11 Aug 2018

More than half of KiwiBuild development proposals still under evaluation

2:49 pm on 11 August 2018

The processing of potential KiwiBuild developments is taking longer than the government hoped.

Highrise construction generic, multistory building generic, construction generic

Photo: 123RF

Almost 100 developers put forward plans for KiwiBuild developments two months ago.

Some developers said they are well underway with discussions however others say they're yet to be contacted.

Initially the Government aims to have at least 1000 affordable homes built by the end of June 2019 with 80 percent funded and built by the private sector.

The KiwiBuild Buying off the Plans approach was the first tender pitch for the government's flagship programme.

Under the tender, developers would be in charge of their own project, including funding it, and the government would underwrite it.

The idea, according to the MBIE, would be to give some certainty to developers who were often required to sell a certain proportion off the plans to secure funding for the build.

The government's underwrite would involve buying units the developer couldn't find buyers for or entering into an agreement to buy all completed units and on-selling them.

The timeline in the tender document told developers that site visits, interviews, and presentations would get underway for those shortlisted by 2 July.

Last month the head of KiwiBuild Stephen Barclay said they were focusing on 10 developments, six of which were in Auckland.

Announcements of successful proposals are expected to start this month, subject on negotiations.

This week the KiwiBuild Unit said of the 97 development proposals 32 were under negotiation.

So far 10 had failed to meet the criteria, leaving 55 proposals still being evaluated.

The unit is aiming to engage with all of them by the end of August, it said in a statement.

"KiwiBuild acknowledges that the evaluation and due-diligence process has taken longer than we'd initially hoped," it said.

"The evaluation process is comprehensive and necessarily robust to ensure we achieve the best possible outcomes. In some cases, developers are being asked to provide additional information. "

Several developers spoken to by RNZ said they hadn't heard anything since putting their ideas forward two months ago.

One faced losing the land they hoped to build on as they could no longer extend their land purchase agreement which was contingent on a KiwiBuild development contract going ahead.

Another said it raised concerns around the Government's time frame and said if the government wanted to ramp up building and meet their targets, they were going to have to get onto it.

Industry commentator Leonie Freeman said while it was promising to hear some were progressing she also knew some developers hadn't heard anything yet.

"We have to build really strong and trusted partnerships between the private sector and the public sector if we want these big targets to be met and one of the things you have to build is trust.

"So on one side you've got the Government requiring a huge amount of work and investment and cost and time to provide submissions. Then on the other side they need to step up and commit to the deadlines..."

She said there wasn't a lot of time to get the houses built so decisions and commitments needed to be made to allow developers to get on with it.

"If [developers] are just sitting there wondering what happens next they could well go off and do something different and we lose the opportunity of kicking off some of these projects."

Other developers RNZ spoke to had been contacted and were happy with how things were progressing.

One had several interviews and phone calls with the Kiwibuild Unit and thought perhaps some hadn't heard anything as the unit was looking to get the most straight forward projects off the ground first to get some runs on the board.

The tender does provide for some projects, that meet all the criteria, to be fast tracked.

Others said it was a new, complicated process that would take time to get going.

Get the RNZ app

for ad-free news and current affairs