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Housing

Does this matter to you?

We want to know your thoughts on the two community housing options below. 

Housing option 1Fund the 2021/22 funding shortfall of $1.8 million through a loan. Shortfalls from 2022/23 would be funded by subsequent loans, with repayments spread over 25-year terms.

This option is preferred because it allows us to fund the deficit in the short term while we consult with the community on a way forward.

HAVE YOUR SAY!

How will the proposed average rates increase of 8% affect your rates in 2021/22? Use our Rates Calculator

Housing Option 2Fund the 2021/22 funding shortfall of $1.8 million directly through rates and shortfalls from 2022/23 with smaller additional rates increases each year thereafter.

HAVE YOUR SAY!

How will the proposed average rates increase of 8% affect your rates in 2021/22? Use our Rates Calculator

We have 377 community housing units across the city, 304 of which are retirement flats. This housing supports people on a low income who have few assets and a special housing need, with our community housing residents paying a subsidised rent.

We have been providing affordable rental housing for over 50 years. We know there is a huge demand for this type of housing and there are a range of providers in this sector. The majority of our housing supports retirees who need secure and affordable homes. We expect demand from this part of our community to keep growing.

However, our housing units are ageing and it is costing more and more to maintain them. Over the last couple of years, we have pared back spending by doing only the bare necessities of repair work, using the dwindling funds in our housing accounts, and delaying work on meeting the new healthy homes standards. But we can’t delay forever. The work needs to be completed by 2024 in order to ensure our housing remains compliant, and almost all our savings have been used up.

In order to get a really accurate picture of all the repairs and maintenance required, we commissioned a detailed assessment of each unit last year. The situation is worse than we had originally thought.

For some time, we have signalled that the current approach to how our community housing is funded is not sustainable because the rent we receive does not cover the costs. Given this, we have been reviewing the options for the future of this housing.

The first option is to transfer the entire housing portfolio to another entity (e.g. a Community Housing Provider). The other is to sell some of the units, which may give us the means to keep providing some form of housing, particularly for our seniors.

We have also looked at raising the rents to generate more income. We changed our subsidy levels last year and the rents increased marginally as a result, but not enough to deal with the shortfalls we have forecasted. Reducing the subsidy levels any further would mean we wouldn’t be providing affordable housing anymore.

We had hoped that our housing review would be finished by now. Unfortunately, this work was interrupted last year due to the impact of COVID-19 restrictions and the more recent Napier rainfall event, limiting our access to properties and reducing our capacity while staff worked on our Civil Defence responses.

In essence, the cost of providing housing is projected to exceed the income we receive from rent by an average of around $2.5 million per annum, as of this year. That equates to a shortfall of $24.5 million over the next 10 years.

We anticipate that, during the next 12 months, we will be able to consult with the community, and make a decision about the future of our community housing. In the meantime, we will continue to keep our properties operational, but propose to borrow funds to cover the deficit and meet our costs. This would mean the 2021/22 shortfall amount (expected to be around $1.8 million) would be spread over 25 years and funded by a small rates rise (0.1%) to cover loan repayments from 2022/23. The other option is to pass on the full shortfall to rates in 2021/22 equating to a 2.8% rates rise.

Housing Option 3Important note: 

Both of the above options require a change to our current Revenue and Financing Policy. Our current policy separates out our housing activity and requires it to pay for itself. 

We are consulting on this policy at the same time as our Long Term Plan consultation – you can give us your feedback on the change which allows us to direct funding from rates and/or loans to the housing activity by visiting - Revenue and Financing Policy.

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