Developing sustainable affordable housing: A project level analysis

The purpose and context of the research This study examines how contemporary Australian affordable housing projects are designed, financed, developed and managed. The study aims to deepen understanding and raise awareness of the various trade-offs that shape the design and development of affordable housing projects in Australia, and to suggest ways in which such trade-offs can be managed to deliver outcomes that are socially, environmentally and financially sustainable. The study also offers a tool for projectlevel evaluation of affordable housing. Governments across Australia are increasingly turning to not-for-profit housing providers to help address shortages in housing that is affordable to low and moderate income households. Consequently, various new forms of affordable housing projects have been developed or procured by not-for-profit organisations in recent years. Previous research has examined some of the challenges faced by not-for-profit organisations involved in this rapidly emerging industry and has focused on organisations or the wider policy and regulatory contexts in which they operate (Milligan et al. 2009, 2004; Lawson et al. 2010; Travers et al. 2011). The focus in this study is on delivery at project level, using a sample of eight affordable housing projects that have been selected on the basis of specified criteria. The project level analysis is underpinned by the concept of sustainability, giving consideration to financial, social and environmental goals and outcomes of affordable housing projects. A sustainability framework encourages providers planning a new project to aim high, to manage multiple objectives and to consider both immediate and long-term impacts. This framework underpins the four principal research questions addressed in the study: 1. What qualitative and quantitative metrics are appropriate to evaluate the on-going financial, environmental and social sustainability of affordable housing projects developed by Australian not-for-profit providers? 2. What are the key contemporary approaches in the development of affordable housing projects by not-for-profit providers? 3. What sustainability considerations have been included in the design and development of affordable housing projects? What trade-offs were made between financial, environmental and social aspects? 4. What sustainability outcomes have been achieved in the affordable housing projects examined? What are the implications for policy setting and organisational development in this field in Australia? Overall, the study aims to encourage a more critical and informed approach to the planning of new affordable housing projects. It is hoped that it will also be of practical benefit to emerging affordable housing providers who can learn from the experience of early players in the industry. Policy-makers should benefit from gaining an understanding of the financial, environmental and social outcomes achieved by projects with different forms and levels of public support. Finally, by developing and testing methods for analysing the sustainability of affordable housing projects, the project offers a methodology that could be used for regular evaluation (see also Milligan et al. 2007) and, possibly, to assist in decision-making about future projects. The projects studied: The study uses a specific definition of the term 'affordable housing', referring to housing that is initiated and owned by non-government not-for-profit providers; is financed through a mix of public subsidies, planning benefits, private equity and/or debt finance; is priced at below market rents; and is restricted to moderate and/or low income client groups (Milligan et al. 2004, p.5). Funding was provided for the examination of eight affordable housing projects. The selection criteria sought to achieve a sample of projects with diverse social, financial and environmental features. Consequently the projects, that were selected from a list of all of the affordable housing projects that have been developed by not-for-profit organisations in eastern Australia until the end of 2009, show considerable differences in scale, dwelling form and size; location (metropolitan or non-metropolitan); funding arrangements; environmental standards; and income and social mix (see Tables 5 to 7).Methodology: The assessment of each project has been based on qualitative and quantitative research methods that included provider interviews, site visits, a design checklist, an independent expert review of architectural aspects, a resident survey, and a focus group with residents and document analysis. Field work was conducted during the first half of 2011. Analysis included two main components. First, each project was evaluated separately by the research team and the independent expert using the data sources described above. Each project's description and assessment is presented in full in Chapter 4; project providers were given an opportunity to comment. Projects are not identified. Second, a thematic analysis was used to identify issues that emerged across the projects, such as typical attributes of affordable housing or common challenges for not-for-profit developers. The thematic analysis is presented in Chapter 5. Findings: Affordable housing projects are developed by a wide range of not-for-profit organisations with different skills and priorities and under policy and funding conditions that vary by jurisdiction and over time. Consequently, as demonstrated in the sample, there is a great deal of variety in their social, environmental and financial outcomes. Below we highlight some of the more consistent findings of the study, drawing particular attention to the trade-offs that affordable housing providers make in order to achieve viable projects. While we are basing these findings on a small sample, our previous research and knowledge of the industry, together with our interviews with providers, which covered the strategic contexts within they were operating, all suggest these findings are more widely applicable. Tenant viewpoints and broader social outcomes The experiences of affordable housing residents had strongly positive aspects, evident across all of the projects studied to a greater or lesser extent. These included especially the high quality of housing provided in good locations, and valued feelings related to security of occupancy and the absence of stigmatisation that was for many tenants associated with more traditional forms of assisted housing, such as public housing. Affordability for tenants generally lay on a range between that found in public housing and the private market. Rental costs were not identified as a problem by tenants, at least partly because of the attributes of their housing that added value for them. In several projects, tenants were also benefitting from lower living costs as a result of reduced water and energy bills and having good access to services, both factors directly associated with the choice of sites and design of the affordable housing project that was studied. Tenants' views of their housing management services were more mixed. While there were examples of good practice in tenant services and tenant engagement in some projects, most were lacking in this area. The most consistent area of tenant frustration was with insufficient car parking provisions, which was a trade-off made in most projects to achieve greater dwelling yield and thus improved financial viability. Without organising compensating arrangements such as shared parking schemes, affordable housing providers are perhaps ahead of their time in reducing the ratio of car parking to dwelling numbers. Limited parking space may also reduce providers' opportunities to sell the property and hence reduce their asset management options.A second area of dissatisfaction arose from projects that, while well located in terms of access, were on sites that presented significant noise and dust issues, which had not been adequately mitigated through project design. In terms of wider social outcomes sought by governments, both low and moderate income households were represented in the profile of residents across projects and also within some. However, access for low income households clearly depends on how far providers are expected to leverage government funding through private financing arrangements under present subsidy policy settings. Projects with heavier debt financing obligations were least able to house lower income households affordably. Older households were well-represented among residents but modified dwellings suitable for people with disabilities were not so widespread. Additional incentives may be required to ensure such outcomes as the sector expands. The study found a lack of transparency and consistency in local registration and letting practices among providers. This finding predates implementation of common access systems for affordable housing, which will help to address the issue by ensuring that those in housing need can register simultaneously for housing that may be provided by a range of different providers. However, the case studies also show why it is important that individual providers maintain flexibility in making allocations to their projects: to ensure that design is appropriate to resident needs; to maintain financial viability; and to support social cohesion objectives. In our sample, there was a clear trend towards providing smaller sized dwellings (to optimise dwelling yield for a given level of funding), which while meeting some priority needs (such as for single person households) also has the effect of excluding larger families from affordable housing. Thus the task of ensuring that affordable housing reflects local demand is an important planning concern.