Category Archives: Housing policy

Promoting a Rare Breed: Private Nonprofit Housing Developers in the GCC

This piece was originally published by Jadaliyya, an ezine produced by the Arab Studies Institute. Jadaliyya combines local knowledge, scholarship, and advocacy to better understand the Arab World and to fulfill its dedication to discussing the Arab world on its own terms. The original article can be found here.

           

By Maysa Sabah Shocair, AHI’s Managing Director of the GCC Region

While working as a Project Manager at the Fenway Community Development Corporation (CDC) in Boston and as a Consultant to Phipps Houses in New York City, I experienced firsthand how nonprofit developers can contribute to preserving housing affordability in central locations. Fenway CDC builds and preserves housing and champions local projects that engage the entire Fenway community in protecting the neighborhood’s economic and racial diversity. It has operated since 1973 and has developed nearly six hundred homes, housing approximately 1,500 low and moderate-income [1] residents, including those with special needs. In addition, Fenway CDC has supported residents through offering job placement and career advancement services, building playgrounds, running after-school programs for teens and operating a center for seniors. Similarly, Phipps Houses develops, owns and manages housing in New York City. Since its  founding in 1905, it has developed more than six thousand apartments for low- and moderate-income families, valued at over one billion US dollars. Phipps Houses manages a housing portfolio of nearly ten thousand apartments throughout New York City. In addition, it serves over eleven thousand children, teens, and adults annually through educational, work readiness, and family support programs.

Now that I am working in the Gulf Cooperation Council (GCC) as an affordable housing consultant for several public and private entities, I often wonder: Could private nonprofit housing developers, like the Fenway CDC and Phipps Houses, make an impactful contribution to bridging the supply and demand gap in affordable housing in the GCC for both citizens and non-citizens? Could the experience of other countries with nonprofit housing developers be distilled and adapted to the GCC states?

To answer these questions, I will first discuss the main attributes of nonprofit housing developers, followed by a discussion on the shortage of affordable housing for citizens and non-citizens in the GCC and the resulting need for nonprofit housing developers. I will then recommend strategies to enable the growth of nonprofit housing developers and end with a few concluding remarks. 

DSCF2587_haram_city_domed_roofs_120514

Domed roofs in Haram City


Nonprofits Housing Developers as Mission Entrepreneurial Entities

In its 2010 landmark study Mission Entrepreneurial Entities: Essential Actors in Affordable Housing Delivery, the Affordable Housing Institute (AHI) defined Mission Entrepreneurial Entities (MEEs) as “private nongovernment entities that are in the business of making housing ecosystemic change by doing actual transactions valuable in themselves that also serve as pilots and proof of concept.” MEEs could be Non-Governmental Organizations, Community Development Corporations, or Housing Associations, labels that have sometimes been used interchangeably. The study profiles twenty-three MEEs in the United Kingdom and the United States, where, in both countries, there has been a steady migration from entirely publicly managed and operated systems to hybrid public-private models, with MEEs as key delivery mechanisms.

According to the study, the three main attributes of MEEs are: (i) being mission oriented, since their goal is impact, not just profits; (ii) entrepreneurship, taking risks and persuading established institutions, including governments, to approve proposals, provide capital, etc.; and (iii) self-containment, because sustainable MEEs must make profits and maintain a positive cash flow. However, generated profits are used to further the purposes of the organizations instead of being distributed to managers and shareholders.


MEEs also share the following strengths:

·         Willingness to serve populations that the private for-profit sector cannot or will not serve, including the hardest-to-house residents;

·         Commitment to providing affordable housing to lower income people for the long term;

·         Building strong connections with residents and the communities they serve;

·         Commitment to providing various social services that lower income or special needs residents may require;

·         Potential for accessing affordable land, buildings and funding through governments and philanthropic entities or individuals;

·         Commitment to seeing projects through both during their early and post-delivery phases.

Given the potential of MEEs to serve populations that are not served by private or public housing provision, this essay discusses the potential relevance of this model to the GCC countries. This interrogation is critical at a time during when many GCC countries are facing a shortage of housing for low and moderate income households. It is also a time in which we are witnessing the emergence of institutionalized charitable giving that could be in part harnessed to help with housing provision. These conditions are creating a ripe environment for the growth of nonprofit housing developers, with the much needed support of the public and private sectors.

Continue reading

Secession: the key to more affordable housing in cities?

By Judy Park, Analyst

Panelists at The Atlantic’s CityLab 2014 conference, held this past September, proposed the idea of home rule – or even more radically, city secession – as a potential solution for increasing affordable housing in cities.

aff housing solution home ruleClick ­­­­­­­­­here for the full article.

During the event, Vishaan Chakrabarti of SHoP Architects and Ben Hecht of Living Cities argued that state and national governance often restricts the ability of cities to produce more affordable housing. The solution, they claim, is to emancipate these cities and allow them to subsidize as they please:

“Subsidize the supply, subsidize the demand: We know how to do all of those. We just don’t have the will to do those things,” said Living Cities CEO Ben Hecht. “Singapore and Hong Kong are willing to do those things.”

The thought that cities would be more effective if left to their own devices is not new. In a time where urbanization is widening the physical and sociopolitical discrepancy between the city and its surroundings, and where cities are increasingly outpacing the GDP of entire countries, it makes some sense.

But good governance is tricky and inevitably context-specific. Home rule could be exactly what that blue bastion in a sea of red needs to build more affordable housing. Unconstrained by state and national regulations, a city could more easily raise and borrow money from their tax base and capital markets. It could vote to direct more money to affordable housing needs.

In other instances, however, the state’s ability to override local priorities and decisions is important and beneficial for affordable housing, as in the case of Massachusetts’ Chapter 40B, a statute that allows an affordable housing developer to obtain state zoning overrides for building in municipalities that fail to meet their 10% affordable housing requirement.

Further, in choosing Singapore and Hong Kong as their poster-children, the panelists seem to imply that the production of mass public housing indicates success: in Singapore, 82% of citizens live in flats built by the government (via the Housing Development Board, or HDB), and in Hong Kong, this figure is slightly less than half.

But all is not well, especially in Hong Kong, which still suffers from a high shortage of public housing and recently won its fourth successive crown for having the most unaffordable housing in the world. Supply may be high, but demand is even higher. Those who are able to qualify for a government flat typically wait three years or more. In the meantime, many residents have no choice but to live in grossly overcrowded units, which have been referred to as cages, that average around 40 square feet. Such housing may technically qualify as “affordable,” but it is certainly not suitable.

Kin_Ming_Estate

Soaring, high-density public housing in Hong Kong.

Tin_Fu_Court

8090hkd-103115usd-per-square-foot-per-month-is-common

Society for Community Organization, a local advocacy group, documents the conditions in the cage homes of Hong Kong. Photo by Benny Lam, for the Society for Community Organization.

Continue reading

What we’re reading: “‘Poor Door’ in a New York Tower Opens a Fight Over Affordable Housing”

Where is the line between incentivizing private-sector development of affordable housing and subsidizing (or promoting) more discriminatory, exclusionary housing practices?  Like many big cities, New York is trying to find out. One of its most recent gray areas is 40 Riverside Boulevard, a 22-story mixed-income development in Manhattan that was built under an inclusionary zoning program and will include a separate entrance – a so-called ‘Poor Door’ – for the low-income or subsidized renters. Read more in the excerpts below or in the full article in the New York Times.

The so-called poor door has brought an outcry, with numerous officials now demanding an end to the strategy. But the question of how to best incorporate affordable units into projects built for the rich has become more relevant than ever as Mayor Bill de Blasio seeks the construction of 80,000 new affordable units over the next 10 years.

The answer is not a simple one. As public housing becomes a crumbling relic of another era, American cities have grown more reliant on the private sector to build housing for the poor and working class. Developers say they can maximize their revenues, and thus build more affordable units, by separating them from their luxury counterparts.

…….But Alicia Glen, the deputy mayor for housing and economic development, said that separate front doors were not in keeping with the administration’s principles of equality, and that the city was working to change the rules to prohibit them. “Walking into a building should not be any different based on income status,” Ms. Glen said in an interview.

It’s a difficult issue that has divided even members of the affordable housing community. But what do you think? Should developers be able to use separate entrances for market-rate and subsidized apartments? If it is not okay to have separate entrances for apartments, is it okay if the market-rate units are condos? Read the full article on The New York Times website here and let us know what you think in the comments below!

South Korea: Finally shifting away from a centuries-old housing system

by Judy Park, Analyst

South Korea’s primary housing system, called jeonse (or “key money”), dates back to their Joseon Dynasty. That is, back when the denizens of this humble country looked like this:

kingsejong

King Sejong is not amused.

Jeonse is one of only two systems of its kind in the world (the other being rahn in Iran), where renting out a modest two-bedroom unit entails the lump sum possession of hundreds of thousands of dollars.

The process goes thus: tenants provide landlords with this hefty deposit to lease a unit for two years. The deposit is calculated as a certain percentage (typically 40-60% in Korea, 20% in Iran) of the value of the unit. The landlord can then invest these funds (e.g. in other properties, businesses, or at the bank) until the end of the two-year contract, when they must return the full sum to the tenant. The unit acts as collateral in the event that the landlord can’t or won’t pay it back. Estimates show that about a tenth don’t.

If interest rates are high, jeonse is good deal for landlords – it’s basically an interest-free loan. If they’ve got the cash, it’s a good deal for tenants – they can live in a unit rent-free and continue to save up money.

koreanapartment2

An average, middle-class apartment in Seoul. Source: HanCinema

korean apartment

An average, middle-class apartment in Seoul. Source: HanCinema

But getting the cash is no easy feat. The typical deposit is a casual $200,000, taking the average household five years and boatloads of fiscal restraint to save up. Despite this, it seems that much of the nation’s families are up for the challenge, as more than 60% of rental units are currently held under the jeonse system. Thus, jeonse units constitute the main source of affordable housing for low and middle income families in the country.

jeonsevsrent

Continue reading

Connecting the dots : Urban Resilience and Affordable housing

 By Eman Lasheen, Harvard Graduate School of Design.

Affordable housing has always been looked upon as a supplementary service provided for a certain population. It is generally defined as housing that is appropriate for the needs of a range of very low to moderate income households and priced so that these households are also able to meet other basic living costs such as food, clothing, transport, medical care and education. As a rule of thumb, housing is usually considered affordable if it costs less than 30 percent of gross household income 1. The core value of investing in the provision of affordable housing is usually related to meeting a growing demand in the fastest, most efficient and inexpensive form, to alleviate socioeconomic burdens. Despite the importance of this highly materialistic perspective, it strikes me as quite lacking to account for higher, more complex interactions at the urban level, where positive impacts of affordability are manifested most profoundly. The connection between the availability of well designed affordable housing and the level of urban resilience is highlighted dramatically during times of crisis or unexpected change. The fact that people would find decent shelters during disasters or sudden shocks is not the only aspect of connection. It is the understanding of how urban communities are able to prioritize, plan and move forward that makes affordable housing a crucial aspect of urban resilience.

One major problem with resilience as an evolving field of research is the ambiguity around its components and intentions. Rooted in ecological sciences, the term has gained a lot of prominence within many other disciplines including engineering, social sciences and urbanism. It has been adapted within each of these disciplines to inform about a certain form of interaction. It remains however confusing to a great extent when it comes to urban sciences, where question such as : “resilience of what ? to what ” becomes a great source of trouble to practitioners and decision makers alike.

Continue reading

Understanding slum dwellers: Part 1 – “Slum dweller”

By: Surili Sheth, Analyst

I use the term “slum dweller” as a descriptive phrase – and I choose to use it because it is how people living in slums refer to themselves, it describes the place they live (which is the subject of this post), and it acknowledges the existence of the type of informal settlement that a billion people in the world live in today – slums.

Slum policy

In developing an understanding of slum development policy, institutions have often failed to take services, environment, and community, and how these are linked to the physical structures and productivity of the people living in the slum, into consideration.

There are three major, interconnected aspects to slums that policymakers are generally concerned about:

1)     The unused or underutilized economic worth – market/productive capacity – of the people living in the slum.

2)     What part the slum (both the physical infrastructure and the people within it) plays in the larger context of the city, state, or country.

3)     The deprivations and poverty the people living in a slum face.

 Often, the connections between these three aspects go unrecognized and they are treated as separate issues in policies that attempt to address the informal settlements. I argue that a true inclusive development policymaker must possess an adequate understanding of all three, using India as an example.

Slums and Affordable Housing Policies in India

Public sector approaches. Early efforts by the Government of India to provide affordable housing to low-income populations were through public sector housing programs for purposes of rehabilitation of the refugee population, redevelopment of slums, housing for economically disadvantaged sectors and low-income groups, and making serviced land available to the poor. In the initial phases, the government’s efforts relied heavily on providing finished social housing to the populace. Various financial instruments and shelter delivery mechanisms were instituted and housing boards and authorities at different levels of government were set up for this provision. These newly created agencies were funded through financial institutions that supported large-scale programs.

Unfortunately, the poor benefitted the least from these public housing policies. According to one estimate, approximately 85% of the expenditures on construction of dwellings by housing boards went to high-income groups and middle-income groups, while low-income groups and economically weaker sections received only 8% and 7%, respectively (The Inclusive City). Additionally, the houses constructed for the poor by public agencies eventually were instead bought by upper-income groups, because they were priced beyond a low-income family’s capacity to pay, despite subsidies by the government. In other instances, higher-income groups obtained public housing units directly by using means such as concealing their true income or using surrogate people as applicants.

The total number of houses constructed by public agencies under these initial programs was too small to have any perceptible impact on the housing problem, and there was a significant lack of maintenance of the structures and public facilities, and thus a significant lack of sustainability of the entire approach.

Simultaneously pursued policies of slum clearance and rehabilitation of housing, with resettlement programs structured under inadequate public housing programs, resulted in the poor being displaced without resources. Slum demolition continues to be a reality in many Indian slums – approximately 200,000 households in four metro cities, Mumbai, Delhi, Kolkata and Ahmedabad were evicted in the two years between 2004-2006, and slum demolitions still continue. In Ahmedabad, in the three year period from 2006-2008, 30,000 households were displaced (Mahadevia).

Partnerships. The private sector has played an important role in the provision of housing in India, but its efforts have mainly focused on housing for middle and higher income households. The Government of India’s National Housing and Habitat Policy (2007) attempted to bring in the private sector to play a role in affordable housing, and to decentralize housing policy. The policy stressed the need for adequate infrastructure (including social infrastructure), strong Public-Private Partnerships, and the role of the cooperative and corporate sectors. It delegated the task of providing housing to state government and other state agencies, with the central government playing the role of facilitator. It also recommended instituting a social mandate on the private sector, advising actors within it to reserve a specific percentage of housing for the poor in their projects. To solve the problem of inefficient housing for the poor, this approach recommended building cost-effective houses for them while simultaneously increasing their purchasing power by linking economic growth to employment.

In Gujarat, Chief Minister Narendra Modi’s announcement at the 2013 Vibrant Gujarat forum to create 5 million affordable homes through Public-Private Partnership is an example of a state government initiative for affordable housing utilizing partnerships. However, the private actors that are competing for the contracts are mainly large-scale developers with potentially little experience or knowledge about the needs of the populations that the created affordable housing is supposed to target.

Though public-private partnership for affordable housing development is an improvement upon the public sector housing and demolition model, it still remains a model that is based on producing new homes for the urban poor (the majority of whom live in slums and have their own communities already), and uses the private sector as more of an entity to contract production of housing units out to rather than a holistic methodology to address the large percentage of the population living in the slums in a participatory manner. These affordable housing policies are missing a key aspect of slums: understanding the people living in the slum and informal systems they have created and live within.

Some states have recognized a few helpful aspects of these informal system – for example, Madhya Pradesh has enacted laws giving no-eviction guarantees to squatters (patta laws). Most recently, the flagship Rajiv Awaas Yojana (RAY) program, instituted by the Ministry of Housing and Urban Poverty Alleviation of the Government of India, envisages that each state create a “slum-free plan of action” to both upgrade existing slums and prevent the creation of new ones, and its guidelines aim to bring private sector and community based organizations into the fold. Again, understanding slum populations is key to making such a plan evolve from a set of normative guidelines to a practically implementable and effective program.

Part II: How to build affordable, quality and sustainable housing?

Author: Delphine Sangodeyi, AHI Senior Urban Planning Associate

[Continued from Part 1]

The equation is not simple, and demands a new approach. Expertise, research and knowledge should be invested and there should be high social and environmental impacts as well as an economical gain. Housing quality is not only dependent on construction costs, but also related to the quality of housing conception, to social responsibility and to a new business ethic and mindset. A new business model is required.

      Reaching affordability

The term “affordability” applies not only to building costs but to maintenance costs as well. The recommended percentage of income to be paid for housing is generally capped at 30% of income. Higher mortgage payments impact a family’s ability to afford food, medicine and other necessities of life. Even if a family can afford mortgage payments on a house there may be other impediments to home ownership. These include difficulty in finding appropriate land, cash for a down payment and closing costs in order to keep expenses affordable.

In each country, region and city, the affordable housing market needs to be studied, since it covers various socio-economical categories. In many locations, the population living in poverty and working in the informal sector is still excluded from accessing mortgages through the formal banking system.

      Qualitative architecture, in coherence to local identity

Evans Essienyi in his AHI blog highlighted well the problem of quality of affordable housing in Africa, and that cultural and identity factor were insufficiently taken into account.

Affordable housing is most of the time treated in its most basic form, by constructing standardized block houses or apartments of 45 m² with 2 bedrooms. Compared to the degraded situation of dwellers, these types of constructions could look a fortiori as a situation of progress, but it can’t be seen as a correct solution, in a sustainable vision.

      Promoting mixed neighborhoods

Social and architectural diversity is very important in the construction of cities and neighborhoods. For instance, each affordable housing project can include different types of housing, and affordable for different social categories: from low income households to the middle class.  Less benefit can be made to build very economic housing since the global project is at a financial equilibrium.

      Access to the City

Due to the rising price of land, the tendency is to build affordable housing projects in the far periphery of cities. It implies problems of social exclusion, problem of access to transportation, services, education and employment.

For this reason, any affordable housing project has to be conceived in partnership with local authorities. A good option would be to determine available lands at a discounted price compared to the market, to avoid territorial inequalities. Taking into account the costs for local authorities for trunk infrastructures to cover the growing periphery of cities and megalopolis, road constructions and services, as well as the negative effects of segregated urbanization and high environmental impacts of urban sprawl; instead, participating to develop affordable housing through urban renewal and discounted land price closer to the city centers and employments poles should be regarded as a more sustainable urban strategy.

The international and multidisciplinary perspectives of the Affordable Housing Institute help in developing alternative and concrete solutions for a more sustainable vision of affordable housing.