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Housing Finance: Property Bubbles or Social &
Ecological Resilience? It’s a choice!
Why market solutions for housing are not sufficient
Brussels, 5 Nov. 2014

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Urban features of social housing
finance for local authorities in Europe
• The social and urban diversity and the accessibility of
housing offers are the major challenges that European cities
will have to face
• While the crisis has put more pressure on the need to for
provision of affordable housing, local governments are facing
increasing funding issues:
– Spanish local governments faced a 30% reduction in financial transfers in
2011
– 11 billion cuts are forecasted in the French local authority’s budgets
• Innovative solutions are developed and implemented across
Europe by local governments and their partners to respond to
the funding issues :
1/ The experience of the IDF Region to finance social housing through
attracting responsible investors
2/ The Community Land Trust (CLT) as a grassroot innovation politically and
financially supported by Brussels’ Capital Region which enables to "keep
money at home" while empowering social housing owners.

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Innovative market solutions to fund social
housing : towards impact investment for the
Île-de-France Region
65% of Parisians are eligible for social housing
In 2012 and 2014, the Île-de-France Region issued socially responsible
bonds for social or environmental projects targeted before issuance:
– 350 M€ raised, including 123 M€ for social housing contribution
– 600 M€ raised, including 180 M€ for social housing contribution
These operations are part of a three-fold strategy:
– strengthening financial autonomy while expanding the base of responsible
investor (85% of the 2014 investors were qualified as SRI)
– supporting its social and environmental local strategy (towards environmental
projects and Social housing and solidarity based economy projects)
– working to fight tax evasion –required information did constitute a criterion for
selecting the managing bank
The extra-financial evaluation of the 2014’s projects funded coupled with
targeted projects and the commitment of the Region to report on the social
and environmental impacts of the funded projects encourage efficiency,
transparency and the adoption by markets of new practices aligned with
long-term finance objectives

Financial and extra-financial impacts
Impacts for the local government and its social housing partners:
• Raising of large amounts of capital at low interest rates (in 2014, 600 M€
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borrowed at 2.375% over 12 years)
• Diversification of investors, specifically towards responsible investors
• Decompartmentalised approach to projects within the Region units
Potential impacts on the bond market:
• Bandwagon effect for requirements of transparency and extra-financial
assessments of both the issuer and the projects funded
• Ability of European local governments to play an avant-garde role in the
regulation of the financial system against tax evasion.
For the investors, these financial operations secure a stable return on
investments, while fulfilling the social mission of providing stable housing
to low-income households and improving the environmental impact of their
facilities
For the social housing partners, the Region acts as a robust intermediary
agent. Housing structures are therefore not directly linked to the market
securing them from market fluctuations.

The Community Land Trust Brussels: a long-term
investment for a permanently affordable housing
Over 50 000 households (7% of the population) are waiting
for public housing in Brussels in 2012
• The CLT is not a new phenomenon (1984 Burlington ...) but the
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interest in this system has grown since 2008
• The CLT are organizations that purchase land to be managed as
a common good
• Their aim is to built houses that are affordable to low income
people by selling the flats and not the land which remains
propriety of the CLT
• The Brussels CLT is the fruit of an active and balanced
partnership between local associations and the Brussels-Capital
Region recognized in the regional legal framework
• The CLT operates a specific mode of public funding through a
dual subsidy from the Region guaranteeing the model’s
accessibility

Financial and extra-financial impacts
The Brussels Community Land Trust adds to the housing instruments
available to the Brussels-Capital Region, and corresponds to its objective
of promoting new kinds of housing, in partnership with local associations
and taking into account the city’s financial means. The CLT acts as :
• An innovative and complementary public policy tool to social housing
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facilitating home ownership;
• An operational tool for ensuring the right to housing;
• A way to co-produce locally ;
• An effective tool for urban renewal and densification;
• A tool to fight against fuel poverty of individuals and local energy
dependence;
• A force for social cohesion;
• A profitable model for the local government, because it only requires
a single initial investment, which is then perpetuated in the housing
units created;
• A tool that empowers households, because it stimulates their active
participation through a home-ownership support programme.

Lessons learned and concluding remarks
• Strong need for flexible and responsive financing tool and strategies
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to preserve affordable housing in a changing environment
• Cooperation between local authorities and their partners are
essential in order to achieve this goal
• Seeking the right balance between endogenous and exogenous
resources and of making a maximum independence from market
fluctuations an element of the responsible financial management of
social housing operators and local authorities
• No one fit for all solutions- but complementary tools and strategies to
finance social housing
• Public guarantee are essential to allow for permanent affordable
housing
• Importance of intermediary structures to avoid direct impact of
market fluctuation of social housing beneficiaries

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Thank you for your attention !
Contact :
Charlotte BOULANGER
Global Fund for Cities Development (FMDV)
Fonds Mondial pour le Développement des Villes (FMDV)
cboulanger@fmdv.net
www.resolutionstofundcities.org
www.fmdv.net