Sam Amadi, former chairman of the Nigerian Electricity Regulatory Commission (NERC), says the privatisation of the power sector was designed to fail.
In a series of tweets, Amadi said the privatisation process could not produce the desired results because the power assets were sold to investors who lacked the financial and technical capacity.
The sector was privatised after the unbundling of the Power Holding Company of Nigeria (PHCN) in November 2013, as private investors took over distribution and generation firms “to ensure adequate, regular and stable supply of electricity to the consumer at a reasonable cost”.
“The power sector was designed to fail. We failed to corporatise and commercialize before privatizing; we privatize senselessly without paying attention to context and corporate governance and regulatory regime; we sold to investors who lacked capacity,” he said.
“We had conducted three tariff hike before December 2015. Did any of these hikes resulting in any significant improvement in revenue or service quality? No. Why because the problem of the sector is not mainly tariff.”
Amadi argued that the challenges in the sector go beyond tariff increase, as such move would force manufacturers off the grid.
“Cost reflective is important. but excessive tariff hike is problematic because it cannot be collected and in a country with poor supply the propensity to pay is low,” he said.
“When NERC conducted “Fit and Proper’ test on all the preferred bidders, only one (or none) has the requisite financial and technical competence to effectively manage the network. I took the report to the VEEPEE to argue that none of these firms are fit. VEEPEE was alarmed and set up a committee with BPE, MOP and NERC.
“We later discovered that BPE amended the TOR to reduce the threshold or financial and technical capabilities. The World Bank doubted that we could sell the discos. We surprised the World Bank and we rejoiced but we did not know we sold to ‘straw-men’.
“The meeting called against me by Minister and DG BPE that I was against privatization because at the villa I advised the DG BPE that so much faith in haste privatization is not justified by theory and practice, I hate to say I have been proved right.”
Local Tools to Address Housing Affordability: A State-by-State Analysisis the fifth annual report produced in partnership with the 49 state municipal leagues. This post is part of a series highlighting findings from this new report.
When it comes to figuring out how to improve housing affordability, cities and states have often found themselves at odds with each other. Housing trust funds, however, have been the rare exception.
Established by legislation or ordinance, these funds are ongoing, public funding for the development of low-income housing. They have been a primary source of funding for affordable housing creation in this country.
Housing trust funds create a unique opportunity for state- and city-level governments to work together and support each other’s efforts to create more affordable housing. Unlike with other tools in the affordable housing toolbox, hurdles like state preemption and competing for funding sources are not an issue. While state funds are often larger, some city governments have also created very robust funds. According to the Housing Trust Fund Project, in 2018 local funds in 109 cities and the District of Columbia totaled over $1 billion.
One example of a successful city-level housing trust fund can be seen in Juneau, Alaska, a city with a population of just over 30,000.
Juneau determined that 85 percent of its residents made less than $35,000 and that, in 2010, approximately 1,200 households were rent-burdened. Many of the residents in this category were found to be youth, special needs residents, veterans and seniors.
That year, the city established a housing trust fund, seeking to fill a local need for more affordable housing options in the absence of a state-level fund. The fund seeks to expand:
Use of capital to develop housing units
The number of one-bedroom rental units for low-income residents
Ultimately, the city is working to ensure the trust fund remains sustainable. With over $400,000 in the fund and two years’ worth of operating costs in reserve, Juneau is tackling the need for affordable housing for its residents, with a particular focus on workforce housing to ensure that Juneau workers have affordable housing options.
Forty-seven states and the District of Columbia have state-level housing trust funds in place to bolster development of affordable housing. Local city- and county-level funds are also an extremely important part of the housing trust fund landscape. In our analysis of housing affordability tools, we found that:
33 states and the District of Columbia have both state and city-level trust funds
14 states have state-level housing trust funds but no city-level funds
2 states do not have state-level funds but do have city-level funds
1 state does not have state- or city-level funds
Housing trust funds provide vital funding for increasing the stock of affordable housing in cities, towns and villages across the country. State- and city-level trust funds are, in many cases, complementary funds that increase the development of affordable housing and work in tandem with other housing policies to meet the specific needs of the local population.
They’re proof that, when cities and states can work together on tried-and-true policies, all communities can benefit.
Infrastructure development, including the construction of roads, bridges, ports, power plants and water supply, are key drivers of economic growth. It facilitates developing countries to boost their manufacturing, services as well as trade.
The fast-paced infrastructure development in India has not only helped the country in becoming one of the fastest growing economies of the world, but also aided in bringing in substantial investment.
Smart Cities Mission has given a boost to infrastructure development. With infrastructure geared towards Smart Cities, the focus is on sustainable infrastructure, which also becomes the need of the hour considering the fact that the planet is suffering from eco-anxiety — due to climate change and diminishing natural resources.
Sustainable infrastructure not just protects the environment, but also adds long-term value to the facilities. It enhances the quality of life for citizens of the country.
Sustainable growth helps in protecting vital natural resources along with promoting efficient use of financial resources.
Pollution is one of the major problems dogging India, whose air quality in India is horrendously bad right now. The problem became so intense that the government had to stop construction at almost all sites.
An increasing number of vehicles, along with industrialisation and a decreasing number of trees, have added to carbon emission.
Sustainable infrastructure can play a role in reducing energy consumption, which helps in minimising carbon dioxide emission. The usage of renewable energy sources directly helps in improving air quality.
Sustainable infrastructure also helps in reducing solid waste. Since the focus has now shifted to solid waste management, companies manufacturing construction materials are coming up with renewable building materials which are easy to recycle.
Various solid waste reduction practices such as construction byproduct management, recyclable management, recycled material usage and waste mitigation have been incorporated.
Owing to rampant exploitation of natural resources, it is high time that we switch to sustainable infrastructure development. This will help reduce dependence on natural resources.
Through building re-purposing, sustainable infrastructure projects will help save natural resources.
Sustainable projects also help to reduce soil erosion as well as water runoff. They assist in preserving indigenous wildlife and open land.
While developing a sustainable infrastructure project, the focus is on less energy consumption. Although the cost of sustainable engineering is higher as compared to traditional building methods, the developer can recover the initial cost due to reduced utility and maintenance expenses.
Apart from bringing down energy consumption, there is a reduction in water consumption too owing to the fact that civil engineers practising sustainable infrastructure design also incorporate water saving- technologies. These projects have water-free urinals — no flush toilets and low flow shower heads.
It also comes with the benefit of improved community health. With improved air quality, reduction in carbon emission, less energy consumption and usage of renewable energy sources, sustainable infrastructure has tremendous health benefits.
Sustainable infrastructure also reduces the risk of damages through unforeseen natural disasters.
Apart from this, the developer of a sustainable project might get insurance discounts through preventive disaster measures, which further offsets emergency equipment expenses.
Structural life spans of the project that are designed keeping in mind sustainability also goes up. This helps developers in cutting down on construction costs. It is safe to say that any sustainable project should remain safe and functional for 200 to 300 years.
Minimalist designs allow property owners to add features as and when needed. The design of sustainable projects is such that it facilitates future additions. The floor plans of sustainable projects ensure that space lends itself to multi-purpose utility.
Sustainable projects also include framework, which includes additional floor levels, as well as accessible wiring conduits that facilitate future improvements.
Apart from providing a better place to live, sustainable infrastructure development also adds to employment prospects. Employment opportunities are created at every step. Job opportunities are aplenty — right from construction to its maintenance. Apart from being the direct source of employment for local labour, it is also a source of income generation for small businessmen who supply materials for construction.
Sustainable infrastructure attracts investment, which ropes in companies providing employment opportunities to local labour and help in controlling rampant inter-state migration.
When Willette Benford was released from prison earlier this year, she knew that finding housing in Chicago would be a struggle. She didn’t have a steady job and was staying on a temporary basis at a homeless shelter—and friends who’d been released from prison in the past told her that no landlord would rent to someone with a felony conviction on their record.
It didn’t matter, Benford says, that the conviction had been the result of a domestic violence dispute that occurred more than two decades earlier, or that Benford was given an immediate release from prison when Illinois updated its domestic violence laws.
Too many landlords in the city, especially those who rented affordable housing, had “blanket ban” policies that would cause them to deny her outright.
“People don’t know the whole story,” she says. “They just look at the paper, and they’re immediately afraid. They don’t know the details, and they just make the assumption that everyone’s still guilty. Then they deny you housing, which is just a basic necessity—and then where else are you supposed to go?”
In late April, Benford was one of several formerly incarcerated people who stood before the Cook County Board of Commissioners and told her story.
She was testifying in support of a law that would prohibit most landlords from denying people housing on the basis of a criminal conviction. After years of pressure by activists with the Chicago Area Fair Housing Alliance, the ordinance finally passed, 15 votes to two.
The victory in Cook County, the second-most-populous county in the United States, is the latest in a burgeoning nationwide movement to ensure housing for returning citizens.
Following the success of “ban-the-box” initiatives that prohibit employees from asking about criminal records, activists in nearly a dozen major cities are now campaigning for the passage of “fair-chance housing ordinances” that would prohibit landlords from denying applicants with prior convictions. In doing so, these advocates are also fighting to change the public’s perception of formerly incarcerated people.
Criminal-justice reformers have stressed the intersection of housing justice and mass incarceration for decades. Recently released or paroled individuals are far more likely to experience homelessness, often because their criminal records prevent them from getting approved for an apartment, and those who do experience homelessness are far more likely to be incarcerated again.
In this way, a conviction from decades past can cast a shadow over a returning citizen’s safety and stability, as well as the safety and stability of their family members.
Research has shown that many formerly incarcerated people experience discrimination when applying for apartments. A report from the Ella Baker Center found that 80 percent of such people said they had experienced difficulty accessing housing.
It didn’t matter what their conviction was for, or how long ago it had occurred—many of them said they were denied housing outright because of “blanket ban” policies maintained by many private landlords and public housing authorities. And if formerly incarcerated people return to live with their family members in housing where there is such a ban, they put those families at risk of losing their housing.
African Americans with criminal convictions face this discrimination especially acutely, according to a report from the Greater New Orleans Fair Housing Action Center. An audit of several dozen landlords across the city found that landlords applied conviction policies inconsistently across races more than half the time, discriminating more harshly against black renters than non-black renters.
It’s hard to measure the precise scope of the problem, but recent statistics show that more than 600,000 people are released from confinement each year, and the majority of them return to cities, where renting is easier and more common than purchasing a home. In New York state alone, more than two-thirds of the 600,000 prisoners released since 1985 have gone on to reside in New York City, and more than half of those released were African American.
Despite the pervasiveness of this discrimination, local laws to prevent it are a relatively recent phenomenon. Activists found success in the early 2010s with ban-the-box initiatives. Deep-seated stigmas against people with criminal records made it difficult to push for fair-chance housing policies in all but a few liberal cities, including Washington, D.C., and New Orleans. Seattle, too, made waves in 2016 when it passed the strongest, most comprehensive ordinance to date.
But in 2016, when the Obama administration’s Department of Housing and Urban Development took a formal stance on the issue, it set off a “sea change” at the local level, says Marie Claire Tran-Leung, a lawyer at the Shriver Center. HUD declared in a policy memo that it was illegal for property owners to deny housing on the basis of a criminal conviction. The memo argued that the 1968 Fair Housing Act, which prohibits landlords from discriminating in ways that result in a “disparate impact,” applies to criminal records as well as protected classes like race, gender, and sexual orientation.
The policy doesn’t have the full force of law, Tran-Leung says, and could only be enforced if a federal court sided with a renter in a lawsuit over the issue. Nevertheless, it inspired activists around the country to make a push to pass more easily enforceable local laws along the same lines.
Five years ago, there were no more than four major cities in the United States that had such laws on the books; by the end of 2019, there could be more than a dozen. San Francisco; Detroit; Newark, New Jersey; and Kansas City, Missouri have passed ordinances in the last few years, she says, and other cities, including Portland, Oregon, and Berkeley, California, are pushing to pass them now.
“It’s definitely gaining traction,” says Tran-Leung. “You’re seeing efforts underway in a lot of different jurisdictions. The [HUD] guidance helped, too, because it really helped make the point that people who are coming back home are subject to a lot of stigma and need strong protections against discrimination.”
Take Richmond, California. With a population of about 100,000, the Bay Area city is bordered to the north by a medium-security prison and to the west by the notorious San Quentin state prison across the San Francisco Bay. As a result, the city becomes a de facto first stop after release for many incarcerated people in the Bay Area.
One such person was Tamisha Walker, who founded the Safe Return Project to advocate for the rights of the formerly incarcerated after she served her sentence. She and her fellow activists surveyed hundreds of returning citizens in the area about their needs and found that housing was at the top of the list.
“To my mind, housing is the first guarantee against recidivism,” Walker says. “Of course the argument in California is always, ‘Oh, it’s a challenge for everyone,’ but we interviewed people who had a job, a steady income, everything they needed, and the only thing stopping them from getting housing was a conviction. To us, that was discrimination.”
Safe Return focused its energy on persuading the Richmond City Council to pass an ordinance like Seattle’s, which prevents any rental landlord from considering criminal convictions. Despite the Bay Area’s reputation for leading on progressive policy, Walker says at first it was hard for the activists to get any oxygen: the city had just passed new rent control laws, and as a result, “landlords were extra defensive—they really didn’t want any more regulation.”
Tran-Leung says the same was true for campaigns in Cook County and Seattle. Realtors’ associations and groups representing landlords appeared at hearings in both cities to testify against the law, she says, as did representatives from companies that offer background check services to landlords.
In Cook County, for instance, speakers from the National Credit Reporting Association told the commissioners that background checks were necessary for “mitigating financial and property risk” and “protecting other residents from physical harm”; the speakers warned of “unintended consequences that could harm the very citizens we are trying to protect” should the ordinance pass.
In Richmond, after long negotiations between activists, landlords, and city politicians, all the parties involved agreed in December of 2017 to support an ordinance that would only prohibit discrimination by landlords who receive affordable housing subsidies. It’s a weaker law than Seattle’s, which prohibits all landlords from considering an applicant’s criminal background, but one that nevertheless has the potential to change thousands of people’s lives.
The victory in Richmond set off a ripple effect in the Bay Area, inspiring organizers in the East Bay to make a push for similar ordinances. John Jones III, another formerly incarcerated activist who lives in Oakland, started connecting other criminal-justice activists around the city and in surrounding Alameda County when he saw Richmond’s bill move forward.
After spending months identifying potential supporters in Berkeley, Jones helped draft a bill that was introduced in the Berkeley City Council last week; his organization, Just Cities, hopes to introduce similar bills in other East Bay cities later this year.
But the fight doesn’t end once an ordinance passes. From there, activists, lawmakers, and city attorneys have to hash out how the ordinance will be implemented and enforced, a process that in Richmond took more than a year and concluded only a few weeks ago.
And in Seattle, a conservative legal group called the Pacific Legal Foundation has launched a lawsuit against the city’s ordinance, arguing that it impinges on freedom of speech; the suit will go before the state supreme court this month. Jones says he fully expects a similar legal challenge tothe East Bay ordinances if they pass.
“One of the biggest barriers to passing these laws is taking on the question of who is and isn’t deserving of housing,” says Deborah Thrope, a lawyer with the National Housing Law Program who worked on the ordinances in San Francisco and Richmond. “We really have to get people to think through the stigma and ask why we even categorize people by their conviction.”
If cities in even the bluest states are fighting an uphill battle against real estate lobbyists as well as a wary public, activists in red states face even steeper odds. Madison, Wisconsin, for instance, had one of the first fair-chance housing ordinances, but the state’s Republican-dominated legislature effectively overturned it a few years ago by passing a law that prevents local antidiscrimination legislation from going any further than the state’s civil rights law.
Texas’s state senate adopted a similar law in April to prevent Austin from implementing a ban-the-box initiative that would have prohibited hiring discrimination.
Thrope says activists are still figuring out how to circumnavigate these preemption laws, but over time she believes such laws may contribute to further segmentation between conservative and liberal states.
Under the Trump administration, it’s unlikely HUD’s 2016 guidance will be codified into a formal policy; indeed, says Thrope, there’s some concern among activists and legal experts that the administration will rescind the guidance the way it has rolled back Obama-era rules on housing desegregation and civil rights enforcement (though at a recent hearing, HUD Secretary Ben Carson said he supported Alexandria Ocasio-Cortez’s suggestion to end the department’s “one-strike you’re out” policy for removing criminal offenders from public housing, which dates from the tough-on-crime 1990s).
In the absence of such federal gains, says Thrope, formerly incarcerated people in red states and rural areas may find themselves denied the right to housing that is on the books in a growing number of liberal enclaves.
“There’s been some progress on the federal level,” Thrope says, “but the real progress has been local. We have these extremely harsh policies that have worsened recidivism, torn families apart, and policymakers are just now starting to say, ‘Okay, this isn’t working, let’s reverse these.’”
Still, the speed with which the fair-chance housing movement has spread from city to city is an encouraging sign for activists who want to push for criminal-justice reform beyond a mere reduction of prison populations.
The long-term consequences of a criminal conviction, these activists insist, don’t end when a prisoner is released or paroled, and cities can’t truly say they’ve ended mass incarceration until they tackle the stigmas that prevent returning citizens from fully reintegrating into their communities. And the first and perhaps the most fundamental step to reintegrating, Jones says, is finding a safe place to stay.
“Sometimes we don’t even try, because we’ve already internalized that there’s a barrier there and no one will give us a chance,” he says. “Or then you apply once or twice and you’re told no on the basis of your conviction, and then you just give up.
“At the risk of sounding overdramatic, it’s absolutely a violent experience, trying to get housing,” he adds. “Especially if you have a desire to do good, if you have to provide for your family, there’s a sense not only of desperation, but of being dehumanized—being told that you’re not entitled to the most basic human right.”
That the Nigerian steel manufacturing sector, arguably the most critical element in the nation’s industrialisation drive, is massively threatened by smuggling and racketeering is a development government should worry about.
The whole industrialisation exercise seems to be one big joke, not only because the Federal Government has grossly neglected the moribund steel sector for long, but also because illegal importation of steel flourishes in many parts of the country today, with little or no government intervention.
The significance of an efficient and viable steel industry to any economy that takes manufacturing and its real sector seriously cannot be overemphasised. For one thing, it is fundamental to the industrial process and operations of many sectors of the economy, considering that literally, all the equipment used in production come from steel.
Just as steel is crucial in the industrial space, it is highly relevant in the domestic front as well. Many home appliances and tools, ranging from electronics to things as basic as cutlery and kitchen utensils, not to mention building materials, have most of their parts fabricated from steel.Hence, it is safe to say that Nigeria’s pursuit of a meaningful infrastructural turnaround as a means of meeting its Millennium Development Goals might be a mirage after all.
The scourge of steel smuggling
A recent revelation by the Galvanised Iron and Steel Manufacturers Association suggested that Nigeria might be losing a whopping N53 billion to steel smuggling annually. A syndicate of saboteurs is alleged to import container loads of steel worth $5 million illegally into the country every week.
Apparently, the smuggling and bootlegging activities are facilitated by the Nigerian Customs Service’s abandonment of a procedure called pre-shipment inspection, which ensures that goods imported into the country are meticulously examined at the point of entry. The development is a further dent on Nigeria’s ill reputation for rudderless border management and control. Consequently, the steel market is saturated with a great many substandard products illegally imported from abroad at the expense of locally manufactured ones. Consumers generally prefer the smuggled products to the local ones on the ground that they are cheaper, even though the latter is superior in terms of quality.
How reforms are stunting local production
It is worthy of note that hostile government policies are limiting the sector’s enormous promise. The high cost of local steel, interestingly, stems from outrageous tariffs imposed by the government on raw materials used in steel manufacturing. That in itself, is a major challenge manufacturers have had to confront with the passage of time. For instance, 35% tariff is currently charged on a cold rolled sheet, a critical raw material in fabricating roofing sheets and a couple of other products.
For an industry that has suffered arrested development over the years, the current crisis suggests that a total sector collapse is imminent. Hordes of steel manufacturing companies are closing shop over dwindling patronage. The situation has also resulted in the retrenchment of thousands of employees in the sector in question.
When asked about the smuggling activities and other developments in the sector, a top official of Ajaokuta Steel Company Limited, who spoke to Nairametrics on condition of anonymity, said, “Even if companies are not folding up, production will be down. The steel sector is at its embryonic stage. Steel consumption in Nigeria is very high.
Illegal importation is a flourishing business because of the high demand, and most of the steel that comes into the country is substandard. Illegal importation is a result of outright connivance of smugglers with customs officials.”
He went further to identify Benin Republic and some West African countries as the places where most of the substandard goods come from. He blamed the factors responsible for this crisis on government and its policies. Equally lamenting the atrocious neglect of the Ajaokuta Steel Company and Delta Steel Company, the two major steel mills in the country, he said no meaningful progress could be recorded in the industry without resuscitating the plants.
“The political will of the government is lacking. Obasanjo attempted to revive Ajaokuta in 2005 but he didn’t give it to competent hands. In 2008, Yar’Adua terminated the concession.”
The way forward
Our source further added, “We shouldn’t expect something significant to happen until government looks the way of concession or privatisation.” To buttress his point, he reiterated a myriad of benefits Nigeria could reap from an active and efficient steel industry.
“Imagine the impact that a project like the Dangote Refinery construction would have had on the steel sector and the local economy if all the steel being used had been sourced locally. Look at all the rail projects government is also doing in different parts of the country. Don’t forget also that everything in oil and gas requires steel.”
For the sector to be transformed to a robust and efficient venture, the government must take effective measures against the rampant corruption in the Nigerian Customs Service and secure our borders, in order to gain the confidence of local investors. There is also an urgent need to review the steel industry reforms, particularly the downward review of tariffs on raw materials used in producing steel.
Potential contributions of an effective steel industry to the Nigerian economy
The opportunities and potentials in the Nigerian steel sector are diverse. The country currently boasts of over 2 billion metric tonnes of iron ore reserves, making it the country with the second largest deposit in Africa and the 12th in the world, according to a statement made by the Vice President, Prof. Yemi, Osinbajo in 2016.
The industry is said to be capable of saving Nigeria at least $3 billion in foreign exchange every year if local manufacturing of steel is massively explored. Kogi, Abia, Plateau, Kwara, Nasarawa, Benue, Bauchi, and Anambra are among the states that have iron ore deposit in commercial quantities. Interestingly, industry experts have revealed that the first phase of Ajaokuta Steel Company alone can create about 500,000 jobs upon completion.
Every Thursday, Henk and Elly Oving take care of their young grandchildren. They don’t have to travel far. They just go downstairs.
The Ovings share a five-story home in Amsterdam — two apartments stacked on top of each other and joined by a central staircase — with their daughter Jantien and her husband, Auguste van Oppen.
“It’s two fully independent houses that are intertwined with one another,” said Mr. van Oppen, an architect who could just as easily be describing the 4,900-square-foot home’s two households.
The van Oppens and the Ovings are among a growing number of families sharing multigenerational residences. From Amsterdam to Australia, architects like Mr. van Oppen and his team at BETA, the local firm he co-founded with Evert Klinkenberg, are designing striking homes that make cross-generational care for aging baby boomers and overworked parents as easy as a walk down the hallway.
In a home in Amsterdam called the 3 Generation House, two apartments are joined by a central staircase.CreditOssip van Duivenbode “It’s about being there together,” said Mr. van Oppen, who designed the home along with Mr. Klinkenberg. “It’s about being there for one another.”
The trick is coming up with designs that incorporate privacy, senior-friendly spaces and flexibility for the future. At the same time, the concept can help address one of today’s more stubborn issues — housing affordability.
Multigenerational homes allow family members to maintain their independence while benefiting from interdependence.
In the 3 Generation House, as it is called, the van Oppens opted for the 1,750-square-foot lower level to take advantage of direct access to the garden for the children, while the in-laws, retired and in their 60s, chose the 1,870-square-foot upper level with an elevator. “We wanted more privacy and the roof terrace,” Mr. Oving said.
Including subtle details like wider doorways and level, uninterrupted floors, their apartment has been designed to be senior-friendly — but discreetly so.
“It doesn’t look like a senior apartment, but it is,” Mr. van Oppen said.
Similarly, in Helsinki, the actors Vilma Melasniemi and Juho Milonoff built House M-M, a three-story home that includes a ground-floor apartment for Mrs. Melasniemi’s grandmother.
“We had long conversations about degrees of privacy,” said Tuomas Siitonen, who designed the timber-clad home, “so they could all live quite close to each other, and the grandparents could take care of their kids, and they could take care of the grandmother, but still everyone could live their own lives.”
The house is on land owned by Mrs. Melasniemi’s parents, who still live nearby in the 100-year-old home where she grew up.
The fully accessible 270-square-foot ground-floor apartment, which was financed by Mrs. Melasniemi’s parents, includes its own entrance and sheltered outdoor space. There is also a common garden area that can be shared by all members of the family.
“When we were building the house, I asked my father to draw the line on paper: Which is the land that we pay for, which is our common space and which is the land of their house,” Mrs. Melasniemi said. “I liked that he made it, as he knows the garden and he knows what he likes to think is their space.”
Mrs. Melasniemi’s grandmother, who was 91 when she moved in, has since died.
“My father got the opportunity to visit and talk to his mother every day,” said Mrs. Melasniemi, who has two children.
But the home is already being used for another phase in its planned long life.
“We discussed the kind of life span of the house,” Mr. Siitonen said. “We thought of how they could use the space when the kids move out, and then when the grandmother passes away. And of course, in the future the parents, one or both of them, might move in there. So it was kind of like we thought of things in five years and 10 years and 50 years.”
As with the 3 Generation House, which was designed to allow for expansions and conversions as the family evolves, House M-M was designed so that the children’s rooms, on the second floor, could be combined. Mrs. Melasniemi and Mr. Milonoff could then move down and turn the spaces on the upper floor into a studio. “And then maybe one of the kids could move into the apartment where the grandmother used to live,” Mr. Siitonen said. “Now it’s rented.”
In Kent, England, Caring Wood is another multigenerational home built with the future in mind. Commissioned by the in-laws of the architect James Macdonald Wright, of London-based Macdonald Wright Architects, it was designed by Mr. Wright and Niall Maxwell, of the firm Rural Office for Architecture, as a country house for the 70-year-old couple and the family’s three daughters and seven grandchildren. “There’s 15 of us,” Mr. Wright said. “The idea really was that we would all spend as much time as possible there.”
Set on 84 wooded acres, the family home takes a pinwheel shape with four corner apartments, one per family.
These are connected to the home’s common spaces, including a central inner courtyard where a family tree cast in glass by the artist Colin Reid sits in the center of the courtyard’s shallow pond.
The shared courtyard of Caring Wood, designed by James Macdonald Wright and Niall Maxwell, of the firm Rural Office for Architecture. “Internal walls are all partitions, so they can be reconfigured,” Mr. Wright said. In terms of lifetime use, he said, “there is a lift that gives access to all levels of the house.”
While privacy is built in, Mr. Wright said the children, ages 3 to 17, have no qualms about breaking it down. “They kind of just charge in between all of the individual apartments,” he said.
In Torekov, Sweden, a coastal village north of Malmo, the firm Maka Arkitektur designed a multigenerational weekend home for a mother and the families of her three children, currently including three grandchildren.
“Torekov has always been a kind of generational meeting point for the entire extended family,” said Daniel Hedner, the home’s architect along with Ylva der Hagopian.
In Torekov, Sweden, the firm Maka Arkitektur designed a multigenerational weekend home for a mother and the families of her three children. It has a main building with two wings and a semi-detached guesthouse set around a shared courtyard.
In Torekov, Sweden, the firm Maka Arkitektur designed a multigenerational weekend home for a mother and the families of her three children. It has a main building with two wings and a semi-detached guesthouse set around a shared courtyard.
Forming an outdoor courtyard that serves as a connecting social space for the family, the 1,740-square-foot home comprises a main building with two wings.
A slightly detached 280-square-foot guesthouse has its own kitchenette and bathroom.
“Access to separate rooms, nooks and corners for privacy are essential in multigenerational houses,” said Ms. der Hagopian, Mr. Hedner’s associate, “as well as generous social space that can gather a lot of people.”
Though large families living together is not a new idea, and mother-in-law apartments are common in many places, purpose-built multigenerational homes are largely “a new phenomena in Western society,” Mr. van Oppen said. But they have a strong tradition in Asian society.
That figured into the thinking of a couple with Asian roots who commissioned Charles House, a multigenerational home in Melbourne, Australia. “For them it was kind of a natural way to have a house,” said Andrew Maynard, whose firm, Austin Maynard Architects, designed it.
For this project, Mr. Maynard turned the traditional Australian “granny flat” (normally akin to a shed out back) on its head by incorporating it into Charles House as an adaptable space on the ground level. Although multigenerational homes are not typically part of Australian culture, Mr. Maynard said the country could certainly benefit from them.
“Sydney and Melbourne are among the top 10 of the most unaffordable cities to own a home in the world. And there’s a whole generation of younger people, millennials, who just can’t even buy into the market,” he said.
Charlotte, North Carolina, one of the Southeast’s biggest cities, is short 34,000 affordable housing units. A booming job market has attracted 100,000 new households to the city since 2000, and supply hasn’t kept up with demand.
In Salt Lake City, Utah, there are more families than available places to live, a shortage of about 54,000 units. It’s the most severe manifestation of pricing pressure in a state where housing costs can run higher than both Las Vegas and Phoenix. This deficit comes after a year when Salt Lake City led the nation in homebuilding.
In Columbus, Ohio, the housing market has cooled after ever-higher prices exhausted buyers who simply can’t keep up with rising costs.
“The sweet spots are still a challenge, but there’s no sweet spot in the high end,” Andrew Show, a local realtor, told the Columbus Dispatch.
Three of the nation’s fastest-growing cities, all far from the craziness of real estate in coastal markets, all building at a relatively speedy clip, and all with popular neighborhoods, boasting year after year of rising prices, have become too expensive for a greater number of potential owners and renters.
When policymakers and pundits talk about the nation’s affordable housing crisis, they usually talk about the forces that deny low-income Americans reliable and accessible housing near better jobs and educational opportunity. And they should; it’s not just a national crisis and widespread policy failure, but a moral crisis for the world’s richest nation.
But new research shows that the shocking realities of the nation’s affordability crisis—8 million renters pay more than half their income on rent, and the country is short 7.2 million affordable housing units, according to the National Low-Income Housing Coalition—have begun to metastasize and impact the middle class.
A new paper by Jenny Schuetz, a housing policy fellow at the Brookings Institution’s Metropolitan Policy Program, found that some of the severe affordability issues impacting low-income Americans have crept into the lower-middle class and, without action, will get worse.
In “Cost, crowding, or commuting? Housing stress on the middle class,” Schuetz looked at census data to find the impact of a decade when housing costs rose faster than average incomes.
Her nuanced conclusions suggest that, on an aggregate national level, there isn’t a middle-class housing crisis. High-cost metros like Seattle and San Francisco unquestionably have challenges, and, of course, low-income households are stretched like crazy. But it depends on how you look at the data.
If you break down the nation into five income groups, the crises faced by the fifth group—or the lowest-income—are increasingly being seen within the fourth group, the lower-middle class. The fifth of the country with the lowest income spends 60 percent of their money on housing, while the next-lowest fifth spends 40 percent, both significantly higher than the 30 percent recommended by economists.
“The issues facing low-income Americans are now showing up in lower-middle-income Americans, and I think that’s something we should worry about,” says Schuetz. “It’s a national pattern. That group is spending more money on rent everywhere, in Cleveland and not just in California.”
Other studies point to a similar kind of strain. Research from Berkadia, a Berkshire Hathaway company, found that the lower-middle income bracket, which it qualified as earning $35,000 to $49,999 between 2012 and 2017, has been hit hard, with 6 percent growth in rent-stressed families during that time period. Cities like Tulsa, Oklahoma, and Omaha, Nebraska, have become challenging for renters, with 40 percent or more of families identifying as rent-burdened.
It’s easier to focus on the extremes of the housing shortage, both the rising levels of poverty and homelessness and the seven-figure spec mansions of the tech jet set. But the creeping cost of housing is pinching a middle class already struggling with flat wages, rising child care costs, and the skyrocketing price tag of a four-year college degree.
This “middle-class squeeze,” as a 2014 report by the Center for American Progress illuminated, was about new constraints, and how “the costs of key elements of middle-class security rose by more than $10,000 in the 12 years from 2000 to 2012, at a time when this family’s income was stagnant.”
Housing unaffordability isn’t the cause of the crisis, per se. But with the cost of everything else rising, it’s not surprising that formerly stable families feel squeezed by even slight increases in housing costs, and that overall growth is hampered by a middle class barely able to pay the bills and put their kids through school.
Aren’t we already in a crisis?
Middle-class Californians, many of whom have recently moved to other, more affordable, areas in the West, like Boise, Idaho, and most new homebuyers looking to buy in the nation’s largest cities, would probably tell you there’s long been an affordability crisis across the income spectrum.
And it’s an issue that’s grown over decades: According to a 2017 report done by the St. Louis Federal Reserve Bank, the median price of single-family housing in the U.S. outgrew the rise in median household income by 390 percent between January 1986 and July 2017.
Schuetz’s analysis for Brookings found that lower-middle-income renters and homeowners continue to be forced to make the traditional trade-offs, sacrificing a combination of cost, commute time, and home size for proximity to big-city job markets. It’s all part of the agglomeration crisis, the clustering of jobs and opportunities in specific metros.
What Schuetz has identified as a newer aspect of the problem is the decision by city governments to cut back on housing production via restrictive codes and zoning, which only drives up land prices (the Lincoln Institute of Land Policy found that the cost of land skyrocketed by 76 percent from 2000 to 2016). Big, productive, and progressive cities have hampered their housing supply with very deliberate policy choices.
“Waving our hands and saying we can’t do anything to fix it gives a pass to local government who have made very bad decisions,” says Schuetz. “As the cost burden of housing keeps inching its way up the income spectrum, if we don’t see that as a problem and change the housing delivery system, it will become a middle-income crisis in more widespread terms.”
If this is what the housing market can produce in a good economy, what will happen to homebuilding if we fall into a recession? A report from the Kansas City Federal Reserve Bank found that during the last 10 years of economic expansion the annual rate of single-family home starts was 25 percent below ’90s levels. The current rate of construction relative to the number of households is at its lowest levels since the ’50s, the earliest date at which this kind of reliable nationwide data is available.
Schuetz believes cities need to ramp up affordable housing production. Will newly rising metros like Denver, Austin, and Nashville act in time to stem rampant price inflation? Or will they fall into the same trap as other, larger metros?
There are also increased calls for state-level intervention, to overrule failed policies at the local level. The repeated, and so far unrealized, push for SB 50, California’s transit-oriented zoning bill, as well as the successful passage of statewide rent control in Oregon, demonstrate the public’s hunger to have governors and state legislatures step in and use the tools at their disposal to put pressure on local governments.
“Local governments have no incentive to change, and actually have incentive to dig in their heels on these issues, so ultimately, I think that’s going to require probably state intervention, like withholding funds,” says Schuetz.
Without some kind of relief on the horizon, the middle class will be locked out of many areas due to housing strain. And like all Americans suffering from the affordability crisis, they’ll lose out—a loss for the entire country.
“The highest-opportunity neighborhoods have become gated communities, and you can’t move in unless you’re a millionaire,” says Schuetz. “To the extent that high housing costs discourage anybody from moving to a place to find a job, have new ideas, and contribute to a society, we should worry about that. That’s fundamentally damaging to opportunity, and that’s going to hurt the vitality of our most productive regions.”
The housing market has made big strides forward over the past decade since the financial crisis, recovering from its historic declines in the mid-2000s and seeing big gains in average home prices in many popular markets across the nation.
Yet the rise in prices combined with rapidly increasing mortgage rates over the past couple of years made housing far less affordable, especially in pricier areas of the country.
However, all that might be changing. Interest rates on 30-year mortgages fell to 3.82% on June 7, continuing a trend that has seen rates plunge by more than a full percentage point since last November.
The current figure is the lowest level for the 30-year mortgage since September 2017, and the weekly move was a sharp drop from 3.99% the week before.
The movements in interest rates reflected the big changes in market sentiment with respect to the expected future course of monetary policy from the Federal Reserve.
The Fed doesn’t directly control mortgage rates for the most part, as its most important lever for influencing the bond market is through its control of short-term interest rates. Yet the bond market pays close attention to the central bank’s decisions, and with an abrupt shift in strategy that’s appeared in the past several months, bond investors have had to adjust accordingly.
In particular, whereas most bond investors previously expected the rate increases that the Fed has implemented over the past two years to continue throughout 2019, they now see a greater likelihood of interest rate cuts in the near future in response to weakening economic activity.
Falling mortgage rates make it cheaper for would-be homebuyers to finance their purchases. For instance, a $300,000 30-year mortgage at the current rate of 3.82% would have a monthly payment of around $1,400, compared to the $1,600 monthly payment for a similar mortgage at the 4.94% rate that was available in November.
Put another way, someone who can afford a $1,600 monthly payment could borrow about $42,000 more now than they could seven months ago. That could spur more home purchases and help give the economy an extra boost heading into the key summer season.
The SPDR S&P Homebuilders ETF (XHB) was unchanged in after-hours trading Monday. Year-to-date, XHB has declined -7.50%, versus a 8.72% rise in the benchmark S&P 500 index during the same period.
More and more people are moving to big cities for education and jobs. While that’s been happening for a while, what’s changed now is that a growing number of companies are now trying to tap into the needs of new migrants, especially millennials.
In the last few years, besides traditional forms of rented accommodations like hostels, paying guests and shared apartments, organized accommodations such as co-living and student living have come into existence, and these organized offerings come with better services and facilities.
In fact, many companies are now especially focusing on the needs of migrant students and offering student living exclusively. For instance, on 6 June 2019, Stanza Living, a student housing company which provides accommodation facilities especially to students forayed into seven new cities— Hyderabad, Chennai, Coimbatore, Indore, Baroda, Pune and Dehradun.
With this, the company has reached a national inventory of 22,000 beds across 10 cities. However, Stanza Living is not the only one offering services in this segment. While Stanza Living started operations in 2017, PLACIO, another student housing management company, was established in 2016 and has a presence in Delhi, Noida, Greater Noida, Lucknow and Indore.
Oyo, one of India’s largest hospitality company, also announced recently that it will be entering the student housing segment soon. (To read more about OYO’s plan, click here). OYO has already launched Oyo Life, a long-term rental housing business targeting young professionals, millennials and students.
Need for student housing
India is a developing nation and opportunities in urban areas for employment, education, and better lifestyle have been the pull factors for small-city and rural populace. The first challenge this migrant population faces is finding proper accommodation, and students top the list
. According to a survey by property consultant firm Knight Frank, Global Student Property Report 2019, released on 7 June, “India has the youngest population in the world, with some 18% of the 1.3 billion-strong population aged between 15 and 24. More than 34 million students are currently enrolled in courses at universities across the country, and this figure is expected to rise.” Further, as per the survey, “the current demand for purpose-built student accommodation (PBSA) bed spaces across the country is estimated to total more than 8 million.”
The market for student housing in India may still be at a nascent stage but there are a number of factors that are expected to drive growth in this segment in the coming years. One of the primary reasons for this is that few institutions or colleges in India provide sufficient accommodation facility to students.
“Only 20% of the current demand is met by university-operated supply. This is despite a survey undertaken by the Indian Human Resource Department which indicates that the majority of students would prefer on-campus accommodation. Existing capacity is limited and new development has ultimately not kept pace with the growth in enrolment,” according to the Knight Frank report.
Besides, a large number of students come to metros to prepare for entrance exams, civil services, corporate jobs and so on. This segment has no option but to stay in private hostels and lodges. According to the Knight Frank survey, “the majority of this accommodation is operated outside of university control by private owners. Often it is off-campus, of poor quality and with little modern value-add facilities such as WiFi or laundry services.”
Some students also live as paying guests (PG) or in shared apartments, but finding a decent PG or a flat mate could be a daunting task.
Cost and returns
Organized students’ accommodations charge as much as or a little more than what you will pay for private hostels or lodges, in most cities. For instance, the cost of one bed in a private girls’ hostel in South Delhi is about ₹18,000-20,000 per month, including meals, whereas Stanza Living is offering one bed at the rate starting ₹11,500 per month (without meals) around south campus, Delhi.
Charges also differ based on the city and location within a city. For instance, Oxfordcaps.com, a student housing portal, offers one bed for girl students, starting at the rate of ₹8,199 per month, near Reva University that’s situated on the outskirts of Bengaluru, but charges minimum ₹14,000 per month near M.S. Ramaiah University of Applied Sciences, which is in the heart of the city.
Besides catering to the needs of students, this segment is also expected to generate higher returns for investors. According to a 2018 report by JLL, a real estate consultant firm, “student housing has the potential to yield more than 12% returns vis-a-vis the core commercial sector in which returns remain range-bound between 7% and 10%. Further, this sector is expected to grow at 38% CAGR until 2020, to ₹2,400 crore.”
As of now, there are only about 20-odd organized firms in the student housing space. Though the facilities they provide are far superior than what other options offer, it may still take a few years for the space to come up in a big way.
This is a co-created content by Mrs. Zubaida Umar, The Group Head, Corporate Affairs, FMBN. The Federal Mortgage Bank of Nigeria (FMBN) has delivered record-breaking achievements in the past four years as a vital institutional tool of the President Muhammadu Buhari Administration in the delivery of affordable housing to Nigerians nationwide.
The achievements are a result of Mr. President’s clear vision for the development of the Nigerian Housing Sector, apparent by his appointment of a competent and reform minded Board of Directors and Executive Management Team for FMBN under the leaderships of Dr. Adewale A. Adeeyo, OON and Arc. Ahmed M. Dangiwa, fnia, ficen respectively.
It is noteworthy that the Bank’s historic strides in the past four years (2015-2019) have found direction under the Buhari Administration’s broad agenda, which is in tangent with its corporate mandate to, amongst others, advance affordable home ownership through the supply of sustainable long-term liquidity to the Nigerian mortgage market; promote a viable primary and mortgage market and; the management of the National Housing Fund (NHF) – a contributory savings scheme designed to mobilize long-term funds from Nigerian workers, banks, insurance companies and the Federal Government to advance concessionary loans to NHF contributors.
Across all corporate performance indicators including loan disbursements, delivery in housing stock, funds mobilization, mobilization of new contributors to the NHF Scheme, available loan products, refund of NHF contributions, the Bank surpassed previous records of achievements. Some of the significant areas of performance improvement are highlighted below.
N147.3 billion Mortgage Loan Disbursement Under the four years of the Buhari Administration, FMBN disbursed the total sum of N147.3 billion for affordable housing finance through National Housing Fund (NHF) Scheme.
Estate development loans totaling N66.3 billion for the construction of 1,726 housing units;
Home renovation loans totaling N22.7 billion granted To 27,618 beneficiaries; and
Ministerial Pilot Housing Scheme loans totaling N21.7 billion for the construction of 1,619 housing units.
Remarkably, the total loan disbursement of N147 billion between 2015 – 2019 represents over 70% of total loan portfolio of N210.6 billion advanced by the Bank since commencement of the NHF Scheme 24 years ago.
This translates to an annual average of N36.75 billion (or more than 600% increase) during the Buhari years compared to an annual average of just N6 billion in previous years!
Refund of NHF Contributions to retirees
In a move that marks a radical departure from the perennial problem of delayed refund of NHF contributions to retirees, in the last four years FMBN recorded over N23 billion as pay-out of NHF contributions to 181,436 qualified contributors.
This accounts for 70% of the cases of the cumulative of 257,396 refund applications successfully processed and 82% of the cumulative sum of N28 billion refunded since the NHF Scheme was established.
The significant improvement in the rate of NHF refund arose from the review of the Bank’s internal processes and Management’s commitment for improved efficiency in service delivery to Nigerian workers who are its customers.
Easing Access and Affordability for NHF Loan Products
In an historic move aimed at at breaking longstanding financial barriers to homeownership by low- and medium-income earners in Nigeria, the FMBN reduced the equity requirement for NHF contributors wishing to access NHF mortgage loans.
With effect from 2018, the following are the more affordable and accessible equity requirements for NHF mortgage loans: Mortgage loans of N5million and under attract zero (0%) equity contribution, a downward review from the 10% previously required as loan own payment; and Mortgage loan of over N5million to the maximum amount of N15million now attract a flat equity contribution rate of 10%, down from the 20% and 30% previously mandatory to access the loan facility.
The drastic downward review of equity requirement for accessing the NHF mortgage loan has made it more accessible and affordable to Nigerian workers within the low- and medium-income brackets.
The implication now is that workers who contribute to the National Housing Fund (NHF) consistently and are up-to-date are eligible for up to a N5 million loan without having to put down a single kobo as equity while those seeking for loans above N5 million to N15 million will only put down 10% as equity.
Introduction of FMBN’s ‘Rent-to-Own’ Homeownership
Scheme In a strategic effort designed to make homeownership more accessible and affordable for Nigerian workers, the FMBN recently introduced the ‘Rent-to-Own’ Homeownership Scheme.
The scheme offers an easy and convenient payment arrangement towards homeownership for Nigerian workers. It makes it possible for a Nigerian worker to instantly move into an FMBN-owned housing property as a tenant and conveniently pay towards ownership of the property in monthly or annual installments over as long as 30 years at an interest rate of just 9%! According to Arc. Ahmed Dangiwa, the Managing Director/Chief Executive, The rent-to-own housing product is designed to make sure that any worker who collects a salary should be able to live in his own home and pay conveniently over periods as long as 30-years!
This is a massive relief especially given how little workers earn.”
Leveraging on Technology
Another notable achievement of the FMBN during the first tenure of the Buhari Administration is the launch of FMBN Digital Platforms.
The Digital Platforms have ushered in a new era of transparency and accountability in the operations of the National Housing Fund (NHF) by empowering contributors with real-time access to information on their NHF accounts.
Key components of the FMBN Digital Platform Solutions Suite of services include the following:
The *219# USSD Short Code service via GSM Mobile networks
The NHF Mobile Apps available on android & iOS platforms
The online Self-Service Kiosk via the Bank’s web portal (www.fmbn.gov.ng/nhfmobile) and
SMS and email notification services to NHF customers.
The platforms enable contributors to receive instant notifications of NHF contributions on the go, update NHF personal records, check NHF balance of contributions, register and retrieve NHF numbers, request for statements of account, calculate home affordability and mortgage payments, and obtain latest NHF-related information from the FMBN Bulletin Board online service.
The greater transparency, clearer disclosure and convenient access to records of contributions from the comfort of homes and offices or while on the go via personal computers or mobile phones has boosted confidence in the NHF scheme.
As affirmed by the Managing Director, Arc. Dangiwa, “On resumption of office, we audited the system and discovered that most employers under-remit deductions, remittance schedules of deductions are not provided, contribution records are not updated or maintained in passbooks and most contributors do not know the status of their contributions.
Having critically evaluated the issues, we decided to automate the process to give contributors unfettered access to information pertaining to their contributions and the policies associated with the Scheme for greater efficiency, transparency, accountability and service delivery.”
Implementation of the National Affordable Housing Delivery Programme for Nigerian Workers
In a move aimed at strengthening stakeholder participation and confidence in the operations of the National Housing Fund (NHF), the FMBN in conjunction with the Nigeria Labour Congress (NLC) Trade Union (TUC) and the Nigeria’s Employers’ Consultative Association (NECA) embarked on the National Affordable Housing Delivery Programme for Nigerian Workers.
The Housing Programme aims at a structured and sustainable approach to affordable housing delivery for Nigerian workers nationwide. About 2,800 housing units are to be delivered in fourteen (14) sites across the six geopolitical zones of the country in addition to Lagos and Abuja, in batches of a minimum of 200 units per zone. House types include finished semi-detached bungalows as well as 1-, 2- and 3- bedroom flats.
The Buhari Years (2015- 2019) represent a period of unprecedented transformation, high-performance and impact at the FMBN in the pursuit of its mandate of deepening access to housing finance, providing access to affordable housing for low- and medium-income earners.
This is a result of the visionary policy direction and strong support the Bank has enjoyed under the Buhari administration. The stellar results and increased impact of the Bank are helping to change the longstanding narrative from negative to better corporate performance, improved transparency, greater efficiency and service improvement.
As the Buhari administration re-strategizes for a second term in office, the FMBN remains poised to sustain the momentum of reform, high performance and impact with the objective of driving delivery of affordable housing and promoting the development of a more vibrant mortgage finance market in the country.