Social Housing FAQs

Social Housing is a model of publicly-owned, mixed-income, decommodified housing development centered on meeting community needs, increasing local control of housing, and sustaining itself through affordable rents.

One commonly used metric defines housing to be affordable when residents pay 30% or less of their income on rent or loan payments. [1] Affordable Housing is often defined by Area Median Income (AMI). Bozeman’s Median Family Income is $126,400 and $73,700 for a 1 Person Household. [2]

No, it is not. Public Housing (also known as Section 9 Housing) is administered and funded federally by the Department of Housing & Urban Development (HUD) and is run locally through local Housing Authorities. Public Housing is restricted to people with low income and has faced decades of funding cuts at the federal level. Social Housing, while also run by a Housing Authority, funds itself locally and serves people of mixed-incomes.

In 1998, the Clinton Administration passed the Faircloth Amendment, which placed a limit on Section 9 housing nationwide at the existing amount on October 1, 1999. After this date, no Public Housing Authority could add new Public Housing to their communities beyond their Faircloth limit. Bozeman, unlike many towns in Montana, had no Housing Authority, and therefore no Public Housing existed in Bozeman in 1999. Because of these circumstances, the Bozeman Faircloth limit is 0, making Section 9 Public Housing impossible unless the Faircloth Amendment is repealed and the federal government re-invests in Public Housing.
Social Housing, however, is not subject to Faircloth restrictions, because it is sustainably funded through a different revenue stream.

Local Housing Authorities have bonding authority. Municipal bonds are low-interest loans, usually used for municipal buildings like fire stations or libraries. By using Municipal Revenue Bonds, construction costs can be reduced, and once built, the revenue from rents can be used to pay back the loans. Mixed-income residents pay affordable rents (30% or less of their income), with higher-income units cross-subsidizing lower-income ones. Mixed-income rent payments go towards maintenance costs and paying off the loans. Once the loans are paid off – rather than leaving the system as profit pocketed by a private developer – that money is placed back into a revolving fund for future Social Housing development.

Currently, two dominant strategies are used to create and maintain affordable housing:

1. Low Income Housing Tax Credits (LIHTCs) subsidize private housing development, provided that a certain number of units built are “Affordable” according to local AMI (usually 20% of units must be available for people making 50% AMI, or 40% of units available for people making 60% AMI [3]). Requirements for affordability expire (usually in 15-25 years), after which the units can be priced at any rate. Affordable housing projects across the state compete for a limited pool of LIHTC, and often affordable housing projects may have a hard time getting off the ground if there is still a gap in funding.
2. Section 8 Housing Choice Vouchers subsidize landlords that rent out affordable units. People often wait on a waitlist for a year for a Housing Choice Voucher, but then may not be able to find a landlord willing to accept them, either due to stigma around Section 8 or because landlords can make more money than they receive from the government through vouchers. [4]

These market-based strategies do increase supply of affordable housing somewhat, but are mostly maxed out and keep control of housing exclusively in the hands of profit-driven developers and landlords. These are interests which benefit from increases in housing prices, and as such can’t be solely depended on to solve the crisis. If profit-driven actors could solve the housing crisis, they would’ve done it already.

In contrast, Social Housing is not a subsidy. Instead of public dollars funding private interests, a Public Housing Authority can develop housing directly, creating more local control and creating a self-sustaining revenue stream.

More strategies also exist to curb housing costs. Other places have systems of rent control, which isn’t allowed in Montana. Other places use inclusionary zoning, which was made illegal in Montana. Many have suggested we tax luxury homes at higher rates, but the Montana Legislature has struck those ideas down. Social Housing is the most exciting option right now, as it is a  legal, cost-effective program that builds local power.

No. Due to Social Housing’s ability to create a self-sustaining revenue stream, it does not incur any burden on public funding beyond the initial investment in the first development. Even then, as soon as residents move in, the recuperation of initial investment begins.

A Public Housing Authority can develop and maintain housing as a public good. Public Housing Authorities are also required by law that all finances, operations, actions, and commission meetings are public and open to public input and scrutiny. This increases transparency, accountability, and public control.

In Public-Private Partnerships (which typically means the public takes on the risk and the private reaps the profits) there is a much larger potential for corruption without transparency with public funds and control of conflicts of interest.

The Montana Code Annotated states that Public Housing Authorities are needed if there is a lack of safe and/or sanitary housing. This is without question the case in Bozeman, and is justification enough to establish a Housing Authority.

No, it’s not restricted. The mixed-income model is designed around people in multiple income brackets living in the same building or neighborhood. This model serves to strengthen community ties and bridge social gaps.

The Davis-Bacon Act requires private contractors to pay “prevailing wages” to employees on all federally funded construction projects over $2000. Montana has its own prevailing wage law, referred to as Little Davis-Bacon Law. Little Davis-Bacon applies to Public Works contracts for construction services (heavy, highway and building) or non construction services by the state, county, municipality, school district, or political subdivision in which the total cost of the contract is $25,000 or more. It requires that bidders on contracts pay a set rate of compensation, including employee benefits, and that at least 50% of the employees of each contractor working on the jobs be bona fide Montana residents. [5]

Social Housing is a Public Works program and, therefore, Little Davis-Bacon Law would apply. This means that contractors would have to pay workers based on Montana Department of Labor defined wages (prevailing wage), pay workers fringe benefits, and have the majority of workers be Montana residents. This gives a unique opportunity for building trade union membership as they already meet all of these State requirements, while many other contractors do not. Local union contracts could be prioritized which would mean more, better paying jobs as well as high quality housing.

In Public-Private Partnerships, developers are able to circumvent Little Davis-Bacon and use cheap and/or out of state labor that could undermine organized labor.

No, Social Housing is resistant to spikes because it operates outside of the market. Due to the funding structure, and because it is not a profit-driven model, the cost for a social housing unit will remain aligned to the residents income, regardless of changes to the housing market. The private model is built on a shortage, but public agencies can resist boom-and-bust patterns by continuing to build when the private sector stops.

1. Sign onto our letter of support.
2. Join DSA!
3. Come to our housing working group meetings on Sundays at 3pm. 
4. Give public comment at the County Commission (public hearing Tues, Nov. 28 at 9am) and the City Commission (public hearing Tues. Dec 12 at 6pm) in support of establishing a public housing authority.