Social Housing As Economic Development
On November 28, 2023, the DC Council Committee on Housing, chaired by At-Large Councilmember Robert White, held a roundtable entitled: Making Social Housing Work in the District of Columbia. Below is the testimony that Will Merrifield delivered on behalf of The Center for Social Housing and Public Investment.
Today, I want to talk about social housing not simply as housing policy but within a broader economic development framework. I want to frame the conversation this way because I believe the affordable housing crisis the District is experiencing is an outgrowth of a broader failed economic development policy which privatizes public resources to incentivize private development. Too often the type of development produced by this system has not been tailored for the public good. Instead, it has maximized profit for private actors and has come at the expense of working-class residents. This economic development policy has been dressed up as “community revitalization” but it does not revitalize. In reality, it has led to a pattern of speculation, demolition and displacement across DC.
To briefly illustrate this point, consider that between 2003 and 2013 the District gave away a staggering $1.7 billion in subsidies to private developers. In return for these massive giveaways, developers promised affordable housing and jobs for District residents- promises which, in many instances, never came to fruition. In fact, over the same timeframe that DC enriched developers with the $1.7 billion, the number of low-cost rental units in Washington DC fell from about 58,000 in 2002 to around 33,000 by 2013, a loss of about half of its deeply affordable housing stock. Conversely, during the same time period, the District saw its high-cost housing stock nearly triple in size, growing from 28,000 units to 73,000 units. These numbers suggest the low-cost units were eliminated and then replaced with high-end units. Much of this was done under the guise of “community revitalization”.
To understand the human toll of these revitalization schemes, it was roughly during this same time frame (2000 to 2013) that more than 20,000 black residents were displaced from Washington DC. These numbers are staggering, and yet there is no evidence to suggest there is any relief in sight. In fact, rents increased by 55% between 2010 and 2020 and currently there are more than 82,000 residents in the District who are rent insecure.
Social Housing as An Alternative Approach Economic Development
Social housing offers a proven and efficient alternative approach to economic development. In 1974, Vienna founded its first urban renewal office and developed a strategy of “soft urban renewal.” The renewal program began in earnest in 1984 and focused on the rehabilitation of privately-owned, substandard housing in parts of the city with a higher percentage of people with low-incomes. The city affirmatively decided against demolition and the displacement of people living in these communities and instead subsidized the rehabilitation of existing buildings. In return for rehabilitation subsidies, the privately-owned units became rent controlled. The city also used this process to procure land in these areas for the production of social housing units. The result was the rehabilitation of the housing stock, the expansion of rent control, the strengthening of the social housing system through the production of new social housing units, and communities kept intact.
The Viennese also emphasized broader social infrastructure improvements within their “soft urban renewal” program. Examples of these social infrastructure improvements are open spaces, kindergarten centers, and public schools. Housing is never developed without developing this social infrastructure as well, which means that all residents benefit from government investment. This holistic approach to development which focuses on building social housing all over the city while investing in social infrastructure has made Vienna extremely interconnected, promotes income equality, and has substantially minimized pockets of economic segregation.
To understand how to finance and scale social housing in the District, we can look right across the border to Montgomery County and the Housing Opportunities Commission. HOC’s social housing model has shown that with a minimal up-front investment, a government agency operating in the DMV housing market can stand-up a network of social housing that is repeatable and scalable. In fact, the most remarkable aspect of the Montgomery County system is its efficiency. HOC essentially turns an annual county commitment of $600,000 over a twenty-year period into a $50 million revolving housing production fund that produces upwards of 700 units of social housing every time it turns over. Moreover, these projects are self-sustaining, meaning they are designed to pay for themselves. Once these projects are owned outright, they essentially become performing assets of the County and can be used to leverage more affordable housing.
The District should adopt this scalable and efficient HOC model as a tool not only to create thousands of affordable housing units but as the center-piece of a broader Viennese style economic development policy which expands affordable housing production across all neighborhoods while also pumping resources and capital investment into underserved communities in a way benefits the current residents.
Washington DC’s Office of Social Housing
To function correctly, a “DC Office of Social Housing” would need to have some defining characteristics. First, the office should have flexibility and should NOT be locked into predetermined affordability or bedroom targets. Different development opportunities will be able to support different levels of affordability depending on a broad set of variables. The most important factor for all social housing projects is that they maximize affordability and bedroom sizes to the greatest extent possible while maintaining self-sustainability. The more the District’s social housing network grows, the more affordability it will be able to leverage. Most importantly, to encourage maximum affordability, the District should use public land to build social housing and also layer subsidies within the system by utilizing vouchers. Next, the Office of Social Housing will be competing against the private market for development opportunities and should not be undercut due to political pressure from private market actors. This makes political independence a necessity. Lastly, the Office should be development focused and staffed with people experienced in finance and real estate so that it can build efficiently and scale social housing in the District.