Social Housing Lands in America
With Washington uninterested in affordable housing, cities and states are turning to an alternative model. Can it deliver on its promises?
Forget the opera and the Schönbrunn Palace. Some of the hottest tourist attractions in Vienna these days are the city’s social housing complexes. Delegation after delegation of American politicians, housing advocates, and journalists have descended upon the Austrian capital to see government-owned housing developments that are nothing like those in American cities. At Karl-Marx-Hof and Alt-Erlaa, residents ranging from the very poor to the upper middle class live side by side, sharing amenities like swimming pools and tennis courts. Since their landlord — the government — has no profit motive, some residents spend as little as 4% of their income on rent.
These trips to Vienna are starting to bear fruit. From Hawaii to Atlanta, state and city governments are initiating social housing programs of their own. The basic concept is this: The government or a non-profit owns a large portfolio of housing that it rents to people across the income distribution. Rents from higher-income tenants help subsidize the rents of their lower-income neighbors. Around the world, social housing developments tend to have much higher-quality architecture and urban design than American public housing projects.
Montgomery County, Maryland has the most advanced social housing program in the U.S. so far. (Check out coverage from Rachel Cohen at Vox or Conor Dougherty at the New York Times). The initial results are promising. Less than two years after the program began, the county opened a 268-unit building, and has more than 1,000 additional homes on the way, all without federal subsidies. MoCo achieves this by offering most of its units at market rates: Across its portfolio, 20% of units must be offered to people with low incomes and an additional 10% to middle-income people. “This kind of project is better for the taxpayer, it avoids a concentration of poverty, and it’s very capitalist in my view,” Zachary Marks, one of the architects of MoCo’s program, told Cohen.
A big part of social housing’s appeal is its potential to be self-sustaining. With a little startup capital, a social housing developer can function much like a private sector developer operating under inclusionary zoning rules. In expensive cities like New York, developers can still profitably build when they’re required to offer a certain percentage of units at below-market rates. MoCo’s social housing agency must earn just enough to cover the costs of building and maintaining its projects. That means it can deliver a higher percentage of affordable units than a profit-oriented developer could, and it can build in economic conditions in which a private developer wouldn’t feel comfortable breaking ground.
But it remains to be seen whether U.S. social housing programs can deliver significant amounts of housing for very low-income people, and how they will interact with America’s existing affordable housing programs.
Tiffani McCoy has thought a lot about these questions as the leader of the movement to bring social housing to Seattle. She led the coalition that passed Initiative 135 last year, creating a social housing developer for the city. She and her colleagues at the advocacy group House Our Neighbors are currently collecting signatures for another ballot initiative that would provide a steady source of funding for the social housing developer. The proposal would tax compensation over $1 million dollars in this famously income tax-free state, generating an estimated $50 million per year. That money could be multiplied many-fold through bonds and other funding sources. If McCoy and her colleagues can pull it off, Seattle just might end up with the best-capitalized, most empowered social housing developer in the country.
We spoke on the phone a couple of weeks ago, not long after she returned from Vienna, as part of my book research. A condensed version of our conversation is below:
How did you get involved in advocating for social housing in Seattle?
For the past several years, I'd been working at an organization called Real Change, which is a street paper that’s part of the international street paper movement. I’d been the advocacy director there, spending lots of time doing campaigns around public restrooms, shelters, putting more money into emergency housing. After doing that for a few years and sharing the stories of unhoused folks, it just really started to dawn on me that the homelessness crisis is going to continue until we start actually addressing the fact that housing is deeply unaffordable. And the fact that we have no plan. No level of government has any plan whatsoever, if we're brutally honest about it.
This group of people, the House Our Neighbors steering committee, decided to go on the offensive to put forward a vision of what we thought would actually start addressing the housing and homelessness crisis at scale. We decided that we were going to do it through a ballot initiative, and that it was going to be social housing. So we drafted this initiative over four or five months of community input. We did case study analysis from across the globe. We took some of the inspiration for the financing from Montgomery County, Maryland, which is, according to how we define social housing, really the only social housing developer in the nation so far.
Can I ask how you define social housing?
House Our Neighbors defines it as free from the speculative market, it is available to all, it is publicly owned in perpetuity, and it is permanently affordable.
I'm curious because the MoCo program, as far as I understand, includes what might be described as “unaffordable” units. How does that fit into this definition?
That’s how they get into the cross-subsidization for the financing piece of the model. They have market rate units that cross subsidize those at the lower end of the income spectrum, which allows them also to add more low-income units than they would if they only relied on HUD.
We also prioritize cross subsidization for the social housing developer here in Seattle. I imagine there will be some market rate units. It will be a choice by future residents to spend their dollars on a social housing developer where they know that money is also going to cross subsidize those in the building that are lower on the income spectrum, as opposed to choosing to have that money go to a private developer for a stock buyback or a bonus at the end of the year.
Because we’re not set up like Vienna or Singapore, or even Britain or New Zealand, where they have ample money flowing into the affordable housing sector, we need to be realistic about where we're going to start. Cross subsidy is the way that we've planned out the financing. We are also running a ballot initiative right now to actually fund a developer at a minimum of $50 million a year. That money could be bonded in the future to accelerate production of housing.
We have four priority income brackets that have to be served in each of the housing developments. The staff of the developer and the board of the developer will decide what the breakdown is in each building. We see this as the core of social housing. Unlike the United States public housing model where we segregate people based on their income, social housing is about social cohesion.
Are there initiatives in other cities and states that seem really promising?
Rhode Island is really exciting. They have a housing production fund that I think was created in the last legislative session. I'm really close with Senator Stanley Chang in Hawaii who has been pushing Aloha Homes for the past five plus years, based on a Singaporean model. And then Assemblymember Alex Lee in California, what he's doing is really, really exciting continuing to advance this regardless of all the obstacles. One of our groups that's meeting with us quarterly is from San Diego. Those are students and youth with the Sunrise San Diego movement that are looking to potentially do a county ballot initiative. In DC they're potentially starting to explore a ballot initiative as well.
There's a long history in the US of trying to fund low-income housing on an “economic” basis, without ongoing government subsidy. And I know there's this cross subsidization element to social housing, but is that enough to actually subsidize ultra low-income housing? For folks who are on Social Security, earning $1,200 a month and paying 30% of that in rent, there's a huge gap in terms of what they can pay and what it actually costs to build and maintain a home.
Public housing in the United States over the decades has been set up to fail, because you cannot sustain a building when you're segregating out a community based on income. It's not mathematically possible. But we continue to do this thing in the United States where we focus only on the lowest income, and some people are really attached to that model. They think it's really important that those with the most need get the public dollars. That's something that's been levied against us from low-income housing advocates. They’re like, how can you be fighting for public dollars to go towards middle-income families when you have people sleeping outside?
I have to remind them, our coalition is made up primarily of people who work with the unhoused. The coalition also started with our unhoused neighbors. We have unhoused neighbors who want to live in social housing. They do not want to live in income segregated housing. They want to be able to make more money in the lifetime of living in a building and not lose their housing.
I know people from when I worked at Real Change who put off income, put off promotions in order to stay in Section 8 housing. This is something that happens regularly. What if instead, we set up a system where we are also providing housing for those who have the lowest income, but we're not segregating them out, and we're also putting them together with folks that make higher incomes that can cross subsidize, so we’re not as reliant on subsidies from the government.
I hope in the future that the social housing developer is able to take Section 8 vouchers, though we’ll have to be diligent to make sure that it's not keeping folks that are undocumented out of this housing. Hopefully in the future, we can tap into the state’s rental subsidies. They're incredibly important. I know people who would have been evicted without them. But what if we had a rental subsidy program that went into a social housing developer, that’s housing the public forever, as opposed to continuing to always subsidize the private market with our public dollars?
How do you see social housing coexisting with public housing, LIHTC tax credits, and vouchers?
It's complimentary. It’s additive. It is working in tandem with the same values and goals of the affordable housing sector to serve people in a non-predatory way. Unfortunately, I did not expect this, but when we first launched the social housing initiative, some of the most vociferous opposition came from low-income housing advocates.
I feel it’s because we're so conditioned in this country to have this scarcity mindset. There’s not enough LIHTC. Vouchers — don't even get me started on the waitlists, those are absolutely insane and quite frankly an embarrassment.
What Montgomery County shows us in practical terms is you can utilize the tools that are there right now, and you can produce more low-income housing in a given year with a mixed-income social housing project than you would have been able to do with just HUD. So either we explore that, lean into it, figure out what we can learn from that and implement it here, or we can spend all of our time and energy trying to get the federal government to add more money to LIHTC and to vouchers. And I don't know about you, but our coalition and the people we've talked to do not want to wait on the federal government anymore. So why would we deprive ourselves of a tool that we can implement locally, to pull more housing off of the private market and to provide more housing for people across the income spectrum.
And then the other thing I will add to that is we have to get away from this idea that all of our affordable housing needs to have a time limit on it. As if in 30 years, we're not going to still need that affordable housing stock. [Most federally-subsidized LIHTC developments have their affordability covenants expire after 30 years, at which point they can be converted to market rate housing.] For us, with our ballot initiative, making sure that this housing was permanently affordable was non-negotiable.
What do you think changed in recent years to shift this conversation that for a long time was rooted in advocating for more of the existing programs and improving the existing programs? What caused people to say, ‘That's just not going to work anymore. We need to try something totally different’?
In the coalition that we started, a lot of the people were mutual aid folks that supported our unhoused neighbors who were being swept every week to another place in the city. And so, wanting government to be more than it is, but not seeing that happen, and then looking to traditional nonprofits that spend more time worrying about their status with elected officials than they do about, sometimes, the mission and getting that mission achieved however they can.
We were just tired of waiting for solutions, tired of trying the same old thing. So we thought, let's actually put forward something that is realistic, a real goal that could make a significant difference in a decade plus — because we're not trying to spin something that's gonna be a savior overnight.
I wonder if you've considered how this could affect the broader housing market in Seattle, if this developer is really able to take off and become a real player in real estate world. I know it's kind of weird to use this terminology because the whole point is to decommodify housing. But could there be other effects for people who aren't even living in social housing?
If the vision takes off in the way that we hope, in a decade plus, maybe a little bit more, it absolutely will have a cooling effect on the market. And this is with multiple projects a year, not just one project per year. We've seen that longitudinally in Singapore and Vienna, how having a robust public sector cools the private market. Because the private market isn’t just competing with itself for tenants, it's actually having to compete with high quality social housing. People will actually have an option for where to spend their money. Right now, people do not have an option.
If city and state governments start prioritizing more surplus land for these public developers, that will spur job growth and housing production. There was a study comparing Vienna and Ireland during an economic bust. You still see housing production in Vienna increasing, whereas in Ireland, it drops because the public sector there isn't as strong. When housing is a public good, you're still producing it even during a bust year because you're not worried about the profit.