Editorial | What went wrong at Ruthven Road?

The National Housing Trust (NHT) owes its subscribers, and Jamaicans in general, a full and honest explanation of what went wrong with its Ruthven Road development, over which the Trust is seemingly being forced into contortions to make the apartments affordable for its members. The issue, clearly, is beyond window casements and fire safety inspections.

The NHT is a government agency which was established more than 40 years ago to help address Jamaica’s chronic housing deficit, with a primary focus on shelters for middle- and low-income workers. It addresses its mandate mainly by providing low-interest mortgages to subscribers, although it sometimes finances projects or undertakes development itself.

The Trust is funded mainly by a five per cent payroll tax, three per cent of which is a paid by employers. Employees pay the other two per cent, but with each year’s payment being refundable after seven years if the contributor does not receive a benefit from the Trust. Otherwise, the employees’ payment can go towards the costs and payments associated with mortgages from the Trust. With a $6.5-million cap on NHT loans to individuals (although two people can combine to borrow up to $13 million), subscribers often mix the Trust’s below-market-rate money with commercial mortgages to purchase what is usually their first home. The complaint often is, though, that the vast majority of the NHT’s contributors earn too little to afford its mortgages.

These are some of the issues that underline the controversy over the Ruthven Road project, a multistorey development on the edge of New Kingston, Jamaica’s uptown corporate business district. It is one of the developments that the NHT has undertaken itself, land tends to be more expensive than elsewhere.

When the Ruthven Road project was first touted, it was envisioned as four mid-rise towers on around 2.3 hectares, housing hundreds of one- and two-bedroom apartments, ranging from close to 65 square metres to near 93 square metres each. The complex would have facilities such as pool, a gym, walking track, meeting rooms and select shops. They were to cost $16 million and $22 million, respectively, a price that was expected to be in the reach of young, relatively high-earning professionals.

But last year, with the first tower nearing completion, the NHT, inviting applications for its 86 units, announced the prices of the apartments had jumped to $27.7 million for the one-bedroom units and $37.7 million for those with two bedrooms. There was a big outcry on social media. The overwhelming view was that they were out of the price range of most NHT contributors. More serious were the criticisms that the NHT was betraying its mission.

Officialdom, including Prime Minister Andrew Holness, to whom the NHT reports, pushed back, even as they explained that the price spiral was the inevitable result of pandemic-related escalation of prices, exacerbated by post-pandemic supply chain problems. But Mr Holness also argued that the NHT had high-income contributors whose interests also had to be served. He also suggested that there was the need for a re-examination of the Trust’s mandate.

“We see the misalignment of vision and reality in the public commentary on the decisions and actions of the NHT,” Mr Holness said in November. “It … rubs me the wrong way as well, when I hear the blanket criticisms, without context, of what the NHT is doing, as if to say the construction of one development on Ruthven Road somehow immediately destroys and deprives everyone else of housing ... as if to say the people who will benefit from Ruthven Road are not contributors as well.”

Beyond the prime minister’s comments were the clear suggestions by the Trust of effective demand among NHT contributors for homes at the price points of the NHT Ruthven Road development. “Having looked at our contributor data, the NHT is satisfied that the demand exists for the units,” the NHT declared in last November. In December, it indicated that young Jamaicans, in the 25 to 35 age range, were part of a robust application process for the 86 units at Ruthven Road.

Things, however, seems to have collapsed. As this newspaper reported, of 226 applications received up to the end of April – under a complex matrix that includes points for income, the length of time a person contributed to the Trust, and proximity of the new development to where they now live and work – only 22 (9.7 per cent) could afford the apartments for which they applied. Thirty-one of these applications were not pursued. Of another 143 initial applications from the open market, only 10 per cent (15) were followed through. It is now reported that perhaps 42 of the apartments may have been committed. Put another way, 49 per cent of them are still to be sold.

This sluggish take-up is despite the fact that as the NHT confirmed a broad swathe of “financing arrangements are being explored and offered to applicants”. These apparently include a willingness to hike the traditional debt-servicing ratio on mortgages of no more than a third to 50 per cent of income. The Trust is also considering a reintroduction of graduated mortgage arrangements. For now, the rest of the Ruthven Road scheme has been mothballed.

That, however, is not enough. We agree with Prime Minister Holness that the NHT is not a charity, and there are times when institutions may have to re-examine and recalibrate their missions. Part of that process requires being honest and open when things go wrong and understanding why. Something went wrong with respect to the Ruthven Road project. Somebody miscalculated.

The project may yet be salvaged. But we ought to know who miscalculated and why and how. It would be useful to know if there were external pressures that influenced decision-making. The NHT’s board and management must be accountable.