Housing heroes: how rich benefactors are not waiting for a housing solution

Friday, 23 October 2020

Rozeena Bi talks about how community housing gave her family security after a house fire.

It was a ‘’shocking thing’’ when Rozeena Bi and her family found themselves at a Work and Income office with no shoes and the clothing they had left their beds in.

In the middle of the night, their rental of eight years had just gone up in flames. The cause: an electrical fault. There was no smoke alarm.

‘'We were just lucky. My husband woke up in time and he got us out.’’

Hours before, Bi had been getting ready for graduation after completing an accounting degree. Her clothes were among the ashes. But her only concern now was finding new accommodation in Auckland's pricey rental market.

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That day, after navigating a maze of social agencies, Bi found herself directed to Monte Cecilia Housing Trust, a community housing provider.

The soon-to-be-finished Westlight apartments in Glen Eden will provide 75 freehold apartments and 90 for community housing. (Artist impression)

‘'I had no clue about all those things like transitional or social housing but when … they said we have a place in Mt Albert, I was happy to compromise. My kids were going to school in Mt Eden but I said no, we need a place and a roof over our heads, that's all that matters.''

It is often said that people are only three life events away from being homeless. Losing a job, a partner or a house can leave a surprising number of people desperate for a roof.

Kāinga Ora, the Government's state housing arm is by far the biggest social housing builder in New Zealand, with 66,000 tenancies.

Ted Manson is presented with an Order of New Zealand Merit in 2015 for services to urban redevelopment. (File photo)

But dotted around the country are a multitude of groups which with more than 13,000 houses between them are making a sizeable contribution to the social housing stock.

Backing for these organisations comes from a variety of sources: charities, bequests, legacy trusts, and sometimes, very wealthy people.

Ted Manson, who founded the Auckland construction company Mansons TCLM, is one such philanthropist.

30092020 Photo: Community Finance/Supplied The Salvation Army's new community housing developing in Westgate West Auckland

His foundation has so far built 163 community housing apartments. The first 73 were part of the 92-unit Life building opened late last year in central Auckland.

The rest are within Westlight, two mixed housing blocks in Glen Eden, which are close to completion. Another project is potentially ahead in Avondale.

Manson likes to keep a low profile but his foundation's website puts the cost of the first two projects at least $100m.

Many other community housing projects are quietly backed by wealthy donors. They include Sir Stephen and Lady Margaret Tindall, who founded The Warehouse, and the late Hugh Green, who built a large civil construction business in New Zealand.

Tiny and Lynley Deane at the opening of their charity's homeless shelter in Taupo.

The Tindall Foundation, along with the foundations of tax entrepreneurs Ian and Wendy Kuperus and plastics manufacturers Brendan and Jo Lindsay, have also thrown their weight behind a new form of fundraising – community housing bonds.

The first offer has now raised $40m to finance three social housing developments for the Salvation Army in Royal Oak, Westgate and Flatbush.

Bonds have long been used by Kāinga Ora to raises money, but it’s new to community housing in New Zealand.

Paul Gilberd, general manager of Community Finance, the non-profit fund behind the bonds, says historically, social housing has not been easy to raise money for.

The beauty of the bond, he says, is that it's a win-win. The investors involved get a better return than the bank, while their wealth is enough to encourage the banks to lend.

The bonds are a great example of what’s called ‘’impact investing,’’ says Lindsay Foundation chief executive Andrew Higgott.

Seeded by The Lindsays, who sold their plastics business for $660m sale some years ago, the foundation usually favours animal or child related causes. The bonds are its first foray into housing.

‘'It really does align with our values,’’ Higgot says of the bonds.

‘'They are showing a philanthropic dollar doesn't need to be parked with a charity.''

A completed terraced house in stage one of the Oneoneroa development by developers Whai Rawa.

Just do it

Not everyone who supports community housing is wealthy. In fact, Rotorua man Tiny Deane is far from it.

But three years into it, he and his wife Lynley are in the thick of it. In a short space of time, their trust Visions of a Helping Hand, has taken over three motels in Rotorua, one in Taupo and a Taupo lodge.

Deane got involved after a leg injury put paid to his trucking job. Addressing homelessness ‘’was never a passion,’’ he admits.

But ‘’I started doing a bit of a study and then looked around town and thought, Holy Shakespeare, I can't believe I’ve never seen this.

‘’A lot of my mates think I’m crazy … but I just live for it now.’’

The Salvation Army opened its doors to a $28m, 52-unit social housing block in Royal Oak last year.

To set up their first shelter, the couple sold their rental property. In 10 months, they had three shelters and were feeding 350 people a day. Since Covid-19, they have placed over 50 families into permanent housing.

Post-lockdown, the Government has become their greatest backer. But as their story has spread, Deane has been approached by other well-wishers. ’’We have some pretty wealthy people behind us.’’

Now the charity has a developer on board and a grand plan to build 500 houses over 10 years.

A new survey has found that housing is more of a concern to New Zealanders than the threat of unemployment.

They will break ground the first two houses over the next month, Deane says, giving those in transitional housing somewhere permanent to go.

Government guaranteed

Many social housing providers have called over the years for the Government to go one step further and offer to underwrite loans that could turbo-charge community housing.

Paul Gilberd says community housing sector has a pretty good relationship with Kāinga Ora, and there is a basic recognition that the massive job of providing enough houses will require all hands on board.

‘'We are not a threat, we are a friend to the Government,'' he says.

Support from the Government has included some up-front capital grants in the past, but it largely supports providers through cashflow, in the form of long-term agreements to take low-income tenants who come with rental subsidies.

But a Government guarantee, which would open the way for big pension and wealth fund investors, has so far been a bridge too far.

''There seems to be some deep-seated philosophical position in there that it would perversely influence the market,’’ Gilberd says.

Ironically, he says, bond aggregators overseas are doing well. In Australia, the demand for higher interest rates is such that a recent community housing bond raised A$560m in two days, and closed three times oversubscribed.

‘’The bond aggregator over there is just a raging success, it's delivering thousands and thousands of new affordable homes.''

Despite this, Gilberd and others have been unable to shift the dial on the Crown's concern about the risk it might have to call the loan in.

Even if a housing provider did default, the Government would have the right to purchase the houses, built to their specifications in locations with unmet need.

''So where's the downside?''

In the Government's absence, wholesale – that's very wealthy investors – have filled the gap, providing security for the bond programme that keeps the banks reassured.

Qualifying investors in Community Finance have net assets of upwards of $5m, which Gilberd admits is ''a pretty high threshold''.

But the ultimate goal is that everyone will be able to invest.

''As soon as we can justify it, we will move to offering a retail product … because not a day goes by when I don't get an email of the site saying, I love what you're doing, can I give you $1000?’’

Impact investment is also finding more acceptance with the institutions. Gilberd says doors began opening after they met with Auckland’s influential Foundation North trust, which has control over more than a billion dollars.

Kiwisaver fund Generate recently announced its involvement in the Community Finance bonds, investing $20m, and Gilberd says other Kiwisaver funds have also been on the phone.

‘’People are realising that they want to play their role and be a part of the solution. I think that's wonderfully exciting.''

Lucky to be alive

After a spell in a transitional house, Bi's family ended up in one of Monte Cecilia Housing Trust's permanent houses in Onehunga. Two years later, they are still there.

With family health issues and debt to pay, an affordable rental was important. She now has a job with the trust as a customer service rep, helping other people as desperate as she was.

''I get calls from people who have been waiting for more than a year, so I can understand the frustration.

''You just don't know what's in store for you for the next day…. I'm happy and lucky to be alive, that's all I can say.''

By the numbers:

Kāinga Ora – owns or manages more than 66,253 properties.

Community housing providers – more than 14,000 properties (including progressive home ownership houses)

Council/pension housing: more than 10,000

On the social housing register (including people in transitional housing): more than 20,000