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Developer gets ultimatum on Bernard Lodge project, Luana prices to be rolled back

Published:Friday | July 8, 2016 | 12:00 AMTameka Gordon
Minister in charge of housing, Dr Horace Chang.

A new developer will be selected for the completion of the Bernard Lodge housing project spearheaded by the Housing Agency of Jamaica (HAJ) if the current contractor, Herzog Jamaica Limited, fails to get the project off the ground by the end of the month, says Minister of Economic Growth and Job Creation Horace Chang.

Additionally, the minister signalled that the price of the houses at Luana will likely be cut by half, or more, to a more affordable sum for the low-income side of the market that HAJ targets, Chang told the Financial Gleaner.

The HAJ is currently being reorganised by the new installed minister amid concerns of mismanagement and delays to several projects. In the midst of the housecleaning, five managers have resigned from the agency

Chang said Herzog Jamaica gave a commitment to launch construction of the Bernard Lodge houses this month.

"If the company cannot start, then we will have to look for a new partner," the minister told Financial Gleaner, following his post-Sectoral Debate press conference on Wednesday. Chang is in charge of the housing portfolio inside the Ministry of Economic Growth and Job Creation.

He said with new interest from developers now wanting to get into the low-income market, the ministry would not allow the project to drag on any longer.

The HAJ should have completed the development in March 2014, and is still holding deposits on the units from at least 300 homebuyers.

Problems with the first co-developer Malphrus Incorporated, with which the HAJ had a public-private venture, resulted in the work being grounded.

In July 2015, another public-private partnership agreement was signed with Herzog Jamaica Limited. Construction should have began later that month but to date, the project remains at a standstill.

All that will change by month end, Chang said.

"We are going to give them until July month end, but we are not waiting around and having poor people suffer for their money," Chang said.

Meanwhile, the price of the units in the Luana, St Elizabeth project will be rolled back to roughly $5 million "or just under $5 million," Chang said, who noted the figure was closer to the price originally set for the houses.

"The board is looking at it, but we may go back down. We are going to lose money, but we are going to be selling at a lower price," he said.

The Luana homes are being sold on the open market to persons in the low- to-middle income bracket.

"The projection was to sell at about $5 million. Now, less than five years later, they are being sold for $11 million and we are not getting any acceptable answers for that kind of variation," the minister said of the HAJ management.

Five senior managers were dismissed from the HAJ this week amid accusations of gross mismanagement at the government agency. They included the managing director, the director of technical services and senior managers with responsibility for construction and finance and information as well as the company secretary.

"The board is examining what can be done. That's why the decision was taken as early as this week, and nobody is going to be given any special treatment. We are laying it bare and we are not covering for anybody," Chang said.

Pressed on whether the HAJ will be scrapped, given the thrust of the National Housing Trust and other agencies to provide low-income housing, an objective of the HAJ, Chang said while the Government is considering several options, winding up the agency is not on the cards.

"It has significant assets, so we can't scrap it. The Government is examining all options and the objective is that at the end of this year, we will put in place some institution that is sustainable in terms of its governance," he said.

The current restructuring marks the second attempt by Chang, as he also had portfolio responsibility for the agency in 2010 when several other changes were instituted.

"It went bad dramatically fast," he said of the state of affairs at the HAJ.

"The project development, management and implementing areas have created the problems. We will have to clean up our relationship with the Housing Trust, banks, and the projects we are doing," Chang said.