Property Matters – Invaders’ Bay Reboot

invadersbay-bw
Once again, controversial development proposals for Invaders’ Bay are back in the news. Those proposals of the Peoples Partnership government appeared to have stalled after the successful legal action taken by the JCC in 2012, but we are now hearing of substantial proposals from the PNM government. Some serious questions have to be answered so that the public can understand the situation.

Invaders’ Bay is a 70-acre parcel of State-owned reclaimed land south of the Movietowne/Pricesmart/Marriott complex near to the National Stadium in west POS. In August 2011, the Ministry of Planning and the Economy published a Request for Proposals (RFP) inviting offers to develop those lands by design, finance and construct proposals.

The entire RFP process was deeply flawed and strongly criticized by the JCC, the T&T Chamber of Commerce, the T&T Manufacturers’ Association and the T&T Transparency Institute, as well as the PNM, then in opposition. To make just one example, the RFP entries were judged in accordance with Assessment Criteria which were published a full month after the closing date. At the time, I labelled the entire scheme as possessing all the ingredients for corruption – see http://www.jcc.org.tt/invadersbay.htm – but most importantly, the RFP was issued in breach of the Central Tenders Board Act.
Continue reading “Property Matters – Invaders’ Bay Reboot”

Property Matters – Housing Issues – part 6

hdc-logoOn Thursday 17th March 2016, the Office of the Prime Minster confirmed that the appointment of Housing & Urban Development Minister, Marlene McDonald, had been revoked. On Tuesday 22nd March 2016, the Housing Development Corporation (HDC) Board issued a Press Release to confirm that its Managing Director, Jearlean John, had been dismissed.

In less than one week, the two top public officials in our country’s housing program had been removed from office. It does not seem decisive that both those dismissed officials were female, but it is more likely that there is another connection between these events.

We have lacked proper standards of governance in our country for so many decades that some people are seeing these dismissals as a ‘breath of fresh air’ in which those new standards are being set. An apparent case of actions speaking louder than words. Continue reading “Property Matters – Housing Issues – part 6”

Property Matters – Housing Issues – part 5

hdc-logo

SIDEBAR: CORRECTION

With apologies to readers, this is to correct my figures in relation to the amount of Public Money which TTMF received in relation to the 2% subsidised mortgage programme. The figures disclosed in TTMF’s Summary Financial Statements are actually liabilities, being the reducing balance on the original allocation of $200M for this programme.

The recalculated figures for TTMF’s recovery of 2% mortgage subsidy 2007 to 2014 are

YEAR SUBSIDY (cumulative)
2007 $.9M
2008 $5.3M
2009 $16.5M
2010 $34.1M
2011 $52.7M
2012 $70.4M
2013 $87.4M
2014 $105.2M

These figures are far less than those I cited in my article, since only $105.2M has been drawn from the original allocation of $200M, as against my erroneous claim that $1,227.5M of Public Money had been spent on this subsidy.

Last week I examined housing subsidy to illustrate the ways in which Public Money is used to provide better housing opportunities.

The sidebar contains my correction, which shows that a total of $105.2M was spent in this 2% subsidised mortgage programme between 2007-2014. I was also informed that the 2% subsidised mortgage had been granted to 1,466 applicants, who earn less than $10,000 per month, to buy homes under $850,000. In late 2014, TTMF also started offering 5% mortgages to applicants who earn up to $30,000 per month for homes up to $1.2M – 298 of those mortgages have been granted to date.

This revision and the new information will require that we pay even greater attention to the HDC’s operations, since it far outstrips the other agencies providing housing options.

So, what is the proportion of applicants between the lower and middle income groups? At pg 28 of the Vision 2020 Housing Sub Committee Report (2005) that is estimated as follows –

…shows that more than half of the demand for housing to 2020 (57.3%) falls within the low-income group with 30.7% in the middle income group and 12% in the high-income group…”.

It is difficult to reconcile those researched conclusions as to the demand for homes with the actual distribution of new HDC homes, in which only 21.7% were rentals. The pattern of distribution of those homes seems to indicate that the decision was taken to promote home-ownership in preference to building rental units. There is no doubt that this decision was detrimental to the neediest applicants, who were unable to qualify for mortgages, while at the same time being beneficial to those whose earnings qualified them for mortgages. Continue reading “Property Matters – Housing Issues – part 5”

AUDIO: The Breakfast Roundtable interview on Sky 99.5FM – 23 March 2016

sky995fmAFRA RAYMOND, Immediate Past President of the Joint Consultative Council (JCC), comments briefly on the firing of Jearlean John by the new HDC board, after being on administrative leave for a couple of months. He says we should not be too quick to believe the Marlene McDonald dismissal is a sign of greater accountability to come on the part of governments. Mr. Raymond also lauds Government’s proposal to use the housing sector to create opportunities for construction industry, to help pull T&T out of recession.

  • Programme Date: Wednesday, 23 March 2016
  • Programme Length: 26:04

Property Matters – Housing Issues – part 4

hdc-logoAlthough the HDC is the State’s main implementing agency for its housing policy, there are other important elements to be considered. The main one I will examine here is the role of public subsidy in the housing program.

Given that we live in a relatively wealthy and very densely-populated small island state which operates a free market system, the prices charged for property sales or rentals have moved upwards historically. One of the objectives of the housing policy is to assist those who are unable to compete in the market, so it is justifiable to apply State resources to reduce the cost of housing to those needy persons.

That allocation of Public Money and land to the housing program is intended to create the new homes for the applicants. In addition to the direct construction of the new homes, Public Money is also used to reduce the cost of housing.
Continue reading “Property Matters – Housing Issues – part 4”

Property Matters – Housing Issues – part 3

SIDEBAR

  • We all know of single persons who get new three-bedroom HDC homes, while entire needy families remain trapped on the waiting-list.
  • We have all seen nifty HDC developments and known that ‘That development is way too nice for any poor person to live in there’.
  • The actual distribution of new HDC homes shows the actual targets. HDC figures on distribution of new homes as at September 4th 2013 show 22% for rent and 78% sold (approx).
  • In 2014 the monthly income limit to apply for a new HDC home was increased to $45,000. According to the Salaries Review Commission’s 2013 Report, that figure exceeds the salaries paid to Ministers in our Cabinet, Appeal Court Judges, The Ombudsman, The Auditor General and the Head of the Public Service/PS to the OPM. That is how far astray our housing policy has gone.
  • The Housing policy is being implemented so as to promote home-ownership. This approach does not benefit the poorer applicants who cannot afford mortgages.

This week I will be examining the allocation policy in greater detail.

The PP administration took issue with the housing policy, very late in their term of office and only in reference to disabled persons and persons whose life had been threatened –

Moonilal plans to review housing policy” in Newsday of Sunday, July 26 2015

“…Moonilal said Government has been satisfying the Cabinet-approved National Housing Allocation Policy 2008, which allows for 60 percent of housing to be distributed by random draw, 25 percent by ministerial discretion, ten percent by protective services, and five percent for senior citizens and the physically challenged….”

Those intentions to review housing policy were limited and in any case, the PP lost the September 2015 general election.

hdc-logoIt was staggering to learn that the monthly income limit for HDC housing had been increased to $45,000 at some point in 2014. That significant and detrimental policy shift must have been done very quietly.

One of the early policy announcements of the new PNM administration was that the monthly income limit would revert to the previous level of $25,000. That policy change caused some controversy and even sparked some baseless talk of lawsuits. One of the concerns was as to the status of those persons who had qualified under the $45,000 limit – Would they lose their place in the queue? The decision was made to preserve the entitlements of those who had qualified under the $45,000 income ceiling.

All of that concern was in my view misplaced, since it did not address the needs of the poorest applicants. Continue reading “Property Matters – Housing Issues – part 3”

Property Matters – Housing Issues – part 2

The previous column outlined the provisions of the current housing policy and some of the implications arising from those. I provided data on housing distribution by tenure and also stated a preliminary view, dismissing the major allegations made against Marlene McDonald – the current Housing & Urban Development Minister.

To understand just how a supposedly-redistributive policy could be used in this fashion, it is necessary to examine how it was changed and how those changes work with the provisions of the Housing Development Corporation Act 2005.

What is the Housing Policy?

Showing Trinidad and Tobago A New Way HomeShowing Trinidad & Tobago a new way home‘ was launched on 18th September 2002 by then Housing minister, Senator Danny Montano. At that stage, the policy for allocation of the new homes produced by HDC were –

…How is housing allocated?
All housing that becomes available is allocated in the following way:

  • 75% is reserved for public applicants through a random selection system.
  • 10% is reserved for the Joint Protective Services – Police, Army, Prisons and Fire Services.
  • 15% is assigned to deal with special emergency cases, senior citizens and physically challenged persons…

The rules to qualify for these homes were –

…Do I qualify?
To qualify for a new home, applicants must be:

  • A resident citizen of Trinidad and Tobago.
  • Twenty-one years of age or over.
  • Neither owner nor part owner of a house or land.
  • In possession of a Board of Inland Revenue tax file number…

These details are from ‘Applying to Buy a Government House‘ on the TTConnect website, but they are outdated, as they refer to the 2002 position. I was very critical of this ambitious new housing policy, since it was located within this context –

“…The Housing Policy of the Government of Trinidad & Tobago is based on the understanding that every citizen should be able to access adequate and affordable housing regardless of gender, race religion or political affiliation”

Those are important policy guidelines, but they are inadequate to the task, given that they are silent on the single common cause of housing need or homelessness. The point is that all homeless persons, or those with serious housing needs have one thing in common, poverty. Yet the policy is silent on that. That silence was a fatal one since the allocations were being made in accordance with a lottery amongst those who fit the four criteria set out above. I recall attending the 2007 conference of the Caribbean Association of Housing Finance Institutions (CASHFI) and the PS of the Housing Ministry stating that about 95% of the applicants in the system did not qualify for a mortgage.

With no specific allocation numbers for rental units and no weight given to poverty or housing need in the process, the results were predictable. The poorest applicants, the ones who could only afford to rent, were sidelined, as shown in the distribution figures shown.

As I wrote in August 2007 –
“…This is a flawed policy which gives you a ticket in the lottery for a new home, only if you can afford one. But, as the old National Lottery slogan used to say ‘if you haven’t got a ticket, you haven’t got a chance‘…”

In January 2008, the new Housing Minister, Dr Emily Gaynor-Dick-Forde, announced a housing policy review with the specific aim of making housing need a part of the assessment criteria. Despite this encouraging news, it was a case of ‘giving with one hand and taking away with the other’, since the category for ministerial discretion was increased to 25%.

The outcomes are shown in these diagrams, with the greater number of units going to those who could afford to purchase. The perverse policy reached its nadir with the recent revelations that the maximum qualifying monthly income for HDC new homes had been increased to $45,000 at some point in 2014. This was obviously done to cater for persons who were in no housing need whatsoever. I tell you. At least the monthly income limit has now been returned to $25,000 – still way too high for a program which ought to be serving the needy persons in our society, but a step in the right direction.

These charts show just how the housing has been distributed, in terms of tenure.

propmatters graph1

propmatters graph2

The table of data from which those charts were derived is here –

HDC ALLOCATION of New Homes

Tenure Type August 8th 2011 Percentages September 4th 2013 Percentages
Rental 256 3.3% 1,962 21.7%
Rent to Own 111 1.4% 66 0.7%
Purchased 7,290 95.2% 7,029 77.6%
Totals 7,657 100 9,057 100

SIDEBAR: Secret Policy in Public Bodies

The housing policy is not available online. The allocation policy which is shown online is 14 years out-of-date. The HDC does not issue annual reports as it is required to do by law, but that is for later in the series.

I had enquiries made at HDC last week, but when my staff requested the housing allocation policy, the reply was ‘we don’t know what you are asking us for’. Take that, it is almost like an echo of the widespread official denial of the existence of the 1992 National Land Policy, which became evident in my 2015 ‘Land for Everybody‘ series. I also personally contacted the top person at HDC to request the allocation policy, but got no reply.

The Minister’s powers

A Statutory Corporation is a public body established under a special law to perform specified functions. The HDC is a statutory corporation and under the HDC Act – The powers of the Minister are specified at S.12 as –

“…12. The Minister may give to the Board directions in writing of a specific or general nature to be followed in the performance of its functions or the exercise of its powers under this Act, with which the Board shall comply…”

That means that the Minister has the power to order the HDC to perform specific tasks and the HDC has to comply with those directions. As such, the HDC would be required by law to follow a direction from the Housing Minister, as seems to have been the case in the Marlene McDonald episode.

Policy monitoring

All of this points to the question of how well can public policy be monitored in the current situation of a ‘virtual vacuum’ in terms of any details as to actual decisions taken. As demonstrated in the distribution figures shown last week, the outcome can be strikingly different from what one might think from reading the declared policy.In the absence of readily available data, it is possible for applicants who already own property to sign false declarations and obtain houses to which they are not entitled, further depriving the needier citizens. Applicants to the protective services have their names and photos published in the newspapers, as a safety-check against any unsuitable persons being admitted. Despite that safeguard, we all know that unsuitable persons do get admitted to the protective services, so just imagine for a moment what has taken place within the secretive arena of public housing.

Open data is a useful approach which would require all the critical data to be easily available in relation to our public housing program. That approach would enable anyone to get these details –

  • Identity of Applicants, together with the details of the category of their applications – i.e. is the person applying as a member of the protective services, a disabled person or a person in housing need.
  • Identity of those persons to whom housing has been allocated, together with the category of their applications, as outlined above.
  • Numbers of new homes built by HDC.
  • Numbers of new homes distributed by HDC.
  • Analysis of distribution of new homes by tenure, category of application and development.

The advantages of a system which promoted the routine online release of this information are obvious. Equally obvious are the kinds of strong objections which would be raised by such a proposal, after all, sunlight is the best disinfectant.The key questions which arise on the issue of the Ministerial discretion are –

  • Rationale – what is the rationale for allowing a politician to have direct control over such important and scarce resources? Is that an acceptable arrangement?
  • Proportion – If one assumes that there is a case for some Ministerial discretion, what part of the output of new homes should be subject to that? Is 25% too high a proportion?
  • Monitoring – In the current secretive arrangements, how can we really know just how many new homes have been distributed by Ministerial discretion? Is that complete secrecy an acceptable way to proceed?

Conclusion

Next, the land use implications of the HDC program will be addressed together with the potent estate management issues.