The HDC launched its first housing Public Private Partnership (PPP) on 3 November 2016 at Mahogany Court, a 160-apartment complex at Eastern Main Road, Mount Hope. It is being designed, financed and built, at a cost of $145M, by NH International, led by my erstwhile friend and colleague, Emile Elias, with completion due in December 2018.
The PPP approach to public procurement is one in which the private sector assumes the risks and constructs a project with repayment of that investment taking place over a period of time, usually from the State’s recurrent expenditure. This a controversial public procurement method, with the detailed reviews of completed projects being heavily criticised for the fact that the private sector has not actually taken much risk. It seems that these contracts often contain provisions which shield the private sector from serious risks. The introduction of PPP into our public housing program therefore deserves careful scrutiny, if we are to avoid the serious losses experienced in more advanced jurisdictions.
This PPP uses no Public Money, the State’s only investment being the value of the land, which was not mentioned thus far. The approach was outlined at pg 31 of the 2017 budget as being one in which the contractor will provide short-term finance to design and construct new homes, which will then be purchased by approved applicants on the HDC’s waiting-list. Those purchases will be funded by TTMF and the purchase prices will be used to repay the contractor. Continue reading “Property Matters – Examining the PPP”