Manji: Council can't afford social housing

23:45, Apr 28 2014

Borrowing $50 million for a ''new and somewhat sketchy'' affordable housing project is ''unwise at best and financially imprudent at worst'', says the Christchurch City Council's money man.

Council finance committee chairman Cr Raf Manji says he is opposed to the council's proposed foray into the affordable housing market and will push instead for the council to sell off its existing stock of social housing.

Deputy Mayor Vicki Buck, an architect of the council's housing plan, says doing nothing to fix the city's woes is a ''really dumb option'' and would lead to  ''social disaster''.

Manji told The Press now was the ''perfect time'' for the council to leave the social housing sector.

Community housing providers and ''new market entrants'' should create ''a sustainable model for providing good quality and affordable housing to meet the needs of both the social and affordable housing market'', he said. 

Housing advocates are adamant the council must hold on to its social housing stock, saying its input is needed more than ever.


Manji's comments come as the council considers whether it should take $50 million out of its investment arm, Christchurch City Holdings Ltd, and use it to set up a  company that will work with the private sector to help kick-start the construction of more affordable homes in Christchurch.

Buck has spent months working on the proposal and believes it could help overcome Christchurch's acute housing shortage.

Manji says the council's interference in the housing market will create undue risk for ratepayers and crowd out new innovators.

He says no proper financial analysis has been done of the proposal and it makes no sense for the council to set up a  company in which it would not have a controlling interest.

''The proposal is well-intentioned but goes beyond the core focus of council at this time. We have many pressing issues to deal with and we should not be looking to any further risky propositions at this time, at least until we have sorted out the rather large hole in our budget,'' Manji said.

''Cheaper and more plentiful land supply, quicker consenting processes, and a review of development contributions are the areas we should be focusing on.''

It was widely acknowledged the council's social housing model was ''broken'' and the rents insufficient to cover costs.

''It doesn't work and it hasn't worked for a long time,'' said Manji, who puts the value of the council's land and housing assets at between $200m and $250m.

Buck said the affordable housing project stacked up financially and that selling the council's housing stock would end in ''social disaster''.

Through the new housing entity the council would qualify for government housing subsidies, which could bring in millions of dollars of extra revenue annually which it could use to improve the quality of its existing housing stock.

It would also stimulate new building activity, which would add to the city's rating base.

''It stacks up incredibly well financially,'' said Buck.

''We know there is a huge shortage of housing in Christchurch and doing nothing is a really dumb option.''

Christchurch Mayor Lianne Dalziel said the council had still to consult the public on its affordable housing plans but it had made commitments to the Government about the delivery of social and affordable housing which she believed it should honour. 

Dalziel said she accepted there were probably better ways to structure the council's social housing portfolio but she was strongly opposed to selling it.

The Press