knows, the Affordable Housing Bill as currently drafted provides the mechanism for the LDA to make affordable purchase homes available on that site. I will use the St. Kevin's Hospital site, which might be an easier example because Dundrum is a very high-density site that will be mainly apartments. They are expensive builds and it is an area of high rent pressure so I imagine there will be a very high proportion of cost rental at Dundrum. There might be more affordable purchase homes on the St. Kevin's Hospital site, which will be lower density given its topography - it is on the side of a hill - and its location. On the affordable purchase scheme there, the LDA would incur the cost of developing the affordable purchase homes. My understanding of the way the Bill is currently drafted is that the difference between the market value and what someone can afford would be held as an equity piece, quite probably by the LDA, that there would not be a coupon attaching to that equity and that people would repay that in due course whenever they are able to afford to pay it. The core point is that their cost burden for that home, in terms of servicing that mortgage by the regulations that are brought in, should be affordable to them.
Chairman: We might return later to the question on the completion pipeline from 2023 to 2025. I am moving now to Fine Gael. Can I have an indication from Fine Gael?
Senator John Cummins: To confirm, I am in Leinster House. I will begin by thanking Mr. Coleman and his growing team at the LDA for their presentation and for the work they are doing. Mr. Coleman probably addressed a lot of the negative commentary in respect of the LDA, which I believe has been unjustified, in the first round of questioning. One element he did not get to address, which I would like to give him the opportunity to address in his response, is the transparency element because there have been many wild accusations with regard to his organisation to the effect that it is not open and transparent. Mr. Coleman summed it up well by saying that the cohort of people the LDA is looking at helping is those who are above the threshold for social housing and are in high-rent accommodation or looking to save for a mortgage. They are the type of people I believe we need to help and are seeking to help with the Affordable Housing Bill and the Land Development Agency Bill.
In answer to the last question asked by Deputy Ó Broin, Mr. Coleman mentioned the mix between cost rental and affordable purchase. If I am correctly reading between the lines he is saying that the costs on any given site will determine the mix as to whether it will be a cost rental or affordable purchase. Is there a tendency for the LDA to go more towards the cost rental side over the affordable purchase side? How does the LDA arrive at that mix?
What engagement has the LDA had with other local authorities? I know the sites Mr. Coleman mentioned in Dublin, Cork, Limerick and Galway. I would remind him, as I have done previously, that the national planning framework identifies five growth areas, including Waterford, which is essential. We have the North Quays project that is progressing but it is essential that there is further engagement between Mr. Coleman's organisation and the local authority in Waterford about other sites, particularly in the Carrickphierish area to which the LDA could bring added value. Lastly, is there anything Mr. Coleman would like included in the regulations or the Bill as set down, that is not already included, that he believes would help him and his organisation in delivering affordable homes for people?
Mr. John Coleman: I thank the Senator. I will take some of those questions. The first point is the transparency piece. This is an area that we have made a lot of effort on quite recently. There have been a few misconceptions around our transparency. If I was to put my finger on it, those misconceptions may have originated with the initial draft of the Bill which, taking the lead from some other recently enacted legislation, implied that there was an exemption for commercial activities of the LDA but that has been dropped. That does not exist. The LDA, including all its subsidiaries, is and will be subject to the full provisions of the Freedom of Information Acts. That is the first point to note.
The second point is that when this discussion was happening around the LDA and transparency, as a board and a management team we said that we want to be transparent and open. We are trying to do the right things. How do we prove to stakeholders that that is the case? Obviously, we will be audited by the Comptroller and Auditor General. We have our own internal audit. We have these meetings, which are very welcome. We will be subject to the scrutiny of the Committee of Public Accounts, but how do we go further? One step that we have taken voluntarily is to publish our board meeting minutes. We will publish them in batches every number of months. There is a big pile of them on our website at the moment.
They are available for anyone to review. One can see the types of issues we are talking about at these board meetings, obviously many of them to do with the business of the LDA, but there are also questions on how we can make housing more affordable, get on more sites and get more homes up and running. We believe that by making those demonstrations of openness and transparency, we will eventually build a reputation for being a very open and transparent organisation. That move, as I understand it, is quite rare anywhere across the system. The second question was on how we decide between competition for cost rental and affordable purchases. It is very much side by side.
It is horses for courses but the best way to illustrate that might be with Dundrum Central Mental Hospital, which will be a very high density site. We want to make the most of that amazing proposition in what is a very high-rent area currently. We will need to discuss the composition with the Minister, of course, but we will look at that area and decide what is needed there right now. Clearly rental accommodation is needed in the area, which is right beside the Luas line. At the moment, two-bedroom apartments can cost €2,200 per month or more on the open market and obviously that is too much for the target market of middle-income households that we are looking to service.
In Balbriggan, we have another large site, which can deliver approximately 800 homes. The rents in that area are much lower. The development will be lower density which might make it more suitable for affordable purchase. A three-bedroom semi-detached house would cost €285,000 or €300,000. The Balbriggan site might provide a real opportunity to make affordable homes available for affordable purchase. Our approach is very much driven by site characteristics and what is needed in a given area. In terms of engagement with local authorities, obviously-----
Chairman: I am sorry Mr. Coleman but we have run out of time in that slot. We will come back to the issue of engagement with the local authorities in the next round of questioning. Deputy O'Donoghue is next.
Deputy Richard O'Donoghue: I wish to pass on the apologies of Senator Boyhan who has been called away to another meeting. He hopes to be back before this meeting ends. I thank Mr. Coleman and the other witnesses for attending. Limerick has a population of 200,000 at the moment, which is forecast to grow to 250,000 by 2026 and 300,000 by 2040. The city and county councils were amalgamated in 2014. Surveys suggest that the number of people who want to live in the city equals the number who want to live in the county but to date, the LDA sites in Limerick are all city-based. I believe that the LDA will do what it says it can do but I am elected to represent Limerick county as well as the city. Why are all the sites city-based? I have spoken to the council and various agencies and the word on the street is that the LDA is not willing to engage with local authorities and other agencies even though it has a vision for the likes of Limerick city and county. It is my understanding that up to 2,000 units can be supplied on the Colbert Station site in Limerick city. What sites is the LDA looking at outside of the city?
Mr. John Coleman: The Deputy's question hits on a key point of debate about the LDA. The national planning framework promotes denser development. It promotes a concentration of activity in our larger towns and cities. The Land Development Agency Bill as drafted points us at towns and cities with populations greater than 30,000, although it does not limit us in terms of that being a floor. Under the current draft of the Bill, we can look at towns that have a population of 10,000 or more as well. We have been up and running for two years and have been trying, as we grow from a standing start, to devote our resources and attention to the lower hanging fruit and have targeted sites that became available in Dublin, Cork, Limerick and Galway. That has been based on what has been available and also targeting the more chronic areas in the cities from an affordability perspective. The general direction of the Bill is focused on the larger towns and cities. In terms of helping to achieve regional balance, the Bill is well drafted to point us towards assisting with that, given that we will have the ability to help Limerick achieve its population projections out to 2040.
In terms of the LDA not engaging with local authorities and other agencies, I would beg to differ and a good proof point for that is in Limerick at the Colbert Station site. We have engaged quite heavily with the officials, Mr. Pat Daly and his colleagues, on Limerick City and County Council. We have also engaged with other land-owning agencies there, including CIÉ and the HSE, to put together a masterplan for the large-scale new urban quarter in Limerick which will be known as Colbert Quarter.
That is really good proof of the LDA's ability to work with local authorities and other agencies but I would go further. Under the Bill, the agency is required to provide services to local authorities. Local authorities should take note of what the LDA has, which is a good staff platform of professionals that can deliver properties and sites. It also has a strong funding position due to funding coming from ISIF and the agency's ability to borrow. In that context, I would tell the local authorities to use the LDA to provide social and affordable housing and to think of the agency's resources as their resources. That is our approach. It is not about being separate from the local authorities or competing with them but about the LDA being used as a tool by local authorities. That is very much our position in that regard.
Deputy Richard O'Donoghue: That is what I wanted to clear up. The spin that has been put out there is that the LDA is not engaging with local authorities. However, I conducted my own investigations and the local authority in Limerick said that the agency was engaging with it.
Chairman: I thank Mr. Coleman for clarifying that. I have had discussions with others about the fact that the LDA is there to assist the local authorities and also has the capacity to pull together public lands that local authorities may not have the ability to pull together.
The Affordable Housing Bill refers to affordable housing for purchase or long-term, secure rental also known as cost rental. I am delighted to see cost rental being defined in legislation for the first time, although we must await the finer details that will be contained in the regulations. How does Mr. Coleman see cost rental evolving? It is only in its infancy and we have just one or two examples of it but how does Mr. Coleman see it evolving over time and what is the LDA's role in that regard? Do we need to do more work on providing a better understanding of the cost-rental model, which provides long-term, secure rental accommodation? This is what many people desire but very few have access to it at the moment.
Mr. John Coleman: I thank the Chairman for what is a very interesting question and one that we think about all of the time. What does the LDA have? It has access to capital but it is not unlimited, so it must be used wisely. It also has access to State land but again, that is not unlimited so the land must be used wisely. There is a real opportunity for us, with the LDA and the Bill, to be quite clever and look beyond the mere delivery of X-thousand homes or units in the near term and look at the strategic options available to the State. If we can use this nearer term opportunity with the LDA, its money and its sites, to create an affordable home sector, especially a cost-rental sector that is sustainable and capable of covering its costs, that could be amplified and applied more broadly. That is the real opportunity here, to prove that we can create a sustainable, replicable and scalable cost-rental sector and that is what we should focus on as a medium-term objective. I know this is something the Government and other agencies involved in housing delivery are also very much focused on. That is the opportunity. A medium-term strategy for the LDA to get up to a certain number, X thousand, of homes in that sector could prove the cost-rental sector to ethical investors who might want to invest in it in the near term. I hasten to add that we are more focused on the deployment of the Land Development Agency's capital to deliver our homes rather than investment at this point. It is probably desirable over the longer term to attract that very cheap ethical-type finance, including pension funds. These are the type of investors we want to see that are not fly-by-nights and will stay for 25 years or longer. As a medium-term objective, that is desirable.
On the question of what cost rental looks like, we can look to other jurisdictions and it would be desirable to replicate the Vienna model in Ireland over the very long term. That gives us some clues, although they have been doing this since the end of the Second World War. It takes a long time to achieve a scale that they have. There are other clues. If we look at regulated affordable rental home providers in Germany, for example, some have average tenancies of 13 years. These are people who could really set down roots in affordable rental or cost rental homes, as we call it, with sustainable and non-transient communities building up as a result. That would deal with many of the concerns people have about rental housing in this country. There is potential transience, with people in a unit for six months or a year, for example. I envisage open-ended leases and putting in measures to encourage people to stay and make the place their own rather than providing for a high turnover of occupants. If we can provide it, people will buy into that.
Chairman: I will direct the next question to Mr. O'Neill and it follows from my previous query. Will he give an indication of completion numbers from 2023 towards 2025? There was mention of activity on nine sites in the opening statement. What is the percentage of affordable units on those recent developments?
Mr. Phelim O'Neill: Shanganagh is the nearest and we have permission from that. As Mr. Coleman indicates, we have a procurement strategy we are currently progressing through the process. We expect that to be on-site with just fewer than 600 units this year. We expect the first units of that scheme to be delivered in 2023 on a phased basis out to 2025. We expect other schemes to start in 2022 and subject to the procurement strategy to be developed on each of the schemes. It is important to note the schemes are all unique, with different typologies and composition and, ultimately, different tenure mixes. That will have an impact on phasing. Broadly speaking, we expect the completion of approximately 600 units in 2023, ramping up from 2023 onwards as more schemes come online.
The phasing I mentioned will be a subject of the typologies. For example, in Shanganagh we expect something in the region of 200 per year to be delivered once the scheme is fully working. We expect a slightly higher delivery rate in Dundrum, given its scale, perhaps 250 to 300 per year, but site and construction constraints have a marked impact on that. We expect to be running at north of 1,000 units per year by approximately 2025 and we hope to expand the portfolio to supplement that on a constant basis. There was a question on tenure mix. As Mr. Coleman has mentioned, we are trying to maximise affordability. The likes of Shanganagh is 100% and we expect more schemes like that, including St. Teresa's Gardens, to be 100% social and affordable housing. Many of the sites coming from the Housing Agency will again be nearly 100% social and affordable housing.
Deputy Cian O'Callaghan: Senator Moynihan and I are rotating our slots and it is Senator Moynihan's turn.
Chairman: It is not on my rota but I do not mind who goes first.
Senator Rebecca Moynihan: The Deputy may speak first.
Deputy Cian O'Callaghan: Okay. Senator Moynihan can go the next couple of times to balance it out. I thank Mr. Coleman for coming in. If the focus is squarely on finding 100% social and affordable homes, will he talk us through the example he gave of St. Kevin's in Cork? Will it be 100% social and affordable or what sort of mix are we looking at?
Mr. John Coleman: It is important to say we will still need to engage with the Department and Minister to agree the levels of tenure on each site. While saying we still need that engagement, from an ethos perspective we are trying to work towards maximising the level of social and affordable delivery on a site-by-site basis. It is our working assumption. Different sites will mean different things. A site in Waterford or one in Cork might need different things from one in Limerick in Dublin such as in Dundrum. That is why the flexibility is needed but our ethos is very much towards social and affordable delivery.
Deputy Cian O'Callaghan: Great. St. Kevin's was cited as an example so what sort of mix will be there, specifically social and affordable, cost rental, private or full market properties?
Mr. John Coleman: Without agreeing it with the Government, I cannot definitively say right now. The lower density homes, such as town houses, would lead themselves more to affordable purchase. That will be what we think about when we consider the site and have the discussions with the Minister and the Department.
Chairman: The video broke up, so did the Deputy pick up the answer?
Deputy Cian O'Callaghan: I got the gist of it, although it broke up for me as well. We have got indications of the mix we will have for other sites, although I appreciate not all have been signed off with the Department. I am just trying to get a rough indication of St. Kevin's and what will be there with respect to tenure mix. The other examples have been given and it was said we want to get 100% affordable or social or thereabouts. What will be the tenure mix for St. Kevin's?
Mr. John Coleman: I would like to be able to give exact percentages but it is simply not possible.
Deputy Cian O'Callaghan: An indication would be fine.
Mr. John Coleman: I would say it would be an absolute minimum of 50% on the site but we want to get those levels as high as we can.
Deputy Cian O'Callaghan: I thank the witness. I very much welcome the comments about transparency, and publishing the minutes is good and welcome. Will the witness speak to how the lobbying register will apply to the Land Development Agency as the question has been raised?
Mr. John Coleman: It is a key demonstration of transparency. My understanding is the lobbying legislation sets out different bodies and employees as designated public officials for the purposes of the Act. My understanding is the Department of Public Expenditure and Reform is reviewing the list currently with a view to putting the Land Development Agency on it. My expectation is that the agency will be on the list.
Deputy Cian O'Callaghan: Will Mr. Coleman talk through the approach the LDA takes or what its policy is in terms of engagement with the wider surrounding community when it comes to the agency planning, developing and managing large projects?
Mr. John Coleman: I will hand over to my colleague, Mr. O'Neill, in a moment. Our approach is to go above and beyond what might be seen elsewhere. We believe we have a duty to do that as a public body. I have lost count of the multiple positive engagements we have had with local authority members and communities in respect of Shanganagh. We are also very deep into a consultation exercise in relation to Dundrum. We appreciate people will have issues. Our job is to deliver dense development in city areas, and many people will have concerns around that. We must work with them. We are never going to be alleviate all of them. We are trying to provide a lot of homes about which people will have many concerns. We are never going to be able to alleviate them, but we can take account as best we can of people's concerns and of some of the ideas and needs they have, without compromising our ability ultimately to deliver affordable homes, which is why we are here. My colleague, Mr. O'Neill will elaborate further on that.
Mr. Phelim O'Neill: We have developed strategies to engage and consult at the very earliest stage, concept stage. We have been very conscious to develop these processes whereby we do not deploy information as a fait accompli. We try to garner information at the earliest stage to try to integrate what we can, and if we cannot integrate it, to explain the practical reasons for this. As Mr. Coleman has said, we have found that engagement with the local authorities, with the elected members in particular as local representatives, with all the schemes that we are working on have been an invaluable touch point. It is very difficult to get a really clear picture from all of the interest groups, but we find the elected members are a great way of getting that broad sectoral response.
Engagement has been a significant challenge with Covid. Ordinarily, we would be out in a town hall forum, but we have tried to deploy technology in that space. We have set up virtual rooms on websites, and we are using that as a consultation forum. We have also done flyer drops because we are conscious that technology is not for everyone and we are trying to take as broad a spectrum approach as possible. We have had positive responses to the consultation. As Mr. Coleman stated, there are many people who may have serious concerns, but we are taking them on board. We are trying to address them as best we can, and if we cannot address them, we try to explain to people why this is the case.
Senator Rebecca Moynihan: I thank the witnesses for attending and for the briefing note they sent to the committee. I am in favour of a vehicle such as the LDA for delivering social and affordable housing, particularly in respect of non-local authority sites. We all know sites owned by organisations such as the Prison Service or the Office of Public Works, OPW, which can be difficult to get to, so an organisation like the LDA could be most useful in that respect. However, the Land Development Agency Bill 2021 contains significant shortfalls that we must work on to address, but that is not why we are here today. We are here to discuss the affordable housing Bill 2020.
First, I wish to ask a few questions, some of which might require only short answers, and some that might require talking through. Could I get an indication from the witnesses of other sites on which the LDA is seeking to deliver cost rental, and if they have any indication of the number of units of cost rental they anticipate delivering over the next five years? I also want to ask about the engagement with local authorities and the proposal in the Land Development Agency Bill that the decision on the disposal of local authority sites would be removed from local councillors. Is that something the LDA lobbied for or welcomes? How long does the LDA anticipate the development of sites taking? We saw criticism from the Dublin City Council assistant CEO a few weeks ago on how long it takes local authorities to get sites together in comparison with the private sector. How does the LDA anticipate it will improve on those timelines?
I would also like to return to the point made by Mr. Coleman. I checked through the Bill and it is not entirely clear. Does he anticipate the LDA will be the special purpose vehicle, SPV, that is taking the equity stake in the shared equity scheme under the affordable housing Bill? He made the point as a bit of an aside, so I just want to clarify that. If that is the case, how is the LDA working in potential negative equity coming into that shared equity from the LDA side of things? That could very much undermine the funding model of the LDA, so perhaps Mr. Coleman could speak to that a little bit more.
Mr. John Coleman: I will take the last question first. There are three possible schemes, namely, the affordable purchase scheme, involving local authority or LDA sites; the shared equity scheme, which could apply to the market; and the cost rental scheme. As I understand it, it is not intended the LDA will invest in the shared equity special purpose vehicle, SPV. Where we are coming from with the minority interest piece, and I must add the caveat that the details still have to be worked out with the Department, is that the working assumption is, for example, where the LDA builds on land accessed by the LDA from State sources that are non-local authority and it delivers affordable purchased housing on that land, if the market value is €300,000 and the household gets it for €200,000, the equity piece of €100,000 would be held by the LDA. That is our current understanding, but we are working through those details with the Department. I hope that clarifies the Senator's query. Taking them in reverse order, the idea that section 183----- (Interruptions).
Mr. John Coleman: -----through the Land Development Agency Bill, obviously that is a matter for the Government in respect of the Land Development Agency Bill. However, I would again make the point we should look at the emphasis being given to services to local authorities in the Land Development Agency Bill. We are here to help local authorities to get delivery happening on their lands, where we can. Regardless of what is in the Land Development Agency Bill, we see ourselves as working very much in partnership with the local authorities and elected members, doing whatever we can to help them get sites developed. We see ourselves very much in the guise of a service provider. That could be providing finance, technical project management services, and so on. Regardless of what is in the Bill, we see ourselves very much as working in collaboration with the local authorities and the elected members.
On the Senator's first point concerning other sites we are looking for that could deliver cost rental, we continually look for further opportunities. The statement I issued showed members the initial sites. As I alluded to in response to Deputy O'Callaghan, while we have ideas about what we might expect on those sites, we simply do not know the exact percentage. On the enactment of the Land Development Agency Bill we will need to engage with the Government on that, but clearly we are very focused on affordable housing delivery in particular, as well as social. In respect of other sites on which we might develop cost rental, there are around 3,000 additional homes worth of sites.
One thing we are doing through the Land Development Agency Bill is that, within 12 months of the enactment of this section of the Bill, we will report to the Government on our view of the development potential for State land. The Government will take that and make a decision as to what should be made available to the LDA, or some other agency perhaps, but we would hope it would be the LDA, to be developed especially for housing. We would anticipate that will unlock a good deal more State land that could be added to the portfolio. I am sorry I cannot be more exact, but I hope it gives the Senator a flavour of our trajectory on this issue.
Senator Mary Seery Kearney: I confirm I am present in Leinster House. I thank the witnesses for the engagement and advice so far this evening and previously. Some cynically have claimed in published articles that the Land Development Agency will create designated activity companies and enter into investment vehicles with third parties, thereby undermining the affordable housing aspect and pretty much privatising the lands of which the agency will get ownership. In that same article, there were allegations that the agency will not build social housing. I would welcome the agency elaborating on the mechanism by which third parties will be brought on board, as well as who those third parties will be and where they will come in with a view to affordable and social housing.
Mr. John Coleman: I thank the Senator for her questions as it gives me an opportunity to clear some of the issues up. There is no basis for any of those claims.
Senator Mary Seery Kearney: I know there is no basis for them. I am just giving Mr. Coleman an opportunity to address them.
Mr. John Coleman I understand. Designated activity companies, DACs, are widely deployed by State agencies just to manage their affairs in an appropriate way. For instance, God forbid, if something went wrong on one site, we would want to ring-fence it from another site to ensure it did not impact it. It makes total sense. It is just normal structuring. There is nothing unusual about it. It is totally normal for State bodies, as well as anyone else.
The only significant way I would see the privatisation of lands happening is by making affordable homes available to people to buy. Obviously, they would own the piece of land on which the home is built. I cannot see the Land Development Agency flipping sites into the market or anything like that. The agency is firmly focused on making sure that social and affordable homes are delivered on these lands. Our focus is utilising our own capital. For State lands, we have €1.25 billion of capital available to us. We can borrow a further €1.25 billion, resulting in €2.5 billion of firepower. We have a good bit of building to do to work our way through that before thinking about investment. We are very much focused on using those resources available to us in the immediate term.
On the point about not building social housing, we will be releasing our business plan shortly after the enactment of the Land Development Agency Bill. While I cannot go into it too much, social housing features quite prominently. We plan on engaging with local authorities, approved housing bodies and other social housing providers to understand what the opportunity is to provide social housing on sites that we access. We think that makes a lot of sense in terms of social mix. It also makes a lot of sense in terms of having a multitude of ways in which we can deliver badly needed homes, both in the social and affordable sector, rather than just focusing on anyone particular avenue. That is firmly on our radar. I thank the Senator for giving me the opportunity to address some of those concerns.
Deputy Thomas Gould: I confirm I am in Leinster House. I thank Mr Coleman and his team for attending tonight and taking questions. It has been confirmed to me that a one-bedroom apartment in the St. Kevin's site in Cork will be valued at €900 per month. That works out at approximately €36,000 a year after tax, net, if one wants to keep that under 30% of a person's income. In other words, that means a person would need to be earning €47,000 a year. That is not the wage of the people looking for affordable housing in my constituency. Will Mr. Coleman comment on that? I do not feel that is affordable for the people I represent and those looking for affordable rental accommodation in Cork.
The Housing Agency stated in its affordability calculator that lower income threshold households could find it difficult to maintain rents between 25% to 34% of their net income. Does Mr. Coleman disagree with the Housing Agency's assessment of affordability? I believe there is a clear contradiction in some of the Land Development Agency's statements. It has stated affordability is a key metric for determining rental costs. At the same time, the agency is giving rental monthly figures which are not affordable for those in my constituency who I represent. How can Mr. Coleman explain this contradiction?
When Mr. Coleman was responding earlier to Deputy Cian O'Callaghan on the St. Kevin's site on the breakdown, I did not get his response. I know he could not be definite because he said he is waiting on the Government. However, I am concerned that the non-committal approach to this would only see 50% or 60% of it given to social housing . We want to see that site to be fully given over to affordable and social housing. Will Mr. Coleman explain that?
Mr. John Coleman: On the affordability issue, it is a complex question. What is affordable? Can one define affordable? I do not think there is an exact figure that one can deploy. Like the Deputy alluded to, a third of someone's income who is on a low income might be less affordable to them than a third for someone on a high income. That needs to be taken account of but there are no hard and fast rules in terms of what is affordable. I am not aware that the Housing Agency has come out with a percentage of net income, as being a level that is affordable or not.
On the Deputy's point about €47,000, I have not worked out the maths on that. What we are not trying to do with affordable and cost rental is necessarily target social housing and people who qualify for social housing per se. My understanding is that the net income for a family or household in Cork for social housing is somewhere between €37,000 to €42,000. That is the net income. I am not sure what that is gross. We are not targeting people necessarily for the affordable rental piece who qualify for social housing. We are looking for a different cohort of people who are not supported. Having said that, we will deliver significant levels of social housing as well across our schemes. That is not to say that we are forgetting about people who need social housing too.
On the affordability piece and measuring what is affordable, our starting point will be to work out that it is certainly a much better option for people than what is out there already. There is a good argument that, depending on the levels of income that people are at, what we are producing will be affordable. I would caution against asking where we are targeting. Is it for people who qualify for social housing or just above that? I guess it is that kind of middle area.
On the exact percentage of what will be social and affordable on a particular site, we are driven by the Land Development Agency Bill. That will determine what percentage there is on a site-by =-site basis. I could come out with a figure right here now. The fact of the matter is, however, that I have to talk to the Department and the Minister on a site-by-site basis to determine what level of affordable and social housing should be on each site. All of the discussions that we have are about maximising social and affordable delivery on these sites. The Deputy will understand that I have to wait for the Bill to come through and for those engagements to happen on foot of the Bill in respect of the exact percentage. As to what I would anticipate at St. Kevin's, I anticipate very significant levels of social and affordable housing.
Deputy Thomas Gould: I have a final question on Mr. Coleman's response to affordability. The LDA might not be targeting people who would qualify for social housing, but it is a fact that tens of thousands of people in the State cannot get social housing because of the long waiting lists. They have to rent properties, but we cannot supply those people with affordable rents. It appears to be contradictory that the LDA is basing affordability on a reduction of the market value at the current market rate, whereas I believe affordability should be based on a person's ability to pay. That would be affordable.
Mr. John Coleman: I agree with the Deputy. I believe we should start with someone's income and try to work out whether it is affordable for the person. The reference to the market rate is only a way to demonstrate the value to people who can access the affordable accommodation. It is not to say we are benchmarking it from that. It is just to demonstrate the value. However, I agree with the Deputy. We should be looking at a person's income and assessing his or her ability to pay the affordable price based on that. Senator Mary Fitzpatrick I thank the witnesses for attending the meeting and for all the work they are doing. It is very important work. It is critical for our country and society that there is a sustainable supply of social and affordable homes. We have to catch up on a full decade in this regard and I am sure the witnesses are acutely aware of the desperate need. We welcome and support their efforts.
I wish to follow up on the discussion about affordability, because this is a key element for people. I welcome Mr. Coleman benchmarking the affordability against people's income. I also accept that there is no simple and accepted definition of it. However, would he agree that, in the instance of Deputy Gould's scenario in Cork, if somebody was earning up to €35,000 in Cork city, he or she would then qualify for social housing? It would only be people who are earning in excess of €35,000 who would be targeted for the affordable rental. Is that correct?
Mr. John Coleman: That is correct. I hasten to add that we will be providing social housing on the schemes as well. It is just that the particular tenure of cost rental is targeted at people who do not qualify for social housing, which is set by net income levels in the different jurisdictions. The challenge is that while we want to demonstrate that what we are producing is affordable to people, we are also trying to marry that to a well-proven concept of cost rental which is sustainable because it covers its costs. We are trying to marry the two. On one side we must cover the costs, but the challenge is to demonstrate to the broad range of middle-income people who we are targeting here that it is also affordable. They are the two concepts we are trying to marry.
Senator Mary Fitzpatrick: It is important that it is affordable, and we understand that, but also that it is viable. There is no point in the first 20,000 tenants getting a great deal and then there being nothing into the future. I absolutely accept that point. I have another question about affordability. There are different income households. There might be one household with a two-bedroom unit and it might have two incomes coming in, or even three if there is an adult child as well. In other households, there might only be one income. Will that be taken into account in calculating the affordability of the rents?
Mr. John Coleman: When we look at rent setting, the cost rental is based on the costs that will be produced. What the Senator is speaking about is the bands of people and the incomes that qualify. I understand regulations will be set in terms of a scheme of priorities, and local authorities will have significant leeway in influencing that. I understand a simplified approach will be taken to that. The target market will be assessed by regulation. I agree with the Senator, however, that where the money coming into a house is available to contribute towards paying a rent, it must be taken into account when setting those limits and so forth.
On the affordability part, the concept of cost rental is based on the sustainability aspect, that is, that it is not a one-time thing, but is sustainable and repeatable, while trying to keep a very close eye on the affordability aspect as well. One can go to Ikea and buy a couch for €300. That €300 is going to be slightly more affordable for some people and slightly less affordable for others, but it should still be fundamentally affordable and a good quality option for them. I guess that is where cost rental is trying to land.
Senator Mary Fitzpatrick: I spent a long time on Dublin City Council and, with great frustration, witnessed decades pass with little delivery of social housing. I appreciate that the local authority did not have the legislation or the schemes to provide affordable rental or affordable purchase over the last decade or so. On the Land Development Agency working with this affordable legislation, can Mr. Coleman outline what the tangible difference will be in terms of time and quantity of homes? We have talked a great deal about affordability, but people are very keen to know how real this is going to be and when. Mr. John Coleman The difference comes down to scale. This is not a massive country. We have many different local authorities. We would like to develop repeatable processes and repeatable approaches to financing. One can get better value for money when it comes to finance. If one borrows, for example, one can borrow at much cheaper rates at scale than one can on individual projects. It is much easier for lenders such as the European Investment Bank to understand what we are offering, as opposed to dealing with a multitude of individual operators. For something like cost rental, in particular, it makes a great deal of sense. We are consolidating our efforts here for all of our colleagues who are producing affordable housing. That is where I see the big benefit - the scale, repeatability of processes and the ability to move nimbly on matters such as the financing of cost rental, which we have the ability to do.
Senator Mary Fitzpatrick: Who will be the shareholders in the LDA?
Mr. John Coleman: The Minister for Public Expenditure and Reform and the Minister for Housing, Local Government and Heritage.
Senator Mary Fitzpatrick: I thank Mr. Coleman.
Deputy Francis Noel Duffy: I thank the representatives of the LDA for attending the meeting. Over the past year, I have engaged in numerous briefings from the agency and I am encouraged that the intent of the agency appears to be moving away from private housing towards public housing. I hope that in the future we might reach 100% public housing on public land. However, we are where we are. As I believe should be the case, the primary remit of the LDA is to utilise State land for public housing. This is in the context of a severe housing crisis. First, does Mr. Coleman agree that the target for public housing on public land should be maximised? Where he does not, could he outline where those profits would be going, and whether they are reinvested if the LDA is selling the houses?
Second, I believe local elected representatives should have a meaningful say in developments by the LDA on local authority land. A councillor's primary role is to represent his or her community and bridge the gap between local residents and the council executive on local matters. Placing a barrier between the LDA developments and councillors is effectively bypassing local democracy. I have spoken on this numerous times as a councillor. Does Mr. Coleman have an opinion on the absence of section 183 of the Local Government Act for the LDA when purchasing land? How does he envisage meaningfully engaging with councillors, given their importance and role in ensuring sustainable development in this area?
Mr. John Coleman: In terms of the approach towards 100% social and affordable, I believe that will happen on many sites that the LDA accesses; it is quite a significant proportion. I think one must allow flexibility for particular sites. A good example is Balbriggan. I understand that approximately 50% of all homes in the area are supported by the State, mainly through social housing. Potentially, one might want a broader mix of housing for the overall area in Balbriggan. On the flip side, another good example is Dundrum, where one would want very high levels of affordable housing because clearly there is a chronic need in that location. It is a question of horses for courses. That flexibility, allied to the LDA's ethos of focusing on social and affordable housing, is a good mix. In my view, it is a sensible mix.
In terms of profits, the reality is that any money that comes back to the LDA from selling affordable homes or rents from the cost rental scheme is going to be recycled back into providing more social and affordable homes. That is my understanding. Our shareholders are the two Ministers, as I have mentioned. I am sure they will be quite happy for us to continue to recycle funds back into providing more homes.
I do not want to pre-empt anything that the Oireachtas or the Government might want to do and discuss in respect of the local representatives. Our approach has always been to engage. A good example is Shanganagh, where we have had 13 or 14 separate sessions with the councillors to tell them what we are about and to engender a bit of confidence that we are all on the same team and, ultimately, want the same thing. That is why we got the overwhelming support of the councillors in that respect. Regardless of what the Land Development Agency Bill says around that piece, we will continue to have very high levels of engagement with elected members. We sincerely value their input into everything we do, not just on local authority sites but also on other sites that we are working on that have not come the local authority sector. So that engagement and collaboration piece will not change.
Deputy Francis Noel Duffy: Is it envisaged that any house will be sold by the LDA on the market?
Mr. John Coleman: It is hard to contemplate every site that we might encounter. As the LDA is a national agency, we will unlock sites everywhere. In the case of a State-owned site in a town of 10,000 people where the market rates might already be very low at less than €200,000, the people in that town who earn between €30,000 and €50,000 might be able to afford what might be deemed to be a market rate in that location because that rate happens to be quite affordable. If we say that there is a piece of State land in a particular town on which we can make housing happen, but it just happens that housing in the town is generally more affordable, that is something we will have to consider. Again, every site is different and we cannot possibly contemplate every situation. I guess that the Bill is drafted to allow us the necessary flexibility to deal with every situation while recognising that our focus is very much on social and affordable homes, where needed. Senator Mary Fitzpatrick Deputy Joe Flaherty sends his apologies. I confirm that I am in the Leinster House complex. I apologise for not clarifying that earlier. I thank Mr. Coleman for answering our questions. Does the LDA plan to use section 183? Did the section come from the Department or where did it come from? Mr. John Coleman It is the Government's Bill. We have shone a light on our form and shown how well the LDA has worked in Shanganagh. We will work within whatever framework is there. Regardless of what is there, I do not see any change in our relationship with the councillors. We want to bring the councillors with us.
Senator Mary Fitzpatrick: That is great.
Mr. John Coleman: It is very important to have local support for all of our schemes. That collaboration piece will not change.
Senator Mary Fitzpatrick: I want to discuss the numbers that Mr. Coleman talked about in the earlier part of the meeting. He mentioned figures of 4,200 homes, 3,000 homes and the potential for a further 13,000 homes. Mr. John Coleman Yes.
Senator Mary Fitzpatrick: They were from sites that the LDA is assembling. I fully accept that the LDA is without legislation or statutory authority, and without any affordable, rental or purchase legislation or scheme yet. I heard Mr. Coleman talk about reporting within a year to the Oireachtas and the Minister on future projections. I ask him to elaborate on this and to explain it to us in more detail.
Mr. John Coleman: There are two ways to look at the LDA. We have been given a mandate to access State lands and we have a duty to deliver. Clearly, there are significant housing and affordability needs. We have a mandate to deliver and open up State lands, so I think it is our duty to deliver on the State lands in the short term. One of the original long-term concepts behind the LDA was as a strategic land manager. A perfect example is the Colbert Station area of Limerick, which is right in the city centre. We are supposed to increase the scale of Limerick city by 50% from now to 2040. How do we do that? Where is the housing going to go? Do we continue to sprawl or do we build up what we have within the city? The State owns the 50 ha site in the Colbert area. The HSE is interested in providing health services, CIÉ is interested in provided transport services and Limerick City and County Council is interested in providing housing. I believe the opportunity can be much bigger if all of those lands are joined as part of a longer-term vision. If the cities are going to develop over the next 20 years, cohesive thinking, rather than a piecemeal approach, needs to be brought to bear. We must utilise any State land that we have to work out that we are going to put our people mainly in more densified situations than the less sustainable sprawl we have suffered from. That sprawl will continue unless we have significant policy movements against it. That will lead to all of the undesirable effects around environmental issues, etc., that we do not want any more. One of the few positive by-products of the past year has been our realisation that we waste so much time commuting. We are trying to tackle those issues over the long term. In the short term, the LDA wants social and affordable housing delivery. In the long term, the LDA wants strategic land management in places like the Colbert area of Limerick. Those are the two things we are trying to do, and that is what is contemplated by the larger number of 13,000 home opportunities.
Senator Mary Fitzpatrick: One criticism has been that just 400 affordable rental units will be delivered this year. We all know that an awful lot more than that is required. Clearly, the LDA knows that and is planning to deliver an awful lot more than that. Apart from a magic wand, what else could the LDA be given that could allow for the delivery of a significantly greater number of affordable rental units within the next 12 months?
Mr. John Coleman: When one looks solely at State lands, it takes time to bring land through processes. It takes time to procure a design team. It takes time for them to create the design because these are really complex sites. It takes time to procure contractors. It is pretty easy to burn through two or three years doing these necessary activities. Of course we need housing now, or as soon as possible. The key thing is for the LDA to continue to build that scale and continue to have the planes circling overhead and ready to land over the coming years. We want to put as many of those planes up there as possible and that is what we are doing. The graph in my opening statement shows a clear trajectory towards funnelling those projects along in the process. We hope that within a relatively short period of time we will have a very large scale that is immediately deliverable.
The Senator's other point was about how we will get delivery within the next 12 months. I understand that the cost rental equity loan schemes deployed through approved housing bodies, AHBs, may be able to target non-State land that is more deliverable in the nearer term, which could be positioned towards the delivery of cost rental homes. That is a viable option and a positive initiative that the Department and AHBs are deploying at the moment.
Senator Mary Fitzpatrick: I thank Mr. Coleman. Am I out of time?
Chairman: Just about but I can let the Senator back in in the third round. I call Deputy Higgins.
Deputy Emer Higgins: I thank Mr. Coleman and all his team for the work that has gone into this area and for his detailed contributions. It is great that we are talking about the Affordable Housing Bill in tandem with the Land Development Agency because together those two Bills represent the Government's response to the affordable housing crisis. It is great to hear Mr. Coleman talk about further sites that have the capacity for another 3,000 homes and 7,200 homes in total in the very near foreseeable future. Senator Moynihan asked about breakdowns of what is coming down the tracks. I appreciate that Mr. Coleman does not have any indication at this stage of what the breakdown would be of cost rental, social or affordable housing. However, it would be helpful if we could get some timelines as to when we might expect announcements of sites that are coming down the tracks and how quickly the breakdown of those sites might be looked at.
Mr. Coleman has spoken a lot about the Shanganagh site and he has used it as an example of collaboration with councillors. I do not mean to be negative when I say I have had much feedback from councillors on the ground in Dún Laoghaire who feel they did not have the input into that they would have liked. Originally the proposal was for 200 social houses, 200 affordable homes and 127 cost rental units but that changed when another 70 units were introduced. The level of social houses stayed the same but there was a reduction of almost 50% in the affordable housing and a substantial increase in the cost rental housing. Councillors to whom I spoke felt they had to fight to get an additional 40 affordable housing purchases added onto that. They feel there was a need on the ground in their area to deliver affordable housing as one of the key priorities. I am just using that as an example of the kind of tension that often exists between councillors and bodies like the LDA, though I am not solely referring to the LDA. That is just how it works and I say that as someone who was a councillor for a decade. The idea that councillors' views and powers could potentially be pushed aside is of huge concern to county councillors. I know Mr. Coleman has discussed it a little already but is there any more comfort or explanation he could give us that could help alleviate those concerns? That would be useful.
This is more about the LDA side of things than the Affordable Housing Bill but I ask Mr. Coleman to explain the CPO powers of the LDA in more detail. This could be a bit of an ignorant question but I am just wondering about development levies. Does the LDA pay full rate levies and is that regardless of whether or not there is a site service fund allocated to a site? If the LDA does pay full development levies, could that funding potentially be red-circled so it is used solely in the development? That could reduce the end price for the buyers, the council or those renting.
Chairman: Mr. Coleman?
Deputy Emer Higgins: Was I that bad that I have made Mr. Coleman leave?
Chairman: I think he has frozen. Could anyone else from the LDA take any of those questions?
Deputy Thomas Gould: Deputy Higgins is always controversial at these meetings.
Chairman: I do not know if the witnesses are in close proximity to each other. Could Mr. O'Neill take any of those questions?
Mr. Phelim O'Neill: I am sure I can try. Looking back through the questions-----
Deputy Emer Higgins: I can recap them if that is helpful.
Mr. John Coleman: Can the Chairman hear me?
Chairman: We have Mr. Coleman back now.
Deputy Emer Higgins: Mr. O'Neill was saved by the bell.
Mr. John Coleman: I promise I was not putting in any interference to avoid Deputy Higgins's questions. I think I got most of them. As to when we will be able to give a flavour of the breakdown, I anticipate that following the enactment of the Bill, once we have clarity on its direction or are fairly sure where it is going, we will have those discussions with the Department to understand what the appropriate tenure mix is. We will be focused on how to maximise affordability. That is what we are going to do and those are the discussions we will be having with the Department. I do not know when the Land Development Agency Bill will be enacted but we should be able to give a clear picture very shortly after that. It is important to note that some of the sites to which we have access are longer term in nature. Sometimes markets change and places become more expensive. Unfortunately the trajectory at the moment has been moving towards being more expensive. For instance, while an area might not be that expensive, relatively speaking, for rent today, by the time houses are completed in five years it quite possibly will be. In Dublin after the financial crisis, rents were what we would now call quite affordable. Ten years later, I do not think anyone would call them affordable. We will be thinking about those things and we will be having those discussions. I imagine we will have further clarity very shortly after the enactment of the Bill.
As regards the tensions around Shanganagh and some of the issues that have arisen there, the reality is that we have gotten a positive outcome. There will be 100% social and affordable housing and quite a large proportion of cost rental housing, which we like. That suited the scheme because it is a high-density one. All but 51 of the homes are apartments and because of costs apartments are more expensive to deliver. They tend to lend themselves better to and tend to be located in higher rent pressure areas. That is why cost rental is often a good solution for apartments. I understand that some councillors would have preferred more affordable purchase homes and we tried to strike a balance by including some further affordable purchase homes to take the number up to 91. Everyone will have different views. For every councillor who wanted more affordable purchase homes there was another who was very happy with high levels of cost rental units. It is a tricky balance to strike.
Deputy Emer Higgins: I appreciate that. My question is, given that as a backdrop, what level of comfort can Mr. Coleman give councillors that the LDA is not overriding some of their powers? Mr. John Coleman
One thing that no councillor on Dún Laoghaire-Rathdown County Council would accuse us of is not engaging. I do not think anyone would accuse us of that. We want to bring people with us. We do not want to go against them. The way to deal with that is to engage, engage and engage. That is going to be our approach and that goes for communities, councillors and-----
Chairman: We may have lost Mr. Coleman again. Did that answer Deputy Higgins's question on engagement?
Deputy Emer Higgins: Not really. While I appreciate that we need to engage, I am talking about meaningful engagement. I have been speaking to many councillors who feel their democratic powers are being potentially eroded by the LDA. We may be running out of time but if somebody was able to address that particular point and the development levies, that would be really helpful. Chairman We are okay on time. We have 20 minutes left and Deputy Higgins's question was the last in the first round. Deputy Ó Broin, Senator Fitzpatrick and I want to come in in the third round.
Mr. Phelim O'Neill: I can certainly answer the question on the development levies. We are subject to development levies. The ring-fencing of development levies by any local authority for use within the scheme would be a subject for it and the terms and conditions of the county development plan, or the development plan of its particular area.
Deputy Emer Higgins: That is really helpful. I thank Mr. O'Neill. Would anyone like to come in on section 183?
Mr. John Coleman: I am not sure if Deputy Higgins can hear me? My connection conveniently broke up again. I will not avoid the question but it is in the LDA Bill. That is a matter for the Government and all we can say is we will work within whatever frameworks are available to us. One thing that will not change is our engagement with elected Members. It will continue to be high.
Chairman: I will go to Deputy Ó Broin. There is time for three or four questions if we stick to five minutes.
Deputy Eoin Ó Broin: If members are concerned about the section 183 element of the Bill, we can remove it on Committee Stage by way of amendment. I encourage all who have concerns to support amendments that Sinn Féin will table. I have many questions on the LDA and its operation in the Bill, but we will leave them for the appropriate session. I am still trying to understand the interaction between the LDA and the Affordable Housing Bill. My central question is as follows. The original idea of the LDA was to deliver 150,000 new homes over 20 years. To do that, the capitalisation from the State was not sufficient, so the LDA was to leverage the value of the land to attract private investors through joint ventures to develop sites. The reason the original Fine Gael LDA had 60% open market sale prices was to attract a level of investment to deliver those 7,500 homes every single year.
If Mr. Coleman is now saying it is not his intention to pursue joint ventures with private investors, even though the legislation clearly allows that, then the scale of ambition the LDA will have in terms of delivery of units will be dramatically scaled down. I am trying to get clarity on whether the LDA is still committed to that large volume of delivery which will be dependent on joint ventures. The €2.5 billion, between capitalisation and borrowing, will be depleted quickly between the equity stake the LDA will provide in the private homes and other outlays. Is the LDA just going to scale back the ambition? It is important for members to understand what the level is.
I am also concerned because the point Deputy Gould made was not really about people below the social housing threshold. It was about those people who are €1,000 to €5,000 above it. For those people, the LDA rents are not affordable in terms of a third of net take home pay, whether in Dún Laoghaire or Cork. How do we include those people in genuine affordability? Likewise, we still do not know what the price of the LDA's affordable purchases will be, so we do not know if they will be affordable or not. Can Mr. Coleman give us any clarity on that?
Mr. John Coleman: I thank the Deputy. I hope he can hear me. I have changed the connection, so it is hopefully a bit more stable. On the 150,000, we have to think of the LDA in two ways. It was never expected or intended that the LDA was going to directly develop 7,500 units per annum every year for 20 years. The current largest housing provider in the country delivers around 1,000 homes per year and one of the largest public limited companies, plcs, in the UK probably delivers in or around 10,000. It just goes to show that was not the intention.
Where the 150,000 came from, and there is a clue in what we are doing in the Cork docklands and Limerick Colbert developments. These are strategic areas where a line can be drawn around them and we can say that a vision and implementation plan needs to be put in place for these areas. If that is done properly, by enabling infrastructure, bringing together landowners, developing plans and master planning cohesively rather than piecemeal, utilising SDZ-like structures, it is where the big impact of the LDA will be over the long term. They take a long time to invoke, but we have to start somewhere and we have to start today. The Deputy will recognise the need for active and strategic land management. That is a key part of it. If we go further and ask what that means, on Limerick Colbert we prepared a vision piece. We are very close to being able to release a master plan and we will, as part of that master plan, work with our partners there to have an implementation plan to get delivery going on that. It will be more than developing housing on that site, although housing will be a key component. It will be about attracting occupiers-employers, people to provide jobs and to provide the wider social and economic regeneration in these areas.
As regards Cork docklands, we are working with Cork City Council to put together an implementation plan for the very large Cork docks area. Only pockets of that land are State land. We will have to work with other landowners in that area to bring about a vision to realise the potential for 10,000 homes to be delivered on time in that area. They will not all be directly delivered by the LDA. Others will come in and develop those sites. Many of them are privately held, albeit there is a significant slab of State land right in the middle with the old ESB marina power station. Our role in that situation is to create a vision, co-ordinate landowners, including the State landowners, to put together a plan to bring in occupiers, to bring confidence and employment and to make it a real, proper live-work proposition we can market with the likes of the IDA and other bodies to be a reality. That is the 150,000 piece and the strategic land management piece that will enable all these areas. If one thinks about the example of Limerick Colbert, that was not on anyone's radar 18 months ago. It now looks like a properly managed, strategic area right in Limerick city centre that could be transformational for the city. That is the effect of the value we can bring in the long run. We are only a little over two and a half years in existence, but that gives a good clue as to where the scale, referred to by the Deputy, will be achieved and potentially delivered given our limited financing.
Chairman: I thank Mr. Coleman. We have ten minutes left for me, Senator Fitzpatrick and Deputy McAuliffe. We will try to fit everything in with three minutes each. One of the purposes of the LDA Bill is the creation and development of new and regenerated communities. Mr. Coleman has touched on strategic land assessment and pulling together at scale for provision of services. Proximity to good public transport is extremely important when talking about affordability and social housing. Lack of access to public transport has often excluded many communities in the past. Public transport needs to be frequent and reliable and we need to look at the principles of transport orientated development. Will the LDA focus on sites that are well served by public transport? Will the scale that we envision the LDA working at, and the ability to pull all the service providers together, allow it to influence the provision of public transport to make those communities better served by it? If Government focuses on provision and increase in frequency of public transport, will that open up other sites that the LDA had not considered previously?
Mr. John Coleman: It is a bit of both. It is a really interesting question. In essence, do we put down the infrastructure and let the development chase it or do we put forward the development and let the infrastructure chase that? Personally, I think it is better for the infrastructure to be put down and let development follow it. It generally does. The Chairman's core point around the targeting of opportunities to create better use of public transport nodes, not just present nodes but to inform the development of future nodes, is really important. Harking back to the Limerick example, obviously this is where various train lines, both active and inactive, congregate - right in the centre of Limerick. By showing a vision for that area, it broadens the thinking of what is possible for public transport in the wider sense in Limerick. If we can provide a vision for the development that will happen here, will that give the confidence to the NTA and to CIÉ to say they are going to invest money here in additional train lines and that they will double track some of the existing tracks to increase capacity? All of those questions are starting to be asked now. We have discussions all the time with the NTA and CIÉ on these exact points. As was said at the outset, it is about whether we front-end some of the transport infrastructure. Undoubtedly, many examples have shown that development will follow it. What will be key is being able to demonstrate the likelihood and the co-ordinated fashion in which that development can follow it, such as with Limerick Colbert.
Chairman: I will call Senator Fitzpatrick and then Deputy McAuliffe. They have about three minutes each.
Senator Mary Fitzpatrick: Actually, I will let Deputy McAuliffe come in.
Deputy Paul McAuliffe: I only have two quick questions. I thank Mr. Coleman and his team for being here for an extended period and for supplying answers to the committee. Mr. Coleman has been diplomatic in his response in regard to section 183. It is a Government decision and I accept that. Does he believe the LDA can carry out its functions and deliver its targets without the power of compulsory purchase? In regard to affordable purchase, in many parts of Dublin the LDA will take the cost of construction and discount it to sell the property at an affordable price, which will be below the cost of construction. In some cases affordability might be the cost of construction plus a margin. How does the cost of construction figure feature in the establishment of the affordable purchase price?
Mr. John Coleman: On the Deputy's last question, if one looks at the Affordable Housing Bill, as drafted, which we will work towards, where the LDA develops on LDA sites, the regulations will dictate at what level and at what price point purchasers can buy into. I understand that will be related to their incomes but that is to be worked out and teased out. That is the path to travel. We would hope we would recoup our construction costs through those mechanisms because we would then take those proceeds and put them into more development. We accept there may be cases where that will not be possible. If something costs €250,000 to develop and a person is only able to contribute €220,000, this might leave the LDA holding that interest in the home and it might have to wait until it gets it back, which might be awhile. That is something which will have to be teased out with the regulation. It is something we are contemplating at the moment. To me, the core point of this seems to be to make it available to household to buy it at a rate that is affordable to it. The first point was about compulsory purchase. Is that correct Deputy McAuliffe?
Deputy Paul McAuliffe: It was more to do with the acquisition. Obviously, it impacts the LDA Bill but it relates to the acquisition under section 183 from local authorities. One might call it forced acquisition. Does Mr. Coleman believe the LDA can carry out its functions and deliver its targets with or without that power, given the partnership approach it wants to take?
Mr. John Coleman: The reality is that there is risk in everything we do. There are 15, 20, or 25 risks in every development we have. When working with a local authority site, is one of those 25 risks whether section 183 will not go one's way? Yes, it is. Notwithstanding what one does, that is a fact. Regardless of the way it bounces, we will work with local authorities to try to deal with their concerns either way, whether that provision is there or not. We will continue to work with them. We always have done and that is the way we will continue.
Deputy Paul McAuliffe: I appreciate that answer.
I want to thank Mr. Coleman and his colleagues for their attendance. The reason they are here is to assist us with the scrutiny of this legislation, how we may improve it and with recommendations we might make on the heads of this Bill. I put this same question to the County and City Management Association, CCMA, last week and to the approved housing body, the Housing Alliance. I asked whether there were changes they would like to see to the Bill. They said they were happy with it and they welcomed the Bill. Can Mr. Coleman give a summation of how he sees this Bill? Would he recommend any changes to it which would assist the LDA in the provision of housing?
Mr. John Coleman: In a nutshell, the LDA is going to deliver significant amounts of affordable housing. The question has always been about what that will look like. The Bill clarifies that for everyone, including the LDA, our elected representatives and the people who are ultimately going to benefit from the provision of these homes. The affordable purchase provisions and the cost rental provisions in the Bill provide us with much clarity about how things are going to work, so I welcome that. I do not propose anything additional to that from the LDA's perspective. It is very important the regulations are correct as well. I look forward to working with the Department and the Minister on those regulations, whenever required.
Chairman: I thank Mr. Coleman, Ms Kenny and Mr. O'Neill for their attendance this evening. It has been very helpful in our task of scrutinising this legislation. I thank members for their questions. The joint committee adjourned at 8.27 p.m. until 10 a.m. on Tuesday, 23 March 2021.
General Scheme of the Affordable Housing Bill 2020 (Resumed): Land Development Agency https://www.oireachtas.ie/en/debates/debate/joint_committee_on_housing_local_government_and_heritage/2021-03-09/2/
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