The new board of the Cayman Islands National Housing Development Trust has taken the affordable home programme in a new direction, involving renting instead of buying, and possibly multi-family developments instead of standalone houses.
For the foreseeable future, the board is abandoning the trust’s previous goal of selling affordable houses to low-income Caymanians, after determining that it is simply not feasible to build decent houses and sell them for less than $100,000, board chairman Rayal Bodden said Thursday. Instead, the trust will make its houses available for five-year leases, similar to initiatives in Florida
In addition to cost concerns, the decision to rent out the houses instead of sell them was made because of the overwhelming demand for a relatively few number of units. More than 700 Caymanian families are on the trust’s list of people who say they need homes – not including families already in trust housing. Those families are either finding housing through the private market and/or are receiving assistance from social services. Some of those families have been on the list since 2004.
Offering five-year leases will give families the opportunity for parents to gain more lucrative employment and/or for children to reach adulthood and to either move out or get jobs and contribute to the family’s income.
Houses for lease
The trust has built 67 houses on three sites in East End, George Town and West Bay, and is in the process of building 27 more, including seven in West Bay and 20 in Bodden Town. That’s 94 houses that are either complete or soon will be constructed.
Trust general manager Julio Ramos said there is room for about 95 more houses on the East End, Bodden Town and West Bay sites.
The new houses in George Town and West Bay replace substandard houses that were razed or are slated for demolition.
In addition to the four sites with new houses, the trust has a site on Eastern Avenue in George Town, where seven houses remain of an original 33, as well as a second West Bay site with 20 older houses, where residents are being moved into alternate housing.
About 30 families who previously had housing ownership agreements with the trust have grandfather status and will be able to continue under lease-to-own arrangements. Those families will still be able to purchase their two-bedroom houses for $56,900 and three-bedroom houses for $69,900 – even though the new houses are of much higher quality and cost more to build.
The rent for two-bedroom houses is $700 per month and the rent for three-bedroom houses is $800 per month. About one-third of the houses have two bedrooms and two-thirds have three bedrooms.
Mr. Bodden and Mr. Ramos said after consulting with independent quantity surveyors and asking for estimates from contractors, they were able to have the two-bedroom houses built for $97,500 and the three-bedroom houses built for $114,000 – not including the value of the land. Each house is about 900 square feet. Multiple contractors were hired to build the houses at the uniform prices.
Budget documents indicate that Cabinet will give the trust $665,000 during the upcoming year for operations. The trust will bring in about $759,000 in revenue from other sources. The trust believes that if it can build up a housing stock of about 200 units, it can bring in enough recurring revenue so that Cabinet will not have to provide annual funding.
However, getting to that number of homes will require significant capital investment from government.
The trust’s 94 new and pending houses were paid for by part of a US$29 million bond issued in 2002/2003. Of that money, US$14.5 million was invested in 2003/2004 for houses and materials that were largely destroyed by Hurricane Ivan in 2004. That money has been the subject of serious contentions by the auditor general.
The other half of the bond was drawn down in 2009 and used to build the 94 new and pending houses, which have an expected useful life of 50 years (as opposed to 10 years for the former, cheaper houses). Unlike the older houses, the new houses are built up to code and have certificates of occupancy. They also have proper land titles. That means that the 30 families who are able to buy the new houses will be able to have the new houses legitimately transferred to them once they are paid for, which was not a sure thing if they had remained in the old houses.
Clean bills of health
Although all of the bond money has now been used, the government has agreed to refund the trust the $5 million it spent on infrastructure, such as roads and fill. The tentative plan is for the trust to use that money on the Eastern Avenue site. While the trust intends to keep building single-family houses on the four other sites in use, the Eastern Avenue site may be targeted for multi-family dwellings, such as town homes. The reasoning is multi-family dwellings will be less expensive to build and can accommodate more people.
Mr. Bodden said the auditor general has issued unqualified opinions – the best possible conclusion – regarding the trust’s financial statements for the past four years. He said the auditor general’s reports are in the hands of the ministry and are expected to be tabled during the November session of the Legislative Assembly, making them public documents. The trust says it has had clean financial statements since 2005.
The trust also is developing a website that will include board meeting minutes, financial statements, public service information, application forms and a database of homes for sale.
The trust’s attempts at transparency follow controversy since the programme’s inception. The latest scandal culminated in the October 2011 arrest of Trust Deputy Chairman Edlin Myles. In August, Mr. Myles was arraigned in Grand Court, where it was alleged that on multiple occasions he falsely represented that insurance was needed for individuals to participate in the housing scheme. His trial is scheduled for April 2013.
In late October 2011, Mr. Bodden – a member of the board who had previously resigned – was appointed as the new chairman of the board. Six other new members were also appointed at the time.