Summary of the Debt-Free Housing for Public Benefit Workers Idea, and Responses to Critiques


(for full idea and footnotes, please see )

With a long-term mindset, we can cost-effectively and permanently decrease the rent on apartments 75% for the people that work in public-benefit non-profit organizations.   This can improve social services by attracting more people to this important sector.    This can be done today by recasting endowment dollars, currently going into investment accounts in big banks, into permanently debt-free apartment buildings for the employees that are the core of our organizations.   Houses can also be converted one at a time to permanently debt-free structures yielding benefits for decades or centuries.

  • Most people in US spend 30-60% of their income on housing (the poor pay the higher %).  Internet Archive employees are the same.
  • 75% of the cost of housing, for either renters or mortgaged homeowners, is for debt payments.
  • Debt resets on sale, and sales happen on avg ever 7 years.   70% of homeowners have a mortgage, and rising.
  • Therefore if we had debt free housing, then many would pay 75% less for housing, or save 22-45% of our income.
  • We can transition housing from market-based to debt-free by owning for the long term.   Since individuals and investors generally do not do this, we need a different entity that thinks long-term.
  • New and special non-profits that buy housing can pay down the mortgage with market rate renters– then it becomes debt-free forever.   The non-profit has to be structured to not allow new debt or selling-out.
  • Buying an apartment building, and keeping it full of market-based renters will pay for the mortgage.   Wait a while and it becomes debt free.    This is a long term strategy.    Certainly by 30 years, but usually much before that, there is surplus income from market rents above the mortgage plus other expenses.
  • The benefit of these future debt-free, therefore subsidized, rental units can be any set of people that the non-profit is designed to serve.
  • I am interested in those that work in public-benefit (non-profit) organizations, but it could be union members, or teachers, or government workers or anything.
  • This form of endowment for organizations makes financial sense compared to invested-money endowments.   Also, it can build community and reduce commuting.
  • Donors that would endow organizations might be shown that this is a good way to create a lasting positive legacy.
  • Government can help, but is not necessary.   Ways it can help:  Fannie and Freddie mortgage support, which is available to all, is a huge help since it takes the risk of a 30 year mortgage at a fixed interest rate.    Could be reduced interest loans.    Could be source a preferred source of housing units, maybe that are in financial distress.   Might not tax employees on the subsidy as income.    Might get the county/state to not charge real estate tax because it is owned by a non-profit and is to benefit non-profits.   But we do not want to give up too much freedom by getting government help.
  • If there were many debt-free apartment buildings, then an exchange system could be set up, so employees have many choices of where to live, and could even change employers, stay in their apartment, and not lose the subsidy.
  • Subsidized housing provides financial security both the the employee and the public benefit organization.
  • Ideally 5% of a city's apartment buildings would be public benefit housing.

Critiques and responses:

Tying housing to employment can lead to abuse like company towns a hundred years ago.
Answer:   We can reduce this issue by detaching the apartments from the employers with separate ownership.    Another diminishing of this issue might stem from having subsidize employees from several non-profits live in the same apartment building (this can be done by having the donor select a set of public benefit organizations to support).   Also, company towns were mostly remote mining towns where there was little choice in employment or housing.

A public benefit organization might later want to sell the apartment buildings to raise cash or focus on their mission.    Answer: since the building would be owned by a separate non-profit from the ones that it is benefiting, there is no line of control to induce a sale.   Since some of the non-profits goes away, we need a way to expand the set of organizations that get a subsidy while staying within the interest of the original donors.

Someone that is getting a subsidy will have a difficult adjustment if they move into market-based housing.   Answer: true.   Not sure how to avoid this other than to allow someone to stay in their unit for a period after their employment stops.    This is particularly an issue for retirees– is there some point that someone gets to continue their subsidy as a retirement benefit?

People want home ownership not to live in rentals.    Answer:  true, this first approach is a rental-like system.    Maybe there can be some experiments in debt-free housing that is owned (but still transfers to new owners without debt).     The rental approach seems easier to start with.

Will this subsidy just look like lower rent from a rent-control point of view making it difficult to have ex-employees stop receiving the subsidy?    Answer: Since the subsidy is given monthly by the non-profit, and it is taxed as income, I think it can be distinguished from simply a low rent.

This is nothing new: it is happening already at Universities and Churches for their communities.  Answer: True, but it is not available to smaller non-profits– this is a way to spread a good idea.

This is complicated, so it will not scale.    Answer: At first it is complicated, but if it is successful, then model legal agreements and donor pitches can be refined and replicated.

Who would possibly finance such a project?   Answer: We hope this will fit fairly normally into the banking and Fannie and Freddie mortgage system, but we are also building a Credit Union that might help:

Are you going to try it?    Answer: I would like to try it in the San Francisco or Richmond California area, where the Internet Archive owns buildings.   The next step is to find people that know more about this.

You are a newbie at housing, who are you talking to?    Answer: I have been fortunate to talk with some great SF based people who have worked on affordable housing, and I have been introduced to some fascinating people through the MacArthur Foundation.    At this point it is still just talk, but the first reactions is that this is somewhat novel and refreshing.   It is novel because it is not as wrapped around government subsidies, and it requires long term thinking (delayed gratification).

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