C
OUR DES
C
OMPTES
Brick and mortar subsidies:
the experience of State
delegations to intermunicipal
structures and departments
May 2011
T
his summary is designed to aid the understanding and
use
of
the
Cour
des
Comptes
report.
Only the report is legally binding on the Cour des Comptes.
The responses of government departments, councils and
other organisations concerned are appended to the report.
Disclaimer
Summary
of
the Public Thematic Report
Contents
3
Summary
of the Public Thematic Report by the
Cour des Comptes
Introduction
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
1
An original regime based on volunteerism
. . . . . .7
2
The construction of new social housing:
a success resting on fragile foundations . . . . . . .11
3
Renovation of private stock:
a more complex delegation to
implement
. . . . . . . . . . . . . . . . . . . . . . . . . . .15
Conclusion
. . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Recommendations
. . . . . . . . . . . . . . . . . . . . . .18
Introduction
5
Summary
of the Public Thematic Report by the
Cour des Comptes
For a long while, construction of social housing has been one of the key elements
of State policy to promote housing. Special efforts have gone into renovating older
housing with the participation of the National Agency for Improvement of Habitation
(French initials, ANAH).
As a responsibility of the State, these two aspects of housing policy, particularly
the first one, were implemented by offices of the central administration. These
distributed resources among the local agency levels (decentralized services within the
prefects) under their control.
In 2004, in application of the law on local freedoms and responsibilities, the
State proposed that the intermunicipal authorities and departments exercise these
functions. This mechanism is known as the brick and mortar subsidies delegation. Its
methods are quite original because it is not the result of decentralization or devolution.
It has been largely successful for local authorities.
Today, half of the metropolitan population is affected by these delegation
agreements. Seven years after the project began, the Cour des Comptes and regional
auditors’ offices wanted to assess what has been achieved so far. To do so, the Cour
conducted its research at the ministry of housing, including the Directorate General for
Development, Housing and Nature (French initials, DGALN) and eight regional
directorates. Ten regional auditors’ offices also examined the management accounts of
15 delegates and the accounts of the associated municipalities and of the public offices
for housing, semi-public companies or other stakeholders associated with them.
This delegation apparently managed to mobilise energy in the field and raise
larger amounts of funds. The results are encouraging for construction of social housing
but more disappointing for renovation of private stock.
7
The delegation
for “brick and
mortar subsidies”:
an innovative
regime
This very special delegation project
came about at a time when government
authorities were looking to reorient
housing policy by breathing new life
into brick and mortar subsidies. The
Social Cohesion Plan law of January
2005 and then the law instituting the
enforceable right to housing (French
initials,
DALO)
of
March
2007
effectively promoted ambitious goals to
build new social housing and renovate
old stock.
In 2004, the State enabled interested
intermunicipal
authorities
and
departments to implement a subsidy
system for constructing, acquiring,
rehabilitating and demolishing social
rented housing as well as subsidies for
renovating private dwellings, via a
delegation mechanism. Together, these
initiatives are known more commonly as
“brick and mortar subsidies”.
Although these subsidies are not
very large budget appropriations, they
also include very long-term subsidized
loans and tax exemptions. Therefore,
building
social
housing
commits
government funding over several years.
When the delegate is a public
authority for cooperation between
municipalities (French initials, EPCI), it
must have already approved a local
housing programme (French initials
PLH), the goal of which is to set
numerical housing targets and indicate
the means required for achieving them.
When an EPCI is not a candidate, or for
a situation that excludes the field of
EPCIs that have signed an agreement,
the department can also volunteer.
A six-year contract is then signed
with the State. It defines the goals and
determines the evaluation procedure, in
particular a mid-project execution
assessment. The contract determines
the amount of commitment monies
allocated to the delegate and the amount
of
funds
that
the
delegate
will
contribute to project completion out of
its own budget. In agreement with the
Caisse des dépôts et consignations, the
contract also specifies the loan budget
that the Caisse can allocate to the
chosen projects.
Obtaining loans from the Caisse des
dépôts is dependant on the granting of
State subsidies and the related final
exemptions. The delegate can use its
Summary
of the Public Thematic Report by the
Cour des Comptes
Cour des Comptes
An original regime based
on volunteerism
1
An original regime based
on volunteerism
8
Summary
of the Public Thematic Report by the Cour des Comptes
own funds to increase subsidies set by
the State’s measurements up to a limit of
5%, increased to 25% as an exception
for a land tax surcharge.
Regarding management procedures,
the State proposes to make available the
departmental directorates of territories
(French initials DDT, formerly DDE)
and the ANAH network, currently part
of the State’s devolved services, but
with the option of allowing delegates to
provide instruction themselves.
In 2011, 108 delegates opted for this
path, including 27 departments, nearly
all urban communities and a third of the
township committees.
A regime within an
evolving framework
The brick and mortar subsidies
delegation is part of a host of legislative
provisions
that
have
evolved
tremendously. The governance of both
social housing leaseholders and the
ANAH have been greatly changed.
Territorial management by the State
has also evolved over this period.
Regional
Directorates
for
the
Environment,
Town
and
Country
Planning and Housing (French initials,
DREAL) were organized at the regional
level. In the departments, the issues of
town planning, social housing supply
and urban renewal are the responsibility
of
departmental
directorates
of
territories
(French
initials,
DDT).
Housing demand and relations with
housing
seekers
fall
under
the
departmental directorates of social
cohesion (French initials, DDCS), or the
departmental directorates of population
protection and social cohesion (French
initials, DDPPCS).
With this new framework, it is not
certain that State actions can continue to
function as needed, since the State no
longer has the means for applying its
skills on all fronts.
The delicate balance of
delegate/municipality
interaction
Delegates have only limited powers.
In order to launch their delegation’s
operations, they must establish an
agreement
with
local
government
authorities charged with town planning
or
housing.
Territorial
proximity
generally
facilitates
pragmatic
negotiations
capable
of
avoiding
harmful road blocks, but at times it risks
making the delegates’ positioning more
fragile.
However, implementation of the
delegation regime has not resolved the
dichotomy between the town planning
jurisdiction of the municipality (land use
plans, right of first refusal, mixed
An original regime based
on volunteerism
9
Summary
of the Public Thematic Report by the
Cour des Comptes
development zones and their land
reserves)
and
the
intermunicipal
authorities’ jurisdiction in the area of
housing.
An indispensable
clarification
This is why it is essential to clarify in
due course the guidelines which public
authorities intend to adopt for the
future after a joint assessment. In fact,
nothing would be more harmful to the
continuation and necessary broadening
of efforts than a prolonged waiting
game. In any case, continuing with the
current delegation mechanism should
be considered only as a very temporary
measure and its ultimate end should be
accurately determined.
Several options are possible. One
solution
would
be
to
make
the
delegation system widespread, another
would be to decentralize the system
overall. Regardless of which solution is
adopted, government authorities should
not skimp on weighing all aspects of the
situation. Indeed, they must consider
not only what a management method
will be in future or whether to include it
in a vision of good administration.
Much more profoundly, the issue
concerns both determining a new
interaction between the responsibilities
of
State
authorities
and
local
communities and the equally delicate
issue of the respective jurisdictions of
the
various
levels
of
territorial
administration in the areas of housing
and town planning.
11
Summary
of the Public Thematic Report by the
Cour des Comptes
Cour des Comptes
An increase in the
amount of financed
social housing and
very social housing
Implementation of the delegation
also contained ambitious construction
targets
(over
100,000
dwellings
annually). Housing was adapted by
region.
The
prefect
handled
its
distribution among delegated and non-
delegated zones, occasionally at the risk
of overestimating local needs and
creating
unequal
cooperation.
Nevertheless, delegates largely did their
share overall of the required effort. If
we compare goals with the population
concerned, delegate commitment was
stronger than in areas without a
delegation, particularly for social and
very social housing (social rental
housing loan [PLUS] and rental loan
with integration [PLA-I]).
In the face of huge tensions on the
housing market, the State has assembled
all possible financing. Results have
matched expectations. Overall, the
number of annually financed social
housing units went from 76,992 to
117,368. The increase in the number of
agreements signed has caused delegates
to play a growing role, to the point of
becoming the majority: in 2009, the
number of financed housing units as
part of delegations reached 65,344, or
56% of the total for the year. The
increase of very social housing is also
greater within housing launched by
delegates; this is an essential point to
meet the expectations of those seeking
housing.
But a lack of
information on
housing units
actually delivered
However, due to the information
system
adopted
by
the
central
government bodies, which the Cour has
already
criticized
several
times
(1)
,
monitoring of the Social Cohesion Plan
2
The construction of new
social housing: a success
resting on fragile
foundations
______________
(1)
In particular: Specific Public Report of June 1994:
Housing subsidies in the State budget
p.78 and
Public Report 2010 p. 55 (
Occupancy and Management of Social Rented Stock
)
The construction of
new social housing
12
Summary
of the Public Thematic Report by the Cour des Comptes
or of the objectives of the DALO law
involves only financed housing and not
delivered housing; in this regard it is
consistent with the indicators adopted
for
budgetary
programme
135,
“Development and Improvement of the
Housing
Supply”,
which
excludes
housing production and includes only
its financing. The State has not been
able, or has not wanted, to adapt its
information system, which is essentially
for budgets, to monitor launched
operations in a concrete and operational
manner.
The
delegates,
however,
have
gradually developed information tools
at the local level that allow them to
better monitor the use of credit and to
enhance their knowledge of markets
and construction costs. Whether at the
beginning or when the delegation was
renewed, a minority of delegates wanted
to
determine
subsidy
conditions
themselves, without resorting to State-
provided
services
(DDT,
or
departmental directorates of territories,
formerly DDE); of these, some are
considering
the
creation
of
an
independent information system. Thus
it is up to the State to be able to offer
modernized, customized monitoring
tools if it wants to preserve its power of
information and expertise.
Some initiatives to
settle the land
problem
The lack of land and its cost are the
first barrier to new construction. But
the
brick
and
mortar
subsidies
delegation became accustomed to the
basis of established law, in other words,
they took into account the prior transfer
to the municipalities of town planning
competences. Thus the intermunicipal
delegates and the departments were in
the worst position to have land reserves
available or to create them. And the
State contribution in terms of making
available its land assets and those of its
operators remained limited.
Delegation successes are therefore
related to the launch of a process that
allowed them to evolve towards a shared
system. On a case by case basis, the
municipalities transferred a portion of
their powers to the EPCIs, signed
territorialisation contracts with the
delegate departements or took part in
common goals themselves, on occasion
through the semi-public companies they
hold shares in or through local public
land agencies.
National public land agencies had
been intervening for some of them for
a long time, in Nord-Pas-de-Calais, for
example. Their activities are now
The construction of
new social housing
13
Summary
of the Public Thematic Report by the
Cour des Comptes
complemented by those of recently
created local establishments. Land
reserves are being created.
Lastly, in conjunction with the
creation
of
land
reserves,
some
intermunicipal
authorities
have
developed specific subsidy types called
compensation for additional land costs.
They have also made use of new
methods of involvement, by acquiring
units available in the existing stock or
future
stock
(sale
of
future
construction, French initials VEFA).
Elsewhere,
the
mechanism
described in Article 55 of the Solidarity
and Urban Renewal Law to encourage
better distribution of social housing has
not yet proven effective.
A goal of 20%
social housing
The text states that as of 2002,
municipalities that have not met the 20%
social housing objective will be subject to a
tax
levy.
However,
within
an
intermunicipal
organization,
the
mechanism is largely ineffective, due to
application of Article 1609 h (C) of the
general tax code. The article defines
methods for allocating the compensation
amount
that
public
intermunicipa
cooperation establishments levying their
own taxes pay to member municipalities.
Any tax owed by a municipality becomes
part of the calculation basis. This means
that, for a fraction calculated as a
percentage of the tax potential, payments
made by a municipality are returned to it.
Mobilizing donors
Organizations that build social
housing
have
been
included
in
leadership of the social housing policy
by means of national contracts to be
adapted locally, via the regional network.
Strategic land asset plans, replaced by
complete land asset agreements, should
also have provided HLM (affordable
housing) agencies with clear priorities, in
keeping with the existing local housing
programmes.
However, due to the inefficiency of
these tools, it is the volunteer initiatives
of local community delegates and
leaseholders that have responded to the
goal
of
resuming
social
housing
construction.
Delegates have signed agreements
with the public leaseholders for whom
they are the reference local authority but
also with private leaseholders. In fact,
the law of 1 August 2003 on guidelines
The construction of
new social housing
14
Summary
of the Public Thematic Report by the Cour des Comptes
and programming for cities and urban
renewal had provided for the EPCIs
who
were
not
already
dominant
stockholders to become second-rank
stockholders of affordable housing
limited companies for a token price.
Then some delegates took on their
full
role,
and
memoranda
of
understanding with all social housing
operators involved in an area were able
to be signed. Their aim is to develop a
social housing supply consistent with
the
provisions
of
the
delegation
contract and to offer social housing
leaseholders a clear basis for enabling
inclusion of future aid in financing
plans.
Delegates also entered into a
partnership with the Caisse des dépôts
et consignations to offer leaseholders a
full multi-annual line of financing valid
as a multi-product loan contract with
the Caisse de dépôts et garantie
d’emprunts (deposit and loan bank) of
the
local
authority.
Tripartite
agreements, related to the objectives
agreements with the same leaseholders,
made it easier to mobilize resources and
shorten administrative and financial
engineering times.
15
Summary
of the Public Thematic Report by the
Cour des Comptes
Cour des Comptes
3
Renovation of private
stock: a delegation
with a more complicated
implementation
Faltering at the top
Initially, the delegation subsidizing
private older stock renovation suffered
from a lack of leadership. On the
national level, the Social Cohesion Plan
and the DALO law adopted goals that
were innovative, specific and socially
targeted, but their scope covered only
one part of the delegated policy. So
depending
on
the
local
context,
delegation agreements included other
goals resulting from local housing
programmes or departmental plans to
subsidize housing for the disadvantaged,
at the risk of spreading delegates’
efforts too thin.
The risk proved to be even more
daunting because the delegates had few
regulatory tools at their disposal. The
system actually operates “on demand”,
within the limits of the budgets defined.
Under these conditions, a policy can
lead to an explosion in demand.
Managing the waiting list in order to
focus on priorities has been a delicate
process to implement.
Because nearly all delegates opted
for a management agreement that gives
the ANAH responsibility for reviewing
files and paying the subsidies, a
delegate’s effectiveness depended on his
ability to make the agency comply with
the directives adopted. The situation
was even more difficult because, until
2010, when the agency obtained a more
powerful central system, it monitored
results with little transparency.
Mixed results and
poorly defined
social priorities
The housing numbers, except for
the effects of contracts signed with
institutional
leaseholders,
are
proportionally weaker than those in
areas without delegations. From 2006 to
2009, these areas were responsible for
49% of results produced. Delegates
accounted for nearly 41%, which is four
points
lower
than
the
average
population concerned (45%).
These
modest
results
were
accompanied by a lack of clear social
priorities. Although the proportion of
subsidies granted to leaseholder-owners
Renovation of private stock
16
Summary
of the Public Thematic Report by the Cour des Comptes
in delegation areas and non-delegation
areas is roughly the same, the share of
rehabilitated housing that was then
rented without regulated rents is
considerably higher, by about 10 points,
among delegates.
Unlike
social
rented
housing,
renovation of private stock cannot
always rely on a network of players and
participants capable of communicating
needs and taking on housing starts for
the accepted operations.
Conclusion
17
Summary
of the Public Thematic Report by the
Cour des Comptes
Implementation of the brick and mortar subsidies delegation has made real the hopes that were
placed in it.
Despite the originality and complexity of this legal regime, the brick and mortar subsidies
delegation was able to draw the participation of volunteer intermunicipal authorities and
departments who became heavily involved to achieve the ambitious goals of producing social rented
housing and, to a lesser extent, renovating old private stock.
Volunteerism has been a key element of success and it has been accompanied by delegates’
efforts to enlist large amounts of financial support and their own support as well. This dynamic
has even more to do with the pragmatic way in which new cooperation arrangements among local
players were developed; the delegation regime acts as a preventive against the risk of barriers
triggered by the criss-crossing of competences and the occasionally complex relations with housing
operators.
Seven years after it was created, the regime has produced encouraging results but at the same
time, it appears to be weakened by a rapidly changing environment. Delegates no longer have the
long-term visibility of planning acts that were present at their creation. Territorial reform makes
the authority of brick and mortar subsidy delegate departments uncertain. If the delegations are
not renewed, the State would not be able to resume direct management of them. So the delegation
appears to be irreversible.
Continuation of the scheme therefore requires some clarification. In particular and in the area
of housing, responsibilities of the State and local communities and the respective competences of
municipalities, intermunicipal authorities, departments and regions require coordination. In the area
of town planning, the experience delegates have earned should lead to a new sharing of housing
policy among the various players.
Recommendations
18
Summary
of the Public Thematic Report by the Cour des Comptes
The
Cour
des
Comptes
recommends:
including State delegations in
long-term plans that establish overall
goals and financial means for future
needs;
reviewing ministerial information
systems to find out accurately and in real
time the results in areas with delegations
and those without in terms of housing
units actually built and delegates’ own
financing efforts;
setting up the single tracking
system for local town planning and
local housing programmes described in
the Molle Law and the law on national
commitment to the environment;
favouring the transfer of town
planning
competences
to
inter-
municipal authorities;
considering data from local
housing
programmes
and
intermunicipal town planning ideas in
agreements signed by the State and
social housing leaseholders, in National
Urban Renewal Agency (French initials,
ANRU) operations and during zoning
changes;
eliminating from the calculation
basis for compensation amounts the
levy on tax revenues for municipalities
that do not meet the objective of 20%
of social housing;
studying the possibility, in the
case of a delegation, of opening a fund
in the account books of an EPCI
devoted
to
acquisitions
in
the
municipality liable for the levy and
asking about transferring the right of
first refusal to the EPCI until the social
housing rate set by the law is obtained,
while planning a similar regime for
delegation departments;
setting ANAH goals covering
the entire field of delegated subsidies
so that these may be able to serve as a
foundation for the delegations;
continuing to adapt ANAH’s
information
system
for
effective
monitoring of delegations;
maintaining the contribution of
leaseholder-owners in goals adopted,
on condition of offering rent control,
in order to diversify the supply of
social housing.