NSW Releases NDIS Housing Tender

The NSW Government has released a tender to build 88 dwellings for people with disability living in the NDIS Hunter launch site. Expressions of Interest for these dwellings are due by 17 November 2015.

The tender is being operated by the NSW Department of Family and Community Services (FACS) to provide new housing to 390 residents of the Large Residential Centers (LRCs) located in the Hunter trial site.

The tender is specifically for the housing component of new group homes – not for the support provision. NSW FACS is following in the directions set out by the NDIS that it expects that housing be de-coupled from support, allowing participants to change providers while retaining their tenancy.

This tender is separate to the continuing discussions about the NDIS’ funding for housing. As we have previously reported, the NDIS housing principles were released in September and provided a broad framework for how the NDIS will fund housing capital for around 26,000 participants. Further detailed on this framework are promised by the end of 2015.

In the meantime, the NSW Government has committed to close its LRCs, and is no longer willing to wait until the NDIS housing issue is resolved so is pressing on to develop housing to re-house people in the LRCs using their own funds between now and 2018 and then handing the funding responsibility for the housing over to the NDIS from 2018. NSW has repeatedly stated that it will no longer provide any disability services (including all supported accommodation) by 1 July 2018.


Who is the housing for?

The NSW Government has been progressively phasing out LRCs over the past decade, with the Hunter sites being some of the last centers to close.

The residents of the three LRCs being closed in the Hunter are generally older people (aged 50-59 years) with an intellectual disability.

  • Many LRC residents have been living in these Centers for many years and most have limited social and family networks outside the Center.

  • The support needs of LRC residents vary in type and intensity of support, however many residents have significant support needs in the areas of personal care and social activities.

  • Residents are also more likely than the general NDIS population to require a combination of disability and health services as many experience poor health with some requiring regular nursing care.

  • Some residents also have challenging behaviours which will require specialist support and may require specialist housing designs.

The closure of LRCs has been controversial with some families and advocacy groups, while others have praised the move as a step towards greater community integration of people with disability. The NSW Government has consistently argued that LRCs are not consistent with the UN Convention on the Rights of People with a Disability and that scattered housing within communities provides the most integrated setting.


How will the funding work?

This tender is not operated by the NDIA, but instead by NSW FACS. This is because the NDIS agreement between the the Prime Minister and the NSW Premier states that NSW is responsible for re-housing people in LRCs. While NSW would ideally have timed its LRC transition with the NDIA’ call for housing proposals, the NDIA’s commitment from 2013 to release more detail on how it will spend its $600m housing fund and call for expressions of interest is yet to be released.

NSW FACS will be funding the 88 dwellings on the same model they expect the NDIS to use. This model is known as “user cost of capital” and is based on the cost that providers incur in providing a capital asset for people with disability to use for accommodation.

The user cost of capital model involves yearly payments to housing providers based on the following cost formula:

  • NDIS specialist disability accommodation funding support = (asset base x cost of capital) + accommodation related operating costs + depreciation – land appreciation – resident contribution.

The expected funding level per resident is around $25,000 per annum ($125,000 per property per annum). NSW FACS are committing to fund the housing between now and when the NDIS is fully rolled out in NSW: 30 June 2018.

From 1 July 2018 the NDIS will take over funding responsibility for the cost of this housing. The tender does not make clear how risk will be born if the NDIS’ ‘user cost of capital’ funding model differs from the NSW FACS tender. This risk could be substantial for providers if the NDIS funding model (yet to be released) differs in its costings or assumptions, or imposes cost caps on any element of housing provision.


What housing design and models are envisioned?

NSW FACS have worked with residents to select the locations they wish to relocate to, with the following dwelling distribution: 41 in the Hunter; 13 in metro Sydney; 6 on the central coast; 9 elsewhere in NSW.

NSW has already purchased 44 of the 79 sites that will be required for the tender. The tender is not clear on how the cost of this land will be incorporated in the formula, but suggest that NSW FACS could transfer the land to providers at full or partial cost depending on how the NDIS decides to fund housing.

The housing model is 5 person group houses, usually integrated within suburbs. The sites selected by NSW FACS are large blocks (800-1000m2). Due to the preference of residents, FACS are also seeking 9 sites to have 2x 5 person dwellings, allowing up to 10 residents to to live on the same site. These co-located sites are all for residents with particular housing needs – including challenging behaviours and complex health needs.

NSW FACS are seeking housing designs that are consistent with their existing design principles for group housing.

The provision of housing is also required to be de-linked from support provision. The tender is only for the housing component of the group homes.

  • Proposals can include a proposed partner service provider, however this will depend on the separate procurement that NSW FACS will undertake for support providers.

  • Housing proposals can be from organisations that also provide support, but the organisation must provide the housing regardless of which service provider is selected to provide support in that dwelling.


Tender next steps

NSW FACS are operating a two-staged tender: the current Expressions of Interest (EOI) round and then a select tender round.

The current EOI round to find interested providers and identify potential models. These EOIs are due by 17 November 2015.

The second round will involve more detailed and fully costed proposals. These will be due on 8 March 2016, with a decision made in early April.

The two staged select tender process is expected to allow for modifications to the housing and financing models based on provider feedback. NSW are also hoping that the NDIS will have finalised its housing funding framework by the end of 2015, which will create more certainty for providers and potentially additional detail to be understood about how funding and service models will work from 1 July 2018 once NSW FACS exits the disability sector.

NSW FACS are seeking housing to be build by 31 March 2018.


The tender documents are available on the NSW Government tender website (https://tenders.nsw.gov.au/), RFT ID FACS.15.104.