How European-Style Public Housing Could Help Solve The Affordability Crisis

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"Public housing" isn't such a loaded term in Vienna, Austria.

In the European capital, public housing is attractive and well-maintained. It's located near schools, transit and cultural amenities. It's home to singles, families and senior citizens — and most important, it's mixed-income, with affluent Viennese sharing walls with working-class residents.

Could such housing exist in the D.C. region?

Increasingly, progressives are saying "yes." In Maryland, Del. Vaughn Stewart (D-Derwood) is introducing legislation to create the state's first "social housing" program. In the District of Columbia, Will Merrifield, a candidate for an at-large seat on the D.C. Council, has made European-style public housing a pillar of his platform. The idea is gaining ground nationally, too, boosted by the presidential campaign of Vermont Sen. Bernie Sanders (I).

But social housing is still a radical concept in the U.S., where government-funded housing is — unfairly or not — associated with crumbling apartment towers marred by crime and poverty. First constructed as segregated housing for low-income Americans during the New Deal era, many public housing projects were reserved for poor African Americans systematically shut out of the housing market. As conditions worsened in public housing, the federal government pulled out, leaving local authorities with enormous maintenance backlogs and residents in unsafe conditions.

Some progressive officials and activists say public housing doesn't need to be this way. Borrowing best practices from cities like Vienna, Austria, they say, could improve millions of lives, chip away at America's legacy of racial segregation and give the country an economic boost.

The challenge is convincing leaders that social housing is more than a utopian ideal.

Social Housing Vs. Public Housing

The main difference between social housing and public housing is who's allowed to live in it.

Since the end of World War II, public housing in D.C. and the rest of the country has been reserved for poor residents, typically black Americans barred from economic opportunity. Owned and operated by governments, disproportionately located in high-poverty areas and exclusively available to the neediest occupants, public housing has never had a working financial model, says Peter Gowan, a senior policy associate with the left-leaning Democracy Collaborative.

"Public housing in the United States was designed to fail," Gowan says. "It was designed to be segregated, it was designed to be low-quality. Where a few public housing authorities tried to do it very well, it was disinvested from later on."

Today, D.C.'s Housing Authority faces deferred maintenance costs exceeding $2 billion on more than 6,600 public housing units, some of which are unlivable.

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That hasn't been the case in places like Vienna, Gowan says. Social housing has existed in Western Europe for more than a century, first established to house the masses of job-seekers who overwhelmed cities during industrialization. But the system didn't truly take off until after World War II, when governments were forced to rebuild cities destroyed in the conflict.

Today, social housing in Vienna is available to people of all incomes. It's often built on government-owned land that's sold to a private company, which then owns and operates the housing units under public oversight. And crucially, social housing is placed in desirable areas and required to meet architectural and livability standards that make it appealing to people across the income spectrum.

"It's something that even a relatively well-off person would say, 'This is good enough for me, I'm happy here,'" says Gowan.

Those higher-income tenants pay market rents, subsidizing the cheaper rents reserved for low-income occupants. In Vienna, typically half of a building's units are reserved for low-income people. Rent costs don't fluctuate wildly year-over-year, in part because the government builds thousands of new social housing units each year, ensuring that supply keeps up with demand.

Today, social housing accounts for an estimated 40% of the housing stock in Vienna.

"The Viennese have decided that housing is a human right so important that it shouldn't be left up to the free market," says a 2013 article in Governing magazine.

Fixing A Broken System

Social housing is ambitious, says Will Merrifield, an attorney running for an at-large seat on the D.C. Council currently held by David Grosso. But he says it's the clearest solution to the District's housing crunch.

Merrifield, who resigned from his job at the Washington Legal Clinic for the Homeless to run for public office, has made social housing a central feature of his platform. The way the city develops affordable housing is deeply flawed, he says, because it puts too much control in the hands of the private sector.

"The way the system works now is our tax dollars are being thrown at developers who are building a bunch of projects that are inaccessible to a large number of people who live in the District today," Merrifield says.

I don't think you can solve the affordable housing crisis by tripling or doubling down on the private market.

He's referring to the city's Housing Production Trust Fund, the city's primary vehicle for financing affordable housing construction. The District sets aside more than $100 million each year to provide low-cost loans to private and nonprofit developers who build affordable housing. But land acquisition costs are high, construction is increasingly expensive, the financing process can be slow and therefore costly, and private developers still have to turn a profit on the housing they build. That can lead to "affordable" projects consisting mostly of higher-income units with a minority of low-income apartments.

D.C.'s approach mirrors how most affordable housing is built in the U.S. today. Nationally, housing for low- to moderate-income people is largely a private enterprise, with homes constructed by for-profit developers subsidized by federal tax credits. But the system is imperfect, low-income housing advocates say. Tax-credit properties are only required to remain affordable for 30 years, and the credits aren't producing deeply affordable housing at the scale Americans need.

"I don't think you can solve the affordable housing crisis by tripling or doubling down on the private market," Merrifield says.

A 'Radioactive' Proposal

Supporters of social housing acknowledge it's a tough sell in the U.S., and not only because of its association with American-style public housing. It's also potentially expensive for taxpayers, at least in its early stages.

Maryland Del. Vaughn Stewart faced tough questions when he introduced his first social housing bill in Annapolis last year. The freshman lawmaker, a Democratic Socialist, had proposed financing a statewide social housing initiative through a $2.5 billion government bond and a tax on millionaires.

Members of the House Environment and Transportation Committee scoffed at the idea.

"We raised taxes on millionaires four times," said committee chair Del. Kumar Barve (D-Rockville). "I tend to think that that's not going to be a good income source."

Committee members ultimately rejected the bill, but left the door open to a compromise.

"I like big ideas," said Barve.

Stewart is now reintroducing the bill this session, but he's changed his pitch. The latest version of his legislation is funded by new document recording fees and a tax increase on high-dollar real estate transactions.

"We are hopeful that this arrangement, which only hits wealthy people when they buy a home, is going to be more politically palatable than the millionaire's tax, which proved to be radioactive," Stewart says.

The Democrat says he's attracted support for the legislation from affordable housing advocates and housing authorities across the state, including the Housing Opportunities Commission of Montgomery County.

"[Housing authorities] are very energized by this," Stewart says. "They're really enthusiastic about the revitalization of the idea that public housing is good. All these housing commissions have operated in an environment for years, or even decades, where public housing is something to be sneered at."

The bill is scheduled for a committee hearing Feb. 28, and it has a companion bill sponsored by Sen. Jill Carter (D-Baltimore City) in the state Senate.

Meanwhile, Vermont Sen. Bernie Sanders has embraced social housing in his campaign for the Democratic presidential nomination, drawing inspiration from the national "Homes Guarantee" plan devised by progressive organization People's Action. That plan is also the basis of a proposal from a Los Angeles city council member that calls on the city to study social housing.

Peter Gowan with the Democracy Collaborative doubts that state or federal governments will quickly sign on to social housing; the idea remains outlandish in the U.S., despite its ubiquity in Western Europe. But he says he's impressed by how quickly social housing has become a national issue in this country.

"We're now seeing people talk about housing on a national debate stage," Gowan says. "The movement is growing. It's getting stronger every day. And I think the first few politicians have become a trickle of politicians, and that could eventually become a flood."