The Ministry and the Department are committed to encouraging"Housing Partnership" initiatives between the Department of Housing and the nongovernment sector which may complement both the direct provision of public housing and the current program-based community housing provision.
(Note:The Commonwealth and State/Territory Governments are undertaking a review of 'amortisation' whereby the value of the public funding of schemes may be written off over time, with the non-government organisation therefore owning the full equity after an agreed period. Such an approach is not included in the Housing Partnerships Program at present. It may be introduced once the review has been completed.)
The core structural approach to developing more choice is the establishment of a purchaser-provider model for housing assistance with the Ministry as Under/ purchaser and the Department of Housing and a range of non-government organisations as the providers.
In the context of housing partnerships, the Department of Housing has currently a dual role: as a housing partner bringing its own resources to the venture; and as a strategic needs planner and assessor of housing partnerships involving stake holders from a range of community housing programs.
When the Department of Housing is referred to throughout these Guidelines it is in recognition of both of the above roles.
Recent administrative restructuring within the Department of Housing has resulted in Regional Directors assuming responsibility for Total Asset Management in their respective regions. Additionally, the change to a multi-skilling approach - with team responsibility for public housing allocations and property management as well as current responsibility for community housing - gives Regional Directors opportunities to develop a strategic approach to the use of assets.
It is anticipated that the guidelines will be used to inform Regional Directors and their staff in decision-making in relation to the use of assets (land, stock, capital funding) in Housing Partnerships projects.
It should be noted that other conditions not outlined in these Guidelines may be raised by proponents. It is suggested that such issues may need to be resolved on a one offbasis by the partners in co-operation with the Office of Housing Policy.
A2 The major benefits of housing partnerships
The benefits of housing related partnerships may be quite transparent to the housing partners. However, they could also be indirect. For instance, some "housing benefits" might accrue to government as a whole (either State or Commonwealth) rather than directly to the Department of Housing. Housing benefits could include urban consolidation, allocation rights, facilitating easier planning/provision of health and community services, etc.
A2.1 For the Government
Housing partnerships have the potential to:
- attract other capital or recurrent assets
- share risks of capital projects
- make better use of non-performing and under-utilised assets (such as land or old stock owned by government Departments)
- make use of the expertise of the project partner (e.g. marketing ability, understanding of residents' needs, local knowledge, housing management)
- reduce service provision cost.
A2.2 For the community
Housing partnerships have the potential to:
- increase the overall housing stock for lower income/targeted needs groups.
- broaden the type and mix of housing
- reduce the need for direct liaison with care and support agencies, whilst providing opportunities for linking to appropriate services in more integrated ways than is possible for scattered housing in the community.
A2.3 For housing partners
Housing partnerships have the potential to:
- more effectively address the specific needs of clients/customers
- make better use of non-performing and under-utilised assets (such as land)
- complement other housing and/or care programs (such as rehabilitation programs, HACC, crisis care)
- access government resources/ assistance
- attract additional funds from other local sources (such as local councils, community clubs)
- enable flexible and responsive management practices
- streamline the lousing allocation process for the client group
- streamline housing maintenance (faster, more local response)
- take advantage of technical expertise within the Department of Housing (design, procurement)
A3 The importance of complementary goals
It is critical that housing partners share common goals, both in the short-term (land procurement and project development) and in the long term - in their approaches to service delivery (housing allocation, asset management, quality of care).
Housing partnerships which are entered into solely for either convenience, operational efficiencies or to prop-up a precarious financial position will usually yield unsatisfactory results.
Both sectors should have a complementary interest in providing housing opportunities for disadvantaged individuals and groups which are:
- affordable (whether rental, shared equity or owner-occupied)
- appropriate (for resident's lifestyle/cycle) well located well designed
- well managed; and provide opportunities for resident participation in decision-making; and
- provide access to appropriate support services.
Agreed standards should apply for each of these outcomes. Standards should be consistent with broader community standards and legislative requirements.
The driving force behind the decision to enter into a housing partnership should be the strategic use of joint capital assets to fill gaps in the housing market for "market-disadvantaged" groups whilst meeting these outcomes.
A4 Establishing a housing need
The decision for the Department of Housing to enter into a housing partnership must be based on a demonstrated housing need, as reflected in the Region's Housing Assistance Plan.
Government funds and Departmental assets should be used within a strategy which addresses needs and does not simply respond co Housing Partnerships opportunities irrespective of need.
The Ministry and Department of Housing is currently refining an approach to developing the three year Housing Assistance Assistance Plan will be reassessed and revised as necessary Each Departmental Region currently develops and refines its own plan, consistent with the framework for the Stare Plan.The Plan covers both tied and untied CSHA grants and allocations.
It is considered that this planning framework, if undertaken appropriately and in consultation with the non-government sector, should not preclude responding quickly to unique opportunities which are consistent with the overall plan.
Additionally, consideration could be given to using some of the Department's capital assets to test new approaches to housing- to examine different ways of doing things.
A5 Capital assets
A range of capital assets may be used in a complementary manner by a housing partnership. All assets should be regarded as having a market based monetary value.
For simplicity, assets can be divided into two main areas:
- physical assets - land, property
- cash or its equivalent (labour, fees).
Note that physical assets would also be converted to a cash equivalent for assessment purposes.
Any of these capital assets could be owned by housing partners or provided byothers for use by the housing partners.
The assets could be made available to the housing partnerships initiative in a variety of ways:
- direct utilisation of land (generally through leasing Department of Housing land to the project developer and/or operator)
- sale of land (either for the purposes of the project, possibly at a discount or to generate funds for the purchase of an alternate site)
- use of capital funds for project development, purchase and/or upgrade of existing stock
- use of labour (expert assistance, fees) in planning, design, building and property management phases.
Part B Implementing a housing partnerships proposal
There are five main stages in implementing a housing partnerships proposal.These are:
- initial contact
- project assessment
- negotiations
- formal agreement
- on-going responsibilities of partners.
B1 Phase 1: Initial contact
B1.1 Introduction
Initial contact may be undertaken in a number of ways. For instance:
- either party could identify a general need for a type of housing partnership in a region
- an organisation (including DOH) could identify an asset (of its own) that has the potential for a housing partnerships initiative
- an organisation (including DOH) could identify an asset belonging to another which it believes has the potential for a housing partnerships initiative.
The Department's policy regarding housing partnerships initiatives has been widely circulated to the non-government sector. Community agencies are encouraged to seek further information from nominated regional officers.
Probity will be an important issue for both the Department of Housing - as a government authority and housing partners.
State government policy demands that arrangements be transparent and entered into in a manner that is fully accountable to all stake holders
B1.2 Calling for expressions of interest for use of Government assets
The Department should normally call for expressions of interest in meeting an identified based on the use of specific assets.
The Department may:
- prepare a brief (outlining the needs of the community, the desired outcomes for the project, the nature of the asset to be committed, criteria for selection and timeframe)
- call for expressions of interest (using a standard format) short-list interested parties
- seek further information from parties to determine feasibility, including financial, technical or housing benefit considerations.
- make a clear commitment to proceed with the venture once publicised (assuming a suitable partner can be found).
Approaches are sometimes made to regions, seeking access to specific Departmental assets, such as land or surplus stock. In such instances, the region should undertake a similar process, having first determined the availability of the asset for a housing need.The approaching agency should be invited to submit an expression of interest in the normal way.
The Application Form (Appendix 1) has been kept as simple as possible, to avoid time consuming input by the non-government agency.
The brief will outline the nature of the project, and potential roles and responsibilities of each party (e.g. development, property management).
Proposals should not need to be fully developed before shortlisting.The demonstration of relevant skills such as technical, financial, managerial experience, the nature of and background to the organisation (particularly its articles of association and current status), contact information and an outline of the proposal - including the outcomes/banefits, resources, stakeholders and roles - should generally be aufficient information to permit shortlisting.
B1.3 Responding to an approach by a community agency with an asset
From time-to-time, a non-government agency may approach a Region with a brief, seeking a partnership to better utilise some of its own assets (e.g. land, human resources or funds).
Bilateral discussions would only be undertaken in the following circumstances:
- the project meets appropriate housing need established under tile Region's Housing Assistance Plan; and
- the project meets the criteria for housing benefit,technical and financial evaluation; and
- there are particular circumstances which warrant such a bilateral approach, such as potential loss of a creative opportunity if the proposal were to be advertised, and the proponent were to lose interest in the venture.
This situation is more likely to arise if an agency approaches the Department with a proposal which is highly innovative or subject to a time-limited offer of its assets.
Approaches and discussions of this nature, while recognising the potential commercial confidentiality implications, should be fully documented and filed.
B1.4 Maintaining a general register of potential housing partners
The Department may regularly (e.g. annually) call for expressions of interest from the non-government sector to join a "Housing Partnerships Register" of groups. Information required at this stage should be minimal - organisation, type of asset/ resources owned by potential co-participant/ expertise/ target group / location/ potential role. Such registers would generally be developed regionally.
Regions could use the register not only for housing proposals but also for other programs (such as the Community Housing Program).
The list helps the Department to access potentially suitable housing partners. However, it should be stressed that the register is an interest list only (not a tender list) and is not closed. Where the Department identifies a project, approaches could be made to one or more relevant organisations drawn from both the list and the community at large.
B2.1 Criteria for assessment
Criteria for assessment will be clearly stated in the documentation available to organisations responding to Expressions of Interest. Factors (not in priority order) include:
- satisfaction of specifications as advertised
- technical achievability and quality of outcomes
- costs to stakeholders
- corporate credibility of the proposer (including feedback from other government funding bodies on suitability ot organisations, availability of further funds for support services, where relevant)
- operational achievability and quality, includitlg ability to meet relevant standards for resident group
- financial benefits to DOH
- overall benefits to government
- benefit to the NSW economy
- benefit to the community
- level of risk
B2.2 Characteristics of the proponent organisation
B2.2.1 Commitment to complementary goals
As outlined in Section A3, it is critical that housing partners share common goals, both in the short-term and the long-term.This should be evidenced by their current or prior activities and their articles of association.
B2.2.2 Legal entity
A housing partner can only be considered if it is a legal entity, such as an incorporated association, a company limited by guarantee or a co-operative.This ensures that liability of individuals is limited and that the organisation has the capacity to enter into legal agreements for a particular benefit.
The partner's memorandum and articles of association should also ensure suitability to undertake the project.
B2.2.3 Capacity to perform
It is considered that a demonstrated capacity to perform is an important selection criteria. In many instances, the housing partner will assume responsibility for ongoing management and stock maintenance. If the co-participant is also expected to take responsibility for project development, it should also demonstrate capability in this area.
B2.2.4 Standards of accommodation and care
The partners must comply with acceptable standards expected by the State or Commonwealth governments.This could include demonstrated compliance with current legislation (such as Residential Tenancies Act, Retirement Villages Code of Conduct, outcome standards established under State or Commonwealth legislation) and other statutory and administrative requirements such as program guidelines or tile requirements of deeds of agreemennt.
It may be necessary to seek the opinion of relevant funding agencies as to the credibility of the potential partner in this instance.
B2.2.5 Financial capability
A number of questions are relevant to all proponents:
- Can the organisation provide evidence of ownership of the asset being offered for use?
- What is the current market value of these assets?
- Does the organisation have a record of financial capability to undertake the project?
- Are the proponent organisations in a healthy financial position for current and foreseeable liabilities?
- Are the proponents prepared to clearly identify project expenditure and report discretely to their membership and to the Department Minister?
B2.3 Structural framework for Housing Partnerships
The most appropriate legal framework for a housing partnership involving the Department of Housing would appear to be an unincorporated housing partnership.
The association of the participants is not regulated by any corporate or trust form, but rather through a contract for the project.The participants usually hold their interests in the housing partnership directly, although for practical purposes (dealing with third parties and administration), there may be interposed on the title to the property a nominee which holds the property as bare trustee and also serves as the manager of the housing partnership.
This form of legal structure is particularly relevant where parties are likely to compete on other projects (as is likely to happen if the administration of the Community Housing Program is separated from the Department of Housing). The parties are only associating themselves for the particular project and are not intending to regulate their respective rights and liabilities generally.
B2.4 Financial evaluation
The Department will maintain a consistent framework for evaluation of the housing and financial benefits of housing partnerships proposals as well as their technical feasibility. The financial evaluation will not be a full economic analysts but will focus on establishing the housing, and financial benefit of a particular proposal This should be able to identify the relative position of all Housing Partnerships participants.
Issues will include:
- housing benefit and allocation rights
- vacancy chain
- development and operational management risks and liabilities.
While the above represents a consistent framework for appraising options, flexibility will be required depending on the outcome of negotiations and prevailing local circumstances.
Appendix 2 is a Project Assessment Checklist.
B3 Phase 3: Key terms of agreement
B3.1 Pre-contract phase
B3.1.1 Milestones
Clear time-frames should be developed and agreed for project commencement and completion. These should be varied only at the agreement of both/all parties.
Progress targets should be set for planning, design, building and operation.
This issue should be addressed through a "term of offer" or a "term of agreement". The latter may be considered a more appropriate concept for housing partnerships, since the co-participants are deemed to be in an equal relationship.
B3.1.2 Design and construction phase
If a housing partnership involves land acquisition and/or construction work, a decision will need to be taken about who is to undertake procurement. This decision should be reached by mutual agreement between the parties.
The decision should be based on consideration of the following points:
- where the competencies lie
- which party has the capacity (i.e. time, commitment and resources)
- which party is bearing the greatest risk.
All production service providers will need to demonstrate compliance with the relevant state government requirements including:
- Code of Conduct
- Code of Tendering
- NSW Government Capital Works Procurement Manual
- NSW Asset Management Manual.
The Department may well involve itself in some forms of construction but leave
others to the private sector.
The Department of Housing has a high level of
expertise with some product types, but other organisations are better in some
product areas.
The Department should, when considering housing partnerships account for
management load and risk. Involvememt in construction to major responsibilities in the longer term (maintenance/ upgrades) if not handled
appropriately. Examples include where building work is defective to some extent, the builder has financial difficulties or is unable to complete under the contract or
where the project has inadequate internal resources to upgrade or maintain and
the Department - as project developer - has to step in.
There should also be a clear understanding by all parties that the building contract (if undertaken by the Department's Production Unit) is a separate function from the Housing Partnerships initiative.
B3.2 Titling and asset management
B3.2.1 Titling arrangements and Equity
The Department of Housing and the housing partner will enter into a tenants-in-common agreement, with relative shares of the equity in proportion to the relative contributions to initial capital costs.
B3.3 Housing management rights and responsibilities
B3.3.1 Allocation rights and responsibilities
The key benefit to the Department of Housing of housing partnerships is access to housing for its clients, either directly (through nominations of waiting list or priority housing applicants); or indirectly (through the housing partnership housing people who are eligible for public housing or if a local need or market gap is filled).
The Department of Housing will normally require direct nomination rights in proportion to the Department's share of initial capital costs; such nomination rights to be exercised for the agreed life of the project.
These direct nomination rights may be exercised (by agreement) in a number of ways:
- through initial nominations to specific dwellings within the project, and to subsequent vacancies in these specific dwellings
- through nomination to a proportion of dwellings and to subsequent
- vacancies in the project as a whole.
There should be a capacity to defer nomination rights on specific occasions by
agreement.
The Department will need to exercise its nomination rights promptly to avoid the housing partner incurring a loss in rental income. The Department should indemnify the partner against such losses if a nomination has not led to a letting of a within a specified period (e.g. four weeks).
On occasions, the Department may choose not to take up full nomination rights, but rather to allow the housing partner to select residents on the basis of an agreed allocations policy. This approach will be reflected in the financial evaluation of projects, as producing only a partial housing benefit for the Department.
B3.3.2 Resident tenure
The form of tenure will vary between project types, but must at least equate with
the Department of Housing's Residential Tenancy Agreement (based on the
Residential Tenancy Act), as varied from time to time. It must also comply with
other relevant standards where necessary e.g. Retirement Villages Act and
associated Code of Practice where older people are accommodated.
The Community Housing Program Guidelines state that the tenancy agreement
must give tenants rights that are at least equivalent to those outlined in existing
State tenancy legislation.
B3.3.3 Rent/Service Fees
Rents will vary project by project, in terms of the level, services to be received,
the method for payment and collection, who it is payable to and the application
of the rent. Rental policy should be consistent with Department of Housing
standards and other relevant standards as applicable e.g. hostel fees where services are included.
For accommodation, where DOH eligible residents are involved, rents are
expected to be consistent with public housing rents (including applicable
reductions or rebates) but should not exceed market rents.This does not
necessarily preclude extra fees being applied.
Additional service fees should be identified and costed. Some of these (such as
emergency call services, access to swimming pool could be charged to all
residents on a pro-rata basis. Others, such as personal care services - where
provided, would be applied on an individual basis only, and should be subject to
separate negotiations, outside the scope of these guidelines.
B3.3.4 Maintenance/ renovations
The partner that receives (and uses) the rent should be responsible for all day to
day and cyclical maintenance, in accordance with agreed standards.
B3.3.5 Capital upgrading
The Departulent of Housing arid the housing partner will agree on major
upgrading requirements for the project as required, and will provide funding for
upgrading in proportion to the equity share of each party.
B4 Phase 4 Formal agreement
B4.1 Legal framework
The legal framework may vary widely.While base agreements will be developed
for the more standard Housing Partnership forms, it must not be assumed that
they all have universal application.
Relevant legal documentation should be developed specifically for each proposal,
in the context of the Department's current guidelines and procedures.
Each partner should seek independent legal counsel as early as possible.
B4.2 Reporting requirements
The Department must ensure that its investment in housing partnerships (i.e. contribution of assets) produces an accommodation benefit for the Region. Some form of monitoring of the partner's compliance on asset management and
service quality is therefore essential.
Reporting considerations include:
- the obligation for feedback to each/all co-participants re the use of the assets and ongoing viability of any housing partnerships project where those assets remain committed
- satisfaction of customers - success or otherwise of the housing partnership.
B4.2.1 Feedback to co-participants
Each of the partners should reasonably be expected to provide feedback to the
other.The nature of the reporting process should be negotiated on equal terms.
The level and type of reporting, however, will be driven mainly by the need for
the "managing" organisation to report to the contributing parties.
Whilst the partner which has given up "control" of its asset to the other partner
will have the greater expectation with regard to the provision of reports, the
project manager will have expectations as well.
For instance, the Department may have entered into a housing partnership with
an organisation with the expectation that an innovative housing service will be
provided, that a specified standard of care is provided, or that the project
complements the Department's regional/local housing plan In such cases, it is
considered that the partner is entitled to feedback as to whether the project is
meeting the Department's expectations.
B4.2.2 Accountability requirements for assets
B4.2.2.1 Department of Housing
As a government agency, the Department of Housing has a number of statutory
and administrative obligations with regard to reporting the use of Housing
Partnership assets.These may include but not be limited to:
- Annual Report. The Department is required to provide information on Housing Partnerships projects in its Annual Report, irrespective of the stage of the project.
- Use of housing partnership funds/assets. The Department will require the project manager to supply information regarding agreed targets, financial management and accountability for funds, management structures and performance of participating organisations and non-identifying tenant/client information.
- Auditor-General's requirements. All housing partnerships undertaken by the Department must be reported to the Auditor-General's Office.There may or may not be reporting requirements which arise out of this (depending on the legal framework).
- Reports on future and previous years' strategic directions and activities in Housing Assistance Plans and specific program plans.
B4.2.2.2 Co-participants
Depending on the characteristics of the organisation and the source of the contributed assets, the co-participant will have a range of accountabilities.
These may include:
- providing information to members at an annual general meeting (financial/ outcomes in accordance with articles of association)
- lodging with the Corporate Affairs Commission an annual statement of the Association's financial situation (Incorporated Association/ limited company)
- notifying authorities (Corporate Affairs Commission/Chief Secretary's Department) re change of name or the objects and rules of the Association
- lodging periodic financial returns with the Chief Secretary's Department (if the organisation has an authority to fund raise)
- lodging returns in accordance with funding program requirements (for capital subsidies, operational subsidies). Funding programs (through a range of State and Commonwealth government departments) have a range of reporting requirements (as outlined above).
B4.3 Dispute resolution
An agreed mechanism for dispute resolution should be embedded in the legal documentation. Ideally, the project partners should use an independent mediator to resolve significant issues. The partners might to use different forms of dispute resolution depending on the stage of development of the project.
B4.4 Use of surplus funds
The legal documentation should identify what represents a surplus, where it may
arise, and specify how it might be applied. Surplus funds should be applied to
approved housing projects which will normally result in more housing benefits by
way of additional assistance or refurbishment /replacement of assets.
B4.5 Default and termination
There are a range of circumstances which may bring a project into default.These may include:
- not meeting agreed time-frames
- non-commencement of building contract
- non-completion of facility in accordance with the agreed plans and specification and/or with the approvals of all relevant authorities
- non-procurement of Council approval as fit-for-occupancy
- permitting use of facility for purposes other than agreed by each (all) parties
- not conducting, managing or operating the facility in accordance with various legislation (Residential Tenancies Act, RetirementVillages Act and the Code, Disability Services Act, etc)
- not keeping the facility and all fixtures, fittings and appliances in good and substantial repair and condition
- not effecting and maintaining insurances appropriate to the construction, conduct, management and operation of the facility.
In any event, the Department should first endeavour to resolve the problem by
negotiation (if possible) and bring the project out of default. If this is not possible,
the Department should act to maintain the benefit of the project in the
community.
If the housing partner which has title/on-going management responsibility ceases operations or is wound up, the Department should determine the appropriate use of the residential facility subject to the provisions of any legal/program arrangements. At times this may involve consultation with the Ministry/State Advisory Committees.
As far as is practical and appropriate, the project should be transferred to an organisation with similar interests, and used for similar purposes (i.e housing for the relevant target group) so that the community benefit is maintained.
B5 Phase 5 On-going responsibilities of partners
B5.1 Monitoring standards of operational performance
The housing partner which does not have operational responsibility should have the right to be kept informed, inspect premises and speak to residents from time to time.
The right of inspection and powers to speak to residents should be negotiated through proper channels and under agreed protocols. It must be remembered that, unless the Department maintains full management rights, the Housing Partnerships facility is not like a Departmental property and the residents are not tenants of the Department. Even where the project is under Departmental management, the provision of resources by another body establishes a right to access such information.
Regular reports which focus on measuring compliance with the original intent of the Housing Partnerships agreement should be provided on an annual basis. These may include:
- Rents - Declaration that rents for public-housing eligible residents do not exceed those of public housing tenants, as varied from time-to-time
- Agreed services - Declaration that services (such as meals funded by resident, ongoing maintenance, rent collection) as stated in the resident's agreement are being delivered in accordance with agreed standards
- Care and support - Statement of compliance with standards set by funding body (for recurrent funding)
- On-going viability - Capacity for maintenance and upgrades, effecting relevant insurances.
- Residents - quality of outcomes for residents
B5.2 Resident appeals mechanism
The partner responsible for on-going management will establish a formal resident
complaints/ appeals mechanism.The Department of Housing reserves the right to
seek access to general (noll-confidentiaD information regarding the nature of
complaints and action taken by management to address problems.
Complaints and appeals mechanisms should be developed in the context of the prevailing appeals mechanisms for clients of housing assistance programs.
Residents' appeals procedures, first for public and then for other housing systems
are being developed by the office of housing Policy in 1994/95.
The Office of Housing Policy
NSW Ministry of Housing, Planning and Urban Affairs,
February 1995
Prepared by: Bill MacDonald and Margaret Tucker
Housing Partnerships Program