Housing ACT wanted better revenue deal as Kaleen units sat vacant

Freedom of information documents reveal occupying the new apartments was delayed after Housing ACT had to determine a leasing model for a community housing provider to manage the units.

There were 66 units built at the Kaleen complex, dubbed Toolangi, and the government intended half to be used as public housing and the other half were to be affordable rentals managed by a community housing provider.

Construction on the units finished in March 2019 but a contract with a community housing provider, CatholicCare, was not signed until June 2020.

The affordable rental units were targeted at low-income earners and not used for social housing.

A government spokeswoman said the delay in the release of the tender was caused by their desire to ensure the model was sustainable for the future.

But the freedom of information documents, requested by The Canberra Times, showed Housing ACT had concerns they could be "selling ourselves short".

The documents also revealed that in March 2020, 10 of the public housing units had not been allocated, as Housing ACT took a "fairly targeted" and "selected" approach to choosing tenants for the complex.

A request for tender for a community housing provider was released in August 2019 but the emails revealed that originally Housing ACT planned to release the tender in April 2019.

In an April 10, 2019 email, Housing ACT had indicated they wanted to release the tender on April 17. The tender was planned to be closed on May 27, 2019. This email was sent to ACT Procurement.

An ACT government spokeswoman said this date was subject to the clearance of ACT Procurement and the approval of the executive within Housing ACT.

"Following feedback from ACT Procurement and further discussions with Housing ACT executives further work was undertaken on the financial modelling before the tender was released," the spokeswoman said.

One of the next emails in the documents came on May 3 from Housing ACT executive group manager Louise Gilding, she said: "The idea of a long-term management transfer is that we also don't wear any maintenance costs. It seems we are giving them all the revenue flow, half the expenses and we aren't requiring any community building ... I feel like we are selling ourselves short?".

When asked to clarify what was meant by this, the government spokeswoman said the construction was funded by Housing ACT and they wanted to leverage this asset to reinvest in housing.

"By requiring the service provider to maintain the properties - both as an asset and a home - it ensures rental revenue flows are not treated as a windfall gain but reinvested to achieve important community outcomes," she said.

Subsequent emails showed discussions between various Housing ACT employees about how to determine an appropriate leasing model but it was ultimately decided in June they needed advice on how to best approach this.

The government sought the advice of an external consultant on how to determine an appropriate lease fee and a report called Affordable Rental Housing Model by Adrian Makeham-Kirchner was commissioned. This was completed in July 2019.

"One aspect of the request for proposal (RFP) process is determining a feasible lease fee to include in the RFP to ensure some rate of return on capital invested in the development," the report said.

The government ended up applying a "net rent model" to the affordable housing properties.

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The government spokeswoman said this meant the community housing provider shares the net rent with Housing ACT using a "50:50 ratio".

"Housing ACT designed a model that was underpinned by research that would strengthen social housing assistance in the ACT, deliver sustainable housing options and supports, and provide certainty to the community sector," the spokeswoman said.

"While at the same time allowing Housing ACT to receive an ongoing revenue stream that it could reinvest into its operations; and one that would provide the community housing provider a viable and fair cost sharing model."

CatholicCare was selected as the preferred tenderer in January after the tender closed in October 2019. The government has previously said this process was held up due to "unprecedented" events such as the bushfire threat, the January hailstorm and the COVID-19 pandemic.

The government spokeswoman said the main reason for the tender delay was due to the fact that the model at Toolangi was a new one.

"The request for tender for the procurement of an organisation to undertake service provision and tenancy and property management of 33 affordable rentals alongside existing Housing ACT properties was a new model of service delivery," she said.

"To ensure the viability and sustainability of delivering affordable and social housing for potentially a 20 year contract, it was essential that full consultation and analysis was undertaken prior to the release of the tender or the execution of contract."