Affordable Housing as Investment, Not as Social Expense

Randy D. Bosch             (c)2010

I attended the 11th International Architecture Exhibition in Venice, Italy, in October 2008 (part of the Bienniale).  What does that have to do with life in the “real world”?  “The Housing Problem”

The Bienniale organizers invited designers and developers who are “in direct engagement with current real-world problems such as the environment, poverty and political strife”, people actually producing housing for the equity and socially challenged in our communities world-wide.

“Element”, a Chilean group, won the Exhibition’s Silver Lion award, “to encourage further development of that ethic” of direct engagement with current real-world problems.  The jury found that Element’s projects showed “an extraordinary mix of expert architectural intelligence in finance, construction and design with sensitivity to the local circumstance to produce a project that would not only provide low-cost housing, but would hold out the real promise of a better economic future for its constituency.”  The group is a for-profit corporation with social interests, and has the Catholic University of Chile and Copec (the Chilean Oil Company) as partners.

Element calls itself a “Do Tank”, not just a “think tank”.  “On the one hand there is ‘endogamy’: a group of architects, dealing with problems that only interest other architects.  On the other hand there is ‘diagnosis’: architects interested in problems that are relevant (e.g., poverty, development or urban inclusiveness), but who have abandoned design and by not doing buildings, have become only experts (somebody that in a given field of knowledge can say what not to do).  Is it possible to engage questions that are of general interest and contribute to them without giving up architecture, offering specific knowledge and tools to resolve non-specific problems?”

Their projects say YES, with a direct address to housing equity.  “A housing subsidy is the biggest aid a poor family will ever receive from a government; one would like to use that subsidy to help; people escape poverty.  The problem is that social housing is now more like buying cars than buying houses: they lose value every day.”  In parts of the United States, where conditions of the current subsidy system sometimes limit qualifying home buyers to a draconian “1-1/2% per year maximum equity increase” upon sale, the real cost of subsidized housing for defined income groups is a demand that they fall further behind the economy when market-sector prices are rising.  Even if the allowed equity increase is higher, in a rising market, the buyers lose value every day, including against what is called “reasonable inflation”.

 Element stated, “We identified a set of design conditions that can make these units gain value over time, treating housing as an investment and not just as a social expense.  Gaining value is not just something desirable in itself (equity increase in order to correct inequalities) but a sign that a family has been able to go beyond mere survival.  In general, in the world one can say that the available money to give housing solutions can pay for only half of the house.  When that is the case, the key question is, which half do we do?  (The concept) takes care of the half that a family will never be able to attain on its own.  That half is design using the factors that can make a housing unit gain value over time.”

 “The biggest problem of the poor is (often) not shelter in itself, but access to opportunities (jobs, markets, education, health, recreation and social assistance) that cities tend to concentrate.  Those opportunities are not available in suburbia (n.b.: or anywhere remote from those opportunities), where land is cheaper and where the poor tend to be expelled in some countries.  Location is much more important than size.  Land being a scarce resource, projects have to be dense enough in order to be able to pay for more expensive and therefore better located lots.” 

Their work “…looks for density, without overcrowding, with the possibility of expansion.  They develop projects in with community participation, and focus on information and the communication of constraints before addressing collective choice.  They see themselves working on inclusive instead of exclusive cities, with the city a very efficient source of equality.

One of their low-cost, subsidized equity housing projects created row-houses in small buildings of attached three-story dwelling units each, with space between or alongside the upper floors of the units to allow for each of the new ownership families to expand their original “half-houses”.  The ground floor of each unit serves as a base, beneath both the original upper floors and the “future development” deck, and serves as garage, storage, home business, workshop or mechanical space, as appropriate to the location in the city, with each house accessed by a private outside stairway to the “deck space”.  As families gain more equity and cash, they are able to “in-fill” their second and third floor space to serve changing family needs in place, further increasing their equity within a building envelope and floor area approved with the original entitlements for the project.  As they grow their families, they can grow their house, stay in their neighborhood, and stay abreast of the housing economy.

The new homeowners are gifted with the full value of the developer’s subsidy to them, and additionally receive full market value for the increase over and above the original “community subsidized” investment – including for the improvements they later add to their property.   Of course there are processes to guard against fraud and favors!

The approach to “real world” solutions by this remarkable group is based upon three principles:|

  • “To think, design and build better neighborhoods, housing and the necessary urban infrastructure to promote social development and overcome the circle of poverty and inequity of our cities;
  • In order to trigger a relevant qualitative leap-forward, our projects must be built under the same market and policy conditions than any other, working to achieve “more with the same”.
  • By quality we understand projects whose design guarantees incremental value and returns on investment over time, in order to stop considering it a mere “social expense”.   

In this spirit, Elemental contributes to improve the quality of life in Chilean cities…understanding the city as an unlimited resource to build social equity.”

 Treating the “contributors” of development exactions to subsidize affordable housing as community or even for-profit partners instead of as “the problem”, and treating new homeowners including those who are truly poor as equity partners through subsidy, instead of as under-endowed “newbies” wanting a free ride on the economic wave, or as expendable transient employees, may succeed in bringing communities together.   Where community effort includes contribution to provision of “affordable housing”, that is true food for thought – and Action!


About randysrules

From a professional background in architecture, community and regional planning, urban design, leadership, and fine arts, this blog provides insights on ethics, leadership, architecture/planning/urban design, Venice, and whatever intrigues me at the time. Enjoy!
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