"The Government’s proposed transfer of up to 2500 state houses in Christchurch to community housing providers will allow older homes to be rejuvenated and may also be used to incentivise new approaches to social housing delivery in New Zealand," says Stephen Selwood CEO of Infrastructure New Zealand.
"It is very positive to see the Government advancing opportunities for innovation in the provision of social housing at a scale. The offer will be attractive to both domestic and international providers.
"Tenants will be pleased to know that there will be no reduction of social housing units and that they may have an opportunity to move into a brand new home.
"As in other parts of New Zealand, state house land in Christchurch is under-capitalised, typically occupied by old, cold and expensive to maintain houses sitting on large sections.
"More intensified development will enable new homes to be built that are both energy efficient and better designed to meet the needs of social housing tenants as well as offering the opportunity to expand the supply of affordable houses in Christchurch.
"The value capture opportunity might also enable community housing organisations to provide greater support for those who may have mental, physical, dependency or other difficulties.
"But it is highly unlikely that it can be used for all three of these desirable outcomes.
"Given the high cost of tendering for these types of transactions, not for profit housing providers want to ensure every bidding dollar is well spent.
"It will therefore be essential that the Government is clear about its priorities when it releases information to potential providers next month.
"In overseas jurisdictions like Canada, government agencies often use a “scope ladder” or outcome focussed approach when tending these kinds of projects. The scope ladders set out the list of outcomes the government desires within a pre-determined affordability threshold.
"That way, instead of tendering the lowest price to deliver the minimum acceptable standard of service, bidders are incentivised to deliver the best outcomes they can within the affordability limits that the government has set.
"If that threshold delivers better outcomes for less money than the cost of the current system then taxpayers, tenants and the Government are assured that they are getting value for money. A win-win opportunity," says Selwood.