Paris Wants to Keep Central Neighborhoods From Becoming 'Ghettos for the Rich'

[M II A II R II K]

Paris Wants to Keep Central Neighborhoods From Becoming 'Ghettos for the Rich'


Dec 19, 2014

By FEARGUS O'SULLIVAN

Read More: http://www.citylab.com/housing/2014/...e-rich/383936/

En Français: http://www.huffingtonpost.fr/ian-bro...b_6336106.html

The French capital has announced a plan to stop housing displacement in gentrifying neighborhoods. It might be the most radical proposal Europe has seen.

- Earlier this week, the Conseil de Paris published a list of 257 addresses (containing over 8,000 apartments) that the city would have a "right of first-refusal" to buy, in order to convert to subsidized housing. --- Located in areas that are being gentrified, the city’s plans would both increase subsidized rental options and ensure that at least some housing in these areas remains affordable to lower- and middle-income residents. The plans operate within existing laws rather than creating new ones—but as you can imagine, real-estate professionals aren’t exactly delighted with the proposals.

- The nuts and bolts of the plan are as follows. When apartments at any of the 257 addresses come up for sale, they must by law be offered first to the city. The apartment should still be sold at the market price —but the price offered would nonetheless be decided by the city, not the seller. --- If the landlord doesn’t like what’s offered, he or she can appeal to an independent judge to have it re-priced, or can withdraw the property from the market. What the landlord can’t do, however, is sell the apartment on to someone else without the city having bowed out first.

- The broader social-engineering goals here are clear to anyone familiar with Paris when you look at where the addresses are distributed on the map. Typically they are in formerly working-class neighborhoods in northern and eastern Paris—Ménilmontant, the slopes north of Montmartre, the eastern end of the Bastille—where lower-income residents are being displaced. --- In places, the list even reads a bit like a gentrifiers’ streetfinder, with addresses on busy, broadly hip café and restaurant strips Rue Oberkampf, Rue Jean Pierre Timbaud, and Rue de Charonne.

- According to mayor’s aide Ian Brossat, the move is about: --- Choosing diversity and solidarity, against exclusion, social determinism and the centrifugal logic of the market. It also aims to reduce inequalities between the east and the west of Paris in particular, developing social supply where it is insufficient.

- The plan’s ambition will come at a cost—literally. If the city is genuinely going to pay market prices, the plan could be expensive, which is why it has set aside €850 million ($1.05 billion U.S.) for purchases. --- In reality, as this is a right of first-refusal rather than an outright purchase plan, only 100 or so apartments may be bought up during current mayor Anne Hidalgo’s tenure. The idea is essentially to give Paris the ability to act as a social-mix monitor, steeping in to prevent social segregation in the public interest if they feel it is under threat.

- Whether it actually works remains to be seen. Parisians voted in the current mayor with a healthy majority knowing such moves could be in the cards, but Paris’ real estate industry is aghast. --- They fear that the measures could discourage buying and selling in an already sluggish market. It’s true that the measures come at a time when Paris rents are actually going down: After years of steady rises, Paris prices actually fell by 2.8 percent in 2014’s first quarter.

- Real-estate brokers also claim that that prices set by the city may still oblige owners to sell at sub-market prices. The mayor of Paris’ 18th arrondissement, which hosts the largest number of addresses on the list, has also made a plea for the city to focus on middle-income Parisians, who he alleges are the “great forgotten ones." --- The city’s self-expressed intention, however, is not to displace existing residents from these addresses, but to ensure that they remain safe from landlords bent on evicting them and redeveloping their buildings.

- The right of refusal plan is just one part of a massive housing push planned for the next six years, one which will see 10,000 new apartments built every year, with 70 percent of this total made up of subsidized housing. The overall budget is €10 billion ($12.3 billion U.S.), and comes alongside plans to convert office space into housing and relax some height limits for public buildings. The high targets are possible partly because the city is working with the Paris transit authority RATP to free up development land. Using a potential maximum 9 percent of this budget for right of refusal plans doesn’t seem excessive.

- We’ll have to wait a decade or so to see if Paris’ new plans genuinely succeed in making it a more liveable, diverse city. But in a world where city after city is throwing up their hands and doing almost nothing to combat displacement, exorbitant housing costs, and their negative effects, it deserves credit for really trying.

.....

http://patrimoine.lesechos.fr/patrim...is-1076436.php

[Minato Ku]

Big noise for almost nothing, this may look ambitious but in reality it will have almost very few effect.
The problem is that instead of being effective, it sends a bad signal to the owners (don't sell during Hidalgo's mandate).
This will not have any effect against the gentrification, the majority of inhabitants are tenants, especially in the concerned areas.

[Crawford]

I'm confused by the map. Aren't those the least gentrified areas, not the most gentrified? Are they just trying to prevent future displacement in more affordable areas?

I would imagine 5th, 6th, 7th, 8th, and 16th would be most expensive, though I could be wrong.

[Minato Ku]

Indeed, this is more about trying to slow down the gentrification rather than putting more lower incomes in wealthy areas.

This is not necessarily the least gentrified areas, I would rather say that this is this some of the least gentrified areas with a low ratio of social housing.

[Crawford]

Originally Posted by Minato Ku

This is not necessarily the least gentrified areas, I would rather say that this is this some of the least gentrified areas with a low ratio of social housing.

Aha, I see, because the 13th and 19th have lots of social housing, right? They are probably among the least gentrified too.

[Minato Ku]

It is rather true.
In the City of Paris, you will find gentrification everywhere. The 13th arrondissement is quite gentrified but because it has a high ratio of social housing it keeps a population with mixed incomes.
The 19th arrondissement is the area with the lowest median income in the City of Paris and it is the arrondissement with the highest ratio of social housing.

In pink, the part of the City of Paris definied with having a social housing deficit (less than 25%). Note that the Marais and the east part of the 7th are excluded

This is why you will find no address in the 13th, 19th and few address in the 20th arrondissement but plenty in the 2nd, 10th, 11th and the western 18th arrondissement.

Anyway, this measure will have no effect to slow down gentrification. This will mostly scare owners of appartments who will be more reluctant to sell.
That does not prevent the owners to choose wealthier tenants.

This is more like a media stunt than anything else as usual.

[the urban politician]

So in other words, private property owners will be forced to sell only to the Government and nobody else?

How are these properties appraised? They are appraised by what the Government is "willing" to pay for these properties. And the Government can simply keep the cost to acquire these very low by 1) making low offers, and 2) hang the stigma of low income housing over these districts.

A very bad, abusive precedent. Worse idea ever. Luckily it's happening in France and not over here. I'm fed up with the Government trying to "solve" the affordable housing issue when, in reality, the free market can easily solve this problem without Government interference.

[Minato Ku]

Not exactly, the city government will have the final say on the sell and it will have the priority as a buyer but this doesn't mean that owner could not sell to anyone else.

- The nuts and bolts of the plan are as follows. When apartments at any of the 257 addresses come up for sale, they must by law be offered first to the city. The apartment should still be sold at the market price —but the price offered would nonetheless be decided by the city, not the seller. --- If the landlord doesn’t like what’s offered, he or she can appeal to an independent judge to have it re-priced, or can withdraw the property from the market. What the landlord can’t do, however, is sell the apartment on to someone else without the city having bowed out first.

Originally Posted by the urban politician

A very bad, abusive precedent. Worse idea ever. Luckily it's happening in France and not over here. I'm fed up with the Government trying to "solve" the affordable housing issue when, in reality, the free market can easily solve this problem without Government interference.

I am pretty sure you can find similar law in many other countries.
Free market would not solve this problem at all when it is the planning rules and NYMBY that prevents the construction of the adequate number of housing.
This is on the hand of the municipal government to make everything to increase the number of construction (softer rules, faster administration..). Those gadget measures would have no effect because it does not address the main problem.

[the urban politician]

^ NIMBY's wield their influence over zoning via Government, however.

True free market development would not be subject to NIMBY spot zoning.

[ardecila]

^ How do you accomplish that in a democracy? The only way is to eliminate zoning and other forms of land-use control. Even Houston hasn't been able to do this properly and still sees large amounts of NIMBYism constraining land use.

If the government has to provide affordable housing, I think Paris probably has the right idea... let government purchase or build and own the housing, funded through a general tax on everybody.

Inclusionary zoning approaches like Chicago or New York just put the costs directly onto developers and stunt the growth of housing. They carry an implicit policy that the housing occupied by poor people should be equal in quality and location to the housing occupied by wealthier people... I find this very troubling. Housing may be a "human right" but the poor classes should have to live in older/smaller/less valuable housing than wealthy people, just as the middle class does.

[Crawford]

Originally Posted by Minato Ku

Anyway, this measure will have no effect to slow down gentrification. This will mostly scare owners of appartments who will be more reluctant to sell.
That does not prevent the owners to choose wealthier tenants.

It sounds like the same idiots trying to create affordable housing in NYC are at work messing up the Paris housing market. But it's true that it's a difficult issue, since you obviously don't want to demolish central Paris.

Sometimes I think it's ok if an area is exclusively rich. It isn't some great tragedy if regular people live somewhere else. Creating affordable housing in the core of Paris or NYC is amazingly inefficient. There are affordable housing units in NYC that cost the public over one million per unit. You might as well give every poor person a huge mansion in exurban Pennsylvania, and problem solved.

[mhays]

In a growing city with high development cost, there are no easy answers. You won't get a combination of square footage, location, quality, etc. But some fairly simple policies can go a long way. Paris' plan sounds horrible.

The first key is to allow growth that's reasonably central and has transit. That can take the edge off market pricing. Much of it can be a few stops outside the best or most convenient areas, which is definitely a key in Paris.

The second is to allow that growth to be cheaper on a per-unit basis. Smaller units, less parking or no parking, etc. Let the market figure those things out vs. zoning. These things aren't good for every resident, but are fine for a large number, including many who can free up larger units for those who actually have use for them.

Third is subsidy at the lowest end. Make it a fair system that doesn't disincentivize development of market rate housing. Inclusionary zoning, rent control, and development fees all pretty directly increase market rates. Tax the whole population instead.

Fourth is a simple, predictable permit process. Some cities pile on costs and can kill even the most compliant project for political reasons only, putting millions of additional costs and potential losses onto every project to control the land, pay design fees, pay your own staff, etc. So nothing gets developed unless the potential payoff is high enough to make the bet worthwhile. Lower these costs and a lower payoff will be ok to developers and their investors, and that's what they'll get because more competition will also arise.

In cities with houses that can be subdivided (probably not central Paris), an accessory-unit trend could go a long way. Simplify the subletting of independent or semi-independent rented units. These can create a lot of cheaper units without a ton of construction, great for both the unit residents and the property owners.

[10023]

So there are two sides to this.

As many of you know, I am generally against housing price controls. I hate NY's rent controls as they are extremely unfair to market rate tenants. I also don't believe that anyone has a right to live anywhere, certainly not renters (as opposed to owners - property taxes which force people into selling are a different story, and a problem). And I don't have a problem with "ghettos for the rich", as long as most of the homes are actually occupied and not just deserted most of the time. Sorry, but less wealthy people just have to make do with less space or a longer commute - the same trade off that 99.9% of people have to deal with.

However, one has to also consider the fact that housing in Paris is already constrained by things other than market forces. You can't really build. Everything is landmarked. There's a height limit. So owners there benefit from these rules, where without any government interference, developers would build, creating more supply, lowering rents and arguably reducing the desirability of these areas in the first place (at least most people must believe so, or the rules wouldn't exist). It is a highly "managed" real estate market anyway, and there can be puts and takes.

Now, that doesn't mean that introducing new rules isn't unfair to current property owners, or that this particular law isn't a terrible fucking idea.

[Crawford]

Originally Posted by 10023

However, one has to also consider the fact that housing in Paris is already constrained by things other than market forces. You can't really build. Everything is landmarked. There's a height limit.

I think there's general consensus that you can't do anything about this. Paris probably has the best contiguous big city urbanity of any city on earth, and it would be a tragedy if this were threatened.

I think most would prefer Paris become a "golden ghetto" as opposed to wrecking the urban form. I certainly have no problem with this; the RER is excellent and no one has a right to a living unit in the center.

[10023]

Originally Posted by Crawford

I think there's general consensus that you can't do anything about this. Paris probably has the best contiguous big city urbanity of any city on earth, and it would be a tragedy if this were threatened.

I think most would prefer Paris become a "golden ghetto" as opposed to wrecking the urban form. I certainly have no problem with this; the RER is excellent and no one has a right to a living unit in the center.

I don't disagree.

My point is that while something like limits on the rent that landlords can charge would be an instance of government using its power to reduce the value of their properties, the government is already using its power in other ways to increase the value of their properties. It's not all supply and demand now.

[miketoronto]

I think Paris and other cities like NYC, London, Toronto, SF and others, have to ask why housing prices have become so high lately.
Paris just like other cities was a popular place to live 15 or 20 years ago. But it is only in the last decade or so that home prices have become inflated in not only Paris, but London, NYC, and other cities I mentioned, plus many more.
Something is just not balanced, when you have homes in huge swaths of your city selling for way more than 95% of the population can really afford.

[Crawford]

Originally Posted by miketoronto

Paris just like other cities was a popular place to live 15 or 20 years ago. But it is only in the last decade or so that home prices have become inflated in not only Paris, but London, NYC, and other cities I mentioned, plus many more.

I think these cities were generally always pretty expensive. I've looked at the advertised apartment prices in NYC back in the 1920's boom, and they weren't that much different than today (adjusted for inflation, of course).

Probably the extreme high end has gotten somewhat out of kilter, because the world has never had so many globetrotting super-rich, but on the whole I'm not certain that these cities are much more unaffordable than other periods in the past.

[10023]

I was writing a great reply on my iPhone and the site reloaded, so I lost it. Need to fix that issue.

[ardecila]

^ tell me about it...

Paris is currently embarking on one of the world's biggest transit expansion programs to bring rapid, frequent rail service to a whole new ring of inner suburbs outside the Peripherique. This is combined with other Metro extensions, RER expansions, and new tram lines. Accessibility in the historically poor suburbs is only going to get better, which puts into question the sense of these moves to preserve a affordable housing in the core.

[10023]

Originally Posted by Crawford

I think these cities were generally always pretty expensive. I've looked at the advertised apartment prices in NYC back in the 1920's boom, and they weren't that much different than today (adjusted for inflation, of course).

Probably the extreme high end has gotten somewhat out of kilter, because the world has never had so many globetrotting super-rich, but on the whole I'm not certain that these cities are much more unaffordable than other periods in the past.

I don't know the answer definitively (it would be an interesting research project for an economist), but this is probably mostly correct.

What makes these cities more expensive on a relative basis today is that, while there are still a finite number of "most desirable" places to live, the aggregate amount of global wealth is so much higher than it's ever been (by orders of magnitude). Not only that, but said wealth is more mobile, and isn't necessarily being earned in the cities in question.

That last bit is a key difference actually. In the 1920s NYC was expensive, but the people making the most money were financiers in NYC. Now you've got money being made in the emerging markets and being used to buy real estate in global capitals, putting it out of reach of even the top 1% locally. Most investment bankers have been priced out of prime central London at this point (at least from buying a family-sized home). That's new.