Statement by the National Housing Development Trust

Report – September 2015

The National Housing Development Trust (NHDT) is happy to announce the following updates, as it relates to the Affordable Housing Programmes:

1. Affordable Housing Initiative (AHI) Programmes – The AHI Programme has been designed to assist low income Caymanians with the purchase of the affordable houses, as constructed by the NHDT. Below are some of the most recent developments for this program.

 Old Affordable Houses – The 107 houses constructed in 2004 were not built to the Standard Building Code and never received Certificates of Occupancy from the Planning Department of the Cayman Islands Government.

 In efforts to correct past mistakes, new affordable homes that met local building codes and received Certificates of Occupancy were constructed between 2010-
2012. Individuals who qualified under the existing programme were transitioned to these homes.

 To date approximately 21 of the 107 original houses remain occupied. Most are located at Apple Blossom in West Bay. The NHDT along with the Cayman Islands Government (CIG) are looking into addressing these occupants’ housing needs.

This has recently been further complicated by the insurance provider, as they have discontinued coverage because of the deteriorating conditions of the homes.

NHDT has no plans to evict existing tenants, although none have made any payments for a long time, at the same time, they may leave voluntarily if they are able to locate improved accommodations. Their safety remains a major concern and NHDT is poised to have them transported to safe shelter, should severe weather or a hurricane threatens Grand Cayman.

 New Affordable Houses – A total of 94 houses were built between 2010-2013. A total of 27 have been sold by way of outright purchases; 18 were to new AHI Clients and nine to existing AHI Tenants who previously had a lease-to-own or a rental arrangement.

Under this initiative the 41 existing tenants of these houses and 12 new prospective applicants for the new houses have the opportunity to seek mortgage financing from the banking institutions.

 Existing Vacant Houses – There are 14 vacant houses that are available for purchase; four in East End, five in West Bay and five in Bodden Town. This is attributed to a few individuals that have moved on and some applicants withdrawing their applications due to personal reasons. NHDT is presently accepting and processing applications for the sale of these existing vacant homes.

 Homeownership Association – As the Affordable Housing Sites are being gradually occupied, there are ongoing initiatives, partnering with the tenants, to establish homeownership associations to protect and safeguard the properties.

 Affordable Housing Applications – To date some 240 applications have been reviewed, and NHDT will be fine-tuning its process, by only constructing affordable houses based on pre-approvals between NHDT and local banks.

 The Way Forward – NHDT plans to construct additional affordable homes in the various districts, where there is a demand for housing, under our existing program. We will issue public notices to invite applicants and will conduct an affordable housing survey, which will further assist in determining the needs for each district.

2. Government Guarantee Home Assisted Mortgage (GGHAM) Programme has been established to assist Caymanians in purchasing their first home for up to $200,000 whereby the CIG stands the guarantee of up to 35% of the mortgage. Below is a brief summary of this program.

 Approved Facility – In 2008 the CIG Government partnered with six local banks to provide home assisted mortgages, whereby a total of $65 million was approved to assist Caymanians with mortgage assistance.

 Approved Loans – A total of $59 million was drawn for 327 successful applicants for a government guarantee of $20.5 million.

 Loans Released – A total of 44 mortgages have been released from the Programmes, as the applicants secured refinancing or paid off their loan facility in full.

 Default Loans – As with any financial institution there are associated risks due to defaults. As of June 2015 the CIG maintained its commitment by settling the demand for six clients that defaulted in the sum of $290,000.00. This payout is interpreted as 1% credit risk on the overall Government Guarantee and is
significantly low in comparison to the equivalent loan facility as issued independently by the local financial institutions.

 Measured Success – The fact that this programme has facilitated 327 families with a 1% default payout risk, is an indicative of its success. This is credited to the Cayman Islands Government and the participating banks undertaking an initiative that has been beneficial to our community and the economy.

 Review of the GGHAM program – In light of the success of the GGHAM Programs, we are pleased to announce that the Cayman Islands Government in concert with the NHDT is currently in the process of renewing the GGHAM program with the participating banks to provide more lenient terms to assist more Caymanian families.

A public notice and update on the NHDT programs and initiatives will be made available as soon as the new agreement is finalized, so that prospective applicants will be aware of the improved criteria. For more information, please contact NHDT at 945-7649 or alternatively please stop by our office at the Cayman Centre that is located across from the Airport Post Office.

3. NHD T’s Financial Performance –

NHDT has passed this last financial year’s audit with clean opinions.

Despite having to write off and demolish the houses that were initially constructed in 2004 at a cost of CI$10 million, the last audits conducted by the Office of the Auditor General concluded that NHDT maintains a stable balance sheet. Yet as a result of the high write offs on Old Affordable Houses, the high write off of Old Affordable Housing Client delinquency, and the high operating costs in previous years, the NHDT has been reliant on the Cayman Islands Government for capital injections for funding bond commitments and to cover its operations.

As with many organizations there is always room for in improvement. The NHTD board has aligned the Trust with its initial mandate of home-ownership. To date our records reflect a decrease of approximately $250,000.00 in operational costs in comparison to the last 5 years; mainly attributed to the reduction in maintenance costs of the condemned old affordable houses and other direct costs such as directors’ fees and professional fees. Directors’ fees for the period August 2009 to June 2013, were CI$360,000.00, compared to

CI$28,000.00 from July 2013 to August 2015 under the new board, chaired by Mr. George Anthony Powell; a reduction of CI$332,000.00

NHTD currently maintains a healthy cash flow of approximately $2.6 million, which will be utilised for further housing projects that are currently being planned. The proceeds from the sale of the New Houses and existing homes $4.5 million, given a total of $7 million, when total realized. This will be reinvested in further project development. It should be noted, that there is no intention to rely on the Cayman Islands Government for capital injections for projects as NHDT will utilize its own resources for this purpose. NHDT will rely on the Government for administrative expenses, minus Directors’ fees and continued serving of the bond payments, as was the initial arrangements.

Summary

There still remains a need for housing in the community, but this aspect cannot be addressed by the present board, under the existing laws which govern it. This void, is where persons are displaced for whatever reasons; retired, low income, subsidized income, widowed, elderly, and handicapped, or presently reside in a condemned Old AHI home, and are unable to service any mortgage with a minimum payment, but will possibly be able to pay their utility bills. One possible scenario is that the present allocation that Government makes to The Department of Children and Family Service for the -provision of rent payment in the private sector, be utilized to service borrowings to develop such a facility. In the long term, Government will increase its equity in the project, with complete ownership. This development can be labelled Government Assisted Living (GAL). This will be an asset on the Government’s books or alternatively give a grant to a service club or similar entity to develop such a facility, with annual subsidies to assist with its continued maintenance.

The NHDT Going Forward

Now that NHDT is currently aligned with the mandate of homeownership it will:

Concentrate its efforts to address the liability faced with the remaining 21 Old Affordable Houses,

➢Continue to find ways to conserve costs,

➢Finalise the sale of the affordable houses that remain on the books of NHDT,

➢continue to provide housing opportunities on the GGHAM and Build on Your Own Property

(BYOP) programmes,

➢Initiate carefully planned projects that will assist Caymanians to transition to these houses once they have been constructed.

Members of The National Housing and Development Trust Board.

Mr. George Anthony Powell – Chairman

Mr.Kearney Gomez -Deputy Chairman / Chairman of the Projects Committee Mrs.Christine Burke-Richardson – Director / Chairlady of the Finance Committee Mr.Teddie Ebanks – Director / Member of the Projects Committee
Mr.Allan Bush – Director / Member of the Projects Committee Mr.Harwell McCoy – Director / Member of the Finance Committee Mrs.Lucille Barnes Rico – Director / Member of the Finance Committee Mr.Rayburn Farrington -Director
Chief Officer, PLAHI or Designate –Liaison Officer

Financial Secretary or Designate – Liaison Officer

Mr. Julio Ramos – General Manager /Board Secretary

END

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