GBO launches ten-year program for affordable housing
23.11.2020 – As Chairman of the Supervisory Board of the non-profit municipal housing association GBO, Lord Mayor Dr. Felix Schwenke has launched a ten-year program worth millions to maintain publicly subsidized housing.
The municipal council approved the bill at its meeting on November 18. "I have been working to bring about this resolution since the first day I took office. For decades, the number of publicly subsidized apartments has been declining. This is exactly what would have happened over the next ten years: without this resolution, 824 apartments would no longer be available at the affordable prices of public funding. Now, with this resolution, we are securing the entire stock of publicly subsidized GBO apartments for the long term until 2030. That's 824 apartments that will remain affordable housing in the long term. This is a real political contribution to affordable housing. Based on the decision, an additional 38 apartments will also receive public funding."
A look at the statistics shows just how urgently the preservation of public housing is needed. According to the housing authority, the number of council apartments has fallen from just under 5,350 in 2000 to 3,731 in 2019. At the same time, however, the total housing stock increased from just under 59,000 to 62,000 in the same period. In percentage terms, the share of social housing in the total housing stock has fallen from 9.1 to 6.0 percent. This trend is not an Offenbach phenomenon: nationwide, the number of social housing units fell by 57 percent between 2000 and 2019 (from 2.6 to 1.1 million). In Offenbach, on the other hand, the decline was significantly lower and amounted to "only" 30.2 percent. "With the programme that has now been launched, we are achieving a turnaround in this housing segment for the first time after more than 20 years of decline," emphasized Mayor Schwenke.
Being able to finance this ambitious program is not a matter of course for Offenbach, emphasized the mayor. "However, this investment in publicly subsidized housing is right and important as part of a city's public services for its citizens. Housing will never become cheaper in our growing Rhine-Main region, but will become more and more expensive, because housing will remain scarce," said Schwenke. "That's why I'm fighting for every single apartment and every penny of rent. Politicians cannot stop the rise in prices, but they can slow it down by subsidizing as many apartments as possible and thus keeping them affordable. This will then also have an overall braking effect on the rent index and is therefore a benefit for everyone in Offenbach. And that's why the fight for every single apartment is worthwhile."
Three building blocks of the program
The program, which was approved by the municipal council as the shareholders' meeting, is based on three building blocks. GBO receives varying amounts of subsidies from the City of Offenbach and the state. The city finances these subsidies from funds raised from the shortfall occupancy tax, while the state has set up its own programs for extending the commitment. Building block 1 is used to extend occupancy commitments where the potential for rent increases would be low. These apartments would no longer be tied once the commitment expires. Here, 287 apartments can be preserved. The public subsidy for these apartments is EUR 0.80 per square meter of living space per month. Occupancy rights are purchased with building block 2. Here, 204 apartments can be taken into commitment as a replacement for apartments that will fall out of commitment in the next few years. The occupancy rights for these apartments are purchased by the state (for 1.50 euros per square meter) and the city (for one euro per square meter) for ten years. Building block 3 extends the commitment of 371 apartments by modernizing them with public funds, which would be released from the commitment without the investment in modernization.
For Gemeinnützige Baugesellschaft Offenbach mbH, maintaining the portfolio will result in a significant drop in income, as the rental potential of the 824 apartments cannot be fully exploited or, due to the cap, will not be realized for a long time even after the commitment has expired. Overall, the municipal utility subsidiary GBO will forgo around 4 to 5 million euros in revenue in the years 2030 to 2035 alone. Nevertheless, GBO Managing Director Annette Schroeder-Rupp stands behind the preservation of the portfolio and calls the program a milestone in the history of the housing association: "We are committed to the term non-profit in our name, especially in times of rising rents."
The ten-year program, which Mayor Schwenke played a key role in preparing, will primarily benefit residents on very low incomes. "We want to maintain the stock of affordable housing for them in particular. That's why we will continue to retain homes in basic residential areas with particularly low rents, such as Im Eschig or apartments in the Dornbuschsiedlung," explained Schroeder-Rupp. But other tenants in Offenbach also benefit from the retention of publicly subsidized apartments: "With our total of almost 5,000 affordable rental apartments, including around 2,150 subsidized apartments, we can slow down the rising Offenbach rent index due to the unabated high demand."
Even though GBO's income will be reduced in the coming years, the Stadtwerke subsidiary will continue to build and make 30 new apartments available in Offenbach every year. In this context, Lord Mayor Schwenke pointed out that GBO has built 79 new apartments since 2018 and added a further 33 to its portfolio: "Our housing association is an important instrument for affordable housing in Offenbach." GBO's extensive social commitment to the city, for example through the very successful "Better living in Offenbach" program, will also continue. However, it may not be possible to provide additional funding for this beyond the current level in the future, according to Schroeder-Rupp.
November 24, 2020