housing policy and urban development processes. Socialist ... down in the cities themselves, as real estate was here more expensive and also a permission was ...
NATIONAL AND CITY CONTEXTS, URBAN DEVELOPMENT PROGRAMMES AND NEIGHBOURHOOD SELECTION
THE HUNGARIAN BACKGROUND REPORT
BY
IVÁN TOSICS HANNA SZEMZŐ LEA KŐSZEGHY SÁNDOR ERDŐSI, JR.
A WORKING PAPER FOR
UGIS URBAN DEVELOPMENT PROGRAMMES, URBAN GOVERNANCE, SOCIAL INCLUSION & SUSTAINABILITY (EVK4-CT-1999-00012 UGIS)
2001 Metropolitan Research Institute, Budapest
TABLE OF CONTENTS INTRODUCTION ................................................................................................................................ 3 PART 1: THE HERITAGE: THE SOCIALIST MODEL................................................................ 4 PART 2: TRENDS IN THE TRANSITION PERIOD ...................................................................... 7 CHAPTER 1: ECONOMIC TRENDS ......................................................................................................... 7 CHAPTER 2: SOCIO-CULTURAL TRENDS .............................................................................................. 8 CHAPTER 3: DEMOGRAPHIC TRENDS ................................................................................................ 10 1. National level .................................................................................................................... 10 2. Urban Population.............................................................................................................. 11 PART 3: NEW HOUSING AND URBAN POLICIES.................................................................... 13 CHAPTER 1: THE NEW POLITICAL AND ECONOMIC FRAMEWORK....................................................... 13 CHAPTER 2: URBAN POLICIES ........................................................................................................... 14 1. Development policy for smaller settlements (1990-94) ..................................................... 15 2. Starting re-centralization (1994-98).................................................................................. 15 3. Continuing re-centralization, strong anti-Budapest policy (1998-) .................................. 15 CHAPTER 3: HOUSING POLICIES ........................................................................................................ 16 CHAPTER 4: SOCIAL POLICIES........................................................................................................... 17 PART 4: BUDAPEST......................................................................................................................... 20 CHAPTER 1: THE MUNICIPAL LEVEL ................................................................................................. 20 CHAPTER 2: THE DISTRICT LEVEL ..................................................................................................... 22 1. The rehabilitation area...................................................................................................... 22 2. The rehabilitation .............................................................................................................. 22 PART 5: SZEGED.............................................................................................................................. 24 CHAPTER 1: THE CITY ...................................................................................................................... 24 CHAPTER 2: THE HOUSING ESTATES OF SZEGED ............................................................................... 25 CHAPTER 3: THE PROGRAM .............................................................................................................. 26 APPENDIX…………………………………………………………………………………………..29 REFERENCES………………………………………………………………………………………..32
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INTRODUCTION Hungary is the only non-western European country in the UGIS project, a fact that puts it into a unique position. Although it has always been part of Europe, and in some periods of history it even belonged to the leading groups of countries, it is without doubt that the forty years of different political and economic system introduced significantly different institutions and mechanisms. Obviously, urban development in Hungary between 1948 and 1990 displays numerous signs, peculiar to the Socialist system. Therefore we think it is important to summarize the specialties of the socialist development model. Without such an overview it would be more difficult to understand the changes of the 1990s, i.e. the transition period from the socialist/centrally planned model into the capitalist/free market model. Of course, the two case studies from Hungary can’t be regarded as typical for all exsocialist countries, since it would present a false picture, blurring the sharp contrasts in urban development among countries from the Eastern block. The term “happiest barrack” aptly depicts and reflects the exceptional situation in Hungary after 1956: socialism with a touch of capitalism. The economic reforms of the late ‘60s together with the municipal reforms of 1985/86 have softened the central power of the state, thus creating an ever strengthening local level. No wonder that the changes at the early 1990s were running the smoothest in Hungary. So the question arises naturally: What should be the lesson learned from the Hungarian experience? In what ways can the thorough examination of two uniquely Hungarian case studies bring us closer to the better understanding of Eastern European housing/urban development? We think that the answer to these questions lies in the very nature of the “Hungarian experience”: the prolonged transitory situation can be used as a perfect analytical vehicle in determining which part of the socialist inheritance is worth to be kept, and which should be forgotten forever.
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PART 1: THE HERITAGE: THE SOCIALIST MODEL Derived from the socialist political model and the system of planned economy, the following political-institutional factors are considered as important specific determinants of the urban and housing policies of the Eastern European countries (for more details see Hegedüs-Tosics, 1992): • • • • • • • •
significant state ownership of the land and the housing stock in cities (as a consequence of confiscation at the beginning of the 1950s) residential incomes under - in the beginning very strong - state control strong and direct state control over land use, leading to very specific landuse patterns expressing the preferences of the socialist state (BertaudBuckley, 1997:3) administrative limitation of housing consumption (one housing unit per family, and one weekend house or plot) state control over certain housing policy factors (state financed housing constructions, social housing policy, subsidised private housing constructions, loan origination, construction industry and materials, etc.) control over the private housing market (private rents, etc.) and indirect regulation of the self-financed form of housing construction administrative limitation of the size and development of major cities (control over the inflow of population, over industrial growth) direct control over the financial resources of the cities, and over the political decision-making process (Weclawowicz, forthcoming).
There were significant differences between the socialist countries in the timing and extent of given measures (e.g. the control over urban land was in Moscow total from the 1920s on, while in most of the CEE cities it was only partial - concentrating on the most dense core of the city - and in some cases introduced only at the end of the 1950s), however, the logic of the state control was the same, leading to very similar consequences. The institutions and households involved in urban development developed their specialised reactions, strategies to the listed regulatory elements. For example, the most important state institutions involved in residential construction formed an interest group, which could be called “housing construction chain” (an institutional trust, power-group of state planners, investors, developers, constructors, financial institutions) to get hold of the direct state funds available on the supply side of the construction of new units (Hegedüs-Pártos-Tosics, 1988). Simultaneously, the behaviour of households was dominated by their efforts to obtain the deep subsidies on the demand side. A clear evidence for this was the “double mobility way” of the better-off households: first they obtained the state rental or cooperative flat from the state, mostly in not desired locations but containing huge state subsidies. Later they sold these units, cashing the subsidies and acquired on the market the units they preferred. The strong state control and the housing policy built on deep subsidies resulted in a distorted conduct of the housing system’s characters on both the supply and demand sides, aiming primarily at obtaining the state subsidies provided through the housing sector. 4
Iván Szelényi, in his study on urban development under state socialism, divided the pre-transition period of the Eastern European urban development into two phases. (Szelényi, 1996:304). In his evaluation the first two and a half decades of the socialist system, namely the period between the late 40’s and the mid 70’s was dominated by the state, having had decisive role in financing, constructing and allocating new housing units, and total control over the land market. The second phase, the period between the mid seventies and the transition is evaluated by him as a period of market factors gaining ground. Hegedűs and Tosics (1996) analyse in their study the peculiarities of Hungary over the general marks of the Eastern European model. In Hungary the private sector of economy has always had a role, and the confiscated (nationalised) stock of units hardly exceeded half of the entire stock even in major cities. A part of the land market was always in private hands, amid quasi-market conditions. The political control was, of course, still the core of the system, within which even in the relatively liberal periods no “real” market sphere could get formed, where economic feedback and the rules of demand and supply would have freely operated (instead, it was only dominated by a kind of political feedback, which is an essential element of planning based on politics). Even so, the distinguishing feature of the case of Hungary was that a limited market was in operation in all periods of the socialist housing policy and urban development processes. Socialist urban development was of course influenced, besides housing policy, by other sectorial development policies. In the 1960s and 1970s - when suburbanisation had started already in some Western countries - in Central-Eastern Europe the centrally planned and spatially concentrated industrial development brought about a rapid increase of the urban agglomerations. The “under-urbanisation” theory (Szelényi, 1996:287), based on the different patterns of locating economic and infrastructure investments shows, however, how different this development was from western suburbanisation. The starting point was the concentrated industrial development in urban centres, which was accompanied by relatively slow infrastructure development of these cities. The new industrial workers of the new urban enterprises could hardly settle down in the cities themselves, as real estate was here more expensive and also a permission was needed for purchase. At the same time workers could commute between their rural residency and the industrial cities by the well developed and cheap public transport, or might have settled in the agglomeration (where real estate was cheaper and no permission was needed for purchase). As a consequence, the increase of the population was most significant in the surrounding agglomeration areas of the urban centres. This is a unique development model of the agglomeration, where the source of rapid increase in population was not the residents moving out from the city but those coming from outside rural areas, willing but not allowed to move into the city. This model may be considered as the “Eastern-European type of urbanisation” (Ekler-Hegedűs-Tosics, 1980:111). This notion of “under-urbanisation” did not mean that cities were not increasing at all. From the 1970’s on, the development of urban infrastructure was accelerated in the socialist cities, mainly in the form of prefabricated large housing estates (with high density of population), becoming an important feature of the socialist urban 5
model. The emphasis on new housing of course had as a consequence the slow, but persistent deterioration of the inner city housing stock. Which in cases was more than a hundred years old and in desperate need of renovation and modernization. As a reaction to this the end of 1970s and the early 1980s witnessed a sharp change in the concept of inner city urban development, especially in Budapest. The drastic decline of both the social and the physical status of inner city areas was slowly becoming the concern of many architects and urban planners. In Budapest the instant, but luckily short-lived solution to the ever growing problem was the demolition of the old buildings. With the space gained in the middle of the city (8th district), a new prefabricated housing development was erected, but with little success. Instead it was met by the unfavorably reaction of both the public and the planners, who did not like the concept of erasing the predominantly 19th century landscape of the capital. By the early 1980s a serious, but nevertheless theoretical urban renewal program started. Plans were made for all run down, inner city neighborhoods on the Pest side to revitalize and rehabilitate. But as a crude joke to the magnitude of the plans only a single block – the famous 15th block in the 7th district – was rehabilitated. For the economic recession was taking its toll there was no money left in the budget of the Budapest City Council to carry on its envisaged grand projects. Still, it was precisely this theoretical preparation, seemingly unnecessary, that helped the 9th district to start its own inner city rehabilitation. Despite the fact that the Budapest City Council ran out of funding by 1985, when the program was supposed to start, it could begin, for the District Council took on the task of financing the majority itself. As we will show later in this study, this rehabilitation remains up till this day one of the most serious ongoing urban rehabilitation projects in the country, and the only one that was originated during socialism. This later data shows how drastically the social and economic changes of the early 1990s halted the urban rehabilitation processes. The majority of the housing stock was privatized, relieving both the state and the municipalities from the responsibility of rehabilitating and renewing them. It’s been only in the last 3 or 4 years that the democratically elected municipalities realized how essential it was to revitalize the inner city areas.
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PART 2: TRENDS IN THE TRANSITION PERIOD CHAPTER 1: ECONOMIC TRENDS Democratization, decentralization and privatization are the main processes characterizing East-Central European societies and economies in transition from Socialism to Capitalism. In this section we are going to discuss privatization and decentralization, for both of them have direct impact on the economic development and the emergence of new economic trends. The privatization of the formerly state owned companies in Hungary started after the first free elections in 1990. Today this process is almost over, leaving mostly smallscale, second rate companies in the hands of the state. (The ratio of the private sector within the Hungarian economy is now over 70%.) This dynamic privatization led to the influx of foreign capital - by far the most in the East-Central European Region which became the driving force behind the rapid economic development. By October 1999 about 20,5 billion USD were invested into the country, and more than half of this sum went into Budapest (This ratio could be misleading though, for many trans-national companies who only have their head offices in Budapest and otherwise establish vast sites in the countryside, are still statistically recorded in the capital.) The majority of foreign investments went into the real-estate and financial sector. In the financial services for example the share of foreign capital exceeded 50% by 1997. The rapid modernization of this sector, together with a stable macro-economic environment, improving communication and transport infrastructure and the presence of multi- and transnational companies have prompted some politicians to think, that Budapest can become the financial center of this region. (This, however, taken the output of the Hungarian economy into account, seems very unlikely). In the real-estate sector the building of retail and office space brought with itself a dynamism badly needed for the economy. Within years, as a result of the concentrated activity of foreign investors, almost 500 thousand square meters of new retail space has been built in Budapest and its agglomeration belt. From 1997 on this concentration has been easing up, and foreign investors seem to target also the medium-sized towns of Hungary. It was the retail sector where, in the first few years, foreign investments were the quickest and the highest, and as a result Hungary, and especially the capital, was experiencing the "invasion" of retail chains. This development has been accompanied by a boom in the office building industry. As only in Budapest the annual construction of office space has been around 50-60 000 square meters this sector can definitely be described as vivid and prosperous. Unlike in financing and retail, there was fundamentally less investment in the industrial sector. Many mines and heavy-industry centers were closed down, leading to high unemployment and the depopulation of whole regions. In Budapest for example, where many of these vast industrial blocks lying 4-8 km from the Central Business District Area were shut down, there are huge premises that are left unused. (Many prospective investors shy off from the problems of the contaminated soil.) Neither has been much interest in investments into infrastructure -which were 7
essential - so these had to be carried out by the government - national or local - itself. (Help from the European Union through funds like Phare or ISPA is currently starting.) Infrastructure development became a high priority in the development policy of the government, especially in the case of basic infrastructure in smaller settlements. (Unlike during the four decades of Socialism when it had no special significance). The decentralization of the political and bureaucratic sphere, a crucial factor for the transition from central to market economy was also carried out from 1990 to 2000. In this decade the new political system of the independent local governments was introduced and developed - which is unquestionably a big success in itself - meaning that the direct involvement of the central government is not possible any more in the decision making processes on the local level. Still, we cannot talk about a total decentralization of power and absolutely independent political entities, for these local-governments have remained financially dependent on the national government. Although local taxes were introduced, their magnitude was constrained, and at the same time the central taxes were being kept high. These new democratic local governments, together with the counties -which represent a sub-national level in between the national government and the municipalities - have a central role in regional planning and development. Nevertheless, their financial independence being curtailed, local governments have difficulty executing their planning potentials on their own.
CHAPTER 2: SOCIO-CULTURAL TRENDS The political changes in the 1990s were followed by changes in the society. This decade witnessed how value standards were turned upside down, how some professions have risen out of the obscurity, while others vanished forever. Norms of behavior were modified, attitudes towards society, government and the media altered. And in the end, as the frameworks for the new society emerged from the ruins of the old one, Hungarians woke up in a fundamentally polarized world. Despite the euphoria over the political changes, the transition period is tasking the society’s capacity. While a thin layer of entrepreneurs, well-educated professionals, representatives of the entertainment industry and members of the former and the new political elite can enjoy all the fruits of the capitalism and free society, around one third of the population is getting more and more isolated, fighting for making ends meat every day. The Roma population of Hungary seems to be one of the biggest losers in this “game”, for their chances are not only worse compared to “Hungarians” because of their relatively lower level of education, but the prejudices against them lead to constant mistreatment from the authorities and the population itself. (The current migration of some families to Canada, France and the Netherlands show how desperate the situation is). Two new, to the Socialist societies unknown phenomena have appeared from 1990: unemployment and homelessness. The forty years of Socialism can be characterized with relative social stability, in which low paid jobs were practically available to everyone (unemployment was within the enterprises) and workers hostels and similar 8
solutions were open to those not having a flat. Unemployment and homelessness were not allowed, moreover punished in this period. Parallel to the political and economic changes the “genie was let out of the bottle”, the indirect protecting mechanisms were lifted. As a consequence: massive unemployment and homelessness appeared seemingly out of nowhere. The restructuring of the economy brought with itself the closing down of the “ailing” branches leading to solid unemployment. The closing of mines and heavy industry centers - Socialism aimed at transforming the predominantly agrarian Hungary into an industrial heaven - left whole cities unemployed. In 1995 the number of registered unemployed was close to half a million, which by 1999 decreased with roughly 20%. (See Table 1) Table 1: The change in unemployment and homelessness in Hungary, 1995-1999 1995 1996 1997 1998 1999 Number the of registered 496 000 477 000 464 000 404 000 405 000 unemployed Number of persons 199 000 139 000 137 000 141 000 150 000 receiving unemployment benefit Source: Hungarian Statistical Yearbook, 1999 (That the number of persons receiving unemployment benefit is always strikingly lower than the number of the unemployed is due to the fact that unemployment benefit can only be paid for a restricted time span.)
Whereas regarding the problem of unemployment there seems to be a small progress, the scope of homelessness has only worsened in the last couple of years. With surging real estate prices and almost no social housing, the homeless have absolutely no chance reentering the housing system. In the early nineties though - according to a study by the Metropolitan Research Institute carried out with Nils Herting from the University of Uppsala - Hungary, unlike many East European countries, reacted rather fast to the appearance of homelessness. It started to develop a national system of shelters, and in 1993, in the Law on Social Management and Social Security a legal definition of homelessness was created. How many people are effected by homelessness is not known. Only very rough estimates are available, which put their number between 25 000 and 50 000, with about half of them living in Budapest. Although the number of beds in the shelters is respectively very few, the low quality and the often occurring thefts make sure that, with the exception of very cold winter periods, these shelters are almost never full. Non-governmental NGOs and other organizations play a large role in providing for the homeless. In 1997 for example, 42% of all shelters were run by them. The economic and political changes have also brought with themselves a cultural diversity, that was missing for about half a century. One highly visible sign for this is the fact, that especially on the streets of Budapest one encounters all the time people from different nations, races and religions. The word “multicultural” has entered colloquial Hungarian, and refers to something positive, something worthy of attention. Today a wide variety of different activities have been made possible, that were much less present before. One striking phenomenon is the exploding number of different pubs and clubs, with growing diversity of music and culture.
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CHAPTER 3: DEMOGRAPHIC TRENDS 1. NATIONAL LEVEL Hungary, like many other developed countries in Europe has an aging population, and experiences a drastic decline in the number of birth per year. The population in 2000 is expected to reach 10.043 200, and with a relatively steady annual decrease of 0.3% it is predicted to go under the magical number of 10 million within two years. This worrying phenomena – which is of course not exceptional but still very unfavorable - is quite recent, for well until the 1980s the annual birthrate was always higher than the death-rate. In the early 50s at the height of the communist dictatorship, the so called Ratkó period - named after the “legendary” Minister of Health, Anna Ratkó - with the ban of abortion made sure that the population was steadily increasing. But even after the ban was lifted, the reproduction rate was positive for more than two decades. In 1960 for example 102 000 people died and 146 000 were born. The two numbers were almost even in 1980 - to 145 000 deaths fell 149 000 births. How drastically the trend has changed is shown by the data from 1999: here only 95 000 babies were born while 143 000 persons passed away. (See Table 2) Table 2: The number of births and deaths in Hungary, 1960-1999 Date Number of births Number of deaths 1960 146 000 102 000 1970 152 000 120 000 1980 149 000 145 000 1990 126 000 146 000 1999 95 000 143 000 Source: The Statistical Yearbook of Hungary, 1999
A positive balance could be achieved from migration into the country, but obtaining an asylum status or later the citizenship is very hard in Hungary. Until 1994 altogether 127 thousand people got the asylum status. 42% of them came from Rumania, while 55,5% was the share of the asylum seekers from ex-Yugoslavia. Between 1988 and 1990 migrants from Rumania dominated, whereas after the eruption of the war in the Balkans migrants from there were decisively more populous. In general 55,9% of all migrants had Hungarian origins. It can even be claimed that most people seeking permanent refugee status in Hungary came from the Hungarian minorities of the neighboring countries. The main reasons apart from the Balkan war were an aggressive assimilation policy in the home countries and the hope of the economic prosperity or at least a better economic stand in Hungary. According to the Statistical Yearbook of Hungary 153 thousand residence permits have been issued till 1999, including 126 thousand for citizens from different European countries. The formation of the Chinese colonies in the last ten years presents one of the most visible signs of the population becoming more multicultural. Although not very numerous, much attention centers on them. The first wave of Chinese migrants came right after the bloodshed on Tienanmen square in 1989. After that, in the early 10
nineties waves of small investors and retailers arrived, looking mainly for good investment opportunities, thus forming a Western like Diaspora. Officially 7 thousand Chinese migrants live in Hungary, but many experts estimate that 20-30% of them are staying here illegally, and put their numbers around 10 thousand. All attempts have failed to form “China Town” like neighborhoods like in the United States and Western Europe, but their presence is highly visible through their commercial activity and the exploding number of Chinese restaurants and above all buffets.
2. URBAN POPULATION Despite strong urbanization tendencies since WWII, at the end of the 1980s central and eastern European countries were still very much behind western Europe and northern America regarding the share of urban population (this share was around 63 % in central Europe, 55 % in south-eastern Europe, while almost 80 % in western Europe and 75 % in northern America, see ECE, 1997:11). As discussed earlier, an important part of the socialist city-development model was the attempt to limit city growth. After 1989 all the earlier political-administrative barriers of internal population flows have been eliminated. If all other aspects unchanged, this would have led to the increase of the migration towards the cities, i.e. to a late wave of urbanization. Data show opposite tendencies: all the big central European cities have lost population in the last years, not only as a result of demographic decline but also as a consequence of migration losses against their agglomeration. The available forecasts for the next decades indicate further losses for Budapest and Prague, coupled with a strong suburbanisation process. Thus, instead of the incentives to move into the city, the opposite tendency, to leave the city, became stronger. More detailed analysis (Tosics, forthcoming, a) can show important differences in the causes of suburbanisation in the German cities versus other central European metropoles, the most important of which is the level of state subsidy given and capital invested into suburban development. In Germany a specific factor, namely the special subsidy - tax-exemption - to housing and economic investments till the end of 1998, contributed largely to the speeding up of suburbanisation. In other central European countries no such government policy and incentives existed. Housing market analyses revealed the fact that the motives of suburbanisation in many cases are not the positive features of the suburb or the negative conditions of the inner city, rather certain expectations with regard to the new housing unit which might be satisfied in the suburbs only. In the case of Budapest this was the big size and the good environmental quality of the new unit, compared to its price (families looking for housing units with such attributes are not able to pay the within-Budapest price of these units - therefore they search for such units in the agglomeration belt on a much cheaper price). If the cities could change the mentioned imbalances, the speed of suburbanisation could be reduced substantially. Among the factors influencing the future changes in the number of population the most difficult to estimate is the balance of external (foreign) migration. This is the only factor which could offset losses in demographic development and due to 11
internal migration: the number of foreign citizens moving to these cities - as they become the new border cities of the European Union - is expected to grow. In the most positive future scenarios of population development of Budapest and Prague the variant of intensive foreign in-migration leads to the stagnation of the population of the city. The balance of external migration depends on a number of factors about which there are sharp debates going on. One of these questions is the number of citizens of the CEECs who will leave to other countries of the EU when free movement of labour will take effect (probably some years after accession). According to most analysts the fears of the present border countries, especially Austria, are exaggerated. Instead, the most likely outcome is that migration towards the metropoles of the CEECs from outside of the EU will be much higher than the number of citizens leaving these cities towards other EU countries. In fact, immigration might even become a serious problem: “... unwanted immigration flows from far afield is a challenge at least as great to the countries of eastern and central Europe as to the western European countries, with the former having less resources and experience to manage them. It pleads for a balanced view on migration within the enlarged Union and for a common European approach to border management...” (Michalski, 1999:8).
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PART 3: NEW HOUSING AND URBAN POLICIES CHAPTER 1: THE NEW POLITICAL AND ECONOMIC FRAMEWORK The basic political, economic and institutional conditions of the socialist urban and housing systems were abolished in 1989-90, when the regime changed. The overall state control was lifted and the long-term (politically motivated) planning was replaced by short-term, budget-oriented planning based on the direct conflict of short-term interests. Foreign investors and big multi-national companies became key players in the revitalisation of the economy, while “national capital” diminished both in size and importance. Recent economic developments in these countries were powered by foreign capital. Currently in Hungary multi-national companies account for approximately 60% of the economic production. Meaning that the change of the system gave way to a real capitalist development in the crudest sense of the word, with both dependency and scarce social security. Still, it is a price worth to pay, for in countries where privatization favored domestic investors without abundant resources, economic development still lags behind. Since the change of the regime fundamentally new factors determine the development of cities in Eastern and Central Europe: •
• • • • •
the complete transformation of metropolitan economy: the bankruptcy of socialist big industry and trade, the emergence of new employment structure and new groups of investors due to privatisation and foreign investment; fast transformation of office and industrial jobs and of commercial services; the relatively fast appearance of market mechanisms determining urban development: quick development of the land- and property market, rapid growth of public utility prices (but much slower rise of housing rents); reduction of government control over housing policy (responsibility delegated to the municipalities) and termination of government subsidy to housing construction and maintenance; the growing independence of settlements and districts (lower level of the two-tier Budapest administrative system) due to administrative decentralisation; the transformation of the majority of tenants into a new class of owners as a result of mass-scale “give-away” privatisation; growing polarisation: a part of the urban population (though smaller share than that of the country population) became unemployed and simultaneously a relatively small part of the population has become wealthy.
The key task for the political transition - parallel to the establishment of democratic multi-party political, parliamentary systems with free elections - was decentralisation. Very soon after the establishment of the new democratic government on the central level, totally new legislation has been adopted for the local self-governments. “Decentralisation is ... a key dimension of the national transition from a command to a market economy. ... The total level of public sector 13
activity must be dramatically reduced, but at the same time the new sub-national governments must be allowed to build staff and institutional capacities.” (Bird-EbelWallich, 1996:2) It is unquestionably big success that in the course of the first decade of the new political system independent local governments have been developed. “There is no direct involvement of any central government officers or politicians in local decision-making and central supervision is restricted to checking the legality of procedures.” (Bennett, 1998:38) Central governments, however, were not very keen to allow the local governments to develop into very powerful and financially totally independent political entities. Therefore the financial autonomy of the local governments was substantially constrained: for example local taxes have been established, but their magnitude was strongly limited (and central taxes were kept on a high level), thus settlements continued to depend mainly on central transfers. Furthermore, in many countries the intermediate level (e.g. counties) of sub-national government was terminated or made insignificant - as a reaction on the very big role these entities played in the socialist system in the allocation of political directives. All these facts prove that decentralisation of political power was limited in the postsocialist countries. Although power sharing between the national and local level changed substantially, compared to the socialist period, the central state managed to preserve strong power. The establishment of independent local governments “... has been accompanied by a higher degree of centralism than was first intended ... as a consequence of the fragmentation of the local level, the weakness (absence) of an intermediate level and as a result of the desire for efficiency and expedience in the context of economic transition.” (Michalski - Saraceno, 2000:19) In this situation the role of the large cities, especially the capitals increased, as the only potential alternative power-centres. The processes of democratisation, decentralisation and privatisation destroyed the main pillars of the previous, the socialist city-development model. With al the limitations mentioned above, the role of state control, of long-term planning decreased in all transition countries and totally new, more market related actors (landlords, land-owners, enterprises, financial institutions) emerged into important decision making positions. In the field of urban and housing policy the central state gave up a substantial part of its leading role, and overall policies were replaced by local government determined strategies.
CHAPTER 2: URBAN POLICIES In the course of the 1990s in Hungary no specific urban policy can be discovered. It is possible, however, to put together the government resolutions with effect on the urban areas and evaluate the “character” of given periods. In this way the analysis and evaluation of policies is a-posteriori and is based on government cycles. This is the best what can be done, in the lack of specific urban policies which could be identified.
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1. DEVELOPMENT POLICY FOR SMALLER SETTLEMENTS (1990-94) The first freely elected, right-wing government carried out a policy favoring the smaller settlements. In this period the number of local governments doubled, many of the small settlements which were forced to operate joint councils with other settlements became independent again and could establish their own local leadership. The main subsidy programs of the central government helped smaller settlements to build up their public buildings, schools, and to develop their infrastructure. All in all, the first government period was not favoring bigger settlements at all.
2. STARTING RE-CENTRALIZATION (1994-98) The second, left-wing government strengthened the middle level of governance, giving self-government status to the 19 county governments and introducing the direct election of their members (Temesi, 2000). The subsidization of the smallest settlements did not continue in the same way, the policy became more balanced. The tendency of re-centralization of financial means, started by the previous government, continued, as each year less proportion of the Personal Income Tax revenues have been left at its place of origination (this share has been decreased from 100 to 50, than to 35 percent), and the centralized part has been re-allocated by the government according to its own priorities. 3. CONTINUING RE-CENTRALIZATION, STRONG ANTI-BUDAPEST POLICY (1998-) The third, right-wing government has continued the policy of re-centralization, the share of PIT left with the local governments decreased to 15, than to as low level as 5 percent. With regard to the approaching EU membership 7 planning-statistical regions have been determined, without, however, making the level of the counties weaker. As a direct transfer of the political situation into policy-making, the government withdrew all special subsidies from the opposition-parties led Budapest – not even those environmental investments are supported by the central government which would be most important for the fulfillment of the EU environmental standards. The official slogan is “more balanced development”, with the forced development of the countryside, at the expense of the “overdeveloped” metropolis of Budapest. Although “over-development” is in itself a hardly tangible and definable term, one has to face the fact that the gap between the developed Budapest and the countryside has been widening. Still, behind these governmental slogans, instead of a well developed plan to foster the countryside’s development, it is only a selective policy that can be found, favoring those settlements which belong to the political camp of the current government. The only positive consequence of this period has been, that although based on a politically biased policy, it has allowed some middlesized towns to strengthen and to gain momentum both in administrative and economic sense. Among the plans for 2001 the government announced some programs which – though with insignificant amount of money yet – could be considered as the first 15
urban subsidy programs (support for block-rehabilitation, support for the renovation of large housing estates). From this overview the direct urban policies are missing, as the responsibility for such measures has been transferred to the local government level. Thus investment, migration etc processes are shaped more by local policies (tax levels, infrastructure supply) than central policy. Currently the strongest political will affecting urban areas is the concept to equalize between the richer urban and poorer rural areas of the country. This anti-metropolis policy prohibits all subsidies to the big cities, especially to Budapest.
CHAPTER 3: HOUSING POLICIES In the socialist housing model all the important decisions over the supply side and also the control over the demand side were kept on the central level, at the central state and party institutions. After the collapse of the socialist system housing could have become one of those sectors of the economy which changed quickly towards market principles. In Struyk’s words housing could have become the “agency of change” (Struyk, 1996). And indeed, the first years of transition brought about significant changes in the housing sector of most post-socialist countries: as a result of decentralisation, privatisation, and restitution the status of millions of the households changed: without a change in the physical circumstances of their dwellings public tenants became owners (privatisation to the sitting tenants) or private tenants (restitution). Besides the impressive figures about the magnitude of changes (see e.g. HegedüsTosics, 1998:151) it became soon clear, however, that in the post-socialist countries housing was rather “shock absorber” instead of the agency of change. In other words, the number of owners increased substantially (in Hungary from 70 to 95 percent of all families) but politicians were not very quick and keen to introduce real market regulations for the new owners. Similarly, it was also difficult in the remaining rental sector to move towards the market, and these difficulties increased parallel to the “secularisation” of the public rental sector (leading to the situation where only the worst part of the sector remains in public hand, occupied by the lowest income families). The most important change in the housing sector was privatisation. In Hungary the rules of privatisation were decided mainly on the central level (the introduction of the Right to Buy policy in 1994). The emergence of a large, market-type housing form with dominating role on the housing market was a gradual process. The direct public control over important price-elements has been lifted and step-by-step many aspects of housing as a commodity were fulfilled (proper registration, the possibility of taking a mortgage loan). In that way by the second half of the 1990s in Hungary the transition can be considered as to be finished in the housing sector, as the privatized stock has been developed into a market-oriented owner-occupied sector.
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Hungary was amongst the quickest of the post-socialist countries in privatization or in the lifting of rent control, and became by the end of the 1990s close to the situation having market housing policy. The biggest gap in this restructuring process is the missing unified social policy. The 1993 Act on Social Matters gave the definition and some basic rules for the housing allowance systems, but such systems were not introduced in each city and the existing systems differ very much from each other. Since 1998 the government has put the creation and increase of families as one of its first preferences. Accordingly, a “family-friendly” housing policy has been established, containing huge subsidies for buying or building flats for families with two or more children. This is rather a middle-class oriented policy, without any social targeting. In the year 2000 the first subsidy system has been introduced to increase the public rental sector. All in all privatization in Hungary, and especially in Budapest functioned as a double-edged sword: it created a situation where the rehabilitation of the more affluent neighborhoods was finally put on the right track – for it enabled the inhabitants to invest into their property - whereas it practically left the remaining housing stock to the state’s or the municipality’s mercy – assuming that they would not let any building virtually fall apart. (How big and urgent a task rehabilitation would be is shown by the fact that a large part of the housing stock in the capital has not been renovated for more than 100 years, meaning that these buildings cannot last without any major reconstruction for more than 10 to 20 years.) Of course becoming an owner from a tenant presented other difficulties apart from the above mentioned sudden financial responsibility. Most had to get acquainted to the feeling of having to care themselves for the “needs of their houses”: previously the state owned real estate company used to look after the houses and the apartments. When something broke down, sooner or later they came and fixed it free. And finally, along with the privatization came the necessity for cooperation. It became inevitable for the proper functioning of a house. But negotiating between owners, and “running” a house on a day to day basis proved to be immensely difficult in numerous cases, especially in run down neighborhoods. So adding to, and in connection with the relative financial deprivation of these poorer neighborhoods, their administrative capacity has often not been up to the task.
CHAPTER 4: SOCIAL POLICIES One of the most important conclusions of economic and social changes is that some significant social groups cannot adjust to the „early form” of the market economy in Hungary. Their age, education, profession, income and assets position do not allow their easy adjustment to the radically new and hardly calculable requirements of the mainly private labour market. The problems of those groups heavily increased the burdens of the national social services system. That cumulative pressure on social system did not relax in the last few years when economic prosperity was started, because, referring to a popular Hungarian phrase ’splitting of the society is being continued’. 17
The structure, legal regulation, competences and financing system of social services system were fundamentally changed in the last ten years. Even so, the general level of social services could reach only a very low standard. The higher income clients, however, who can afford to pay the market price of social services, are able to find high quality services in the private sector, e.g. elderly people’s home. The most important reason of low level functioning of public social services is the lack of operational and development sources. After 1990 the central government started to transfer to the local governments the responsibility of operating the social system. The decentralization process did not solve financing problems, because the central (normative) sources were not enough to fully cover the costs of the services and the normatives were not tied to the social sector. That is the reason why many local governments put additional money into the local social sector, while others spend less amount than the central normative subsidy. Due the shortage in financing many of the local governments cannot develop and run all the services prescribed by law. The 1993 Law on Social Management and Social Security re-regulated the rules of the social services which were defined earlier in different laws. Since then the related new laws on Child Care (1997) and Retarded People (1998) were passed. The Law on Social Security defined different types and frames of subsidies in cash or payment in kind (the criteria of eligibility and the amount of subsidies is bound to ’minimum level of old-age pension’ which is HUF 18 310, or 265 EUR per month, in 2001), the forms of personal provisions (basic personal provisions: social feeding, social assistance at home, family care service professional personal provisions: attendance institutions, rehabilitation institutions, day-care centers, temporary homes) and financing of them. The local governments (cities, villages) have to supply the different social services, but in the cases of professional personal provisions the liability of supply depends on the number of inhabitants on the settlements. The county and Budapest municipalities operate those ’intern institutes’ which can supply professional provision for different types of disabled people. The social security (health and pension) and employment systems are belonging to government competence. The central budget finances local social systems on a normative basis, calculated by different indicators of the settlements. The Law on Social Security and other regulations give broad margin to define eligibility criteria and amount of subsidies for local governments. That is the reason that local social regulations are significantly different and people have no equal chances to access services (for example there are about 20 different regulations of housing allowance systems among the 23 independent district governments in Budapest). The share of entrepreneurs and non profit organizations (civil organizations, churches) in supplying social services is increasing but their professional knowledge and institutional background limits their role in social sector. As a new phenomena in last few years, the new central and local social programs (except for the local normative services) are more and more selective in choosing their clients. Those who satisfy special conditions can participate in programs but others not. We can suppose three main reasons for that: (1) the limited sources for 18
social programs are aimed to be spent on ’deserving people’, (2) the missing of reliable control of income and asset, (3) the programs can motivate only those who can/want to change their low social and economic status but not the mass of apathetic ‘losers’ of changes. It seems that most of the city development programs select clients as well: instead of the ‘classical’ gentrification process, city development programs secure the moving in of the higher status households.
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PART 4: BUDAPEST There were also fundamental changes in the administrative system. The 1990 Law on Local Governments reinforced the two-tier administrative structure of Budapest (municipality and districts), in which very important functions were delegated to the district level, while the municipal level became the owner of the public utilities. This dual system functioned with great difficulties and many modifications were necessary: •
• •
1990-1994: the period of equal rights in municipal-district relations, the two actors could successfully block each other (e.g. the municipality had the zoning right while the district issued building permissions thus both actors had a strong tool to stop the idea from the other). 1994-1998: modification of the Law on Local Governments, the municipal level has got some more rights, especially in planning for the whole city. 1998 - New ideas emerge to increase the role of the districts, especially in the allocation of central budget transfers.
Regarding the surrounding area, Pest county, this can even more regarded as a scattered system. The rights of the county self-government were minimised, as a result of which Pest County has practically no power to influence any decisions of the settlements. A special system of financial resource-allocation between the municipality and districts has been introduced in Budapest.
CHAPTER 1: THE MUNICIPAL LEVEL Half a year after the first free national elections, in the fall of 1990, the first municipal election were held in Budapest. Just as on national level, six major parties competed in the city. Officials had to be elected on both district and municipal levels. The then elected Mayor of Budapest is still in his office - he won also in 1994 and 1998 - thus ensuring a continuum in the goals and the preferred stream of development by the municipality. (As shown above, not only the elected officials fluctuated in the decade between 1990 and 2000, but municipal and district relations have been subject to constant changes.) One of the difficulties the Municipal Government of Budapest has been facing in the last ten years were the problems of the huge run down areas around the central business district. During Socialism the tendency of neglecting the inner city (with the exception of the tourist area) led to the rapid decline of both the physical conditions and the social status of these neighborhoods. On the eve of the first free elections Budapest found its historic downtown area, where the housing stock had not been renovated in many cases for almost a century, in a disastrous condition. In some parts of the inner city the flats had low comfort level: either the bathroom, or the 20
toilet or both were missing. The question was how to stop physical deterioration and, at the same time the constant decline in the social status of these inner city neighborhoods, and try to prevent the formation of ghetto like areas. The utmost important thing was to get the rehabilitation process started at least in some targeted blocks. The real challenge was to find the financial resources. The organizational structure of the Municipal Government did not promote the preparation of complex Urban Development Programs. The municipality was divided into 23 departments, each specializing in one field. These departments were not ranked, meaning that they all represented a separate authority in their own field of interest. This organizational structure resulted in the lack of “horizontal communication” among these departments. This made complex urban development programs almost impossible to carry out. A slight change occurred in 1996 when the passing of the Urban Rehabilitation Concept and Program fostered the daily contact and communication among some departments (housing, city planning and city development). The Urban Development Program which was in part financing the rehabilitation of the Középső-Ferencváros area - a run down inner city area in the middle of the 9th district in Budapest, lying in between the Ferenc boulevard, the Bokréta, the Viola and the Tűzoltó sreets - was originated by the Budapest Council (the predecessor of the Municipal Government of Budapest) and the District Council of district 9 in 1983. It has been going on ever since with uneven intensity. The actual construction began in 1985, and when the first free elections came in 1990, three blocks in the targeted gentrification area were 60-70% ready. It came to a halt in 1990 - the new district leadership had to decide whether they wanted to go on with the rehabilitation - and was finally set forth again in 1992. Its financial means are hard to estimate, for it overlaps drastic economic and political changes. We can safely state, that the rehabilitation began with 300 million HUF (then the equivalent of around 6 million dollars). From 1985 till 1990 a total of 613 million HUF were spent on reconstruction. (It makes virtually no sense to convert this sum into either euro or dollars, for during this time Hungary was experiencing an inflation close to 30% with HUF losing its value at an enormous speed.) Between 1992 and 1998 both the renovation and the reconstruction costs multiplied. 3.544 million HUF was spent on renovation, and 10.108 million on reconstruction. This equals around 13,5 million Euros for renovation and 38,6 million for reconstruction. In the 1985-1998 period altogether 125 buildings have been demolished in the course of the program, including 802 apartments. 51 buildings have been renovated - partially or completely – and 67 new ones have been constructed. (Among them a couple of hotels, a grocery store, a nunnery, a nursery, a sports center, but above all apartment houses.)
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CHAPTER 2: THE DISTRICT LEVEL 1. THE REHABILITATION AREA The 9th district (Ferencváros) is divided into three larger parts: the inner, the middle and the outer. The neighborhood under discussion forms part of the Középső (middle)-Ferencváros, though it is only an enclave, stretching from Nagykörút (Grand boulevard, the biggest boulevard sliding through downtown Budapest) till Viola street, which is only six streets away from it. Two streets running diagonal to Nagykörút (Mester and Viola street) form the other two borders, with only one street between them. The proximity of the Nagykörút and the river Danube make this neighborhood traditionally a respectively prosperous part of Középső-Ferencváros, and the district. The whole Középső-Ferencváros area, lying on the border of downtown Budapest and the typically working class and ethnic enclaves of the city, is a predominantly poor neighborhood. Once an agrarian territory, which was transformed during the building boom of the late 19th and early 20th century, was home to the manufacturers, small retailers, representatives of the petty bourgeoisie. After the second world war however, with the nationalization of the housing stock and the emphasis on new housing developments, the social status of this historical neighborhood started to decline, which was of course accompanied by the deterioration of the houses and the environment. In the early 80s the area was home to poor people with a high percentage of Roma inhabitants. The successful rehabilitation from the 1985 has been aimed at restoring the old charm and the social status of this neighborhood. The area itself, where the rehabilitation concentrates gives a very mixed impression with just about half of its houses “shiny” and “glittering”, and with the other half rundown. Rehabilitated and ghetto like areas neighbor one another, with people of very different social status living close to each other. The whole neighborhood is characterized by three to four story houses along the main routes, and smaller, one or two story ones in the side streets, inner areas.
2. THE REHABILITATION The newly elected local government - which became responsible for the maintenance of the stock only in 1992 when the property transfer was finished - was faced with a handful of problems regarding the rehabilitation. Whether to privatize the housing stock or try to continue the rehabilitation instead? If continuing the rehabilitation what sort of financial construction to choose to generate enough revenue for the skirocketing costs? How to win the investors confidence so the rehabilitation won’t be limited to just a few houses? And above all, how to communicate to the residents of the targeted area, that the ban on flat privatization, was in fact in their interest? (This threat of privatization is not to be underestimated, for there was immense political pressure in favor of the privatization of the housing stock. Had it been privatized in the designated area, no municipal involvement would have been possible, thereby preventing the neighborhood rehabilitation to take place at such an impressive scale.) 22
Three major actors have been involved in the rehabilitation of the KözépsőFerencváros area: • public authorities: the local government of the 9th district and the Municipal Government of Budapest • private investors • a non-profit organization: the SEM IX. joint-stock company. The procedures are the following: Decision makers from these three actors meet on a regular basis. The tenants are not part of this decision making process. But when a house gets selected, either for renovation or for destruction, representatives of the municipal government negotiate with each and every one of the tenants on a one to one basis about their future housing. If the tenants wish to return, and are willing to pay the higher rental costs after the renovation, than the municipal government provides them with a temporary flat. All tenants who return will have the opportunity to by their apartments in the future. The ones, whose house gets demolished, or find the new rental costs too high will be provided with another flat at a different part of the city. (Not necessarily the 9th district.) A key to the success of the rehabilitation has been, that from the very beginning the whole process has been clearly separated into three, well-distinguishable parts, namely: the rehabilitation of the existing housing stock - which is the responsibility of the district government - the construction of new buildings on cleared up sites this being carried out mostly by private entrepreneurs - and the clearance of the perspective site for future investments. This last function, the preparation of the area for investors, has become the responsibility of SEM IX., a non-profit joint-stock company. Its activities include as stated above - the infrastructure upgrading of the targeted territory, the installation of public utilities and the sale of the municipal land. The company, apart from the 51 % rate of the local government, has the biggest private Bank in Hungary (OTP) and the French Caisse des Depôts et Consignations among its shareholders with 24,5% 24,5% of the shares. There are two great advantages of having a separate company organizing these otherwise municipal responsibilities: First, the enterprise has to act according to the rules of the market, for both OTP and the Caisse des Depôts et Consignations expect that. But with the local government being the biggest shareholder, the public control of the company is still ensured. (And being a nonprofit enterprise, it has to reinvest its profit into the rehabilitation territory which has already made possible the financing of a nursery and two municipal apartment houses.) Second, this division of labor leads to the separation of decision making authorities. SEM IX has the right to bring decisions in matters on a daily basis, but all its decisions have to stay within the conceptual framework set up by the local government. This latter is ensured by the annual reporting of SEM IX to the district assembly.
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PART 5: SZEGED CHAPTER 1: THE CITY Szeged is the fourth biggest city of Hungary, according to the number of inhabitants (166161 in 1998). The city is situated in the south – eastern part of Hungary, besides the river Tisza and Maros, in the south of the Hungarian Plain, near the country border, which separates Hungary from Yugoslavia and Romania. From 1962 it is the centre of Csongrád county, which belongs to the newly formed Southern Great Plain Region (Dél – alföldi régió) with Bács-Kiskun and Békés county. The region created after the Regional Development Act passed by the Hungarian legislation in 1996 fulfills the requirements of EU NUTS II. category. Szeged is the biggest and most developed city of the region. The region belongs to the less developed areas of the country. The GDP in 1998 was 78% of the country average, which is the fourth place within the seven regions of Hungary, but the best in the eastern part of the counrty. (See Table 3) Table 3: The economic situation of the Hungarian regions Region % of average GDP of Place according to GDP Hungary within the regions Central Hungary 149 I. Central Transdanubia 96 III. Western Transdanubia 105 II. Southern Transdanubia 78 V. Northern Hungary 67 VI. Northern Great Plain 69 VII. Southern Great Plain 78 IV. Source of data: Statistical yearbook of Csongrád county 1998.
Although the region belongs to the less developed ones, Csongrád is the best developed county in the region, and belongs to the better developed counties of Hungary. It has the 5th place among the 19 counties according to GDP, and the 7th place according to the role of foreign investments. Only the capital, Budapest and some western – Hungarian counties have better conditions according to these dimensions. This relatively good place of the county among the others is strongly determined by the county’s central city, Szeged. The city and it surroundings are far more developed than the other parts of the county. Szeged has always played the role of the regional centre in its history. The budget of the city in 2000 is the second biggest one in Hungary (33 billion HUF), after the capital Budapest. The structure of economy is much closer to current 24
trends in the western world than in other parts of the county: while the economy of the county’s other parts is determined by agriculture and some branches of industry (first of all food industry) in Szeged besides some branches of industry (light industry, food industry, energy industry) the third sector has the most important role to play. The output of the economy is also better than of the other parts of the county. Szeged is the centre of commerce and banking in the region. The city is the most important educational and cultural centre in the Hungarian country, especially concerning higher education (12000 students attend the universities and colleges of Szeged). The city is also a centre of research and development. The vicinity of the state border towards Yugoslavia and Romania after the Trianon Treaty in 1920 had ambivalent consequences in different ages. The family and cultural connections have been strong. After the modification of the borders, between the two world wars some functions formerly taken place in the cities which became parts of Romania were moved into Szeged, e. g. the city’s central role in education began at this time. On the other hand economic relations were torn apart, which had a negative effect on the economy. Family connections were also torn apart for many years. After the second world war the development of the city was much slower than of cities in the other parts of the country, because of the strained political relations between Hungary and Yugoslavia. The city still wears the consequences of this pausa in development in some dimensions. The development was given an impetus when Szeged became the seat of Csongrád county in 1962 and in the late ’60 –s, when mineral oil and natural gas was found near the city. In the ‘90s the economic crisis in the county affected Szeged as well. For the city did not have a monolith economic structure, the crisis was not so deep but lasted longer. The Yugoslavian war hindered the development of the region and it’s centre, Szeged, and worsened the economic crisis mentioned above. Nowadays the vicinity of the borders seems to become an advantage again, for the region is a participant of TiszaMaros-Duna Euroregion, and Szeged has a great opportunity to became the centre of this entity and to become “the southern gate of Hungary”, and a european logistic centre. The current city structure of Szeged is mostly determined by the reconstruction of the city after a great flood in 1879, which destroyed more than 95% of the buildings. In the 1880s a new city structure was set up, according to the trends of city planning of the age, with avenues and boulevards, which make the city structure similar to Budapest or Vienna. Another strong factor that influences the view and structure of the city is that in the outer parts a great number of large housing estates were built in the ‘60s and ‘70s. Our study refers to this area of the city.
CHAPTER 2: THE HOUSING ESTATES OF SZEGED The construction of housing estates in Szeged started in the ‘60’s with a peak in the ‘70’s and ended in the ‘80’s. During this period 26000 flats were built up (there are app. 60000 flats in Szeged). The town has six housing estates: “Északi város”,
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“Fölsõváros”, “Makkosházak”, “Odessza”, “Tarján”, “Újrókus”. In 1990 68000 people lived in these estates, 40% of the town’s population. The physical quality of the houses reached the standards at the time of their building, but now it doesn’t meet the current standards. The major problem concerning the program is that these buildings are heated costly and much energy gets wasted. The physical condition of the houses also requires more or less renovation. The houses were built partly from central budget money and became public rental houses rented out by the local authorities (Councils). For the housing policy of the socialist era treated housing as a state supply, the rents were kept low, they could not even finance the maintainance of the houses. This is partly the reason of the relatively bad physical conditions. A certain amount of the houses was originally built for owner occupation by the National Savings Bank or in housing cooperative form. In the beginning the newly built housing estates were quite popular. Although formally the flats were distributed according to social conditions, some researches showed that the system did not function according to its own formal standards, higher status population moved to these areas in a greater number than the formal principles of distribution would have given reason for (Szelényi-Konrád, 1969). Later the status of these areas began to decline, upper status population moved out, the ratio of lower status people increased. The workers of large state owned firms moved into these estates thus after 1989 the problem of growing unemployment has touched this area strongly. In the ‘90s elements of social decline became more and more visible. This was one of the reasons why the local government decided to launch the program.
CHAPTER 3: THE PROGRAM The program started in 1997, ended in the the end of 1998, as a part of the municipality’s 12 year rehabilitation program. The total costs of the investment reached the amount of 3.017.916 Euro (790.000.000 HUF), including 802.231 Euro (220.000.000 HUF) provided by local government and 2.215.685 Euro (580.000.000 HUF) provided by 'German housing estate loan' administered by UNIC ( now Raiffeisen Bank )..During the renovation program eight buildings were renewed with approximately one thousand flats (968 flats). New insulation was applied, the heating system was modernised, the individual adjustment of the heating was developed and the individual measurement of water consumption was equipped. As an effect of the renewal the ratio of energy saving reached up to 60% in certain buildings, the mean of energy saving is 25%. Expenses of housing decreased. Besides these results the houses became much more aesthetic, and social decline seems to get stopped. The financial background of the program was set up by the government decree 105/1996, aiming the reduction of communal energy consumption. The decree established the opportunity to receive a loan from the German government, with interests subsidised by the Hungarian government. The purpose of the loan was to 26
support the building reconstructions resulting saving of energy. The total available amount of the German loan was 30 million DM. The loan of the German government could not make considerable changes in Hungary. First, the total amount of available money would have been enough to renovate less than 1% (5000 flats) of the flats built with industrial technology (Hegedüs-Sárkány, 1997). Second, the requirements which had to be fulfilled, and the system through which the loan could be acquired made it impossible or very difficult to get for most of the owners. The housing estate reconstruction in Szeged is practically the only successful program carried out with this financial source. The program required the complex renovation of the insulation system, in order to meet the standards (when the building formerly did not meet the standards) or to obtain a certain amount of energy saving (if the building has already reached the standards). It costs very much (about 800.000 HUF/flat in Szeged), so many of the owners couldn’t afford it. The possibility of making partial developments (e.g. insulating only a part of the building at a time, next time a next part etc.) , even if this is not the best technical solution, could make the program available for more owners. The banks involved in the program (6 banks in Hungary) did not really want to include private owners (owner-occupied blocks) in the program, for they found it too risky (unclear legal status of owner-occupied blocks, the mortgage system doesn’t really function well). Two banks declared officially the kind of actors they accept or do not accept. From the viewpoint of the banks local governments are the best actors to have the loan, for they have stable financial background. The program is also advantageous for the local governments, according to the amount of subsidies, but on the other hand the expenses can not be pushed further to the tenants, so local governments have to put considerable amount of money in the program, which can not or only in a very lond term can be refunded. The technological requirements were too complex, they required too high standards for all the actors (banks included). Potential applicants often did not have information about the program, so many of them couldn’t get the loan even if otherwise they fulfilled the requirements. The role of heating companies is problematic, for the reducing of energy consumption can make the companies to make prices higher, so the financial savings on energy can disappear. Heating companies should be integrated in the program. (Hegedüs-Sárkány, 1997). It is crucial to remark, that the share of local governments in the property market is very low in Hungary, because of the privatisation processes in the ‘90s. In Szeged local municipality owns only 10% of flats. Szeged made a much more conscious policy in the housing sector, than other local governments in Hungary, the city did not privatise all of its housing stock.. The municipality set up some important goals which defined the principles of privatization:, e.g. to provide specific functions. The houses where the program was executed, all remained in the property of the local government of Szeged, because they have specific function in the rental housing market (houses for the old, houses for the young for temporary use etc...). The fact that these houses are in the property of the municipality is very important. The question of rehabilitation creates problems everywhere in the country after the privatization of the housing stock. The huge majority of the properties has been 27
privatised. Local governments face serious problems when they try to implement homogeneous policies for development. Their opportunities and tools in influencing the processes are very much different in the owner – occupied properties than in their own properties. The position of the owner-occupied blocks concerning rehabilitation is problematic. Owners have to collect a common fund for renewal, but this is usually not even enough to get a subsidy from the local government (a certain percentage of selffinancing is required). Banks do not really want to take part in the financing of these renewals, for it is too risky for them: these houses do not have stable economic background and the mortgage system doesn’t really work well. Organization of such a renovation is also problematic for the private owners: it is difficult to get all the owners to agree, there are always people who don’t want or can’t afford the renovation, etc., not to mention the problems with the mortgage system: people usually do not want to make such contracts. The revenue of the privatised properties can only be spent for renovating of building flats. Szeged has a good situation, for the income of this source is higher than in other cities in Hungary (the city owned more flats than other cities), and they managed to prevent the fund from being spent for other purposes. It’s forbidden by law, but many local governments did that. So Szeged had a stable financial base for its rehabilitation policy.
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APPENDIX
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