THE Housing Agency of Jamaica (HAJ) appears to be on the brink of insolvency as evidenced by a status report on its financials which was submitted to the Public Administration and Appropriations Committee (PAAC) of Parliament yesterday.

Managing Director Karl Bennett insisted that the entity needs another revenue stream as the slim profit margin from the low-income mortgages and the smattering of other services it offers were not enough to stay afloat.

“We inherited a mortgage portfolio which is primarily Portmore mortgages; the other source of revenue is from the deposits and sale closure of housing solutions. We do provide some legal services for titles and so on, [but] those (mortgages) are the primary sources. It is obvious from the numbers that this is not adequate and not sustainable. We are on the tail end of the mortgages for Portmore [as] probably in another five or six years the mortgages will go away and we will be left with only the sale of units to keep the operations going,” he explained.

According to the report, the HAJ’s assets of $15.7 billion up to the end of August cuts close to its liabilities of $14.4 billion, while its revenues for the same period only amounted to $106.5 million.

“Would you say that the HAJ is insolvent? If your liabilities are almost matching its assets, then you’re insolvent,” PAAC Opposition member Mike Henry asked.

The line of questioning was, however, interrupted by some Government members who reminded him that the issue had come up for discussion before, and that it was determined a “policy matter”.

Bennett then sought to explain the glaring negative variances of more than 400 per cent year to date. “This is because of the non-closure of sales; essentially what happens is that we borrow from the NHT (National Housing Trust) to construct, for example, and each time we sell a property the NHT takes a proportion of that to offset the construction loan. So until we close the sale we keep racking up liabilities. The bottom line is we have not closed the number of units that we had budgeted to close,” he outlined.

As a result, the managing director said, the HAJ expects to lose $183 million for 2015/16. August alone accounts for a net loss of $35.5 million.

In the meantime, Bennett said the Derick Lattibeaudierre-led board of the HAJ has given strict mandate to the management to not start any new projects, but to concentrate on completing and “stabilising” its finances. “We have been very successful in stabilising the finances. At the start of the tenure of the board, we had owed contractors and government agencies way in excess of $600 million; today we are down to $229 million. When we started we had just about $16 million available. Today, through control of expenses, we now have close to $60 million. We are trying to successfully complete those projects that are in the ground,” he stated.

Meanwhile, Bennett said the restart of construction on the Bernard Lodge housing development in St Catherine should finally begin this December. The three-year project was announced in February 2013 by Housing Minister Dr Omar Davies and was to have started in April of that year. Just under 1,600 units are to be built at a sale price of $4 million to $5 million.

“We are now in the process of doing the designs,” Bennett stated. He said close to $400 million of depositors’ monies have been refunded due to the delay.

The HAJ was set up in 1998 through the incorporation of Caribbean Housing Finance Corporation Limited, National Housing Corporation Limited, and Operation Pride. Its mandate is to sell housing and serviced lots, as well as to upgrade informal settlements.

— Alphea Saunders