Every year the City of Vienna builds about 5,000 new units of public housing. While the process to create housing is much like the way “affordable” housing is done in the United States, the architectural quality of the projects is unparalleled.
AN’s William Menking together with Wolfgang Foerster, a senior officer in the Department of Housing for Vienna, and New York developer Abby Hamlin are curating a traveling exhibition on the Austrian city’s extraordinary achievements in this field in the past five years. Andreas Stadler, director of the Austrian Cultural Forum, invited some of New York's best minds involved in the field of housing to a roundtable with Foerster about the relevance of Viennese housing to projects in this city. Housing in Vienna will tour the United States in 2013 and 2014.
William Menking, AN’s Executive Editor: In Vienna, the city essentially controls the housing market. That's obviously very different than in the United States. There's a process by which these different projects take place that has some resonance with projects like the Hoyt Schermerhorn Urban Renewal area in Downtown Brooklyn, Via Verde in the Bronx and other new projects in New York.
Wolfgang Foerster, Head of Housing Research Department, City of Vienna: At the moment, Vienna has 1.7 million inhabitants. It's growing very fast. We expect to have 2 million in the next 15 years or so. About one third of the city lives in the private housing market and about 60% live in some sort of public housing.
The city feels responsible and the people also expect the city to provide housing. If someone can't find affordable housing they go to the city and say, “It’s your task.” We build something like an average of 5,000 units per year in the subsidized sector, which is something like 82-85% of the total new housing construction.
Vienna is independent from the national state and we have our own housing laws and budgets. One of the goals of the Vienna housing program is not about showing nice facades—because nice facades you can find anywhere in the world—but it's about the process behind it. One of the biggest challenges at the moment is the population increase of 20,000+ people per year. The average household size in Vienna is two people, which is more or less the same all over Europe, so 20,000 per year means 10,000 new apartments needed every year, which is quite a challenge for a city the size of Vienna.
We're building a lot of mixed-use housing projects. There is one new mixed development that includes normal housing but also special-care housing for people with Alzheimer’s who need permanent care. The interesting thing is the color concept and orientation system the architects developed with specialists in health care. These are people who have completely lost orientation and need a continuous way to walk, so all the ways inside and outside the building are built in the form of a ring system so they can continue to walk in a figure eight form.
We also want to stop suburbanization, so we have some places that are well connected to public transport, but are not right in the city center. On the outskirts of Vienna, we also can build some low-density developments. This is a particular way of living and not everyone would want to do this, but at the same time this sort of dense, low-rise development is a way of stopping suburbanization and keeping people somehow in the city and connected to public transport so they don't need a car.
Overall I find the failure of many public housing programs, including probably some in New York, is that they are too uniform. They have one type of building that they repeat and repeat. So we wanted to introduce competition into the planning in Vienna.
What we do with an area of say, 2,000 apartments, is divide it into different plots. One plot should not have more than 300 flats; It's an unwritten rule. For each of these plots we have a developer's competition with a four-pillar system that consists of planning, cost, ecology, and social sustainability going beyond the apartments. It's about how people live together.
David Burney, Commissioner, New York City Department of Design & Construction: I can't decide whether this is inspiring or depressing given the lack of investment in essential housing in this country.
One of the failures of some of the public housing programs in this country has been lack of integration of economic diversity and things like social services and the silo-ing effect of different types of housing. And I think you've really helped to work towards solving that problem. If we could get to even a fraction of where [Vienna is] going it would be tremendously helpful.
Abby Hamlin, President, Hamlin Ventures: I think what I see is the notion that housing is a cultural resource as well as a social resource. I love the fact that housing is a catalyst for neighborhoods, for social issues, and also for cultural integration within a city. And I don't think that opportunity is often talked about here. We tend to segment. There needs to be a cultural, political, and socioeconomic shift to see housing not just as a silo of housing but as something that stabilizes communities and can also be used, as we did at Schermerhorn, to integrate cultural and artistic uses within the same building as housing.
Rosanne Haggerty, President, Community Solutions: I think we all have the same question about how is this financed? Is this publicly owned land? What participation is there from the state government? How does this happen?
Matthew Wambua, Commissioner, New York City Department of Housing, Preservation & Development: What tends to be the nature of the housing stock?
Foerster: We already have existing public housing stock. What we are building now is affordable housing. It's built by nonprofit housing associations, which keep it, so it's forever belongs to the nonprofit housing associations. It's rental housing and there are income limits for the people that move in, not for people that live there because the income is only checked at the moment when people move in, but then they can stay there forever.
The financing is a state subsidy, which is given in the form of a long term, low interest loan for a period of normally 35 to 40 years with a 1% interest. That is given, depending on the type of housing, for between 1/3 and 1/2 of the total construction. The rest is then brought up by the housing association. They have some resources of their own from rent, and from housing where the loans have already been paid back. Because they're nonprofit they're not allowed to consume the income. They have to reinvest it. This doesn't explain the whole financing because there's still a gap, and this gap is [filled by] normal bank financing at a lower interest rate or by specialized housing banks.
Paul Freitag, Managing Director, Jonathan Rose Companies: How do new housing associations compete with the larger, more established housing associations?
Foerster: It's not easy, to be honest. In Vienna we have something like 30 to 40 housing associations of different sizes. The smallest one would have something like 4,000–5,000 units, and the largest 50,000–60,000.
Haggerty: And the land? Is that publicly owned? How does that process work?
Foerster: The land is normally already owned by the city. The city has its own housing fund, which is again a nonprofit organization owned by the city, but is not part of the city administration. They were founded in 1985 and they were given start-up capital in the form of land, and since then they have been working with their own means—buying, developing, and reselling the land. Whoever wins the housing competition, the city gives them a subsidy or the city sells them land at a price that was already cleared before. For the housing subsidies the total budget is 600€ million per year, about $700 million.
Charles Laven, President, Forsyth Street Advisors: So it's four times our budget. My question would be how do you control cost? In New York City, 70 to 85 percent of our housing system is private. It's higher nationally. That means we control cost because there's a tyranny of feasibility, and a tyranny of government regulations, and costs are controlled by those two tyrannies.
Foerster: In the subsidy law there's a maximum cost per square meter. But that wasn't so successful because everyone reached this maximum level. That's why in 1985 we introduced this competition. There is a maximum cost in the law still, but in order to win a competition you must always be better than the law. So now we have a system where they're far below the maximum cost, so costs have been reduced year by year. As far as the land is concerned, we have to buy the land on the free market, but at the same time we've also introduced a maximum cost which we're willing to pay for the land.
Freitag: What do you spend per square foot for construction?
Foerster: The average is now something like 1600€ per square meter, so that would mean $200 per square foot.
Laven: In the private sector, the unregulated market place of New York, people can build a pretty nice building for $150 or $160 per square foot.
Hamlin: At that cost we can build a safe building, a functionally, appropriately designed and affordable building, but even market-rate housing (5, 6, 7-story, $180-200 per square foot) in New York and in other parts of this country architecturally are generally pretty dismal in terms of the level of design. So when we get to affordable, the market itself starts out, in my opinion, at a different place in terms of architectural quality. But the other piece of it that is the HPD regulations. To what degree are there city regulated 'shoulds' or 'musts' in terms of the plan review? Where do you think the plan review process for HPD-funded projects enters into the innovation vs. lack of innovation category?
Wambua: Let me start by creating some context. First of all, I was especially impressed with the level of integration [with housing in Vienna]. Not just the affordable housing but the notion of artistry, aestheticism, multiculturalism. And I personally think one of our biggest shortcomings is the decision-making because it’s been bureaucratic and inflexible, and I don't think that it's historically been well-aligned with thinking about a lot of the issues we're talking about now. There are shortcomings from the standpoint of efficient production and what looks good and what makes sense. What I would say is that we've changed leadership. We have a spectacular head now who I have a great amount of faith in.
Freitag: How does subsidy work once the units are placed in operation? How can they build equity and what is the subsidy situation for the renters?
Foerster: We have two types of subsidies. One called Object Subsidies, which go directly to the housing association to reduce the financing cost for new construction. That's what I was talking about before. Then we have a smaller program included in the 600€ million, of course, which is individual rent allocations to households.
Wambua: Now I feel vindicated, because we throw in our rental subsidy.