The Bermuda Housing Corporation will be footing the bill for Government's new housing scheme -- with interest payments expected to cost at least $600,000 per year.

Housing Minister Wayne Furbert unveiled plans on Thursday to spend at least $17 million building 100 housing units in clusters throughout the Island.

Finance Minister Grant Gibbons said the Bermuda Housing Corporation (BHC) will pay for the scheme by issuing a bond.

Dr. Gibbons stated: "In order to finance the bond, the Housing Corporation will spend between $600,000 and $700,000 per year in incremental interest -- which will be partially financed by rents from the tenants.'' Mr. Furbert said renters receiving subsidies under the Housing Allowance Programme (HAP) could expect to spend about 25 percent of their household income on rent.

Dr. Gibbons said the cost of the new initiative will not be absorbed into the overall Government debt.

But he admitted that part of BHC's debt had been covered by Government in the past, so the Corporation could receive lower interest rates.

"Right now, about $27 million of Government's debt is directly related to the Housing Corporation -- which is down from the mid-30's a few years ago.

"Although the Corporation is not intending to sell the units in the first few years, when you're building houses, they become an asset that can be sold eventually to reduce debt,'' he added.

But Government's plans to build the two- and three-bedroom housing units for low-income families received mixed reaction.

Shadow Housing Minister Renee Webb remained sceptical about the plan.

"I just don't think the scheme is feasible,'' said Ms Webb. "Anyone who knows anything about building on the Island knows a year isn't enough time to build 100 new houses.

"Government says they will spend $17 million on 100 units, which works out to $170,000 per unit. It's not realistic...they were talking about spending $120,000 to renovate the former Baselands properties.

"Maybe the Minister knows something the rest of Bermuda doesn't, but I find the whole thing odd.

"And it makes no sense to subsidise. Why not just charge people according to their income?'' she added.

Pressure housing groups voiced similar concerns about the initiative.

National Tenants and Future Homeowners Association spokesperson Coreen Tucker said she was "very concerned'' about the initiative.

"Where is this money, this $17 million, coming from? And are we going to be taxed heavily a few years down the line to pay for this? Could costs escalate to three to four times that amount?'' she asked.

And Ms Tucker questioned the impact mass building would have on the construction industry -- and said more foreign workers could be brought into the Island to accommodate the demand.

She stated: "I want to reiterate Renee Webb's comments about whether this is simply electioneering -- it sounds good, but all that glitters is not gold.'' People's Coalition for Affordable Housing (PCAH) spokesperson Rosemarie Pedro praised Government for the plan -- but said there were still unanswered questions.

"The Coalition would like to extend their congratulations to the Housing Minister for his recent press conference regarding Government's initiatives to make available a substantial amount of houses for rent to low-income families,'' she said.

"It would appear that Government has admitted there is a real need for affordable housing.

"But PCAH needs the Minister to understand that there are still some other administrative concerns that cannot be ignored in order for these initiatives to be successful.

"The Coalition is concerned about tax payer's money being spent on subsidies...subsidies are more necessary for those forced to rent from the private sector,'' said Ms Pedro.

"We will not deny that there is still a greed factor that also dictates the market value.

"Making available such a substantial amount of houses will free up some of the real estate.. .hopefully this will allow rents to decline,'' she added.

Mr. Furbert was off the Island and unavailable for comment.

GOVERNMENT GVT