Feb 11

Chicago’s flawed public housing policy offers valuable lesson to SA

CHICAGO is notorious for its disastrous public housing policy, but its costly mistakes could provide a salutary lesson for South Africa, which is grappling with its own housing dilemma.

As with much of the US — and the world — Chicago was plagued by poverty and slums after the Great Depression, particularly in segregated black areas.

Well-meaning government advocates fought to clear blocks of derelict homes and build safe, affordable housing for the city’s working poor. They erected sprawling complexes and massive high-rises and they crammed in people who were grateful for a warm bed and a roof over their heads. Their efforts were hailed as a victory for civic progress at the time.

But by the 1980s, Chicago’s public housing — particularly its high-rise towers — had deteriorated into dilapidated, gang-ridden shooting grounds.

Today, after spending millions of dollars on their construction, Chicago has spent further millions ($1bn and counting) demolishing and rebuilding.

One of the most significant differences between government housing in Chicago and South Africa is ownership. In the US, public housing is typically set up as government-owned properties rented out to poor citizens who pay rent on a sliding scale. It is designed to move people “up and out” of the system and prevent them from getting stuck in a welfare trap. But it does not always work that way.

In South Africa, citizens who are provided with government homes are entitled to ownership. But that has its own problems.

University of Cape Town housing expert and senior lecturer Robert McGaffin says home ownership is not the right model for South Africa.

“We’ve got this fixation with ownership, which is nuts,” he said in a recent interview from a coffee shop in Newlands. “When you have affordability levels like we have in South Africa, the bulk of our population should be sitting in rental housing.”

The main problem, Mr McGaffin says, is fixing people to a location when unemployment is at 25%. “You want labour mobility to go wherever the hell there’s a job.”

Kecia Rust, who runs the Centre for Affordable Housing Finance in Africa, says the ownership model does not work for everyone and has “been a noose for some people” because home ownership is expensive.

But, she says, her organisation has studied whether government-issued homes are working as an asset — in both social and economic terms — and her research has shown they are. “We saw astonishing levels of investment. You’d think these are very poor people, but they invest on a number of levels.”

Chicago author Bradford Hunt cites the inability to screen and evict tenants as a key reason for Chicago’s failures. New York City did a better job, he writes.

That city employed “a cadre of professional real estate managers who ran it as a business. Tenants were screened; rules were enforced,” he says.

South Africa’s Department of Human Settlements does have a public rental programme known as Community Residential Units (CRUs), which seeks to transform government-owned hostels and provincial properties (purchased prior to 1994) and other municipal-owned structures into rehabilitated rental properties. CRUs are offered to people earning between R800 and R3,500 per month and are run largely by provincial governments.

The Western Cape runs one of the largest CRU programmes; the City of Cape Town administers 43,500 units and has so far refurbished 5,622.

Western Cape department of human settlements spokesman Nathan Adriaanse says the city’s rental stock has been neglected for many years and become dilapidated — which residents have cited as cause to refuse to pay rent. The province is working to rehabilitate the units and has seen improved rent collection on refurbished stock.

But, he says, public sector rentals are typically difficult to manage. “Residents are less responsible in terms of honouring rental payment with the public sector.

“Political intervention on government-owned stock can derail eviction processes.”

Mr Adriaanse says dealing with those challenges requires effective property management and partnerships with the private sector.

“It is also important to understand who is best suited to implement and manage low income rental properties. In our experience, the management of the property and tenants by accredited institutions is more effective on all levels as oppose (sic) to the function vesting with a government entity.”

Mr McGaffin warns South Africa’s CRU programme could go down the same road as Chicago’s.

“Public housing stock worldwide is a very, very problematic product,” he says.

Private sector can help relieve shortage

MINISTER of Human Settlements Connie September reminded readers in a letter in Business Day this month “that the provision of housing in South Africa is a constitutional obligation, which all governments, not just the ANC, will have to fulfill.”

“Housing is not a theoretical equation,” she said. “It is not something abstract, it is a crying pain for many people in our country. Government will not abandon its responsibilities towards the poor.”

A spokesman for the department, Vusi Tshose, says tackling South Africa’s housing shortage will require a “multipronged approach” and co-operation from the private sector.

The department says the private sector could assist by:

• Providing housing opportunities for payroll employees.
• Complementing the government’s Finance Linked Individual Subsidy Programme.
• Raising awareness among employees on how to access government subsidies.
• Partnering for basic services.
• Providing an equitable contribution between both government and employers to service the “gap” market.

(via BD Live)

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