A Lesson From China’s Urban Villages
THE URBAN VILLAGE
In China, the issue of affordable housing is deeply connected to the rapid urbanization of cities in the past 20 years. Rural inhabitants are flooding cities like Shenzhen or Guangzhou and as a result these cities end up with these incredibly dense neighborhoods (pictured above) right outside of their central business districts.
The characteristics of those areas are generally referred to “handshake architecture”, buildings constructed so close together that someone can reach out and shake hands with the person in the next building. And while there are issues with this type of urban plan, it serves the cause of affordable housing in the following ways:
- Instead of directly subsidizing housing developments, the government can spend tax dollars on funding energy efficient retrofits, better quality management systems for those developments and reducing the burden of rising operating costs for landlords as an incentive to maintain rent levels.
- Since the government owns the land, they can regulate pricing in awarding those parcels to developers. This allows for lower development cost and thus more economic feasibility.
- Where there are limits in residential building heights, this type of plan creates more housing units per block than would be allowable in traditional urban planning scenarios.
Similarly in the US, the idea of bending building codes to allow for micro-units as affordable housing apartments in central business districts will allow for many more housing units, while minimizing the amount of direct subsidy that the government must place into those projects.
COMPARING TO HOUSING POLICY IN THE U.S
Affordable housing is a topic that is tossed about in local politics all over the united states, as a social policy to address the rising cost of living for those on the edge of poverty. Its also a way to allow everyone across the economic spectrum to have access to major cities where there is better access to jobs and education. Here in the states the government moves that agenda along in the following ways:
- The Federal Government (IRS) issues a certain amount of tax credits to each state. Developers are awarded those credits and then sells them to investors to fund their projects, in return, the rents remains capped at a certain level.
- Housing developers can apply for a HAP contract through the Federal Government (HUD), where the government sets your rent, gives the landlord a guaranteed payment monthly, and tenants pay only a portion of that amount.
- Local Governments can also build their own housing (often referred to as the Projects), which is also subsidized through a contract with the Federal or State governments.
- Lastly, in the case where the Government owns the land, they may decide to give it away to developers for very little money, or lease the land at a low rate, and in return, the rents on some of the apartments remain capped at a lower level.
In Sum, there is almost no scenario where you can find low income housing in the CENTER of major cities like New York City, Chicago, San Francisco, without the help of some government subsidy. The economic feasibility just doesn’t work because land is so expensive in those areas.
THE URBAN VILLAGE LESSON
A better way to implement affordable housing in city centers is to implement a similar strategy for increasing density in central business districts in the form of what we are seeing as today’s micro-units. In our cities most desirable economic centers, why not increase the number of micro unit developments, which will bring more low income households to those neighborhoods. More units per square foot equals more revenue for the landlord and less direct subsidy from the government.
Ensure quality of those units by setting design standards, monitoring occupancy limits, creating a supporting infrastructure of public safety, schooling and community resources as a means to enhance the standard of living at the same time.