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Case in Point: Innovative Partnership Model for Low-Income Housing in Post-Socialist Cities

Albania, like most post-socialist countries, has experienced rapid privatization of previously state-owned housing and growing affordable housing shortages in its cities over the last two decades. While most socialist countries placed a strong emphasis on social and affordable housing, this has not been the case since the dissolution of such socialist states, including Albania. Indeed, the rapid deregulation of housing prices has caused hyperinflation. In large cities, housing prices increased ten to twenty times in many cases. Informal settlements have formed in many urban areas as a result of these changes. The situation is further exacerbated by the presence of more than 500,000 urban migrants living in such informal settlements.Launched in 2009, a new pilot project has formed a partnership between central and local governments to address the need for social housing at the city scale. The project involves the construction of 1,200 rental apartments for more than 5,000 people in seven cities in Albania. The Government of Albania is financing this project through a State loan of 15 million Euros from the Council of Europe Development Bank (CEB), which covers half of the development costs. Participating municipalities, in turn, contribute the land and infrastructure necessary to complete the development and assume the responsibility to repay the loan.Led by Dr. Tsenkova, numerous international and local consultants worked together to design the legal, financial and institutional framework that enabled this pilot project. In particular, Dr. Tsenkova worked with the CEB in Paris and the Ministries of Finance and Construction in Albania to establish a system for effective housing partnership between central and local governments and the engagement of the private industry. She also developed comprehensive manuals for project management and investment to ensure that the social housing built in different cities met both quality and affordability standards.The new social housing that has been established through this pilot project is both fiscally and socially sustainable. The project provides housing to some of society’s most disadvantaged individuals, such as victims of violence, persons with disabilities and those of low or modest income. Rents are set at 4 percent of development costs per year and tenants are not expected to spend more than 30 percent of their income on housing costs.By encouraging a mix of programmatic uses, such as community, retail and business spaces, in addition to housing, these developments also catalyze neighborhood engagement. In some cases, such as in the city of Tirana, the social housing provided by the project has been strategically allocated to encourage mixed-income communities and to ensure the inclusion and support of socially disadvantaged households. Efforts were also made to develop social housing on attractive, centrally located sites.This innovative approach to social housing provides a powerful precedent for future development in Albania, as well as other post-socialist countries facing similar challenges. By designing and establishing a clear, compelling and comprehensive partnership between central and local governments, this pilot project has significantly enhanced the ability of participating municipalities to provide housing for socially vulnerable groups. In Tirana alone, this project has helped build 400 apartments for some 1,400 residents. The thought and creativity invested in this project will ensure that social housing developments, and the communities they inspire, will withstand the test of time.