Key Worker and Affordable Housing

Key Worker and Affordable Housing - Expression of Interest

Introduction

With the housing crisis adversely affecting the Warrnambool the community, coupled with the limited capacity of local organisations and businesses to attract essential personnel, Warrnambool City Council is inviting expressions of interest from community housing agencies to activate and deliver a key worker accommodation and affordable housing project.

Council is seeks to collaborate with a community housing agency to conduct due diligence and investigate a project to create key worker and affordable housing solutions.

At the initial stage, the proposed project will be developed to enable a community housing agency to establish a local presence and assist in the development of further social and affordable housing stock.

This is the re-issue of a request for Expression of Interest after incorporation of feedback on lease tenure from a number of Community Housing Agencies. The previous lease tenure was for a period of 10-15 years. With this EOI Council is extending the lease tenure up to 25 years. This also takes into consideration the recent announcement from the Housing Australia Future Fund regarding 25 years as the minimum period of agreement for Government funding.

Background

Numerous socio-economic factors have triggered a critical housing crisis in Warrnambool. Key industries including healthcare, education, and construction, struggle to attract essential personnel, negatively affecting the community. The situation is exacerbated by over 400 long-term rentals operating as short-stay accommodation while a number of motels have closed. The following key statistics illustrate the depth of this problem:

  • Rental vacancy rate - 0.8% (healthy market rate - 4%);
  • Median rental price - $500 (average increase of $100 per week from 2021);
  • Total rental properties as a ratio of total dwellings (18% - significantly lower than the state average - 30%);
  • 1/3rd of renters facing severe rental stress due to increasing rents;
  • Lack of key worker accommodation is having a negative effect on industries being able to fill positions < economic development; and,
  • Lack of local presence of community housing agency to prepare shovel-ready projects for the future.

Council's 2019 Social Housing Planning document pinpointed a housing deficit of 1,430 dwellings in Warrnambool, a figure projected to rise to about 2,810 dwellings by 2036 based on current housing growth rates. Even with the record 400 building permits issued by Council in 2022, there remains an urgent need for short to medium-term solutions to alleviate the socio-economic consequences stemming from the housing shortage.
 
Without a swift and substantial influx of housing construction, the existing crisis will worsen. Both Council and external organisations have reported extreme difficulties in recruiting employees, primarily due to the housing shortage, especially in private rentals. This scarcity has a negative impact on the municipality's ability to attract key workers in need of affordable rental housing and also affects tertiary students. Ongoing advocacy efforts offer no assurance of housing supply through existing funding avenues, unless a shovel-ready project is introduced.

Given, the current circumstances Council has thoroughly considered strategies to tackle the housing issue in the short to medium-term by making use of land owned by either Council or the Victorian Government. While activating Victorian Government land would be a time-consuming process, there is an immediate opportunity for Council to accelerate a key worker and affordable housing development on a section of the land in Harrington Road. This land was part of the buffer zone of the former saleyards, and this approach can be pursued concurrently with the development of a master plan for the entire area.


Proposal

Warrnambool City Council will lease out the land abutting Harrington and Coughlans roads (exact location to be determined through due diligence) - for a period of up to 25 years through a Memorandum of Understanding (MoU) with a Community Housing Agency that will meet the following requirements:

  • Build a minimum of 50 self-contained units, preferably using prefabricated modular construction, with a mix of one-bedroom, two-bedroom and three-bedroom units.
  • Units to be made available as key worker accommodation for organisations and businesses in the municipality and affordable housing using a 50/50 split.
    Key worker accommodation will be allocated by the Community Housing Agency through an expression of interest from local employers in the municipality that will be opened every 2 years.
  • Affordable housing allocations will be done by the housing agency through established models.
  • The project will be fully managed by a Community Housing Agency.
  • Council will lease the land for an agreed term of up to 25 years. The final lease agreement period will be determined in conjunction with the Community Housing Agency and the funding agency.
  • The land will return to Council with all built assets disposed through sale or relocation, at the end of the project period, unless a future agreement determines otherwise.
  • The Community Housing Agency will establish a local presence in Warrnambool within two years.
  • Further long-term housing projects will be developed in Warrnambool and the South West.

Harrington Road looking north.
Harrington Road looking north.

 

Harrington Road looking south
Harrington Road looking south.

Requirements

Council will lease the land to a registered housing agency.

Due diligence will determine the overall concept, detailed design, period and modality of the lease, the pursuit and security of funding, the model in which the properties will be managed, the pursuit of the planning exemption (refer to Insight Planning memo - noting that the reference to the lease period of 10 to 15 years has been revised to “up to 25 years”), and the operation of the site.

Please note investments identified are estimates only and will be explored during due diligence.

Responsibilities

Warrnambool City Council

  • Design-due diligence, concept design, detailed design, site studies, investigations and community consultation.
  • All approvals including but not limited to planning and building permit/approval.

Community housing agency

  • Collaborate with Council in the concept and detailed design of the project, including site studies and investigation, including community consultation.
  • Construction of the key worker and affordable housing, including construction documentation and required tendering processes.
  • Operation of the key worker and affordable housing, including meeting the performance standards set out in the Housing Act 1983.


Funding and due diligence

The Community Housing Agency will be responsible for all development and management costs for the project, from the period when Council signs the lease agreement. Any investments identified within this EOI attachments are only estimates and will be finalised during due diligence phase.

Funding for the project will be sought through Australian Government or Victorian Government grants and may include philanthropic contributions.

The due diligence process will further explore:

  • who will be responsible for any funding or grant application or from the Australian Government, Victorian Government, including any philanthropic contribution;
  • who will take out the debt amount required to service the project and have responsibility for that debt;
  • who will contribute equity to the project beyond the land contribution if required; and,
  • if private equity investors are able to partner in the project.

 

Next steps

Based on the response to the Expression of Interest, a Community Housing Agency will be selected to develop and manage the project, the next steps in the project will be:

  • Community consultation on the proposal and the project.
  • Establish an MoU of the details, terms of the lease, and development with the chosen housing organisation and Warrnambool City Council.
  • Draft design layout for the site prepared by the Community Housing Agency in collaboration with Council officers.
  • Community engagement process on the draft design and layout for the site.
  • Incorporate any design amendments arising from the community engagement process.
  • Council Report and Decision on the final design and layout for the site.
  • Statutory permits/approvals sought for final design.

Application requirements, selection criteria and weighting

The Community Housing Agency must provide a detailed explanation of the prerequisites necessary for them to establish a local presence in Warrnambool within the next 24 months and respond to the selection criteria below.

Selection criteria Weighting
Background of Community Housing Agency and capacity to develop and manage projects in Warrnambool and South West Victoria, including reference to prior or existing housing stock in Warrnambool. 15%
Demonstrated ability to develop affordable housing. 15%
Prerequisites required and intention of Community Housing Agency to establish a local presence in Warrnambool within 24 months. 15%
Technical response to Council's proposal for the concept at Harrington Road. 20%
Management model proposed for the concept at Harrington Road. 15%
Estimated project delivery time frame 15%
Social and local procurement 5%

EoI conditions

1. Warrnambool City Council is now advertising its Expressions of Interest (EOI) online from its e-tendering portal, eProcure. EoI submissions can only be received electronically via eProcure.

2. To access EOI’s being advertised by Warrnambool City Council tenderers are required to register as a supplier. Registration is free. To register, please visit
eProcure and click on the ‘Register’ button located in the member login section.

Once registered suppliers can access any advertised expressions of interest, tenders, quotations, download documents, clarify queries using the question forum and lodge electronic responses. Council is not responsible for transit times for electronic delivery of documents.

eProcure’s Electronic Tender Box will send an email receipt upon submission, listing the submission details.

3.Please contact eProcure on 1800 377 628 if you experience any difficulties logging on or downloading any documents from the website.

4. All questions regarding the EoI are to be posted on the eProcure online question forum.

5. Expressions of Interest  emailed, faxed or hand delivered direct to a Council staff member will be automatically disqualified.

6. Expressions of Interest must be received no later than 2pm on Friday March 8, 2024 (the closing time).

7. Late submissions will not be considered.

8. Council will neither be responsible, nor pay, for any cost, expense or loss, which may be incurred by any person in connection with the preparation or presentation of an EoI.

Council does not warrant the accuracy of the content of this EoI and is not liable for any error or omission in this EoI.

9. Council reserves the right to change any information and/or issue addenda for the EoI before the closing time.

10. Persons obtaining or receiving this EoI and any other documents issued in relation to the EoI may use the documents only for the purpose of preparing a submission.


11. Applicants and their representatives must not engage in any collusive, anti-competitive or similar conduct with any other supplier or person in relation to this EoI.

12. Applicants are required to disclose any conflicts of interest in their offer and also notify Council if any conflict of interest arises after lodgement of their offer.

13.Council reserves the right to:
a)discontinue or suspend the EoI process;
b)extend the Closing time of the EoI;
c)amend this EoI; and
d)negotiate with any prospective applicant submitting an EoI.

14. After evaluation of all Expressions of Interest, Warrnambool City Council may, without limiting other options available to it, do any of the following:

i. prepare a shortlist of Respondents and invite tenders from those respondents;
ii. call for tenders from the market generally for the goods or services or any similar or related goods or services;
iii. enter into pre-contractual negotiations with one or more respondents;
iv. decide not to proceed further with the EOI process or any other procurement process for the goods or services; or
v. commence a new process for calling for EOI’s on a similar or different basis to that outlined in this Invitation.

Definitions

For this project, the following will be the operational definitions used.

Key worker: a scope will be developed to only include those industries and their workers that are most affected by the current housing crisis. This definition will be periodically reviewed based on emerging needs.

Affordable housing: In the context of the project, the definition of affordable housing has been modified from how it is understood as defined by Section 3AA of the Planning and Environment Act 1987. For the project, the term affordable housing excludes social housing and public housing. 

Rents will be capped at or below 75% of median rental market rate and guided by Homes Victoria's "affordable" scheme.