Construction to start immediately across eight sites in Cork, Clare, Galway, Kildare, Roscommon and Waterford
Brings the number of social housing units under construction across Ireland through PPP to 999 across 10 local authorities
On behalf of the Department of Housing Planning and Local Government, the National Development Finance Agency (NDFA), part of the National Treasury Management Agency (NTMA), today announced contract award of the Social Housing Bundle 2 PPP project to Torc Housing Partnership.
Bundle 2 comprises eight sites for the development of 465 social housing homes across counties Cork, Clare, Galway, Kildare, Roscommon and Waterford. Construction of the 465 units will commence immediately following the award of the contract, with construction expected to take between 14-18 months (depending on the site in question).
Site (Local Authority)
Number of Units
The Walk, Roscommon Town (Roscommon)
The Miles, Clonakilty (Cork County)
Slievekeale (Waterford City and County)
Ballyburke (Galway City)
Shannon East (Clare)
Poundhill, Skibbereen (Cork County)
Oakwood, Macroom (Cork County)
Butterstream, Clane (Kildare)
County Cork is leading the way in Bundle 2 of the PPP Programme, with 152 of the 465 new social homes being delivered on three sites across the county. In 2016 only 45 social homes were delivered in Cork City and County. Since then 680 new social homes have been built, and another 885 are currently on site. All of this has happened under Rebuilding Ireland.
The PPP Process for Social Housing
The NDFA acted as agent for the Department of Housing, Planning and Local Government (the Sanctioning Authority) and Cork County Council (the Sponsoring Agency on behalf of all local authorities involved).
Using a payment and availability Public Private Partnership agreement to construct social housing is a new innovation in Ireland, with the first such homes commencing construction under Bundle 1 earlier this year. This approach leverages economies of scale through large numbers of homes being tendered, constructed and maintained for 25 years in bundles of sites. Competitive private financing and cooperation between construction, facilities management and tenancy management bodies are brought together through consortia that bid for each Bundle.
The procurement process that was followed for Bundle 2 saw four consortia shortlisted and invited to tender, with the competing bids submitted in February 2019 and evaluated on technical and financial criteria. Following this process, and in line with the detailed PPP procurement procedures as set out by the Department of Public Expenditure and Reform, the preferred tender was compared against the pre-approved Public Sector Benchmark, in order to confirm that it offers a Value for Money solution for the Exchequer.
The contract for Bundle 2 has been awarded to Torc Housing Partnership. Under the contract, the construction works on these developments will be delivered by a joint venture between JJ Rhatigan & Co. and the Spanish firm Obrascon Huarte Lain S.A. Upon completion of construction on each site, facilities management services will be provided by Derwent FM and Tuath Housing Association for a 25-year service period. Tuath will also provide tenancy management services. These bodies are also providing equity for the project in conjunction with the lead equity providers Equitix Ltd. and Kajima Partnerships Ltd. The German bank Nord/LB are providing debt funding for the project.
Details in respect of the development sites can be found here: https://www.ndfa.ie/project/social-housing-ppp-bundle-2
The above project is the second bundle of units being delivered through the Social Housing PPP Programme, and it follows on from the successful awarding of the contract for the first bundle of sites to Comhar in March 2019. Construction on the 534 social housing homes across six sites in the greater Dublin region has commenced, with the first units scheduled to be delivered under Bundle 1 from mid-2020.
PPPs represent one strand in the plan to accelerate the supply of social housing, which is the second pillar of the Rebuilding Ireland Action Plan for Housing & Homelessness. These Social Housing Public Private Partnerships will deliver up to 1,500 social housing units across three bundles of sites.
Eoghan Murphy, Minister for Housing, Planning and Local Government, said:
Today’s announcement represents an important milestone in the provision of social housing through the innovative Social Housing PPP programme, under which 534 social homes are already under construction.
Firstly, I am delighted to announce that the second bundle of sites under this programme has reached Financial Close, with contracts being signed with the Torc Housing Partnership, who successfully tendered for this project. This will see the delivery of 465 homes across eight locations in five local authorities. Not only will these units help contribute to our national targets for social housing delivery under Rebuilding Ireland, but each development will form an important part of their associated communities, and will provide long-term secure homes for people across the country.
The structure of the PPP process ensures that construction of these units will commence immediately, with the first homes from this bundle being available for occupation by their new tenants from in early 2021.
I would like to acknowledge the dedication and hard work of staff from the relevant local authorities, in particular Cork County Council in their role as lead local authority; the National Development Finance Agency who led the procurement process for this project, as well as officials from my Department. The contribution of the various members of the Torc Housing Partnership is also very important, and the delivery of these units is now entrusted to them.
I look forward to watching the progress of this second bundle, and would like to wish our partners in the local authorities and the NDFA well in undertaking this process over the coming months.
Tim Lucey, Chief Executive, Cork County Council, said:
The PPP model is an integral part of delivering local authority social housing requirements. Cork County Council is particularly proud to have the opportunity to be the lead authority for the PPP Bundle 2 Project and to be part of the successful collaboration between the Department of Housing, Planning and Local Government, the NDFA, and the Local Authorities. This is a collaboration which will have a real and meaningful impact in social housing provision.
Andrew O’Flanagan, Director of the NDFA, said:
This is the second social housing PPP to begin construction this year, delivering significant additional social housing capacity for six local authorities.
The project is a strong example of effective collaboration between the Department of Housing, Planning and Local Government, local authorities and the NDFA, using a model that will deliver homes for people who need them as quickly as possible and ensure the effective management and maintenance of these homes for many years to come.
Notes to Editors
Overview of Social Housing PPP Process and Value for Money
How does PPP deliver Social Housing?
- The homes being delivered under the Social Housing PPP programme use what is termed an ‘availability based’ PPP model, in which a private sector company designs, builds, finances and maintains the social housing developments in return for a monthly unitary payment.
- This ‘availability based’ PPP model has been used successfully in Ireland for over 15 years to deliver roads, schools and courthouses, as well as signature buildings such as the Courts of Criminal Justice and the Dublin Convention Centre.
- This model has been adapted for the construction and management of social housing. This process begins with the local authorities, as initial designs and layouts for individual sites are completed by them in conjunction with technical advisors appointed to the project and following consultation with appropriate advisors in the Department of Housing, Planning and Local Government.
- The consent of the elected members of each local authority is an important part of the process. Planning permission is secured through the local authority Part 8 process, in which a vote of the elected members is required to secure planning permission on the agreed design. The elected members within each local authority must also pass a Section 85 motion, which confirms that the relevant lead local authority can act on their behalf throughout the PPP process.
- No public land is transferred to the PPP company. As part of the contract, the PPP company is granted a licence to the land for the duration of the contract (construction plus 25 years management of the housing developments). The relevant local authority remains the owner of the land and the landlord of the homes. At the end of the contract, the houses constructed on the land revert to the full ownership of the relevant local authority.
- An important part of the process is the services that the PPP consortium provides to manage and maintain the homes for the duration of the 25-year service period. In order to provide these services, bidders have partnered with Approved Housing Bodies (AHBs). AHBs have extensive experience in this area, and are well-known for providing a high-quality service to their existing social housing tenants.
- Rent is set in the same way as for other local authority tenants. The AHB collects the differential rent from the tenants of the housing development. The rent is passed back to the State in its entirety.
- This ‘availability based’ PPP model ensures that the private partner is paid their full contracted amount monthly only if all housing units are fully available and properly serviced for their tenants, with a range of deductions applying if set conditions are not met.
- PPPs represent only one strand of the overall plan to accelerate the supply of social housing, the delivery of which is the focus of the second pillar of the Rebuilding Ireland Action Plan for Housing & Homelessness.
How is Value for Money ensured?
- Securing value for money (VfM) is an overarching tenet of the PPP procurement process and the Central PPP Unit in the Department of Public Expenditure and Reform provides guidance in relation to PPP projects to achieve this objective.
- The guidance sets out specific VfM tests that are applied in the case of PPPs over the course of the planning and procurement process. These tests focus on assessing whether or not the PPP approach compares favourably with the alternative cost of using traditional procurement to achieve the same result. The purpose, sequence and format of the four VfM tests in the PPP approval process are set out clearly in the PPP guidelines.
- Both Bundle 1 and Bundle 2 of the Social Housing PPP programme have met the relevant thresholds for each of the four tests in this rigorous process established to confirm delivery on a value for money basis.
Overview of costs covered under the PPP Process
- Each Social Housing PPP contract is paid through a monthly Unitary Charge payment. This payment incorporates all costs under the contract, including the initial construction costs of the units, or what might be referred to as the pure “bricks and mortar” costs, as well as all required roadways, site landscaping and services.
- In addition to the construction costs, this payment also covers a range of other costs:
- Ongoing “running” costs – These include the management and maintenance costs, such as the day-to-day upkeep of the properties, general facilities management, and tenancy management, including void management, tenant helpdesk services, and the provision of community development services.
- Costs of finance for the project, including interest repayments on loans secured to construct the units.
- An estimate of the projected cost of inflation over the 25 years of the contract's operational life.
- Cost of meeting the defined quality requirements that must be met when ownership of the homes is passed over to the relevant local authorities at the end of the 25 years.
The extensive life-cycling and upkeep of the properties that is specifically included in the PPP contract ensures that all properties will be returned to the State in good order at the end of the 25 year operating period. Such an approach is not as prominent a feature of traditional housing provision models, which tend to focus on the upfront capital cost.
 ‘PPP contract award for 534 social housing units’, Rebuilding Ireland, 21 March 2019, https://rebuildingireland.ie/news/ppp-contract-award-for-534-social-housing-units.