In the Dáil Thursday, Housing Minister Simon Coveney said his department has asked Dún Laoghaire-Rathdown County Council to get commitments from the developers planning to build 8,000 homes on a large site in Cherrywood about the “affordability” of housing.
“My Department expects that final agreements will be in place by the end of June to facilitate the signing of a formal grant agreement with the local authority in respect of LIHAF funding,” Coveney said.
The government has allocated €15.19 million for road upgrades and a bridge at the Cherrywood site, from its €200 million Local Infrastructure Housing Activation Fund (LIHAF), which it says will unlock land for housing development.
Other local authorities seem to be working to a similar end-of-June time frame. In the Fingal County Council area, three projects or sites have been earmarked to receive LIHAF money for infrastructure: in Baldoyle-Stapolin, the Donabate Distributor Road, and Oldtown-Mooretown.
Officials there have been given a draft grant agreement from the Department of Housing to fill out, said a spokesperson for Fingal County Council.
“It is a requirement that housing providers enter undertakings on housing delivery and affordability with the council. The completed documents are due to be submitted to the Department by the end of June,” she said.
It’s unclear why the department and the local authorities are working on this affordability issue at this late date.
A 30 September 2016 circular from the department about assessing applications for LIHAF money said that “All bid proposals should incorporate an appropriate legal mechanism or form of undertaking to ensure cost reductions are delivered at the point of sale.”
Coveney said on 3 April that local authorities “have received commitments from housing developers with regard to affordability”.
And millions of euro in LIHAF funding has already been earmarked for specific projects.
In the Dáil Thursday, Coveney said the Department of Housing would “not sign off until we see the detail of the affordability commitment developers will have to make.”
He said: “We are putting in €15 million [into Cherrywood] and we want a dividend from that, in the context of affordability as well as getting houses built quickly.”
But it is still unclear exactly what “affordable” will mean.
In one circular issued in August 2016, the Department of Housing said it was looking for 40 percent of the units to be sold at 10 percent below the average asking price in the area, including under €300,000 in Dublin.
In a later circular in October, it said that if that wasn’t possible then bids should include an affordability dimension that sets out “a measurable cost reduction exercise that compares between a ‘before’ and ‘after’ LIHAF funding scenario”.
“All bid proposals should incorporate an appropriate legal mechanism or form of undertaking to ensure cost reductions are delivered at the point of sale,” it said.
While it is still unknown what that means in euro and cents, Sinn Fein TD Eoin Ó Broin said that he is concerned it won’t be affordable.
“The first thing is 10 percent below the average asking price isn’t affordable,” he said. “For example, if the units are €380,000 at an average asking price and you’re getting 10 percent off that …”
Another issue is that the criteria for affordability should be clearer, he said. “Central government should stipulate the level of affordability that is acceptable to secure the funding.”
How Were They Assessed?
According to responses to frequently asked questions put out by the Department of Housing, proposals for LIHAF money “that had a clear link between the delivery of public infrastructure and the provision of housing at significant scale and at affordable prices were prioritised”.
But it’s unclear how, if in some cases the affordable “dividend” had not been determined yet, the proposals were assessed.
A spokesperson for the Department of Housing noted that affordability “was not the sole criterion against which the proposals were marked but both scale and affordability were important factors in the five criteria used for assessing proposals”.
“The proposals were […] marked against all five criteria using the information submitted by the local authorities,” he said. (Other criteria included things such as “strategic fit” and “timeframe for delivery”.)
John O’Connor, the chief executive of the Housing Agency, said that, as he understood it, the funding was to provide infrastructure to land to open it up and make the development of sites viable.
The affordability aspect wasn’t necessarily a huge part of it. “The focus is on increasing housing supply and that having the effect of reducing house prices and rental costs,” said O’Connor, who was on the committee that looked at the LIHAF bids.
He said that large-scale developments such as Cherrywood and Adamstown are critical, as there are too many other developments “where people are just building houses and they aren’t mixed use or ideal long-term”.