Housing Beyond the Market: Transatlantic Precedents

Not too long ago, The New York Times ran an article about how full-time fast food workers in Danish franchises of restaurants like McDonald’s or Burger King are able to live well, requiring neither government “hand-outs” nor a second job to make ends meet. The authors, Liz Alderman and Steven Greenhouse, pointed to differences in the cost of living, tax rates, attitudes to inequality, and the role of unions to explain this striking disparity between the socio-economics of an American icon in its exported form and the way it functions back home. Several of the experts interviewed in the piece cautioned against comparing apples and oranges. But the beauty of the piece lies precisely in the fact that the authors are not. They are showing us a singular, unchanged item: the Big Mac. Denmark’s fair wages are the result not of “cultural” or “contextual” differences, but a moderate price difference combined with profits that are likely lower than in the US and yet substantial enough to keep the corporations running. Given the current debate about growing income inequality, shouldn’t it be easy to learn from Copenhagen, especially given that it is mediated via a well-known product?

I bring up the Big Mac in thinking about a recent afternoon-long symposium, “Housing Beyond the Market: Learning from Berlin, New York, and Zurich,” that I coorganized with Hilary Sample as part of Columbia GSAPP’s MArch housing studio. The goal was to discuss recently completed nonprofit housing from Zurich and Berlin in light of the viability of cooperative and “Baugruppen” (collective building group) models for New York. Akin to analyzing what makes the Danish Big Mac fair, we asked: how is it that Zurich, a city whose cost of living exceeds New York’s in most areas, manages to create housing that stays out of the market cycle in perpetuity? Perhaps these reduced-profit models are exactly what has allowed architects to challenge established unit typologies and urban design, serving a variety of needs, from extended households, to live-work scenarios, to singles? Sample and I prompted three presenters to dissect the regulatory, financial, and political frameworks that had made their projects possible, and asked four local respondents to reflect on how we might learn from these case studies for New York.

The audience, who, with the exception of one developer, self-identified as architects, generally delighted in the variety and quality of the Berlin and Zurich projects. (Despite multiple and repeated invitations to decision-makers at city, state, and federal levels, there was not a single current member of an agency, task force, or a financial institution on the panel, or, by the show of hands, in the audience.) But this positive response was immediately qualified with resignation about the “cultural” and “contextual” differences that would make these projects impossible here: “New York is much too high-risk for this sort of thing;” “Germany is just so progressive.” Matt Lasner‘s two-fold response was telling in this respect. Lasner is a professor of urban history at Hunter and an expert on co-ops and condos in the United States. On the one hand, he was keen to claim New York as the origin of the Baugruppen, pointing to the city’s first co-op, started in the 1880s by artists who wanted better housing and amenities.^[1] On the other hand, he couldn’t help but speculate, somewhat unconvincingly, that Americans don’t like to work on joint projects and prefer convenience. More persuasive was an economic argument he made: housing remains the main vehicle for wealth-building in this country, so where is the incentive to commit to limited-profit ventures?

Despite the reflexive reaction to state that what is possible elsewhere doesn’t apply at home, one strong consensus did emerge in the course of the afternoon: that architects can take a leading role in shaping municipal land and housing policy, engaging both the public and private sectors, as designers, developers, and as citizens.

Antje Buchholz and Jürgen Patzak-Poor, principals of BAR Architects, presented several of the firm’s inventive, mixed-use buildings for some of the cheap, abundant, and centrally located infill sites available in post-1989 East Berlin. Developed with varying funding sources, most of these projects were not the result of top-down government programs but of the architects assuming the role of developers in order to realize ideas otherwise not considered feasible. This includes unconventional dimensions and connections between rooms, varying levels of finishes, and amenities accessible to all residents, such as guest rooms. Many of BAR’s projects were realized on the Baugruppen model, literally “building groups.” Here, future residents join together to act as the developer, sometimes with the architect as a member, as in BAR’s case, in other cases acting as an external consultant. The model gives residents a larger say in the design of their homes and can significantly lower construction costs by sidestepping the intermediary of a professional developer. The resulting housing isn’t nonprofit or affordable through government-controlled income restriction, but by virtue of the self-management and the resulting lower development cost.^[2]

The success of the Baugruppen model is based in part on the savvy and financial resources of middle-class urbanites. For this reason, the model has faced the criticism, even by its own proponents, that it leads to homogenous, self-selected groups of residents. However, as land values have sharply risen in recent years, a broad coalition of citizens and architects, many from a Baugruppen background, were the ones to organize to oppose the cash-strapped city’s policy of selling City-owned land to the highest bidder only.^[3] Based on the convincing set of projects realized by Baugruppen, the City took note, and since 2013 has worked toward implementing three different allocation processes, two still largely based on maximizing immediate return, one of which, however, referred to as “concept-based,” now allocates land by prioritizing long-term social, environmental, and architectural metrics, actively acknowledging the need to serve not only the middle-class but lower-income residents as well.

In contrast to the bottom-up, small-scale projects realized in Berlin, Anne Kaestle, principal of Duplex Architekten, dissected some of Zurich’s recent large-scale housing redevelopments, generally of former industrial sites. The city’s recent boom of cooperative housing construction is a response to a dramatic lack of affordable housing. In contrast to the historic ruptures characterizing Berlin, the city government in Zurich has continued to build on and refine an established, 100-year work-sharing arrangement: the City is responsible for leasing land to qualified groups, while those groups are responsible for building and managing nonprofit cooperative housing on those sites.^[4] Kaestle outlined a notion fundamental to all cooperatives, written into Swiss cooperatives’ by-laws: the “Kostenmiete,” or “cost rent.” This means that the rent is determined by the revenue needed to sustain a building’s operation, financing, and capital needs only. As a result, buildings become less — not more, as is frequently assumed in New York — costly to operate in the long term since once the mortgages are paid there remains only building maintenance and occasional physical improvements. It also means that there is no option to “go market rate” for reasons of “recapitalization.”

The active municipal role allows the public sector to control the quality of design by insisting on open, anonymous architectural competitions. Kaestle presented various commissions that her young firm has gained in this manner, including the master plan for “Mehr als Wohnen” (More than Housing), a pilot project of eleven buildings launched jointly by several existing housing cooperatives to proactively test new forms of cohabitation, including micro-units clustered around shared living space. Kaestle summarized the architect’s role in pushing affordable housing forward with a Steve Jobs quote: “People don’t know what they want until you show it to them.”

To bring the debate on pilot projects back home, Eric Bunge, principal of nArchitects, related the progress of the firm’s micro-unit proposal for New York City, perhaps the most discussed and internationally publicized affordable housing experiment in the US today. Currently under construction, the project was one of the last initiatives of the Bloomberg administration to test a possible reduction of the minimum allowable unit size from the current 400 to around 300 square feet. Bunge spoke of his testimony on the matter to the City Council, where he recommended that if minimum unit sizes were to be decreased, the City should regulate other parameters, such as increasing the ceiling height and requiring amenities and space outside the actual unit. Respondent Chris Sharples, a principal of SHoP, designer of many of the city’s largest affordable housing developments, stressed that in addition to taking on the role of the design expert, architects also have a responsibility to challenge the “means and methods” of construction. These aren’t typically part of the architect’s contract, but in order to achieve the goal of lower cost and higher quality, Sharples argued, testing modular, off-site construction as nArchitects is doing in this project is critical.

So: can we learn from transnational perspectives? Can we productively analyze differences in the relative roles of the public and private sectors, notions of ownership and use, ideas about acceptable profit margins and the role of design?

Brian Loughlin, for many years Chief Architect of Jersey City, now special housing adviser to its mayor, provided perhaps the most constructive and at once provocative response to what he had just seen: a proposal for developing housing along the model of the charter school, with the goal of allowing smaller groups with specific ideas to experiment through publicly funded pilot projects. What is genius about this idea is the fact that it could be acceptable across the political spectrum, while subversively establishing a principle not at all accepted by many in this country: that housing, just like education, is a right and its provision should be secured by single-stream, tax-sourced funding. The potential problem, of course, is that charter housing, if this is what it would be called, would likely circumvent some of the constraints faced by the public sector, such as paying prevailing wages and contributing to pension funds. These requirements constitute some of the key factors that make the development of all officially sanctioned “affordable” (that is: income- and price-restricted) housing in New York up to 30 percent more expensive than “market-rate” housing, as respondent Lucille McEwen, CEO of the nonprofit Manhattan Valley Development Corporation, pointed out.

Which brings us back to the article on Danish American fast food and another surprising fact mentioned there: Denmark has no minimum wage law. The current wages were secured in direct negotiations between the union and the trade association representing the restaurants, no government involved. Could this be a model for housing?

There is one pertinent detail that Antje Buchholz and Jürgen Patzak-Poor neglected to mention in their talk: the inspiration for BAR’s practice as architect-developers was San Diego-based architect Ted Smith.^[5] The Pacific, perhaps even the Atlantic, is closer to Central Europe than we may think. And so there is reason to believe that the notion that limited profit can be good business and create better housing might yet reach us from across the Atlantic, whether that’s via the American burger, or via exceptional architectural precedents, wherever they are produced.