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Dilemmas of integrated development in post-socialist cities. Iván Tosics Metropolitan Research Institute, Budapest Open days of the Regions 08A10 - Putting deprived areas back on track Brussels , 8 October 2013. Structure of the lecture.

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Dilemmas of integrated development in post socialist cities

Dilemmas of integrated development in post-socialist cities


Metropolitan Research Institute, Budapest

Open days of theRegions

08A10 - Putting deprived areas back on track

Brussels, 8 October 2013

Structure of the lecture
Structure of the lecture

1) The political and institutional context of urban development in CEE countries: the socialist past and the pecularities of transition

2) Integrated urban development: how to involve residents in post-socialist cities

3) Two cases to regenerate deprived urban areas in Budapest

4) Conclusions: challenges and difficulties to apply CLLD in post-socialist cities

The command society and the large housing estates
The command society and the large housing estates

  • The idea to build housing estates with prefabricated technology reached its peak in the socialist countries: the top-down, dictatorical political regimes created more than optimal circumstances to develop the technology into ideology

  • The large-scalerebuilding of old cities and creating whole new cities was not allowed to be criticized openly

  • Direct state subsidies to the builders and to the population made it easier to accept the estates

The changes in economic terms
The changes in economic terms

  • At the beginning of the 20th century the level of economic development of Hungary was equal to that of Austria, Finland, Italy and Spain.

  • In the interwar period the country could only very slowly and gradually try to regain its importance on the international scene

  • After WWII the 44 years of Soviet dominance and imposition of the socialist system Hungary sank down substantially, to the level of Greece and Portugal.

European cities on different economic development levels in the early 1990s
European cities on different economic development levels in the early 1990s

  • Gross Social Product per capita on constant prices (showing the economic development level of the region, rather than the standard of living of the urban population)

    • 33.000 EUR: Hamburg, München, Helsinki

    • 27.000 EUR: Stuttgart, Paris, Brussels, Vienna

    • 20.000 EUR: Köln, Strasbourg, Utrecht, Marseille

    • 13.000 EUR: Birmingham, Dresden, Manchester, Barcelona

    • 5.000 EUR: Athens, Budapest

    • 4.000 EUR: Prague, Warsaw

Dismantling the socialist system
Dismantling the socialist system the early 1990s

  • Following the collapse of the socialist system, the over-sized public housing sector had to be reduced and the top-down political and planning system had to be changed.

  • However, in most post-socialist countries the overarching state control was replaced by free market relations, the “historic pendulum” went to the other side (Bertaud-Renaud, 1995).

  • The main restructuring processes:

    • the privatization of the housing stock

    • the decentralization of the administrative structure

The change in property relations
The change in property relations the early 1990s

  • Margaret Thatcher privatised 2 million public rental units over a time period of 15 years

  • East-central European countries privatised 3.1 million rental flats within only five years.

  • The “winners” of this “privatisation race” were the south-eastern European countries, where 77 % of the public stock has rapidly been sold off to the sitting tenants.

  • Discounts on sales prices for sitting tenants were usually above 85 %, there were even examples for almost 100 % discount.

  • Tirana: the share of the public rental stock changed between 1993 and 1998 from almost 100 % to 0 %, in Budapest from 50 % to 10 %, in Prague from 71 % to 52 %.

T he realities of the processes in the 2000 s
T the early 1990she realities of the processes in the 2000s

  • extremely high share of owner-occupied units in many of the countries

  • decentralized decision-making, low cooperation level of public actors

  • low efficiency of the public sector (no monitoring, no evaluation, no sanctions)

  • urban governments became opportunity-led mechanisms of the neo-liberal transformation(Tasan-Kok)

Similarities and differences
Similarities and differences the early 1990s

  • In the post-socialist period the market forces are similar everywhere but the cities themselves differ in the way their public sector works.

  • The development of these cities depends on the changing relations and conflicts between the market forces and the public sector which wants to control them.

  • The public sector can make substantial differences. Post-socialist cities will differ in a similar way to how Vienna differs from Italian or British cities.

European cities on different economic development levels in the mid 2000s
European cities on different economic development levels in the mid 2000s

GDP per capita on constant prices (showing the economic development level of selected cities)

80.000 - $: Dublin, Frankfurt, Helsinki, Milan, Stockholm

70 - 80.000 $: London, Turin, Vienna

60 - 70.000 $: Brussels

50 - 60.000 $: Paris, Rome

40 - 50.000 $: Madrid, Munich, Hamburg, Birmingham

30 - 40.000 $: Athens, Budapest, Warsaw, Lyon, Manchester, Lisbon

Source: PwC, based on OECD data reflected on city boundaries

What is integrated urban development
What is integrated urban development? the mid 2000s

1) Horizontalcoordination: betweendifferentsectoralpolicies

  • Brownfieldcommercialdevelopmentwithtrainingforloweducatedpeopletobecomesales-persons

    2) Verticalcoordination: betweendifferentlevels of government

  • National urbanregeneration policy framework and financingsystemforregional and local projects

    3) Territorialcoordination: betweendifferentterritorialunits

  • Social mix strategyinpoorneighbourhoodwithattraction of services and development of communityinfrastructure

Horizontal the mid 2000scoordination: betweendifferentsectoralpolicies




Vertical the mid 2000s and territorialcoordination

How to achieve integrated development in the post socialist cities
How to achieve integrated development in the post-socialist cities?

Inthecontextof post-socialisttransitionwithweakand uncoordinatedpublicsectoralpolicies and no tradition of civicorganizations (i.e. weaksocialcapital) specialmethodsarerequiredtoachieveintegrateddevelopment


  • indeprivedareaswithsubstantialpublicownershipintermediarymanagement organization is needed(Rév8)

  • indeprivedareaswithoverwhelminglyprivateownershipcondominiumsarethetoolstoinvolveresidents(Ady)

    Local programmeshaveonlychancetoachieveintegrateddevelopmentiflocalgovernmentssuccessfullyusesuchcatalyzatorstoensuretheinvolvement of thelocal community

Case 1 a socially sensitive urban regeneration programme in budapest magdolna quarter
CASE 1: a socially sensitive urban regeneration programme in Budapest: Magdolna quarter

  • Strategicplan of district VIII forfifteenyears (2005-2020)

  • So far twophases

    • Phase I (2005-2008): fundedjointlybythe Budapest and theDistrict 8th Municipalities – pilot project for Budapest RehabilitationFundsociallysensitivesubprogramme, 2.7 millioneurtotalinvestment

    • Phase II (2008-2011): ERDF funding (ROP) – key project and a model program, 7.2 millioneurtotalinvestment

    • Phase III – (2013-onwards) ERDF,13 m eurtotalinvestment

  • Applicationforcomplex ESF funded project is goingon

  • Integratedprogrammes: bothphysical and softprojects (housing is compulsoryelement)

  • Extendedpartnership

A projekt terület Budapest: Magdolna quarter

Nagyfuvaros utca - Népszínház utca – Fiumei út – Baross utca – Koszorú utca által határolt terület

Budapest belvárosának határán, Józsefváros középső részén

L: 12.068 fő

T: 263.800 m2

The project area

It’s bounded by Nagyfuvaros – Népszínház – Fiumei – Baross – Koszorú streets

Location: in the periphery of the downtown of Budapest, in the middle of the district 8. of Budapest

Inhabitant: 12.068

Area: 263.800 m2

Elhelyezkedés Location

Main pillars of the magdolna i programme
Main pillars of the Magdolna I. programme Budapest: Magdolna quarter

The aim of the programme is not to turn Magdolna into a rich area,but to bring back the colourfullness of Józsefváros and terminate deep poverty.

  • Urban renewal: special programme for the tenants

    • To involve them into the renewal

  • Programme for creating communities

    • Create a community house, give rooms for civil organizations

  • Public space program

    • Improve the central square (Greenkeys, Interreg IIIB)

  • Educational program, safety program

    • De-segregate the school (from 98% to ‘normal’ share of Roma kids)

Main interventions of p hase ii
Main Budapest: Magdolna quarterinterventions of Phase II

  • Hard investments

    • To improve housing conditions (60% of the project): 7 condominiums, 16 social housing buildings (2 fully, 10 partially, 2 facades)

    • To improve living environment: public spaces

  • To strengthen local social services

  • To improve the educational service

  • To improve the employability of people

  • To improve public safety conditions

Results and problems of the integrated approach in magdolna quarter
Results and problems of the integrated approach in Magdolna quarter

  • Management structure of social urban renewal

  • Link between politics and management

  • Public participation

  • The level of improvements

  • National policy framework and financing

1 management structure of social urban renewal
1. quarterManagement structure of social urban renewal

Mayors offices are too bureaucratic and thematically focused (silos).

  • RÉV8, aspubliclyownedcompany, outside the office, is a good solution to develop long-term integrated solutions

  • Interdisciplinary company, international learning is very important – RÉV8 has learnt a lot from other countries

    National policy and financial frameworks areneeded.

  • In Hungary also the ministry has learnt a lot and created the policy for Integrated Urban Development Planning. Unfortunately, onlywithshortterm EU financing.

    Conclusion: integratedurbanrenewal is a difficult and long-term intervention whichneedsnational policy framework, longterm financing and dedicatedlocal management.

2 link between politics and management
2. quarterLink between politics and management

RÉV8 has graduallylostdecision-makingpowerover theyears

Cooperation between politics and management should be close and consistent

  • residents expressed at the beginning that they will not contributetorenewalbecause the mayor promised them (10 years earlier) that they will get other flats…

  • RÉV8 has learnt that it should be very careful to reach agreement with residents – many times both sides promised something but later the municipality did not help the company to be able to fulfil the promises…

    Conclusion: politiciansshould keep strategic decisions but should devolve everyday management

3 public participation
3. quarterPublic participation

  • First phase: 2 mill eur, working with 4 publicly owned buildings, making the cellar areas clean. 350 theur per building was announced as upper limit for renovation. The own work of residents was taken into account when determining the new rent level.

  • Second phase: 7,4 mill eur, 85% funded by the EU. Renovation of 16 publicly owned buildings, support to 7 condominiums.

    The use of EU money is extremely rigid and requires too quick decisions which makesthe involvement of peopledifficult. People only start to believe and being interested when the contract is signed and the money assured. Inthecontractvery detailed plans have to be prepared which can not be discussed any more with the people…

  • Thirdphase: 13 mill eur, out of the 28 programmesonlyone (publicspacerenewal) willbe implementedreallywiththepeopletogether – inallothersthemunicipalityfoundittooriskytoacceptrealinvolvement of people

    Conclusion: the more EU money, the less opportunity for participatory planning (underpresentrules of Cohesion Policy and nationalapplication)

4 the level of improvements
4. quarterThe level of improvements

  • Second phase: in Dankó 16 all flats got WC and shower. Rent increased 2-3 times and utility payments even more drastically. Tenants did not want to move back.

  • The nationalsocial safety net has been drastically cut recently, to a fraction of the original level (upper limits introduced, limitation of money for one family…)

  • The higher quality of renovation, the less is the chance to keep the original residents

    Conclusion: local actionshavetheirlimits,forthesuccess of social renewal the nationalsocial benefit system has tofollow the increase of thehousing costs of original residents

5 national policy framework and financing
5. quarterNational policy framework and financing

  • In France Politique de la Ville exists since the 1980s, and also a Ministry exists for integrated policies (this is not the case in Hungary at all)

  • France recognised that from the million level projects now there is a need to go for billion eur projects to achieve betterresults

    Conclusion: inMagdolna the fate of the area can not be changed with 2+8+13 mill euros. Theproblemswithschool, crime, bad houses, employment remain unsolved and theneighbourhoodwillfaceseriousdifficultiesafter EU moneydries out

How integrated was the approach in magdolna
How integrated was the approach in Magdolna? quarter

  • Horizontalcooperation: somecooperationexistsbetween local governmentdepartments

  • Verticalcooperation: socialrenewalgets EU funding; no Budapest strategyexists; districtstrategycontinues

  • Territorialcooperation: onlyondistrictlevel

    Hungary’s innovation: introduceintegrateddevelopmentinpooresturbanareas of the country, bringing back publicleadershipafterprivatization, organizinginterventionsinareasneglectedbythe market, keepingtheoriginalresidents.

    However: only 162 millioneurfrom 24 bneurtotalspending (0,6%) – integratedurbanrenewal is notpopularon local level

    The sociallysensitiveurbanrenewaldependstotallyon EU resources and is financiallynotsustainableifinthefuture EU supportterminates

Case 2 csepel ady project in budapest
CASE 2: quarterCsepel Ady project in Budapest

  • Csepel: one of the 23 districts of Budapest

  • Ady estate: appr. 5000 inhabitants in 2064 apartments

  • Ten 10 storey high buildings: 5 of them are cooperatives and 5 are condominums. (About 94% of the units are owner occupied and 6% are public rental.)

  • Social composition: one of the least prestigious estates in Budapest. (However not deeply marginalised.) The schools are also socially segregated on the estate.

  • The aim is to stop the further degradation of the estate and in parallel to improve the social position of the inhabitants living in the estate (not crisis management but PREVENTION)

Project content
Project content quarter

  • Project budget: 4,5 million Eur of which 2,85 million ERDF contribution

  • Project duration: Okt 2009 - March 2011 - June 2012

  • Content:

    • Partial renovation of 7 large prefabricated residential buildings (out of the 10 being located in the estate – as 3 rejected to participate), affecting 1549 housing units

    • Renewal of the public spaces and public buildings

    • Upgrading of the commercial buildings

    • Creation of a new Community Centre

    • ESF types of measures (vocational trainings and community building activities)

Results of the ady project
Results quarter of the Ady project

  • Energy saving: 6-40%, resulting in 10-100 euro saving/year/flat. (The fixed part of the district heating fee limits the amount of savings.)

  • The decrease of real estate prices slightly moderated (but continued as a result of economic recession)

  • 45 inhabitants got certificates of vocational training (appr. 46% of them are still employed after 6 months)

  • The attandance of the new community centre is well above the expectations

    (250-270 people/week in average)

Key findings i
Key findings I. quarter

To what extent is there evidence of ERDF housing investments contributing to integrated sustainable urban regeneration of the target areas, i.e. highly populated deprived neighbourhoods?

  • Housing was relevant part of the interventions: appr. 50% of the investments

  • Inhabitants evaluated housing interventions as the most important part of the programme

  • Without ERDF no major renovation could have happened for decades

Key findings ii
Key findings II. quarter

What are the main challenges encountered in the preparation and implementation of these regeneration projects?

  • It was a new experience for the whole management system→high burdens of administration → low level of flexibility and innovation

  • Public participation existed through the cooperatives and condominiums but its level was relatively low (lack of culture in this field)

  • The time frame (1.5 years) even with the unexpected extensions was not appropriate to reach the most marginalised layers of the society

Key findings iii
Key findings III. quarter

What lessons could be learned from the current ERDF regulation framework regarding housing interventions and its practical implementation?

  • ERDF with housing element provides opportunity for integrated interventions in the most marginalised areas (compared to national programmes lower leverage effect but higher social effect: a trade-off)

  • Housing is a decisive element to reach the ‘critical mass’ of investments in order to re-position (but not over-position) the target areas

  • In privatized areas the cooperatives and condominiums have to be used as intermediary organizations to include residents

1) T quarterhe contradiction between the requirement of transparency (resulting in too high administration burdens and too rigid programming structure) and the need for flexibility in such complex programmes has to be addressed

  • a mentor system (with mentors provided and empowered by the managing authority to bring quick decisions) could solve some of the problems in the preparation and implementation phase, while also contributing to the controlling of the process

    2) Enough time for planning and implementation has to be ensured (especially in the case of ESF type of measures) in order to enable the programme to work intensively with marginalised inhabitants

  • the 7 year long EU planning periods allow for such longer-lasting, more participative type of programmes. The national programmes should avoid the division of the 7 year period into rigidly separated shorter planning periods which make integrated programmes with long lasting effects impossible

    3) The roles of politicians and managers should be separated

  • politicians should decide the strategic aims but not influence the implementation phase. Managers should be open to democratic tools to capitalise all the knowledge of the stakeholders.

Integrated urban renewal physical and social changes
Integrated urban renewal: physical and social changes quarter

  • The level of physical renewal has to be determined very carefully (the higher this level is, the more will be the population change)

  • In very segregated areas some population change is unavoidable, and also the high level social services are needed to continue for long, to ensure the sustainability of the renewal

  • Interventions in deteriorated areas have to be done in time, otherwise only demolition remains as solution

  • Deprived areas in different parts of the city with different land value have to be approached differently

Urban regeneration in post socialist cities
Urban regeneration in post-socialist cities quarter

Over-privatization of housingand weak public leadership lead to sub-optimal models of urban regeneration.

EU fundsarethe main sourcesforarea-basedurbanrenewalbuttheseare used to growing extent for energy improvement aims, with no orweaksocialtargeting


  • Building-by-buildingdecisions of privateowners

  • Privatedeveloper-leadrenewal (gentrification)

  • EU supportedarearenewal (increasinglyenergy-led)

    Whatmight go lost: area-basedintegratedrenewal.

Summary integrated development
Summary: integrated development quarter

  • Integrated development is needed, in the times of financial crisis it is even more necessary to look for interventions which are not mono-sectoral

  • Sustainable social results can only be achieved in combination of horizontal and area-based interventions

  • Area-based interventions may only have limited results if the higher level policies (welfare systems) do not work properly

  • Area-based interventions have to be carefully designed, the level of physical improvements determine to large extent the social outcomes, the involvement of residents is crucial (CLLD can help)

  • Hungary’s innovation: introduce integrated development in poorest urban areas of the country, bringing back public leadership, after privatization, organizing interventions in areas neglected by the market, keeping the original residents.

  • However: only 162 million eur from 24 bn eur total spending (0,6%) – integrated urban renewal is not popular on local level