Property Matters – New Public Housing

“…that this is “a defining moment for the housing construction industry in Trinidad and Tobago”, the Minister stated that “the Government through agencies like the HDC, remains committed to providing affordable, well-designed housing accommodation and adequate infrastructure and amenities for the various low and middle income citizens…”
—Statement by Housing and Urban Development Minister, Major-General Edmund Dillon at launch of the HDC’s latest housing initiative.

Signing-hdc.jpg
Official signing photo. Photo credit: The Ministry of Housing and Urban Development

On Friday 17 May 2019, the HDC signed contracts for an extensive program of new public housing with China Gezhouba Group International Engineering Co. Ltd (CGGC). The arrangement is that CGGC will design, finance and construct 5,000 new homes for the HDC in phases.

The first two-year phase is for 204 flats at South Quay in POS and 235 at Lady Hailes Avenue in San Fernando at a cost of $71,739,411 USD. The contract sum for the first phase was stated in USD, which raises for me questions as to why it was not stated in TTD. The contract sum is equivalent to $490M TTD, so the average cost per unit exceeds $1.1M. That does not count the land of course, since we always seem to place no value on the land.

I have three concerns with these ambitious proposals –

  1. the price of these new homes being promoted as affordable;
  2. the actual arrangement between HDC and CGGC; and
  3. the role of foreign contractors.

Affordable Housing?

This arrangement is one in which the contractor’s investment is recovered from the sale of the completed new homes. I will examine that arrangement more closely later in this article, but it is safe to assume an average sale price in excess of $1.1M TTD. There is no way that price can be considered affordable. None whatsoever. Let me explain.

The official figures from the Central Statistical Office (CSO) for 2014 state that 60% of the country’s households have a monthly income below $9,000. It therefore stands to reason that the average monthly household income is less than $9,000.

I checked with home mortgage lenders as to the estimated monthly installment for a $1.0M mortgage for 20 years on the most favourable interest and was told that would be in the $5,000+ range. What is more, the monthly income an applicant would need to qualify for that mortgage would be in the $18,000 range.

In 1968/69 HDC’s predecessor, NHA, sold new homes at Morvant to lower-income applicants, one of whom was Dr Keith Rowley’s late mother (see pgs 32- 35 of Dr Rowley’s autobiographical ‘From Mason Hall to Whitehall‘). That hard-working woman was a cook at the Breakfast Shed, yet the powers that be at that time were able to create housing opportunities affordable to her.

But that was fifty years ago, so what has changed? In the intervening period, we had financial boom after boom, together with a tremendous expansion in education and training. Can we really say that we are providing for those humble, hardworking citizens who are truly unable to afford a home? If the answer is no or we are not sure, it seems to me like our national public housing program needs to be seriously re-examined.

Sometime ago, I quipped about some people trying to tell you that a fish was an egg. This is no joke, this is how a serious re-distributive policy, intended for the benefit of our neediest citizens, was derailed in broad daylight.

PPP arrangement

This design, finance and construct contract seems to be one in which the contractor recovers those monies from the sale of the completed units. This is a type of Public Private Partnership which can be achieved without placing any Public Money at risk, but three points need to be noted.

  1. Some critics have questioned the lack of tenders and so on, but that is a part of how this program is meant to work. The HDC launched its Housing Construction Incentive Program (HCIP) in 2016 to encourage investment from contractors who would design, finance, and build new homes on public lands. The fundamental principles being that the private sector deploys its capital to provide new homes and that no public Money is required. An underlying aspect is that the construction, design, market and financial risks are carried by the private sector. On that basis, the case was made that suitable contractors could be selected from applicants without the need for tenders which would arise in a conventional contract.
  2. The preceding point is that tenders were not used since the contractors carried the risks. There was some reported skirmishing on the matter of risk allocation between HDC and NH International on the first such of these projects, at Mahogany Court in Mount Hope. It was later reported that those issues had been resolved, but we need to ensure that the risks remain with the private sector, that is the deal.
  3. Land Value remains a tangible and significant public investment in these projects, so it is important to allocate the correct weight to that element. Our negotiations must not ignore that element.

Local Content?

Finally, the HDC’s statement on this aspect made me smile –
…Local content including materials and labour are expected to be used for this project…” Given the poor record of Chinese contractors in engaging local professionals, labour, materials or subcontractors, it surprised me to see those claims. I did wonder if any percentages, monitoring procedures or penalties had formed part of this contract.

This is exactly the kind of issue on which the JCC would have made a statement and/or proposals in the past. The most recent statement shown on that organisation’s website is 23rd November 2016.

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11 thoughts on “Property Matters – New Public Housing

  1. There are many questions to be answered here, but as a local professional I would certainly like to know what role local architects can play in the project.

  2. Read between the lines. No need for local architects. The Chinese will be doing the whole “hog”. This seems to be a cookie cutter type of construction. But the price is about $1.1million. What is affordable price housing in TT?

  3. I can only surmise and suggest here that we teach our children Chinese and Spanish from the preschool levels so that they can negotiate the substantive repayment arrangements or survive with those dominant cultures since they will respectively be economically and numerically powerful.

  4. Nothing has changed after the revelations in the Auditor General’s report in 2017. All political parties and governments do not care about the amount of money they waste and steal from the people of TT. In another society there would be riots in the streets. State enterprises spending billions of dollars not accounting for these transactions. Only in Trinidad and Tobago!!!!!!!!

  5. Occupy Wall Street lasted about 7 years and has had little effect there or elsewhere. Tiny changes camouflage the larger and harder policies enacted to keep the 99% at bay. We need to embrace ourselves and blueprint a model for our children’s future.

  6. What about 30 year mortgage at zero percent with down payment assistance . That could be 3000 pm? Small beer compared to free university.

  7. Reading all the reports and comments I get the impression people think that over 5,000 homes will be built. The contract stipulates 6,000 housing “units” , meaning that these are units in multi-floor buildings. There os no need for large tracts of land for each unit. This type of construction is the most cost efficient way to build a large number of homes at affordable prices. North America and all over the world is now mandating higher density building. The price tag of $1.1 million for a unit in a multi-floor building is overpriced. At this time a modest 3 Bedroom flat on 5,000 square feet of land is being sold in the price range of $1.1 to $1.3 million dollars. There are companies advertising in the newspaper that they can construct a small home for around $400K to $500 Thousand. Why is the professionals in the construction not highlighting this atrocity on the people of TT? Architects and cost engineers should highlight the disconnect between the cost and the actual housing units being built. Wake up construction professionals! The Chinese are eating your lunch.

  8. once again the lack of accountability in state projects continues unabated while the lessons to be learnt from relics of past state housing from las alturas to udecott COE continues to be ignored by ignorant electorate.

    in 2015 of april 27 in an article in guardian newspaper,- as opposition leader rowley had to this to say..
    he was committed to bringing accountability and transparency back in to govt .. under section 75(1) of
    Constitution.. whereby the Cabinet shall be collectively responsible therefore to parliament and that
    Parliament had authority to hold people publicly accountable”

    what a laugh … if my country were not suffering so….

    the hypocrite now in govt fails to do any of that so ..not for UFF report or Colman enquiry report or las alturas report or petrotrin or ferry gate or tobago THA gate

    SO despite two independent ( ie not politically biased ) Privy counCil rulings exposing to the Commonwealth and World at large, the poor governance of T&T under Rowley led regime

    the issues being Chief Justice e matter which that should have triggered action already and now the PNM Malcolmn Jones led Petrotrin State energy FOIA that Privy Council exposes attorney general ( to political interference( flavour)- both of which based on PC rulings in an honourable government that said it would be be transparent and accountable but which it has failed to do in all of its years in office thus far ..
    should trigger the resignations of attorney general and CJ

    THEre is no honour in this Rowley led governance it seems…

    as for corruption allegations it is a case of the POT calling the KETTLE BLACK …

    and just as the autobiography pre written to assume he would occupy white hall … when it did not exist as PM office …. it only reflects what mirage this leadership is .. A total failure to account and be transparent ..

    yet the deafening quiet of the civic DUMAS ” in the public interest ” privy council ruling in all of this e speaks volumes about the failure of not just governance but Integrity in public life from the Tobago born posse in leadership roles .

    Let me see if those who talk will walk the vote for ChAnge Of POLITICS in 2020 for it is the PNM stronghold in d west by its apathy that keeps T&T in this stranglehold .

    to afra i say keep up the FOIA ..with boundless faith in our destiny ..

    For my part I will support any all inclusive party you host… …..

    more questions for you- on the chinese housing – where is the feasibility study ( and I do not mean all those PNM party honco trips to China by Young Snr and Huggins ) – surely Town and Country Current land usage / population density impact report. to form basis of govt white paper on housing policy .. all should be available on website for citizens to see.. as part of transparent and accountable process via parliament . .as well as EIA ( after all we struggle for water supply now so what about impact on utilities and roads with more vehicles etc _) especially NH project in MT hope… and such like
    and poor construction issues – communist china has no transparent and accountable policy in govt ..
    also its buildings requirements far different to ours … we cannot just copy..

    these multistorey become PNM ghettos for criminals – just look edinburgh 500 ..and moravat and maloney so why continue to build such…

    surely allowing housing contractors to build two storey homes that suit T&T lifestyle for home ownership makes more sense
    and to build in current low density population areas like tobago/ wallerfield make more sense?
    and it must now factor in Schools and Hospitals and admin and work spaces to meet these new developments integrated needs ….

    Intelligence in planning that this govt seems to lack ..

    but monkey dey say cyah see d end of de own tail….

    hope what was good for goose good for gander come 2020.
    pb

  9. While we ramble, the masses will either reelect the PNM or regress to the UNC and we can reproduce the above with date changes. David Rudder in ‘1990’ sings, “It is strange, the more we change, rearrange, everything just seems the same.”

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