NHT recommends scrapping Ruthven Towers Phase Two, insiders reveal

The National Housing Trust (NHT) reportedly recommended abandoning plans to fund Phase Two of the controversial upscale Ruthven Towers project to make way for it to be undertaken by any interested private developer.

The recommendation was reportedly approved by the board and submitted earlier this month to the cabinet of Prime Minister Andrew Holness, who is also the minister in charge of the housing agency, more than one government insider confirmed to The Sunday Gleaner last week.

One official said developers were invited to participate in a special programme where they would build to the NHT’s specifications on the St Andrew property but they indicated that they would not be able to do so, and made a proposal that did not meet the NHT’s objectives.

“The NHT said, if this is what the developers are saying, then they’re not going to be able to build houses for their contributors at that location (Ruthven Phase Two). So let the developers go ahead and take on the risk for developing that part of land. But, they are only selling it on the condition that the developer who buys it will be building houses on that land,” the insider told The Sunday Gleaner.

PRIME MINISTER’S ANNOUNCEMENT

But some confusion has emerged following Holness’ announcement in Parliament on Thursday that 400 units from “Ruthven 2” were included in the 15,009 houses that the NHT is expected to start building over the next 12 months, starting April 1. He said more than 96 per cent of the houses are geared toward lower middle-income to low-income contributors.

He said the 15,009 units comprised 4,309 two-bedroom solutions, priced at an average below $13 million; 7,600 one-bedroom units, priced at an average below $10 million; and 3,100 serviced lots, priced below $4 million.

Those prices have already triggered concerns for owners in Ruthven Phase One, who paid between $27 million and $37 million for their units.

Holness dismissed criticisms from the Opposition that the NHT was not focusing on low-income earners and pointed out that, three years ago, the government gave the NHT policy directive to “redirect its resources” to that group of contributors.

“We are not taking on houses where the price point is in middle and high. There are a few legacy projects which we were committed to which we can’t come out of, and those projects will continue. But we are not taking on any new projects that is outside of the policy guideline for low-income to lower-middle-income,” he said during his contribution to the 2024-2025 Budget Debate.

It is not clear whether the Ruthven development was included as a ‘legacy project’.

Sunday Gleaner questions submitted to the Office of the Prime Minister on Friday morning for clarification and Cabinet’s final decision on the Ruthven project were not answered up to press time on Saturday.

Questions on the status of Phase Two, including the start date for construction, were first submitted to the NHT on March 12, but there has also been no response.

PUBLIC BACKLASH OVER PHASE ONE

The NHT is funded by a mandatory contribution on salaries, and is tasked with providing affordable homes to Jamaicans at below-market mortgage rates.

The NHT has faced strong public backlash over the Ruthven development, which is located in St Andrew. The first phase cost the state entity over $5 billion.

The 86-unit apartment complex was opened in 2022 and the prices ranged from $27.7 million to $37.7 million per unit, well out of the range of its average contributors.

The NHT has over 550,000 contributors and about 66 per cent of that number earn between the minimum wage and $30,000 weekly, according to the entity’s latest annual report (2022-2023).

Three other income bands attract higher interest rates, with the highest being five per cent for persons who earn more than $100,001 weekly. That group accounts for about five per cent of contributors, the report said.

The NHT loan limit for individuals is $7.5 million for open market purchases and 100 per cent financing, or up to $15 million for scheme homes, subject to affordability.

The Ruthven criticisms prompted a review of plans for Phase Two but, at the handover of units in Phase One in August 2022, Prime Minister Holness announced that the Government was going ahead with the project.

“There should be no reason why somebody who can afford a $40-million home should not get the opportunity to buy his $40-million home. There is no reason. Just as long as we are ensuring that the man that only can afford his $8-million home, he gets it too,” the prime minister argued.

PHASE TWO NO LONGER VIABLE

However, the NHT reasoned in its recent recommendation that going ahead with Phase Two is no longer viable, multiple government sources have disclosed. They are not named because they are not authorised to speak on the matter.

“At the inception when we finished Phase One, everything was nice, but that was at a point in time. Now, things have moved on and the appetite has shifted. We really want to go back and put more resources into keeping house prices down,” a second government official said.

Among the reasons outlined for scrapping the project are high construction costs and the strong likelihood that the units would exceed $40 million, “over and above the price for the most expensive units in Phase One”.

On housing demands in Kingston and St Andrew, Lenworth Kelly, president of the Incorporated Master Builders Association of Jamaica (IMAJ), said “the real demand is under $30 million”, adding that those units “are sold before they are built”.

“As for residences priced in the $40 million to $50 million, those are usually taken up by persons looking to invest or purchasing from overseas,” he said in December 2023.

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Outstanding issues plague Ruthven Towers Phase One

Meanwhile, one of the government officials explained to The Sunday Gleaner that the challenge with the NHT divesting its interest in Ruthven Phase Two is to ensure that the homeowners in Phase One are satisfied that “the idea they were sold” about a luxury apartment complex is still fulfilled.

“There would be a lot of things to work out because, right now, we still have some issues to address for Phase One. We are working through them but it has not been a smooth journey with the controversy, the flooding, and so on. Some of the benefits for Phase One buyers were tied to the completion of Phase Two,” the source added.

A major issue for current homeowners in Phase One is obtaining splinter titles for their units. Some of the questions submitted to the NHT on March 12 referred to that issue, in addition to the registration of the complex as a strata and the status of promised amenities such as a multipurpose court, tennis court, a meeting room and jogging trail.

As Ruthven does not have a strata number and cannot register with the government’s Commission of Strata Corporations, it cannot have a properly constituted strata management body made up of residents. What now exists at Ruthven is an interim strata executive committee, with the NHT still being responsible for managing the affairs of the complex.

A strata property is a building or collection of buildings where individuals each own a unit (a strata lot) but where there is also common property such as driveways, for which each resident shares ownership.

The outstanding issues are but some of the problems that have plagued the upscale development. In 2022, the basement parking was flooded, resulting in the trust paying out at least $44 million in compensation to more than a dozen affected residents.

SEVERAL COMPLAINTS LODGED

The Sunday Gleaner has obtained a document titled ‘Update – February 2024’ containing the NHT’s responses to several concerns of residents. It also pointed to an initial plan to facilitate a faster construction of amenities while phase two was built out. But it said the plans have changed, with the provision of communal areas and amenities deemed “high priority”.

“The NHT is intended on undertaking the construction of the communal facilities and dispose of the Phase Two property under a separate arrangement. The discussions are to continue, and the new timelines shared by mid-April 2024, with the interim strata committee members,” the NHT told residents.

According to the agency, because of the change, it “cannot proceed with the application for splinter titles for Phase One, until the revised and approved subdivision plan is available, the new titles issued therefrom, and the revised and approved strata plan becomes available”.

It said, once the approval is granted, it can then apply to the National Land Agency for splinter titles and the Proprietor Strata Plan Number, which would enable the development to be formalised.

Residents remained dissatisfied and issued further complaints in March.

“Since the Ruthven Towers development opened in 2022, owners and their families have been plagued with several issues concerning the development or their individual units,” the interim strata executive committee said in an email dated March 7, 2024 to senior executives of the NHT.

“Issues, from the flooding incidents of the basement parking, in-unit flooding impacting multiple units due to poor plumbing and testing, to the strata corporation registration and formation, which remains incomplete after twenty months, leaving homeowners and management in limbo.”

It added that: “residents at Ruthven Towers were promised a modern, safe, and comfortable living environment. However, the lack of attention to critical issues is compromising this vision and residents’ quality of life. If unresolved, these deficiencies could cause the community to fail,” the committee said.

The NHT itself has concerns about how some residents have been using the property, including for short-term rentals, which are forbidden.

jovan.johnson@gleanerjm.com