Part 4: Different Tactics
Chapter 17: Subsidized dwellings
Chapter 17, 340 -341
To induce private owners to erect these buildings in neighbourhoods where they are needed to replace worn-out buildings or to augment the supply of dwellings, the government agency involved, which I shall call the Office of Dwelling Subsidies (ODS) would make two kinds of guarantee to builders.
First, the ODS would guarantee to the builder that he would get the financing necessary for construction. If the builder could get a loan from a conventional lending institution, the ODS would guarantee the mortgage. If he could not get such a loan however, the ODS would itself lend the money….
Second, the ODS would guarantee to these builders (or the owners to whom the building might subsequently be sold) a rent for the dwellings in the building sufficient to carry them economically
In return for making financing available, and for guaranteeing the building an assured rental income for all occupied apartments, the ODS would require that the owner (a) build his building in a designated neighborhood and sometimes in a designated spot there and (b) in most cases, that he select his tenants from among applicants within a designated area or designated group of buildings
…After the landlord had selected his tenants from among the applicants, the ODS would then look into income of the tenants selected.
… Those tenants who could not pay an economic rent (their full share of costs) would, at least in the beginning of such a programme, be most or all of the tenants applying. The ODS would make up the difference…
If a household’s income improved, it’s proportion of the rent would go up, and the proportion provided by the subsidy would go down. If and when a household reached a point of paying a full economic rent, it would thereafter – for as long a this was true – be no concern of the ODS. Such a household or individual could stay on in the dwelling for ever, paying the economic rent…