GBO receives municipal land for the construction of new affordable apartments

"What sounds bureaucratic is actually a step towards the creation of affordable housing by the GBO, the likes of which have not been seen in Offenbach for decades," says Lord Mayor and GBO Supervisory Board Chairman Dr. Felix Schwenke. "In essence, it's quite simple: in order to create affordable housing, the building society needs land and money. The land now offers GBO the space to build a three-digit number of apartments. And financially, the GBO's contribution now offers the opportunity to finance additional construction projects amounting to 31.5 million euros with the usual loan financing of 80 percent," says Schwenke. "This has not happened in Offenbach for decades - and it will have a positive impact on rents in Offenbach."

From the mayor's point of view, it was crucial to find an alternative to all the things that were not possible. What seems obvious in retrospect was a complicated path, according to Schwenke. For example, the sale of the properties to the GBO, as suggested in a resolution passed by the city council in November 2017, would have been an obvious option. "However, the experts at GBO have repeatedly indicated to me that buying the plots, which cover a total of over 10,000 m² and have a market value of a good 6.3 million euros, would have a negative impact on GBO's liquidity." As a result, Managing Director Annette Schroeder-Rupp and Mayor Schwenke examined options for a discounted sale, but these would only have solved the problem to a limited extent. "The classic alternative would have been to grant a leasehold. However, GBO would not have been able to lend on the plots in the way that is important for financing the construction of the houses if they had been granted leasehold," explains GBO Managing Director Annette Schroeder-Rupp.

Mayor Schwenke regrets: "Other cities simply solve this problem by sometimes providing massive subsidies from their budget for the construction of publicly subsidized housing." Unfortunately, this approach was also ruled out due to Offenbach's budget situation. "Rich cities can afford this support, but poor cities like us unfortunately can't afford it on a large scale. So we had to look for another solution."

Schwenke himself then contacted the treasurers of other municipalities and managing directors of other construction companies in Hesse to find out about their experiences. "I didn't want to have to reinvent the wheel. If someone has a good idea elsewhere, I'm happy to adopt it for Offenbach," says Schwenke. For example, he came across a model for transferring the properties to the GBO's capital reserves. "This model also had to undergo numerous legal checks, for example with regard to European state aid law, public procurement law and tax law," explains Managing Director Annette Schroeder-Rupp.

"Now it is finally clear: we can act. We have a way that also works in Offenbach," says Schwenke with relief. "We still own the city's assets, which were previously on our books in the form of the properties, through our shares in GBO," explains Schwenke. However, the GBO is now simply wealthier than before and has the opportunity to borrow against the plots and use the loans to finance housing construction.

Schwenke announced that the next step would be for the GBO's Supervisory Board to address the issue: "It will be the task of the GBO's Supervisory Board to decide on corresponding requirements as a voluntary commitment for the realization of the construction projects and for the inclusion of publicly subsidized apartments. Corresponding preliminary planning for a multi-year construction program has already begun."

Managing Director Schroeder-Rupp confirms this: "The Chairman of the Supervisory Board and I are in constant communication on this topic. We are very pleased to now be able to tackle an ambitious and important construction program for Offenbach and will continue to constructively support and help prepare the decision-making process in the Supervisory Board."

February 1, 2021