The Case for Social Housing in Washington DC
Before founding The Center for Social Housing and Public Investment, I worked in DC as an attorney representing tenant associations fighting to save affordable housing and keep their communities intact in the midst of large-scale redevelopment projects. The notion that redevelopment should be equitable and that people should have a right to continue living in safe and affordable housing should not be a radical proposition. In fact, in one of the wealthiest regions- in the wealthiest country in the world- it should strike us all as absurd that our elected leaders have not efficiently and effectively used government resources towards that end. However, not only have national and local leaders failed to ensure housing stability and affordability, they have maintained a system that has resulted in an acute housing crisis. DC’s housing crisis is a political crisis- elected officials are allowing developers and their investors dictate what type of housing gets built. These developers and their investors have one goal in mind - to maximize profits.
For decades, local elected leaders have embedded housing policy inside a broader economic development strategy rooted in the belief that government’s primary role in development is to help developers inject capital (money) into neighborhoods. The way government aids in this capital injection is by subsidizing large scale development projects as part of “community revitalization” schemes. The idea is that flooding the private market with public assets and government subsidies will result in an avalanche of capital investment. This capital investment will theoretically produce enough corporate largess to have a trickle-down effect on the housing market. The theory continues that this trickle down will create enough affordable housing to meet the demand of low- and moderate- income renters. Obviously, this has not happened. What has happened is an extraordinary transfer of wealth from the public sector to the private sector.
The Numbers Don’t Lie
An in-depth investigative Report by WAMU found 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, both politicians and developers promised affordable housing and jobs for District residents - promises which, in many instances, never came to fruition. The policy decision to transfer billions of dollars of public money and resources to private developers- in the midst of an affordable housing crisis-has essentially had the effect of pouring gasoline on an already burning-hot housing market. According to a study conducted by the DC Fiscal Policy Institute, over the same timeframe that DC enriched developers with the $1.7 billion, the number of low-cost rental units fell from about 58,000 to around 33,000, a loss of nearly half of DC’s deeply affordable housing stock. Conversely, during the same time period, DC saw its high-cost housing stock nearly triple in size, growing from 28,000 to 73,000 units. These numbers clearly show that developers were taking public land/money and using those public resources to eliminate affordable housing while building more expensive housing in the place of previously affordable units.
Affordable Housing Production cannot keep up with the loss of Affordable Units
DC is spending massive amounts of public money to build “affordable units” but the return on investment is dismal. Between 2015 through 2022, DC invested $1.4 billion which created around 9,000 units of affordable housing. In addition, the DC Housing Authority claims it needs $2.2 billion over the next 17 years to keep its public housing stock, which consists of only 8,000 units, viable for its residents. These numbers show how fatally flawed DC’s housing policy has become. Massive public subsidies coupled with hyper-reliance on the private sector has encouraged speculation and driven up land values and costs across the District. This not only makes it more expensive to produce affordable housing, it means that current affordable units will inevitably be lost due to these speculative patterns. As such, production will never be able to keep up with the loss of affordable units in the current system.
The consequences of these polices have been skyrocketing rents, massive inequality, hyper-segregation, displacement and political corruption.
Social Housing- A Proven Alternative
Social housing systems offer an alternative to the current hyper-dependance on the private market to solve the affordable housing crisis. Social housing has been around for a long time, the most famous model can be found in Vienna Austria. Vienna’s system has been studied relentlessly and was recently highlighted by the New York Times in a feature which referred to the city as a renter’s Utopia. The core principle imbedded in the DNA of any true social housing model is that Housing is a Human Right and that housing policy should be designed meet that objective. Instead of subsidizing private developers, social housing calls for public resources to be used to build self-sustaining, deeply affordable, mixed income housing- in many cases this housing is owned by the government.
Vienna has a population of approximately 1.9 million residents which makes it the largest city in Austria. Of this total population, a whopping 60% live in social housing. The City of Vienna itself directly owns 220,000 social housing units which are homes to about 500,000 residents. In addition to these units owned directly by the municipality, Vienna has fostered the building of an additional 200,000 government subsidized apartments for a total of 420,000 units of social housing. In total, social housing in Vienna makes up nearly half of the total housing stock. Moreover, the Viennese model is accessible to broad sector of its residents; in fact, 75% of the population qualifies to live in social housing. Broad participation in the program has removed any stigma of accessing social housing and has made the program wildly popular among its residents.
Clearly, the Viennese have cracked the affordable housing code by essentially creating a surplus of affordable housing in order to exert downward pressure on rents. This creates a “public option” for renters against which the private market must compete. As a result, renters in Austria only spend on average of 27% of their income in rent.
Social Housing in the United States
The deepening of the housing crisis in the United States has created the momentum for the concept of social housing in municipalities and states across the country, including Montgomery County, Maryland. DC might be next- last year, Councilwoman Janeese Lewis George proposed the Green New Deal for Housing Amendment Act of 2022 (Green New Deal For Housing) aimed at making social housing a reality in Washington DC. The Green New Deal for Housing would essentially create a public sector development arm to use government resources to meet the housing needs of all Washingtonians. If enacted, the Green New Deal for Housing would create an Office of Social Housing tasked with developing District owned social housing. This approach, strong government intervention to produce deeply affordable housing across income spectrums, would mark a radical departure from the District’s current inefficient trickle-down market-based approach.
How the DC Social Housing Model would Operate
As currently configured, the social housing model put forth by the Green New Deal legislation is most closely associated with the model in Vienna Austria and is very simple at its core. Here is how it works:
First, the government treats housing as infrastructure and uses public resources to build a system of high quality mixed-income rental housing that rationally and efficiently meets the needs of its residents. This means localized investment in the production of thousands of units of deeply affordable mixed-income rental housing.
Second, there is no private developer, which means the profit motive is eliminated, thus allowing social housing to operate with maximum economic efficiency while providing 100% affordability. Residential rent (as well as any commercial rents from ground floor retail) is used productively, first covering the operating costs of the building; any surplus rent after the operating costs have been met then pays down the building’s construction costs. Finally, buildings contain a mix of incomes. The rents of tenants with higher incomes offset the lower rents paid by people who earn less. This is called rent cross subsidization.
Thus, social housing creates publicly-owned, self-sustaining, permanently-affordable rental housing.
The Way Forward
Private developers and their investors are interested in one thing and one thing only- maximizing their profits to the greatest extent possible. To that end, they have created housing systems that promote land speculation and that seek the highest rents possible. DC officials are now faced with a choice, they can continue to subsidize this corrupted system, which has caused rampant displacement and instability, or they can embrace Social Housing as part of a broader New Deal infrastructure program. We have seen that social housing works; the question is will elected leaders embrace this bold and proven solution.
Will Merrifield, Founder and Executive Director of The Center for Social Housing and Public Investment, Inc.