Mick Wallace (Wexford, Independent)
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60. To ask the Minister for Housing, Planning, and Local Government the amount paid to approved housing bodies to date in upfront or accelerated CALF funding; the amount of interest that to date has been paid back on these loans; the amount of principal loan funding that to date has been paid back; and if he will make a statement on the matter. [4846/18]

Mick Wallace (Wexford, Independent)
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There is much interest in and concern about how the Minister is dealing with the housing crisis. On social housing, why has the Government anointed and funded approved housing bodies to deal with the shortage of social housing stock? With regard to capital advance leasing facility, CALF, funding, how much has been loaned and paid back and how much does the Department expect to get back in the long term?

Damien English (Meath West, Fine Gael)
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The Government is committed to supporting approved housing bodies, AHBs, to contribute to the delivery of social housing. The purpose of the capital advance leasing facility, known as CALF, is to provide AHBs with a small amount of loan capital to assist them in securing other loan finance for the purchase, construction or refurbishment of new social housing homes. The loan facility can support up to 30% of the eligible capital cost of the project where the units will be provided under long-term lease arrangements, known as payment and availability agreements, for local authorities for social housing use. A nominal interest rate of 2% fixed per annum is charged by the local authority on the initial capital amount. Repayments on either the capital or interest are not required during the term of the loan, although where an AHB chooses to, repayments can be made during the term. No such repayments have been made to date. At the end of the term, the outstanding capital amount, plus the interest accrued, is owed and repayable to the local authority.

In recognition of the shift in investment required by AHBs towards construction of new units, my Department introduced upfront or accelerated CALF payments in 2015, a change to the scheme which was launched in 2011, which allows for the drawdown of funds prior to a project starting on site. Up to 95% of the approved CALF funding can be drawn down as specific milestones are achieved, while 5% is held back until the payment and availablity agreement is signed. The use of funding in this way provides more funding certainty for AHBs, particularly on construction projects. There are 42 projects that have received approval for accelerated CALF payments, amounting to over €63 million in capital advances.

Mick Wallace (Wexford, Independent)
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I do not know who in the Department negotiates with approved housing bodies, but I would not mind setting up my own charity and arranging a meeting with them.

Damien English (Meath West, Fine Gael)
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The Deputy is welcome to do so, if he meets all of the criteria.

Mick Wallace (Wexford, Independent)
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As the Minister said, by way of CALF the Department provides 30% of the funding upfront for a private organisation to purchase housing units. From what I can see, the loan is unsecured, with a 2% interest rate over a 30-year term. It is understandable organisations are not queueing up to repay during the term of a loan. Even after the 30-year period, there is no concrete repayment option. There are four vague possibilities as to how the money should be repaid to the housing authority but from the guideline notes I have read, it seems as though the housing authority does not think anyone will be around in 30 years time to collect the money; therefore, they are not too worried about it. In effect, the Government is paying one third of the building cost of the units, retains no claim on the properties and will then pay once again to rent the properties back from the approved housing body. Having spent some time in the construction industry, I can say it is not a great business model to pay for something, to give it away and then rent it back. I understand the pressing need to provide social housing units, but the Minister should address the matter of ownership and say why he believes the State giving up ownership of housing infrastructure for which it is paying is a good idea.

Damien English (Meath West, Fine Gael)
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I disagree with the Deputy. It is a good scheme and makes financial sense if we can stretch our capital budget and by putting up 30% of the cost it results in a 100% spend on a house which is to be delivered, but it is only part of the solution. Every time I engage with local authorities I stress that they are central to the delivery of social housing. They are the key players. Approved housing bodies engage and work with them to go through every housing project, with the Department's housing agency. They are allocated about one third of Rebuilding Ireland's expenditure for housing delivery in conjunction with the local authorities. It is, therefore, a good scheme. We will get our money back and expect to do so. All of the approved housing bodies go through the regulator. The Deputy claims that it is easy to step in and he is welcome to do so if he engages with the regulator and passes all of the regulations, but, in fact, it is not that easy to pass all of the tests. To ensure the money is secure, there is a tough regulation process to be gone through. At the end of the 25 or 30 year period, the outstanding CALF loan interest must be paid. The AHB may decide to sell the homes and repay the moneys owed to the housing authority, given that at that stage the asset should have a considerable residual value, and may wish to invest elsewhere. It may wish to realise some of the residual value of the properties and secure a further private loan to invest in homes and repay the housing authority or it or the housing authority may decide to enter into another leasing agreement. There are many options, but the money is secure because it is the same as a loan facility.

Mick Wallace (Wexford, Independent)
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I find it interesting that charitable, not-for-profit approved housing bodies are very good at making profits. When one considers the amount of State aid they receive, they would have to work very hard not to make a profit. Take Cluaid, for instance. It made a profit of over €6 million in 2016. Its rental income is €16 million and it has reserves of €74 million. It is sitting on a portfolio of almost 6,000 units which it values at €615 million. In three years time, thanks to schemes such as CALF, it plans to own well in excess of 8,000 units, on many of which, the local authority will pay 92% of the market rent. This, in turn, will be topped up by the tenants' differential rent payments.

In most cases the charitable approved housing body would be getting more than the market rent. The private sector could not compete with these fellows. We are paying the deposit and the mortgage and the Government is giving the units away. In that context it is not surprising that the Central Statistics Office, CSO, and EUROSTAT want approved housing bodies to go on the balance sheet. Approved housing bodies manage their stock well and manage their tenants well, but I still wonder why the Department is so allergic to building and owning social housing. The Minister has said that local authorities are central to it. I can tell him that the local authority in Wexford has been sidelined and the approved housing bodies are running the show. It is costing us more, and it could be done cheaper through the local authority.

Damien English (Meath West, Fine Gael)
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I want to stress that the local authorities are the key players for social housing. The approved housing bodies are part of that and are working with us and our local authorities to deliver quite a lot of social housing into social housing stock. They have a proven track record. I am not sure if the Deputy is trying to insult them or compliment them. He seems to be confused in his comments. They are doing very good work in most cases, in conjunction with local authorities.

Mick Wallace (Wexford, Independent)
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We are overpaying them.

Damien English (Meath West, Fine Gael)
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For the record, I have asked our councils and local authorities to engage more with them, because the approved housing bodies cannot bring any project forward without the co-operation of the local authorities. They work through them, with our Department and the agencies. I want to be clear on that. The Deputy should not tell me that they are taking over local authorities or that local authorities have been sidelined.

Mick Wallace (Wexford, Independent)
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They are in Wexford.

Damien English (Meath West, Fine Gael)
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They are part of it and have to work in conjunction with local authorities. I have to stress that they provide very good value, and our commitment under the 30% target is about €63 million. We are getting a large amount of housing stock for that. One can look at the figures that have been delivered over the past year in terms of the housing targets. This year there will be in excess of 2,000 houses, in 2019 there will be 2,000 houses and in 2020 there will be 2,600. The figures are quite good. They are delivering. This is money well spent, in my view, and I disagree with the Deputy when he tries to slag them off.