NHT bungle

Persons approved for mortgages of up to $40 million for units at the National Housing Trust’s (NHT) upscale Ruthven Towers development cannot get to move into their new homes because an occupancy certificate is yet to be granted for the complex.

The Jamaica Fire Brigade confirmed Friday that there are issues preventing the issuance of the clearance for the 86-unit St Andrew property to be occupied.

This has increased the frustration of several of the pre-selected homeowners, who have been waiting for months for a set date when they will get their keys.

“This is taking an awfully long time. I am exhausted at the meetings and revisions. NHT has been all over the place with this. To learn now that there is no occupancy certificate?” vented an annoyed buyer, who did not want to be named.

The Jamaica Fire Brigade’s public relations officer, Emeleo Ebanks, said an application was made for the certificate, but he has declined to discuss specific details. He also said he could not speak on when the last inspection was done, and whether a certificate is likely to be issued within the next two months.

“I cannot comment further on that right now,” Ebanks insisted when pressed.

ADDITIONAL PRESSURE

There are some “structural issues” with the property, two senior officials at the NHT have disclosed.

There are concerns about the fire doors, a staircase, and the access to the basement where residents are to park, said one of the officials who requested anonymity because they were not authorised to speak on the matter.

The latest situation is additional pressure on the NHT which was set up in 1976 to provide affordable homes and low interest mortgages to Jamaicans, and whose projects have mostly been targeted at low- to middle-income earners.

Numerous persons in the agency’s leadership ranks have expressed “embarrassment” that the entity’s controversial re-entrance into upscale housing, since backing out of middle- to upper-income developments in 2012, has not been going according to plan.

“The Ruthven Road project is a case of the tale of ‘The Emperor’s New Clothes’. The emperor, in this case, has been caught naked with his pants down,” said the official.

The project has been hit with several missed deadlines and financial creativity by the NHT to ensure persons selected can cover the costs of the units that range from $27.7 million to $37.7 million.

Last December, the NHT reported that the one- and two-bedroom units at the New Kingston, St Andrew property were sold out, weeks after they were put on the market.

The NHT, which reports directly to Prime Minister Andrew Holness, has not answered questions from The Sunday Gleaner on the current issue, including whether the absence of an approved fire door is contributing to the delay. There are reports the door is expected in Jamaica between May and July.

According to the NHT, the selection process for Ruthven Towers is ongoing.

“The NHT anticipates the selection of the new homeowners will be completed soon. The NHT will be able to share more on the selection process upon completion,” said the state entity in a May 20 statement that was hardly different from what it provided over three months ago.

‘QUICK AND EASY’

On the issue of financing, the NHT has been considering and revising several options to enable the pre-selected persons to be able to cover the costs of the units.

The NHT had indicated that it was willing to finance up to $15 million per unit at an interest rate of four per cent for the Ruthven Towers development. The remainder will be financed at an interest rate of seven per cent.

But there was confidence that the units would be disposed of “quick and easy”, noted one of the agency’s officials.

The NHT has used two means to allocate the units – through open market offering and its Priority Index Entitlement (PIE). Under PIE, persons applying for a scheme house benefit are shortlisted based on a combination of factors, including proximity of the scheme to the applicant’s workplace or then address or residence.

Up to April 30, 2022, of the reportedly 226 applications submitted under PIE, only 22 were able to afford the units. Approximately 70 applications were closed. There were 143 applications from the open market and only 15 were completed.

It means 37 applicants were in a position to be handed keys. That figure has reportedly grown to about 42.

Several unions representing public sector workers have also reportedly returned their special allocations.

The Jamaica Civil Service Association, which has membership of 30,000, said the two units assigned to it were returned as the members were selected in the regular intake.

The association’s president, O’Neil Grant, said members complained about the costs.

The Jamaica Teachers’ Association has also returned the one-bedroom unit that it was allocated because “our members are not earning enough to be able to afford such a mortgage”, President Winston Smith said.

It was a similar case for the Nurses Association of Jamaica, whose president, Patsy Edwards-Henry, said the unit it received had to be returned because “it was too expensive”.

“Nurses wouldn’t be able to afford it at this time,” she said.

Sunday Gleaner calculations put the monthly mortgage amount for the lowest-priced Ruthven apartment at $149,000, which means that someone seeking to qualify for a unit would need to earn upwards of $5 million annually.

RANGE OF OPTIONS

The NHT board has reportedly considered a range of options to get persons into the apartments.

Among the initiatives proposed were: increasing the debt-service ratio to 50 per cent from 33.3 per cent; approving three applicants for one solution; increasing the deferred mortgage facility for up to 40 per cent of all solutions, which would mean that just under half of the Ruthven units could have mortgagors who can only afford 60 per cent of the costs, with the other 40 per cent pushed back to major payments during the life of the mortgage.

The NHT also reportedly considered resuscitating the graduated payments mortgage where the payments would be hiked over time.

An option of ‘lease to own’, where tenants could get to buy the properties after 60 years, was assessed.

In his contribution to the 2022 Budget Debate in March, the prime minister announced that up to three NHT contributors would be able to apply for a two-bedroom or larger housing unit.

And, over a week ago, Holness said the Government will pursue a rent-to-own housing programme.

It is not clear whether those policy shifts are connected to the push to address the problems with Ruthven Towers.

The NHT confirmed in its May 20 statement that “alternative financing arrangements” outside of its standard loan facilities are being made available. It said they include intergenerational mortgages, lease to own, deferred mortgages, among others.

“All these financing arrangements are being explored and offered to applicants, as is customary across all NHT schemes,” the agency said.

NO DELIVERY DATE

The issue of maintenance fees is also another concern, given that Phase Two of the project has been halted to allow for a review of its future, which means some of the promised amenities such as a multipurpose court, tennis court, a meeting room and jogging trail have no delivery date.

The NHT did not address questions on those costs, including what the fees will cover, but it’s believed that the first proposed maintenance fee of $40,000 monthly has been reduced to $30,000. Some potential homeowners have said they have been given figures of $20,000.

There are also claims that the NHT tried to woo building societies to finance the loans without the requisite splintered titles. The entities backed out because of the risks in that approach.

There are also growing internal worries at the NHT about the cost of the project, especially after the addition of two floors to the originally approved drawings.

Back in 2010, when the NHT initially proposed the Ruthven Towers project, its estimated cost was $1.9 billion. Up to 2017, the cost of the development stood at $5.2 billion but, with the variations, the final cost is not clear.

Under the original design, the complex was slated to include 238 apartments, spread across four blocks, each rising six floors, on a 5.71-acre property.

The NHT redesigned the plans and, two years later in 2019, Donald Moore, senior general manager of construction and development at the NHT, said single building in Phase One would be eight floors.

Construction of the Ruthven apartment complex, which is being led by M and M Construction, started in 2018 and the completion of the first phase was initially expected within eight to 12 months.

The NHT had originally proposed selling the Ruthven Towers units for $16 million to $22 million, but the new costs are 73 per cent higher than initial projections.

The proposed prices were seen as more akin to the quotations that come from private developers whose market tends to be in the middle- to upper-income categories, whereas the NHT has traditionally served the lower end of the market. First-time homeowners applying to the NHT can access up to $6.5 million.

When the new prices came out late last year, the NHT defended them, saying the costs reflected skyrocketing construction prices, its location, and access to amenities.

Meanwhile, Holness is now on the hunt for a new NHT chairman as the incumbent, Lennox Channer, a senior executive in the Jamaica Broilers Group, confirmed last week that he will step down on August 31.

He took over in 2018 from Dr Nigel Clarke, the current finance minister.

It is not clear whether the problems with Ruthven Towers and other issues at the NHT contributed to Channer’s departure.

“My increased professional obligations, alongside personal commitments, have prompted this decision,” he told staff in a memo on Wednesday.

jovan.johnson@ gleanerjm.com