The housing policy problems on the local level

The participation of local authorities in forming and realizing of the housing policy in municipalities’ territory is fixed by the legislation of the country. The principal regulatory enactments determining this participation are FL-131 “On the general principles of local government organization in the Russian Federation” [3] and Housing code of the RF [1]. According to FL-131 the local affairs in the field of housing sphere development and the objectives of housing policy are the following (Articles 14 and 16):

• •    provision of the low-income citizens who live in settlement / urban district and need in improvement of housing conditions with home accommodation according to housing legislation;

• •    organization of construction and maintenance of municipal housing stock;

• •    arrangement of conditions for house building.

Under the logic of these articles the foreground task of local housing policy is provision of the low-income citizens with home accommodation at the expense of giving them the accommodations which belong to the municipal housing stock. It means that such stock must be social one, i. e. it is given only to those who can’t solve their housing problems by themselves because of their financial situation, and this stock must have some necessary elements of comfortable dwelling as well and at the same time the upkeep costs for maintenance and repair must be minimum. The requirement of low costs for maintenance and repair of such accommodation is conditioned by both low income of dwellers themselves and need to subsidize their costs for upkeep of housing stock from budget.

How important is the municipal housing stock with a view to its weight in the total volume of housing stock? The share of municipal housing stock in whole in Russia is only 12.5%, and in the future it will probably be reduced to 10% having regard to the prolongation of term for free privatization of accommodation. At the same time the differentiation of regions depending on their level of municipal housing stock can make up as much as 3 times. So in the regions of the North-West federal district the share of municipal housing stock is still considerable in the total volume of housing (tab. 1) and it won’t probably be reduced considerably.

For the North-West federal district the volume of municipal housing stock will make up about 18 – 20% in general, and in some regions,

Table 1. Housing stock structure by the forms of property in 2008 [6], in per cent

	Private	State	Municipal	Others
Russian Federation	82 . 4	4.9	12.5	0.2
North-West federal district	75.7	9.2	14.7*	0.4
Karelia Republic	63.8	4.6	30.4	1.2
Komi Republic	70.8	2.5	26.7	-
Arkhangelsk region	70.2	2.2	27.2	0.4
Vologda region	81.1	1.3	17.0	0.6
Kaliningrad region	78.7	2.8	18.5	-
Leningrad region	77.5	2.4	20.0	0.2
Murmansk region	70.2	3.2	26.5	-
Novgorod region	83.4	1.6	13.1	1.9
Pskov region	75.5	2.5	20.0	2.1
Saint Petersburg	77.2	22.8	-	-
* Whereas the city of Saint Petersburg is the city of federal importance, this figure includes both the stock belonging to the federal authorities and the stock belonging to the city directly, i.e. the municipal stock. Considering that the share of Saint Petersburg’s housing stock in the total volume of the North-West federal district is rather large – 42% (in accordance with the data in 2008), so the actual volume of municipal housing stock in the North-West federal district is about 20%.

in the Karelia Republic, the Komi Republic, the Arkhangelsk and Murmansk regions in particular, it can remain at the level of 25% out of the total volume of housing stock.

Thus the issues of effectiveness of the municipal housing stock as a tool of government’s housing policy will be still important for many regions for a long time.

It is of interest to consider if the today’s nonprofit housing agrees with the social housing concept. It is historically established that the nonprofit housing is inhabited by both the low-income people and the people with rather high income. The previous housing legislation established the right of life tenancy of accommodation, and it holds true in the current housing code of the RF [1]. Although now the living accommodations in the municipal housing stock can be given only to the people of low-income, later the change of their property status as well as their family composition have by no means an influence on their title to room. It means that the municipal housing is given as life tenancy, not as temporary possession (rented dwelling).

Besides that the well-established mixed structure of property in the residential houses resulted in the fact that the municipal housing stock had both the houses of low operational costs and the houses of high costs. It leads to the increased expenditures from budget to subsidize the “rent” for the low-income people. So the municipal housing concept and the social housing concept are different. In fact, there is no social housing stock in the country, i.e. the stock meant for people of low-income or people from other socially unprotected group1.

Owing to the right of actually life tenancy of accommodation the available municipal housing stock is decreasing, and the provision of needy citizens with accommodation is fictitious, there is no construction of any new houses. It is necessary to have budgetary financial resources to build such social housing. If in the large towns the municipal housing stock can be formed by appropriating money at the expense of higher budget receipts in whole or by allocating some defined municipal share in the private construction, the small towns are deprived of these opportunities. In fact this direction of housing policy can be realized only with putting on a wide construction by obtaining funds from better provided population in the municipali ty.

Proceeding from the above the priority task of housing policy on the local level is to be “creating favourable conditions for housing construction” and not provision of the low-income citizens with home accommodation. This direction of housing policy is closely connected with other local problems (figure) , and it is a part of general program on the municipality’s social and economic development.

The local matters of land policy are the following (Article 14-16 FL-131):

• •    approving of the overall plans of settlement / urban district and the rules governing land use and site development;

• •    approving of the documents for territory planning based on the overall plans of settlement / urban district;

• •    granting of the permission for building and for putting the projects into operation when building, reconstructing, overhauling of the capital construction projects situated in the territory of settlement / urban district;

• •    approving of the local standards for architectural planning of settlement / urban district;

• •    land reserving and withdrawing for municipal needs including by means of repurchase within settlement / urban district;

• •    land control over the land use in settlement / urban district.

As a matter of fact all these matters are the items of housing policy in the field of “creating favourable conditions for housing construction”. It means that the realization of the tasks in the field of municipal land resources management is a necessary condition for implementation of the local housing policy. The policy as to lands of settlements and their forward development must conform with the purposes of housing policy and facilitate its implementation.

Municipalities can administer both active and passive land policy:

an active land policy means that municipality plans and prepares the plots of land for site development and sells them collecting revenue and forming the municipal fund to buy new plots of land and to finance the construction and the infrastructure. As a result of that the settlement appeal and the volume of taxation increase.

A passive land policy consists in the lack of firm and coordinated actions of local authorities and in their participation in regulating of land relations from time to time. Such policy leads to the fact that the settlement structure is scattered and the costs for infrastructure increase. The settlement appeal is reduced and the population move to more favourable settlements nearby. It leads to the reduction of local budget revenue and to the increase in its expenditure.

The land policy of municipalities is connected first of all with the lands under apartment block. The rationally planned residential

Interconnection between housing policy and other directions of municipality’s social and economic development

Housing policy of municipality к                       |

Using of municipality’s land resources

Condition and development of municipality’s community facilities кJ

Condition and development of municipality’s transport and energy infrastructure ^4

Table 2. The dynamics of communal public service volume per capita [6]

2000 to 1995, % 2005 to 2000, % 2008 to 2005, % Reference data: 2008, roubles Russian Federation 396.0 497.1 171.9 5043 North-West federal district 328.0 557.6 166.0 5740 Karelia Republic 295.1 562.4 134.9 4664 Komi Republic 365.0 607.4 180.9 6419 Arkhangelsk region 266.4 648.9 168.7 4345 Vologda region 362.0 759.6 193.0 5733 Kaliningrad region 388.3 534.0 154.5 5478 Leningrad region 266.3 696.1 183.4 5948 Murmansk region 335.0 708.8 159.5 9850 Novgorod region 274.3 644.5 142.8 4214 Pskov region 336.1 510.8 203.7 4161 Saint Petersburg 344.6 450.2 156.5 5826 area itself is attractive for dwelling, and it is one of the factors of population growth and consequently the source of increasing in the local budget revenue.

The development of municipality’s communal, energy and transport infrastructure also must accord with the housing policy priorities and with the needs of adopted urban-building plans. In the municipality the development, updating and reconstruction of generating capacities depend on the needs of both the population and the business. The main form of organization of power enterprises and infrastructure is a profit-making form which is partly regulated by the government on the regional and federal levels. So the local authorities cannot have a serious influence over the energy sector development in the municipality. Their impact comes to nothing more than allocating the plots of land and connecting some new consumers to the power grids, the latter is mentioned in the Land Code of the RF 2.

Another housing policy task is “financing and co-financing of overhaul repair of houses” (Articles 14, 16 of FL-131), including the op- erations connecting with increase of energy effectiveness in the houses (in accordance with the local governments’ powers to solve the local problems (subsec 8.2 of Article 17 of FL-1313), it is very urgent under the costs of households for resources supply of their houses are increasing (tab. 2).

For example, in the North-West federal district the volume of resources consumption of housing stock is going up steadily (see table 2), and it is still a considerable part of households’ costs.

The annual growth rate of communal public service per capita from 1995 to 2000 was 120 – 130%, from 2000 to 2005 it was 140 – 150%, and from 2005 to 2008 it was reduced again up to 120% on the average.

As a rule, about 50% of cost of the provided communal public service go to heat supply of housing stock.

The works connecting with energy saving are worth to do only after the energy saving standards have been worked out, and that is provided by Federal law “On energy saving…” [4]

adopted at the end of 2009. At the same time the fact that the financial funds are allocated to overhaul including the works connecting with energy saving by the federal and regional budgets in accordance with the law FL №185 “On the Fund for promoting…” [5] before the proper standards are adopted can lead to the unreasonable expenditure of both budgetary funds and people’s means. Since this law doesn’t provide for obligatory participation of local budget in financing of overhaul repairs of housing stock, the local authority has nothing more than organizational and information functions. Such optional participation of local budget in overhaul repairs leads to the fact that the municipality is able not to pay for the share that goes to the municipal housing stock, and thereby breaking the Housing code of the RF. The overhaul repair costs are imposed on either the regional budget or the tenants of the municipal housing stock. In the latter case one can say again that the municipal stock isn’t the social one and doesn’t have any social function.

We have already noticed about the economic inefficiency of the current works connecting with energy saving. It consists in potentially unreasonable costs of households because there are no required inspections of housing heat loss particularly and technical justification of necessary measures to attain the acceptable level (standard) of energy saving and energy costs.

Another issue of economic efficiency of the current works connecting with energy saving is the established energetic and communal public infrastructure. In particular the heat supplying enterprises in small towns are local monopolists as a rule. They have some minimum engineering performance standard of generated heat, i. e. the heat plant mustn’t supply less than this heat volume. Meanwhile as these enterprises are profit-making ones, so they have some threshold of profitability, and they also can’t fall lower than this threshold and the latter is higher than the engineering performance standard. By this time many heat plants in small towns keep their balance at the threshold of profitability, because all possible measures to minimize the costs without updating investments have already been taken. Under the circumstances the total increase in heat consumption by housing stock will lead to the need for increase in the tariffs and there won’t be any economic effect of heat saving. It is possible to change this situation only by tight control over local monopolists, economically enforcing them to invest in the updating and reconstruction of energy enterprises. Since the main anti-monopoly control is concentrated at the regional and federal level but not at the local one and the key condition of their consent to raise the tariffs is “economic justification” (and in the case at issue the tariffs are justified, of course), the economic result of these programs for population is seen to be non-positive for the time being. Under the conditions of step-by-step implementation of the energy saving program the short-run gain will be given only to that part of population who will be the first to assume some energy saving measures, at the same time another part of people will incur some increased costs for maintenance of obsolete infrastructure, the energy supplying and public communal enterprises will impose these costs on them.

The transport infrastructure of municipalities also fails to keep up with the population’s growing needs. The transport problems solving (road network expansion and extension, car park making, public transport development etc.) is different in large and small towns, in historical centers and outskirts. The local authorities’ housing policy has a great influence over them. The town-planning decisions which ignore the changes of population’s needs for both the transport infrastructure and the town residential area can lead to the decline of municipality appeal and its competitive ability. In the present residential area it’s very difficult or impossible to solve any transport problems because of both the building requirements and the requirements to create environmentally friendly zone for living. As for the towns that don’t have large areas with historical buildings the condition for changing of their transport infrastructure is an implementation of programs on comprehensive development and demolition of dilapidated housing. But such changes also demand heavy financial resources which don’t exist in small towns.

Thus the local authorities’ housing policy cannot be comprehensive because it depends heavily on the decisions and financial support of state authorities – federal and regional ones. As a rule the local housing policy is concentrated on the following directions:

• •    approving of urban designs,

• •    allotting of lands for house building on a competitive basis,

• •    fixing of charge for connection to the public service infrastructure,

• •    working out of town programs on overhaul repairs, energy saving etc.

Such participation of local authorities in the development of housing stock and municipality’s residential area isn’t enough under the deep crisis of housing and communal services. The financial question as it is one of the most important problems for the housing estate development but some institutional decisions will be able to improve the financial situation as well as the situation on the whole.

First of all it is necessary to combine the municipal housing concept and social housing concept, to make the demands for those who live in the municipal houses tougher and to take the nonprofit housing out the houses of high running costs by on-selling. In the future it is economically sound to build the municipal social housing just for unprotected sections of the population without scattering it about all houses. As the experience of large towns shows, when people having different income levels live in one house it leads to the deep social conflicts and the lack of adequate finance to support the housing stock.

Another way out of the present crisis is an active land policy which implies that the municipality plans and makes the plots of land ready for building and sells them. So it collects revenue and raises the town fund to buy some new land parcels and to finance the construction and the infrastructure. As a result the settlement appeal rises and the tax volumes grow.

The rise of new construction appeal for high income and average income sections of the population in small towns is achieved by nulling of the charge for connection to the public service infrastructure, planning of the plots for integrated development, giving of such plots to the individual developers without any competitions and auctions which raise the price of construction. These affairs are also under the jurisdiction of municipalities, and that yields some solid growth of revenue for the long period of time thanks to the refusal of lump-sum payment in the local budget.

Besides that without creating of new housing stock it is impossible to solve the dilapidated and dangerous housing problem which is urgent for many towns in Russia. The use of differentiated approach based upon the households’ financial resources as well as the transfer to the nonprofit forms of financing of new construction will help to solve this problem too.