by Anthony Scott
How to integrate marginalized populations into the social and economic fabric of our societies is the premier public policy challenge of this century. Ahead of the World Cup and Olympic Games, the government of Rio de Janeiro has been aggressively seeking to regain control of and integrate select favelas (shantytowns) into the larger city. This has been done principally by the State government’s police pacification program, which permanently establishes a community-policing unit (UPP) to maintain security gains, along with UPP Social to facilitate social and physical investments (Municipal Government of Rio de Janeiro, 2013). In response to this public investment in physical capital and security in formerly inaccessible real estate markets, international and Brazilian speculators and developers are buying up valuable property while it is cheap (Steele, 2013). While existing favela homeowners with titles to their land have gained from increased land value, there is growing concern that their children will not be able to afford to buy a home in the neighborhood or even afford to rent after the mega-events (Barbassa, 2012).
This entry focuses on the Vidigal favela in the South Zone of Rio de Janeiro, located near one of the Olympic development areas. Though it is one of the smaller favelas, it boasts the most prized view of Rio’s famous Leblon and Ipanema beaches. In Vidigal, which was pacified by the UPP in January 2012, rent has reportedly quadrupled since the government announced plans to pacify the favela in 2008 (Barbassa, 2012). While UPP Social’s land titling program has allowed many residents to enjoy the property valuation (Secretary of State of Housing, 2011), there is currently no government policy on maintaining housing affordability for low and moderate-income renters, nor any policy to ensure that children of low and moderate-income residents can afford to buy other homes within the community (Cummings, Morar Carioca: What’s Not to Like?, 2011). In response to these issues, this entry introduces the concept of a community land trust (CLT) as a mechanism to protect community culture and to permanently preserve a core of low and moderate-income housing stock.
Toward Permanent Affordability
Apart from the need to address the issue of speculative rent increases, the high ownership rates in the Vidigal (nearly 80% according to the 2010 Census) ensures that relatively few residents will be evicted by the market in the short-term. Assuming that the current land appreciation is permanent, the greater concern is the loss of social cohesion and culture by individual landowners deciding to sell their land to speculators, and the inability of future generations of low and moderate-income residents to pay rents and buy property within their community. To address these concerns, the municipal government must support collective land tenure in the form of a community land trust (CLT).
A community land trust (CLT) is a community controlled non-profit organization that owns land and leases that land specifically for community development objectives, usually affordable housing. Individuals might buy and own the buildings on the land, but the non-profit owns the land underneath the building. Practically, it means that when a homeowner goes to buy a building, she gets a subsidized rate because the cost of the land (on which the building stands) is factored out. The basic structure ensures that homeowners have a sense of stability comparable to land ownership—as land is typically leased to homeowners for 99 years with the right to transfer to their children. In exchange for this subsidy, when the homeowner opens the building for renters or goes to sell her building altogether, she must do so in accordance with any restrictions that are stipulated in the land deed, e.g. rent or sell below market-rate.
In this way CLTs can ensure that homeowners get a fair return on their investment, while ensuring that homes remain affordable to low and moderate-income renters and buyers (Peterson, 1996). Best of all, CLTs are majority-owned and operated by the community, giving communities real control of land and leverage vis-à-vis private developers, and government redevelopment plans. The model has proven successful in preserving housing affordability in other high-cost real estate markets such as New York City, where the Cooper Square CLT (CSCLT) and RAIN (The Rehab in Action to Improve Neighborhoods) CLT have been preserving affordable housing for over 20 years on the Lower East Side of Manhattan.
Nonetheless, the start up costs of land acquisition and development in those markets make it prohibitive for CLTs to scale up beyond what is donated to them by the City (Angotti, 2007). While land in Vidigal is cheaper, housing non-profits in Brazil do not enjoy tax-deductible donations like in the United States (Perlman, 2010), and the government’s policy on allowing residents to donate their land to a non-profit is unclear. These are barriers that the government is uniquely poised to remove in order to preserve a rich cultural community and take a real positive step toward the integration of Vidigal into the City.
Vidigal is poised to be a model example of how a well-situated favela can preserve housing stock for low and moderate-income residents. This cannot be achieved, however, without preserving current housing stock through collective land tenure. It should also be noted that these interventions are only one piece of integrating the favela into the city, and will not lift residents out of poverty without maintaining security gains, and complementing them with greater investments in human capital, such as job-skills training and quality primary education.
Anthony Scott is Master of Public Administration candidate at the School of International and Public Affairs (SIPA) at Columbia University