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Strategic mistake in housing

Back in time: Lieutenant-Colonel David Burch, during his time as housing minister, overlooks the Loughlands development in the company of Ewart Brown, then the Premier. Loughlands was among the new builds criticised by the late Larry Burchall (File photograph)

Dear Sir,

I recently came across one of Larry Burchall’s opinion pieces online, which was originally published in the long-retired Bermuda Sun newspaper — and, surprisingly, it was one I had never read. This letter was written in 2011 and he was writing about our so-called housing crisis at that time, which he claimed was somewhat of our own making. Actually, he said it was “our own Bermudian housing bubble”.

Let me explain. In the year 2000, Mr Burchall stepped down from his role as chairman of the Bermuda Housing Corporation and he handed over an analysis of the housing problem to the late Nelson Bascome, who was at the time the Cabinet minister responsible for housing. In 1999-2000, Mr Burchall found that Bermuda had a surplus of housing, which amounted to about two thousand empty housing units, at various price ranges, including some which were derelict or near derelict, but which with government funding could be renovated or upgraded and converted into housing units that could then be put on the housing market at affordable rents. He estimated on average, it would take $100,000 per unit to make them rentable. (It is worth remembering that back in 2000, construction costs were much cheaper, the Government had little debt and we had lots of “wiggle room” for spending.)

The biggest stumbling block to the plan, according to Mr Burchall, was the need to use the Government’s power to force owners of near-derelict properties, or of properties that were tending towards dereliction, to allow Government in the guise of the BHC to step in, finance the renovation or fix-up, find and place a paying tenant, and then recover basic costs with all excess going to the owners. Importantly, the ownership would always remain with the homeowners. Mr Burchall said that the legislation to achieve that was already on the law books, had been for several years and just needed tweaking.

Well, Mr Burchall’s 2000 housing plan never saw the light of day and both the Progressive Labour Party government of he day and the United Bermuda Party opposition continued to lament the shortage of affordable housing, which ultimately led to more brand-new builds on ever-shrinking green space — all constructed during the period between 2007 and 2011, resulting in the government residential developments of Loughlands, Perimeter Lane and Southside.

By the time Mr Burchall penned his 2011 letter, he estimated that Bermuda had many more empty housing units — close to 4,000 — that he said were arising from the Government’s building response to the non-existing “housing crisis”, and they were also the result of very evident Bermudian emigration. He noted that more housing was planned for Sandys and another “affordable” housing development was under construction in Warwick; ie, the former Grand Atlantic, which we all know, painfully and expensively, is morphing into the Bermudiana Beach Resort.

So, what’s bad about the Government saving the day and building affordable housing for the people? Mr Burchall made that crystal clear when (in 2011) he wrote: “Admirable as the new-build idea was, it was and it still is a strategic mistake. Why? Because the new-build process added to our national costs. The ‘subsidising’ process transferred these much higher costs from homebuyers and renters on to other taxpayers. More scarce land resources were taken up.”

Wow. Talk about a déjà vu moment regarding costs/debt placed on the taxpayer, more buildings swallowing up green space and flawed promises of being the people’s saviour. I feel like I’m in a time machine.

To its credit, the PLP government tried to initiate a project in 2007 to revive these derelict properties in an attempt to provide low-cost housing, but that was stalled because of a complex web of legal disputes, family-ownership squabbles and conflicting political priorities. In 2011, the Bermuda National Trust also recommended that the Government focus on these disused properties. It said: “Tackling the issue of derelict properties is a truly sustainable practice,” and the BNT spokeswoman added that in doing so, it simultaneously deals with a number of issues in Bermuda such as limited, low-income housing, regeneration of neighbourhoods, and the restoration and renewal of important landmarks.

Let’s move forward to December 2022. Lieutenant-Colonel David Burch, our Minister of Public Works, reported in the House of Assembly that the BHC had 700 occupied residential rental units, but there was a waiting list of 129 families. He said that there were 77 additional units which were vacant because they were part of “the derelict” inventory owned by the BHC. Yes, we have derelict government housing. Why? Because those units are in need of major renovation before they can be occupied, which is clearly a reflection of the Government’s funding crisis and its resultant inability to maintain the existing BHC stock of housing.

I learnt from Colonel Burch’s statement in the House that the BHC also manages a Private Sector Rental Programme. This programme allows for privately owned units to be rented to the BHC — with guaranteed rent and intervention by the corporation when tenants do not honour their commitment. The rates are less than market rates, but the rent is guaranteed to be paid on time and the unit returned to its original state at the conclusion of the tenancy. To my surprise, Colonel Burch also informed us that the BHC is looking at new ways to address the privately owned, vacant and derelict properties to bring them back online.

Well, we now know that some 23 years ago, there was already research on this very subject, contained in a report produced by Mr Burchall with policy implementation recommendations, and that report — I would venture to guess — was placed on a shelf alongside numerous others with no political will to move this initiative forward.

The impressive legacy and commonsense wisdom of the late, great Larry Burchall is invaluable. A pity we didn’t learn anything from it.



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Published June 01, 2023 at 8:00 am (Updated May 31, 2023 at 6:25 pm)

Strategic mistake in housing

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