Elder housing: investing sale proceeds in affordable housing

In May 2023 Council consulted on using the remainder of the sale proceeds to deliver housing outcomes for the city. Whilst some of the funds had been committed to support local community housing providers and Papakāinga housing, the majority were unspent and Council held a consultation to check in with the community on its proposed plans for the unspent portion.

Council consulted on investing an initial $10 million into a Housing Equity Fund being established for the Bay of Plenty region, with remaining sale proceeds to be invested once available, into either the Housing Equity Fund or alternative affordable/social/elder housing projects within Tauranga.

Council received 67 responses, and 70% of these supported Council using the sale proceeds for housing outcomes. Of this 70%, 89% supported investment into the Housing Equity Fund. A small number of respondents wished to see the sale proceeds spend on elder housing outcomes specifically (rather than affordable housing more generally).

The consultation results were reported to Council in August 2023 and Council decided to:

• Invest an initial $10 million in the Housing Equity Fund being established for the Bay of Plenty region.
• Allocate a further $1.5 million for registered community housing providers and $1.5 million for Papakāinga housing (to be evenly distributed over years 1 – 3 of the 2024-2034 Long-Term Plan)

Council also decided that further decisions regarding investment of the elder housing sale proceeds would occur prior to adopting the 2024-2034Long-Term Plan and would not be subject to consultation.

The Council sold seven of its nine elder housing villages to Kāinga Ora – Homes and Communities in 2022.

Kāinga Ora will continue to deliver affordable housing to existing tenants.

The two villages retained by council were in Pitau Road and Hinau Street, which are considered unsuitable locations for community housing. These two villages are currently in the process of being sold for private development. Council worked closely with the tenants of these villages and found them affordable, comfortable, and secure homes in Tauranga, before the villages were offered for sale.

While some of the sale proceeds have already been committed to support local community housing providers and Papakāinga housing, the Council held a consultation to check in with the community on its proposed plans for the rest.

The first part of the proposal involves investing $10 million in a Housing Equity Fund, alongside Bay Trust and TECT, who are also intending to invest in the Fund. Any funds that council invests will be spent within Tauranga city.

The second part of the proposal would see the remaining sale proceeds from the elder housing portfolio also being invested in the Housing Equity Fund and/or other affordable housing initiatives.

The Housing Equity Fund will provide affordable housing for those in our community who are most in need, while delivering a return on investment to support multiple, future housing projects.

For more information on the Housing Equity Fund, please visit Bay of Plenty Housing Equity Fund.

Community consultation ran from Wednesday 31 May until Monday 26 June.

Kāinga Ora – Homes and Communities now owns seven of Tauranga City Council’s elder housing villages. Over time the sale to Kāinga Ora will deliver an increase in public housing for the city, alongside ongoing affordable housing for existing tenants.

The $17.2 million deal comes with a commitment by Kāinga Ora to invest a further $32.4 million on upgrading and redeveloping the villages for public housing within the next 25 years. The sale agreements take into consideration the age and condition of these older properties and the ongoing costs to maintain and provide warm, safe and dry public housing. The agreements include a six-month transition process, a 25-year partnership between Council and Kāinga Ora, and ensure current tenants have an affordable place to live, now and in the future.

While there are no current redevelopment plans for the villages, Kāinga Ora will explore redevelopment opportunities over the next 2-3 years, to support the strong demand for public housing in Tauranga. If villages are redeveloped, existing tenants will need to move. However, they will be provided alternative affordable housing, located where possible in a community of their choice.

Sale of Pitau Road village and Hinau Street village

Alongside this work, Pitau Road village and Hinau Street village are being sold for private development. This follows Council’s decision in June 2021 to separate these villages from the rest of the portfolio and sell them for private development.

Through the sale of the villages, we worked to achieve a number of important outcomes – like security of tenure and keeping rents affordable for existing tenants. In addition, over time the sale will result in  additional, higher quality units being built. This might mean tenants are moved to new accommodation to enable the improvements to take place. At all times, tenants will have a place to call home.

Public housing is provided in New Zealand by Kāinga Ora (central government) and by registered community housing providers. Community housing providers are community based, not-for-profit organisations focused solely on providing public housing and affordable rental housing.

Unlike councils, public housing providers have access to central government funding allowing them to provide subsidised housing. That also puts them in a far better position to upgrade, replace and increase stock.

On top of that, where council can only act as a landlord, public housing providers can offer much more. They can provide tenants with access to wraparound services (like budgeting advice and disability support) and new tenants with access to income related rent subsidies (IRRS).

Between 7 May and 7 June, we asked the community to tell us their thoughts on the future of Pitau Road village and Hinau Street village. We sought feedback on two options:

1. Council’s preferred option: Pitau Road village and/or Hinau Street village are separated from the elder housing portfolio and sold for private redevelopment.
2. Alternative option: Pitau Road village and/or Hinau Street village are sold as part of the elder housing portfolio.

We received 576 pieces of feedback with 79.5% supporting separating Pitau Road village and/or Hinau Street village from the elder housing portfolio and selling the land for private development.

The most common reasons provided in support of this option were that elder housing should not be delivered by council and that the location was not a suitable location for subsidised housing (either public or elderly). Following this feedback, we decided to separate these villages from the rest of the portfolio and sell them for market value and private redevelopment. The sale process is currently underway.

A total of 2050 submissions were received on the elder housing topic during the Long Term Plan community consultation process.

758 (37%) were in support of option 1 (retaining the status quo)
843 (41%) were in support of option 2 (to divest to an approved community housing provider)
449 (22%) selected neither option

The mayor and councillors emphasised the welfare of elderly tenants was the number one consideration in the decision to divest. The welfare of current tenants will be protected using covenants to ensure tenure, rent stability and retention of numbers of units.

Any money raised from the sales of the nine villages – 246 units – will be set aside in a reserve for elder or social housing-related use.

In 2017, Council carried out a review of its elder housing portfolio, operations and future service delivery. The review comprised three elements – an independent report by the New Zealand Housing Foundation, tenant engagement through the establishment of a tenant advisory group, and wider stakeholder engagement through the establishment of a working group.

The initial findings were presented to the Community and Culture Committee meeting on 8 August 2017. The committee agreed that council should progress with its investigation into how best to provide elder housing services in Tauranga with a more in-depth investigation into two options:

1. Council retains ownership of the elder housing portfolio and partners with a community housing provider
2. Council divests the current elder housing portfolio to a community housing provider

New Zealand Housing Foundation report (1.2mb pdf)

The findings from the in-depth investigation were presented to the Community and Culture Committee meeting on 14 November 2017. The committee agreed to seek community feedback on whether council should divest its elder housing portfolio to one or more registered community housing providers, through the 2018-28 Long Term Plan.

Option analysis report (389kb pdf) Business case proposal (473kb pdf)

One of Council’s key priorities is to provide a higher standard of living for all residents and ensure that our city’s elder housing tenants are receiving the best possible service to meet their needs, now and in the future. Tenant welfare has been the primary consideration, with an agreed outcome that tenants are no worse off than before, with access to better well-being services and affordable housing.