Structure of the lecture

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1 Urban regeneration and neighborhood renewal in European cities (with special focus on CEE countries) Iván Tosics Metropolitan Research Institute Budapest TU Vienna Perspektiven der Stadterneuerung und Stadtentwicklung 17 January 2013 Structure of the lecture 1) Some theoretical framework: when is urban renewal needed (and what form)? 2) The political and institutional context of urban development in CEE countries 3) Densely built up old inner city districts the problem of regeneration 4) The development, problems and regeneration of large housing estates in Europe 5) What can cities do with their most deprived areas? 1

2 1. Theoretical framework: when is urban regeneration needed (and what form)? Different types of problems in urban areas: Deterioration ti of a building Physical deterioration of a neighbourhood Deprivation and decay of an area Different types of interventions: Housing renewal Urban renewal Urban regeneration 2

3 Deterioration and intervention Cases when deterioration speeds up and no regeneration happens land value exists but the market actors are unwilling to invest land value exists but the decision on the area depends on non-market forces (e.g. the public sector) no land value exists (e.g. socialist system) Potential reasons behind non-investment into regeneration of the area general financial problems of market actors in urban renewal (e.g. war) financing avoids the particular area because of concentration of migrant or ethnic groups (socio-spatialspatial aspects); because of legal-institutional reasons: lack of proper framework for joint decisions on building and on neighbourhood level decision over development means is centralized by non-market actors and the focus of urban development concentrates on other areas Drift through urban space and time Position of communities in fragmented urban space. Urban value S p a c e Market change A t0 Public intervention A 3 A 4 Which strategies? A1 decline A tn A 2 A2 steady state t A3 gentrification A4 coherence best practice A 1 t 0 t n t x Time 3

4 The choice of urban regeneration: to what level? The choice of the level influences the social consequences Highest level: either total renewal or high quality new construction, with total change of residents (gentrification) Up to the same level back: revitalization with change of many of the residents Stop further deterioration: limited renewal, keeping the original population 2) The political and institutional context of urban development in CEE countries Central and Eastern Europe in historical context Cities of Central Europe were in a semiperipheral zone to the main European urban core area The urban system was relatively weak (in southeastern Europe very weak) and had a strong west-east gradient: Bohemia, Moravia, Slovenia and dthe western parts of fhungary and dpoland did not differ substantially from western Europe. In the last 100 years the borders between countries changed many times. 4

5 Changes in the capital cities of independent countries in East-Central Europe in the course of the 20 th century Before 1914 After 1920 After 1945 After 1992 Vienna Vienna Vienna Vienna Belgrade Belgrade Belgrade Belgrade Bucharest Bucharest Bucharest Bucharest Sofia Sofia Sofia Sofia Cetinje (Montenegro) Budapest Budapest Budapest Warsaw Warsaw Warsaw Prague Prague Prague Tirana Tirana Tirana Tallinn Tallinn Riga Riga Vilnius Vilnius Bratislava il Ljubljana Zagreb Sarajevo Podgorica Pristina Skopje Minsk Kiev The special aspects of the socialist development model ( ) residential incomes under (at the beginning total) state control significant state ownership of the land and the housing stock in cities (as a consequence of confiscation) strong and direct control over land use, leading to land use patterns preferred by the socialist state administrative limitation of housing consumption (one unit per family) state control over all housing policy factors (housing construction, social housing policy, subsidized private housing constructions, loan origination, construction industry and materials) attempts to control the private housing market (private rents, etc.) including the self-financed form of housing construction administrative limitation of the development (inflow of population, industrial growth) of major cities direct control over the financial resources of the cities 5

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8 The changes in economic terms At the beginning of the 20th century the level of economic development of Hungary was equal to that of Austria, Finland, Italy and Spain. In the interwar period the country could only very slowly and gradually try to regain its importance on the international scene After WWII the 44 years of Soviet dominance and imposition of the socialist system Hungary sank down substantially, to the level of Greece and Portugal. European cities on different economic development levels in the early 1990s Gross Social Product per capita on constant prices (showing the economic development level of the region, rather than the standard of living of the urban population) EUR: Hamburg, München, Helsinki EUR: Stuttgart, Paris, Brussels, Vienna EUR: Köln, Strasbourg, Utrecht, Marseille EUR: Birmingham, Dresden, Manchester, Barcelona EUR: Athens, Budapest EUR: Prague, Warsaw 8

9 Phases in the socialist development period First phase: in the 1950s elimination of the independence of the local level, politics dominates and sectoral ministries are stronger than local councils. Second phase: in the 1960s the local councils gain ground against the economic sectors. The result is top-down planning, limited local independence. Third phase: opening towards small private economic actors Fourth phase: from 1986 reform of municipal finance, introducing the regulation of revenues (instead of expenditures): preparing market economy The change from planned to market economy Following the collapse of the socialist system the historic pendulum went to the other side (Bertaud-Renaud, 1995). Regarding urban development: the over-sized public housing sector had to be reduced and the top-down political and planning system had to be changed. The main restructuring t processes: the privatization of the housing stock the decentralization of the administrative structure 9

10 Privatization of housing to sitting tenants Two options to reduce state ownership: restitution and privatization Based on central or local government decree the tenants buy their units on a discounted price Privatization in east-central European countries was give-away privatization : discounts were huge Mass-privatization of housing was the single biggest wealth transfer which affected directly the households in the E-C-European region. Different legal regulations: privatization of management companies (D), buildings turning into condominiums (HU), co-ownership (RO, BG) Arguments for housing privatization Political arguments: households buying their flats get property (saving) to cushion the costs of transition, thus deprivation of these households is less serious (joblessness should not go together with homelessness). housing to be shock absorber instead of agency of change Financial arguments: Reduction in public budgetary outlays for the operation and maintenance of the stock Privatization is decreasing inflationary pressures as excess demand of households is soaked up and they become interested in saving more. Arguments for the tenants to buy To avoid the fear from future rent increase To acquire control over the functioning of the house; to capitalize the value gap through renovation or sale for other purposes Because of these serious arguments it was politically very difficult to steer and limit mass give-away housing privatization 10

11 Dramatic changes in property relations Margaret Thatcher privatised 2 million public rental units over a time period of 15 years East-central European countries privatised 3.1 million rental flats within five years. Discounts on sales prices for sitting tenants were usually above 85 %, there were even examples for almost 100 % discount. The winners of this privatisation race were the south-eastern European countries, where 77 % of the public stock has rapidly been sold off to the sitting tenants. Tirana: the share of the public rental stock changed between 1993 and 1998 from almost 100 % to 0 %, in Budapest from 50 % to 10 %, in Prague from 71 % to 52 %. Public rental as % of all dwellings % privatized 1990 after 2000 Poland Czech Republic Slovak Republic Hungary Romania Bulgaria Albania

12 Changing legal aspects for housing renewal in Hungary Law on Condominiums: since : this law has been made as the legal framework of privatization Very limited effects on larger scale renewal of buildings as requiring unanimous decisions 2004 modifications in order to make the decisionmaking process in condominiums more effective Information over the owners and the debts required Major decisions (sale of common properties, larger improvements) possible with 4/5 majority Debts over 6 months (condo fee, payments for renovation) lead to lien on the property The consequences of mass privatization Positive effects: Condominiums in better areas started renovations; individual flat-ownership played a shock-absorber role Privatization helped the kick-start of small SMEs Negative effects: Growing inequalities in housing consumption Growing differenciesi in the chances for renovation of buildings, leading to spatial differentiation Emergence of social problems in the housing sector 12

13 Give-away privatization increased inequalities Survey results (Metropolitan Research Institute, Budapest and The Urban Institute, Washington, BRPS, 1992) The upper income group above 75 percentile received 31.7% of the rent subsidy, while the low income group, in the lowest 25 percentile income range received 21.6% of the rent subsidy. The value subsidy was distributed even more unevenly: 40% of the total value went to the upper income group, while the lowest income group obtained 17%. Privatization thus transferred and even enlarged the unequal situation of the rental stock into the private sector. Give-away' privatization is a large gift to sitting tenants, increasing inequalities favouring higher income tenants. Distribution of the 1990 public rental housing stock according to the main organizational forms after privatization (BRPS, 1995) 100 % Private condos Private majority in condos Private minority in condos 100 % public ownership Total 1. Public rental 10 % 71 % 10 % 9% 100 % housing stock 1990 ( ) 2. Flats according to the physical condition of the building a) bad 13 % 20 % 59 % 71 % 28 % b) medium 43 % 57 % 32 % 27 % 50 % c) good 44 % 23 % 9 % 2 % 22 % Total 100 % 100 % 100 % 100 % 100 % 3. Remaining public rental sect. (after priv) - 40 % 27 % 33 % 100 % ( ) 13

14 Growing social polarisation Post-socialist economy: the share of poverty increased, while social housing disappeared and social policy has been reduced drastically Large-scale privatization created many low income home owners (without safety net) The consequence is the increase in homelessness and poverty, more and more visible in public spaces The reaction of the public hand is fragmented and very limited in the 1990s Tenure categories in EU countries 100% 80% 60% 40% 20% 0% HU BG PL EU25 F A NL social rental private rental owner occupied 14

15 Countries Social (public) rental housing Poverty rate Old EU countries NL, S, A % % D, F, UK % % ES, P, EL 1 5 % % Transition countries CZ, POL 15 20% 15 25% H, EST 4 8 % % ALB, BUL, ROM 1 3 % % 3) Densely built up old inner city districts the problem of regeneration Area based urban renewal policies went over substantial changes in the last decades. In the 1970s purely physical (rough) renewal was used to improve deteriorating areas The 1980s brought efforts to keep the original population in place with gentle urban renewal In the 1990s the combining i of physical, economic and social interventions lead to complex area-based urban renewal, applied in selected small neighbourhoods 15

16 Rough urban renewal Extensive physical interventions, the renewal of the buildings with high physical outcome is the leading aspect of the interventions. Accompanying social programmes are of secondary importance (in market variant: those who can not pay the costs, have to leave the area) Gentle renewal in Vienna The urban renewal office approaches buildings in assigned areas Costs are calculated for different versions of interventions Rent-tribunal decides about rent level Residents can choose which level of improvements and rents they want 16

17 The deterioration of inner city housing in Budapest Most of inner city housing was built in the second half of the 19th century as private rental multi-family housing All major renewal cycles were postponed Nationalization in 1952, state owned bureaucratic maintenance companies Socialist period: no investments, t young families move out The socialist period: institutional conditions for urban renewal state monopoly of the means of production, oneparty rule, single-rank hierarchical social order with the cadre elite at the top the state strongly determined the income of the citizens; the state acquired virtually all-important means of production and centralised all important investment decisions; price control over the whole economy as an additional tool in the enforcement of political goals Thus the social and spatial aspects of urban development were largely controlled in the socialist countries by the central state. 17

18 The socialist attempt for urban renewal The idea of urban renewal emerges in the mid 1970s. First area-based pilot program, around 1985 in Budapest: Block 15 in District VII. old buildings in the selected block became fully renovated while their dense courtyard wings demolished all the tenants of the state-owned owned, run-down tenement houses were moved out and re-housed to other parts of the district. the renovated buildings remained in the public rental sector after total renovation with low rents. The evaluation of socialist urban renewal Housing allocation: two-third of the flats were allocated to families living in close-by run-down houses (which were on the list of buildings subsequently to renovate) while approximately one-third of the new tenants represented higher-status groups who got the renovated flats through exceptional allocation channels, as a reward for their high political or economic positions. This has been called as socialist gentrification, as gentrification-type changes were caused by state allocation instead of market forces (Hegedüs and Tosics 1991) Under this model the rehabilitation of the of the inner city of Budapest (appr. 100 th flats) would have taken 400 years! 18

19 Transition into capitalism: the missed opportunity for urban renewal Area-wide urban renewal requires leading role of the public sector Large scale housing privatization decreased the role of the public, giving decision making rights to the new owners of condominiums Only one example of public sector led, market oriented renewal: District IX, Ferencváros District 9: Ferencváros 19

20 The only one success case: rehabilitation before privatization The only successful public sector led, market oriented renewal: District i t IX, Ferencváros Rehabilitation started in small scale in the 1980s The new district leader continued the idea after the collapse of socialism Privatization could be avoided Non-profit development company has been established Successful revitalization in PPP scheme with partial exchange of the population The public lead, market oriented attempt for urban renewal This was a model for urban renewal mixing public and market factors but was swept away by mass privatization of housing Difficulties: the scarcity of public money the unwillingness of private capital to come to rundown areas with concentration of low income families The role of the public sector: pland and organize the area-wide restructuring, relocate the lowest income residents, hand over areas for private developers This was public lead gentrification, as gentrification-type changes were initiated by the local government The gentrifying and replacement effects were under control this model could have become a compromise for urban renewal under market conditions 20

21 The Budapest Urban Renewal Program Although housing is district responsibility, the municipality launched BURP with financial support from privatization revenues Stages: 1994: district programs, municipally owned buildings 1997: condominiums, replacement of dwellings, public utilities, emphasis on area-based programs (action areas) 2000: complex area-based programs Action areas and the approved area-based programs until

22 Composition of the District action-area programmes 7% 1% 14% 78% Épületfelújítás Renewal of buildings Lakás-pótlás Replacement of dwellings Infrastruktúra Infrastructure Komplex Complex programme Approved and spent subsidies in the District action areas Not at all or only partially spent Megítélt approved Megvalósult spent I II V VII VIII IX X XIV XVIII XXII 22

23 Subsidies approved in the framework of the Condominium Program Vissza Grant nem térítendő Hitel Interest-free loan Approved grants and interest-free loans for the districts (million Ft) Subsidies, million Ft támogatás, millió F vissza Grants nem térítendő támogatás kamatmentes Interest- hitel free loans District kerület 23

24 Problems Scarcity of financial funds Very uneven distribution ib ti of public funds: district IX the winner of action area programme district V (CBD area!) condominiums winner of building-level subsidies Decreasing share of area-based and larger restructuring programs Recommendations (2001) Preserve the two tier distribution system of BURP funds (city and district municipalities) Concentrate funds to area-based programs as opposed to condominium renovation Elaborate a normative subsidy system for the different types of renewal programmes Renewal based on real estate investment Socially sensitive urban renewal Renewal to preserve the urban heritage Establish a City Municipal Urban Renewal Unit Continue monitoring of urban renewal programs 24

25 Area based complex urban regeneration program in Budapest In 2005 there pilot areas were designated for an area based socially sensitive urban regeneration program: District 8 Magdolna neighbourhood District 9 Dzsumbuj District 10 Bihari road The Magdolna neighbourhood forms an integral part of the city, while the other two rather resemble social estates CASE C: Magdolna quarter social renewal Elhelyezkedés Location A projekt terület Nagyfuvaros utca - Népszínház utca Fiumei út Baross utca Koszorú utca által határolt terület Budapest belvárosának határán, Józsefváros középső részén L: fő T: m 2 The project area It s bounded by Nagyfuvaros Népszínház Fiumei Baross Koszorú streets t Location: in the periphery of the downtown of Budapest, in the middle of the district 8. of Budapest Inhabitant: Area: m 2 25

26 Map about share of persons with university degree within the population over the age of 25, in New ideas in the practice of integrated urban renewal The level of physical renewal has to be determined very carefully (the higher this level is, the more will be the population change) In very segregated areas some population change is unavoidable, and also the high level social services are needed to continue for long, to ensure the sustainability of the renewal Interventions in deteriorated areas have to be done in time, otherwise only demolition remains as solution Deprived areas in different parts of the city with different land value have to be approached differently Jacquier graph revisited: A2 and A4 locations 26

27 Project management and financial conditions RÉV8 established 1997 with 10 persons, later it grew to 20 staff Interdisciplinary (urban experts, architects, engineers, sociologists, social workers, economists) Capital: 240 th eur (60% district, 40% municipality ownership of shares) Magdolna quarter 15 years social regeneration programme A) 2,8 million eur support from BURP for 3 years for the social renewal pilot project B) 8 million eur support from Structural Funds ; C) further 13 million eur support from Structural Funds beyond 2013 All property decisions taken by the district local government, monthly financing, based on annual financial plan. Main pillars of the Magdolna programme The aim of the programme is not to turn Magdolna into a rich area,but to bring back the colourfullness of Józsefváros and terminate deep poverty. Urban renewal: special programme for the tenants To involve them into the renewal, handling them as quasi-condominiums Programme for creating communities Create a community house, give rooms for civil organizations Public space program Improve the central square (Greenkeys, Interreg IIIB) Educational program, safety program De-segregate the school (from 98% to normal share of Roma kids) 27

28 The achievements and problems of the Magdolna regeneration programme This is the most successful socially aimed urban renewal programme in Hungary. The public space, community building, school, urban security angles function well. Since 2009 EU money became available and buildings with 400 flats have been renovated which made poosible to step further than A2 (cosmetic interventions) towards A4 (high quality urban regeneration for and with the local residents). However: since 2010 EU money is decreasing. Besides also the political will is diminishing: although the new district local government supports the programme, the independence of RÉV8 has further be limited and most of the committed team had to leave the company. Decision-making Influence of inhabitants Subsequent models of urban renewal in Budapest in the 20th century Before WWII: private rental model Socialism: politically dominated Early capitalism: condominiumbased private private landlord central authority, political bodies condominium associations (building-by-building) g) no influence no influence total influence (veto power of individuals) Budapest model for area-based renewal municipal and district local governments minor in market-based model, some in social renewal model Transfer of costs into housing direct relationship no relationship direct relationship direct in market-based model, expenditures of little in social renewal residents model bank loans, market no need for loans bank loans on bank loans in market- Availability of terms, taken by the due to full public market terms but based model loans for renewal landlord financing individual some loans in social underwriting renewal model Availability of subsidies for renewal little, indirect subsidies (tax exemption) large and not transparent subsidies central interest rate subsidy, local cash subsidy subsidized loans in market-based model some loans in social renewal model The size of units of renovation building action areas (blocks of houses) buildings, parts of buildings action areas (blocks of houses) 28

29 Different types of potential urban renewal policies in Budapest Dimensions Market-based renewal Socially sensitive urban renewal Aim To include private real To decrease the estate investors in segregation of the mostly renewing the better areas declining areas and keep of the city the local inhabitants Renewal to preserve the urban heritage To extend the city core, preserving urban heritage, improving the image of the city Initiator District local governments Municipality of Budapest Municipality of Budapest Approach Amount of public subsidies Smaller projects in better located urban areas, mixed buildings, 1-2 blocks, based mostly on the demolition of larger contiguous blocks Limited Complex programme: areawide physical renewal and social programmes Substantial amount of renewal and social subsidies Improving public spaces, concentration on individual building refurbishment Substantial amount of renewal Increased subsidiesy Organisation Real estate developer Public urban renewal Local renewal office, to company, with the duty of designing and coordinating physical renewal and social programmes initiate the refurbishment of condominiums, provide for permanent technical assistance, and coordination of public investments Examples (numbers indicate districts) V. Belváros; IX. Central Ferencváros VIII. Magdolna quarter VII. Jewish quarter (potential model, not existing yet) Inner city urban renewal in Budapest - evaluation Promising start: ideas for renewal emerge mid 1970s, almost at the same time than in Vienna Socialist renewal (before 1989) financially not sustainable Compulsory privatization (RtB in 1993) and decentralization to districts wash away the chances for large scale renewal Innovative examples (Ferencváros 1990s, Magdolna quarter 2000s) are only exceptional cases 29

30 4) The development, problems and regeneration of large housing estates in Europe We really believed, in a quasi-religious sense, in the perfectibility of human nature, in the role of architecture as a weapon of social reform... the coming Utopia when everyone would live in cheap prefabricated flat-roofed f multiple l dwellings heaven on earth. Philip Johnson, American architect 30

31 Differences between housing estates: two questions to think about Question 1: In Paris and in Prague two housing estates were built roughly at the same time, in the 1970s. The average flat size is 90 sqm in Paris while 50 sqm in Prague. What do you think how do these estates function nowadays, 40 years later? What is the difference and why? Question 2: The picture shows two prefab buildings (built roughly at the same time, 40 years ago) in post-socialist cities, 20 years after their privatization. Why are they so different? 31

32 West-East: differences in time periods in the western countries the peak of high rise construction was between (the 1968 Ronan Point gas explosion and the 1972 Pruitt Igoe demolition marking the end) in the post-socialist countries the peak was between in some countries decrease started with financial difficulties in the 1980s in some countries only the change of the political system has led to a decrease West-East: very different magnitudes high-rise housing has significantly larger share in east-central European countries (18-30 % of the total housing stock) than in western European countries (1-9 %) in east-central European countries 20 to 40 percent of the total stock is to be found on housing estates of over 2500 units, compared to 3 to 7 percent in the Western countries the maximum share of units in large housing estates is over 70% in some regions and cities in the post-socialist countries, while it is 20-25% in Western countries. 32

33 4/a. The large housing estates in Western Europe Structural explanations In the UK in the postwar decades municipality led large investments (as reaction on housing shortage) Dunleavy Large public investments also in other western countries as part of the welfare economy, in the hope of increasing and equalizing housing conditions for people Problems with large housing estates From the 1970s there are growing problems with large housing estates Prefab buildings were demolished first in the US, followed by many western countries by today What can be the reasons behind that: The physical conditions of the buildings, The monotonity of the estates, Their position in the city structure, The run-down public spaces, The mounting social problems? 33

34 An empirical analysis of the problem Coleman: Utopia on Trial Large empirical surven in the UK in buildings with 106 thousand residents Looking for signs of physical deterioration: garbage, graffiti, vandalism, share of kids under public control Taking stock of 15 physical design-elements of the estates (number of floors, flats per buildings, flats per corridors, ) Showing strong correlation: the larger the estates and the buildings, the more problems Arriving the physical determinism conclusion: problems are caused by physical factors; thus problems can be solved by physical interventions Critics by Williams: false correlation, caused by third elements, the systematic housing allocation policy London Broadwater Farm housing estate 34

35 Explanation based on hard, structural factors My approach: hard factors create differences betwen LHEs: housing policy, legal-institutional, financial regulations, public services, transport LHEs were products of public policies (housing shortage, socialism) which subordinated market considerations to political power issues this public control (building policy, housing allocation policy) itself determined the starting position of the LHEs in the housing hierarchy LHEs face new troubles when public control decreases (decentralization, privatization, decrease in state subsidies) The evolution of urban renewal policies s: purely physical and security-aimed renewal to improve deteriorating areas s: cross-sectoral interventions (environment, new functions, employment, ) s: combination of physical, economic and social interventions with public participation aiming at complex area-based urban renewal s: further integrated in larger territory, adjusting to needs calculations on local housing market, applying mixing/social ideas; metropolitan integrated strategy looking long-term ahead 35

36 Physical urban renewal Extensive physical interventions, the renewal of the buildings and the introduction of security measures is the leading aspect of the interventions. Accompanying social programmes might be very different across countries, depending on housing and welfare system. Illustration: early periods of the renewal of the Amsterdam Bijlmermeer estate Amsterdam Bijlmermeer housing estate Built Between 1967 & 1973, second phase 1980s Largest post war housing estate in Netherlands 30 angled tower blocks, 10 storeys high and m long with balcony access flats Over 20,000 homes when completed Approximately 90% built as social sector housing 36

37 Integrated area-based interventions with public participation More strategic approach Setting up separate institutonal structure for the housing estate Involving the representatives of residents into decision-making Example: Castle Vale estate, Birmingham Birmingham Castle Vale housing estate Built Between 1964 & 1969 Largest post war housing estate in Midlands Mixture of 34 tower blocks, maisonettes & houses Home to almost 20,000 people in 5,000 homes when completed Approximately one third of Castle Vale was built for sale 37

38 Problems arising During 70 s & 80 s social conditions deteriorated Problems of crime, vandalism, arson, drunkenness & street fighting Educational attainment way below City average Unemployment stood at 26% Life expectancy 68.3 against City average of 75.9 Castle Vale Housing Action Trust HAT established in 1993 following a 92% vote from tenants 12 Year Programme of Regeneration with the right to return to the Council at the End Refurbish 1500 Homes and build 1200 new homes Holistic Regeneration: Health Employment Education Environment (Community Safety) 38

39 Resident Involvement Key to long term sustainability Investment needs to reflect the priorities of the community Several neighbourhood associations set up in different areas of the estate Conflict between tenants and freeholders Process identified to democratically elect estate wide representative group Estate Forum established 1996 later became Tenants & Residents Alliance Castle Vale Community Housing Association Established 1997 Tenant Consultation Panel Set Up Tenant Consultation Panel Set Up Officers provided advice on Legal Framework and Good Practice Residents worked numerous Saturday mornings & Wednesday evenings agreeing the 12 key Housing Policies 39

40 Castle Vale homes demolished including 32 tower blocks (out of 34!) Almost 1500 new homes built 1333 homes improved 1461 Jobs created 3415 training places New Shopping centre, community facilities Unemployment reduced d 26% - 6% Educational attainment improved Life expectancy now just below city average The challenges of area-based urban renewal policies Area-based urban renewal proved to be successful in many cases (see URBAN programme) However, in the last decade also the problems of such interventions became clear and debates started about the public interventions. Major dilemmas of area-based interventions: Should interventions be area-based at all? What should be the content of the interventions, to what extent should the local community be changed? 40

41 Area-based social mix policies with different aims The original version of this idea aimed to create a better mix of housing categories in poor neighbourhoods, with the hope that a supply of new good quality housing would attract new affluent households, leading to a better social mix of local residents. In a later version of this policy the aim has been modified social mix can at least offer the opportunity for successful households to stay in the neighbourhood. This means that they will not have to run up the downward escalator and leave the neighbourhood. (Vranken, De Decker and Van Nieuwenhuyze, 2003 p61) Evaluation of social mix policies Evaluation of such policies (e.g. the Dutch Big City Policy), however, have shown problems: the idea of attracting the better-off to settle in disadvantaged neighbourhoods appeared not to work. (Musterd and Ostendorf, 2008 p83). The success of area based projects depends also on the ability to provide decent jobs within the neighbourhood (or within distance that is easy to bridge). (Vranken and De Decker-Van Nieuwenhuyze, 2003 p62) 41

42 French cities: mis-use of the concept? Social mix policies can easily become too `fashionable, applied without careful analysis of local circumstances and/or leaving important aspects out of consideration. In many cases large-scale demolition programmes are launched in lower status peripheral areas with reference to social mix policies but with little or no regard to the external effects and on other social consequences. Paris: large scale demolition in the banlieus have been heavily criticized by social analysts referring to the fact that there is a huge shortage of social housing. Lyon: demolition of physically sound housing in large housing estates: La Duchere Neighbourhood social mix of housing Analysis from the US: Georg Galster Evidence shows that if the share of disadvantaged in a neighbourhood is below 20%, no effect, if above 40%, explosion. Estimating the aggregate social costs of decreasing concentrated poverty. One of the methods to increase social mix might be reducing the share of poor to 20% in all neighbourhoods where this share is above. These poor families are parashuted to non-poor neighborhoods, however, only up till an extent that they increase by no more than 5% the share of the poor there. There are also other ways to increase social mix, HOPE VI (housing vouchers) is a potential method. In his calculations 450 bn USD would be needed for that ( up till some months ago I thought this is substantial amount of money ) and property values in the neighborhoods to where the poor were parashuted do not change substantially. 42

43 Some critical remarks about the US ideas Besides evaluating the effect of the parachuted poors on richer neighborhoods (real estate value) also the effect of the parachuted richer families on poor neighborhoods should be evaluated. Are there positive communicationbased effects? If not, mixing is only to increase property values in the area offering nice real estate to middle class families Social mix idea should be differentiated according to type of neighbourhood: in ghetto areas this may more be justified than in low-rent or immigrant-receiver areas. In the latter mixing can easily lead to destroying existing social links without offering anything better Additional question: which poor families should be moved out (difference between poor and harmful families, the latter handled in UK by the law on anti-social behaviour) and where they can be parashuted in 4/b. The large housing estates in Central and Eastern Europe Central and Eastern Europe in historical context The socialist model of development: The post-socialist transformation, since 1990: the sub-sequent phases Twenty years after: the task of regulating market forces, build up new type of public control Similarities and differences: pictures and stories about four countries 43

44 The command society and the large housing estates The idea to build housing estates with prefabricated technology reached its peak in the socialist countries: the top-down, dictatorical political regimes created more than optimal circumstances to develop the technology into ideology The large-scale rebuilding of old cities and creating whole new cities was not allowed to be criticized openly Direct state subsidies to the builders and to the population made it easier to accept the estates State support to prefabricated, high-rise housing in Hungary in the 1970's 44

45 Different patterns of transition The change towards the market followed different patterns, national differences increased between the post-socialist countries, earlier belonging to the same camp. A. Germany: the introduction of a new regulated market system with public and private rental housing B. Hungary and Slovenia: quick change towards property owning country with sufficient legal background C. Czech Republic, Slovakia, Poland: slower increase of owner occupation, substantial ti cooperative and public rental housing D. Romania, Bulgaria, Albania: quick change to the dominance of individual owner occupation, without the necessary legal background A) Housing estate renewal in Germany: a systematic approach 1 14 million flats on large housing estates in 1,14 million flats on large housing estates in eastern Germany 1991: decision about a 10 year renewal program First step: two years pilot program with 11 different schemes 1993: final political decision towards complex urban renewal for all housing estates East-Berlin: 380 th flats in prefab buildings, of which 300 the in one area. ¾ already renewed 45

46 High level complex renewal of large housing estate areas Complex building renewal: all internal and external problems to be solved, new design New housing construction to finish the estates Total rebuilding of public spaces Development of new public functions (administrative, education, social, etc) Creation of new working places at or close to the housing estates Process of estate renewal Survey of physical conditions, questioning of the residents to find out the problems and expectations After long debates approval of long-term plan and immediate interventions Initial works concentrating on smaller, flashy improvements (playgrounds, new garbage collection, ) 46

47 The financial system of estate renewal Non-profit housing associations reformed into user-friendly and efficient market players National government covers one third of the approved costs of the complex estate renewal Two third of the costs has to be covered by the state (regional government), the local government and the non profit housing association (formula decided by the state). The increased costs of the housing association lead to increase of the rent compansated for the poor by the means tested housing allowances The invisible elements of the over-arching renewal policy Institutional background: non-profit, efficient large housing associations (thousands of flats) Legal background: no individual flat privatization but making the association semi-private Financial background: sharing the high costs (up till 25 th eur/flat) between the federal state, the region (state), local municipality Social system: residents pay increased rents (supported by increased salaries and unified means tested housing allowance system) Technical: efficient construction industry to perform the large scale estate renewal 47

48 The failures of the German approach Integrated on the lower scale but missing the larger scale and the long-term view Huge subsidies also to other parts of the housing market in the eastern regions (construction of low rise owner occupation) Consequence: 1 million empty flats in the Eastern states Change in policy: in the 2000s Urban Rebuilding East introduces combination of demolitions and renovations B) Large housing estates in Hungary: problems to solve after privatization The share of prefabricated housing: 260 th units in Budapest (30%), 770 th units in Hungary (20% of stock) 20% of flats in prefab buildings already reached the time when basic renovation would be needed. Due to the outdated heating systems and the largely missing heat insulation, the heating costs on housing estates are much higher in other housing forms. Consequently growing differences in the real estate values. Energy improving renovation would cost more than 5 thousand eur in flats, which have an average value of thousand eur. The costs of renovation are relatively high, not only compared to the value of the flat but also compared to the income of the residents. 48

49 Legal regulations and financial conditions hampering housing renewal in the 1990s Law on Condominiums (existing since 1924) became the legal framework of privatization: privatized buildings were compulsorily turned into condominiums since However: 100% agreement needed for extraordinary decisions (e.g. renewal). Growing arrears due to legal difficulties to sanction non-payment Banks did not issue loans in the 1990s as condominiums did not have legal status Very little improvements in the course of the 1990s District heating on housing estates: advantage or problem? Flats on large housing estates are supplied with district heating. From an environmental point of view, district heating can be seen as advantage even today, having much lower emissions than other heating forms. In Hungary district heating systems are almost exclusively based on gas as energy source. As a consequence of energy pricing, and due to the losses in an outdated supply system, district heating is 2-3 times more expensive than other, environmentally less friendly forms of heating. All prefabricated buildings in Hungary became privately owned. More and more condominiums started to think about to disconnect from the district heating system. 49

50 Budapest Havanna housing estate Built between , comprising flats, originally 65% public rental. No public interventions till late 2000s, except for privatization (decreasing public rental to 15%). Small scale building renewal programs starting as late as the late 1990s CCTV system fully developed d Improvement of play-grounds Public space improvement program Havanna days to strengthen local identity 2000s: Improved legal aspects for housing renewal Law on Condominiums: modifications in 2004 to make the decision-making process more effective major decisions (sale of common properties, larger improvements) possible with 80% majority debts over 6 months (condo fee, payments for renovation) lead in a simple process to lien on the property information collected about the owners and the debts Banks became more active from the late 1990s to issue housing loans National subsidy system introduced for energy saving renewal of large housing estates Still: condominiums rarely decide for overarching renovation, only step-by-step 50

51 Panel Plusz, 2005: further support to the owners for energy-saving improvements Local governments have to establish a framework (bidding system) and have to apply to the ministry to contribute to the financing of the successful bids The 1/3-1/3-1/3 system (max eur/flat for the state contribution, in reality the average is eur) functions more successfully since the 2005 modifications, as condominiums (above 10 flats) may get subsidized loans for their part, without individual leans on property. Miskolc: 2.5% of all prefab flats handed in successful bids in , while 9% in The effect and recovery of investments Normally only 1/4-1/2 of the investment costs adds to the value of the property More important that 20-30% of heating costs can be saved Improvement of technical installations of the building and the public space around becomes also possible but only after energy saving measures are completed. 51

52 The results of the subsidy programme In 2004 only 5 million eur was spent by the central government on the prefab programme. In 2005 this has been increased to 32 million eur, allowing the most needed energy saving improvements of appr. 15% of the prefab stock The high level of central government spending for energy saving renewal continued until the financial crisis. Crisis: government budget, the co-financing capacity of local governments and of the owners became much more limited. By the end of the 2000s appr. 25% of the prefab stock has been improved energetically. The concentration of urban problems in specific areas of cities Large housing estates: although there are no crisis estates existing yet in Hungary, the situation of estates differ substantially Those estates are in worse situation which are in cities with higher unemployment, have more units and higher share of high-rise buildings At the moment it is clear that not even such estates are at the bottom of the local housing markets (inner city ghettoes and city-edge Roma settlements are in much worse conditions) 52

53 D) South-east European countries: the collapse of public control Romania, Bulgaria: quick change towards laissez-faire market system Mass-privatization of housing and public services Withdrawal of earlier financial and legal frameworks for housing estates Consequences in large housing estates: collapse of district heating, deterioration of public areas, individualized renewal efforts Romania: the collapse of the district heating system on housing estates Most of the local governments privatized not only housing but also the services In the lack of local public control district heating systems have collapsed in almost all cities Individualized id d heating solutions have to be introduced with dramatic consequences 53

54 Bulgaria: individualized renewal efforts Without strong legal framework of privatized buildings families consider only their own interests Reduction of heating costs is a primary aim but in the lack of cooperation the solutions are far from optimal Individualized interests meet the offer of entrepreneurs and small scale solutions dominate the buildings which would need overarching approach Summary 1: Large housing estates as consequences of structural policies LHEs were products of public policies (housing shortage, socialism) which subordinated market considerations to political power issues this public control (building policy, housing allocation policy) itself determined the starting position of the LHE in the housing hierarchy LHEs are getting in trouble when public control decreases, due to decentralization, privatization, decrease in state subsidies the market is positioning the LHEs in the structure of the cities, based on land values, densities, while segregation might lead to the deepening of the neighbourhood effect 54

55 The answers on the two questions Paris Prague: the fate of LHEs depend on their relative position within the local l housing market (which is much better in Prague than in Paris, despite the different physical characteristics) The renovation of buildings depends to a large extent on the legal-institutional background: in Budapest condominiums assure the needed background, the Bulgarian co-ownership system not Summary 2: Large housing estates in the post-socialist cities The story of east European large housing estates was determined so far by two phases of public policies: The power machine at the designing and building of the estates The politically dominated transfer of these estates into private ownership after the collapse of socialism Now a third phase of public policy would be needed, to adjust these estates to housing needs and improve their links to the urban fabric. In this phase the use of western knowledge and experience is needed more than ever. However, the weakness of the public sector and the unwillingness of (urban) policy to deal with the issue predicts a bleak outcome of large housing estates. 55

56 Summary 3: Limited chances for West-East knowledge transfer The western countries usually have stronger organizational structures (e.g. non-profit housing associations) to implement public policies, as the east-central European countries. There are also differences in the legal systems which were much less developed in the eastcentral European countries in their quick change to the free-market system Western countries are much richer, with average investments into housing estate renewal around 25 thousand eur/flat (including costs of investments in public spaces). In the east-central European countries the most optimistic proposals aim for 5-8 thousand eur/flat investments 5) What can cities do with their most deprived areas? 56

57 Growing social segregation, leading to extreme cases on large housing estates The polarization of society leads also to increased spatial segregation Housing allocation (public policy) and value gap (market) factors might lead to extreme consequences In extreme cases the deterioration (especially in prefabricated large housing estates) can be very quick Example: Scampia estate (Naples) Neaples Vele di Scampia housing estate 57

58 To deal with segregated areas The first task is to understand, analysing the types and problems of given areas (e.g. are they dead-end end or transitory areas) and the dynamism of the processes (are they on a positive or negative trend in medium term). This has to be followed by the analysis of the reasons behind the dynamic mobility processes of population groups (in dialogue with them). Decisions have to include both sectoral and area-based tools. Planning and interventions should extend to the whole city also to rich areas to get them accept to the role they have to play in ensuring city-wide diversity. The alternative to demolition Demolition and enforcing social mix are very controversial interventions with questionable outcomes. Segregated areas should be handled as long as possible with policies increasing the opportunities of the marginalised residents. land-use and housing strategy across the whole functional urban area ( de facto city ) that prevents the development of extreme segregation specific efforts in public services provision in those areas that show a higher number of social problems education and school policy that promotes equal quality of education and social mix of students in all schools a social housing policy that makes affordable housing available in all parts of the city planning regulations against the development of gated communities a mobility policy that is guaranteeing equal opportunities of access by public transport from all parts of the city to the job market and major facilities 58