In this four-part series, we present municipal policies and projects that offer inspiration and illuminate potential pathways for more sustainable and equitable futures. While each example represents a modest step on its own, together they suggest how municipalities take an active role in building local resilience while taking collective responsibility. These examples arose from our research in two case study cities, Freiburg (Germany) and Grenoble (France), and cover various sectors: waste management, food, housing and advertising in public spaces. They demonstrate innovative, but also contested ways in which municipalities navigate local development and structural pressures, including fiscal constraints and pressures for economic growth. The third story examines how concept-based tendering is used in Freiburg’s housing development project “Kleineschholz” to build long-term affordable housing “for the common good”.

Selling to those with the best concept and vision

When municipalities sell land, they most commonly do so through a competitive bidding process in which the highest offer wins. Concept-based tendering works differently: at a fixed price, potential developers compete through their plans and visions for the site. Rather than merely setting minimum standards on issues like ecological construction or the proportion of social housing, cities can invite developers to demonstrate their ecological inventiveness, commitments to social mix and long-term affordability, and ideas for creating vibrant neighborhoods. In doing so, cities shift focus from maximizing short-term revenue to exerting meaningful influence over who builds, what they build, and for whom.

This approach also allows municipalities to deliberately mobilize community-oriented actors, such as housing cooperatives, who do not treat affordable housing as an externally imposed obligation but as their core organizational purpose. This makes for more durable outcomes: actors whose statutes are built around cost-based provision are far less likely to exit the affordable housing stock once rent restrictions expire or market conditions shift.

Kleineschholz: Building a neighborhood for the „common good“

Concept-based tendering is at the core of Freiburg’s district development project Kleineschholz. In building around 500 new housing units on a centrally located site, the city committed itself to working exclusively with actors oriented towards the common good.

To translate that commitment into a tendering process, the city defined four eligible organizational types (see Table 1). Across all four, the common thread is that housing is not provided for private gain but either remains in collective ownership, as in a cooperative, or is delivered by actors with a specific housing-related purpose, such as those with a public service mandate or a remit to house workers in essential professions.

This common-good requirement stood alongside further conditions: a commitment to realize at least 50% of the total residential floor area as subsidized rental housing, adherence to the Freiburg Energy Efficiency Standard 55, connection to the district heating network, and minimum standards for photovoltaic use and building greening.

Table 1: Organizational types specified by the city of Freiburg to be eligible to participate in concept-based tendering (see Schmid, Fricke, Zengerling, 2024).

#	Description of organizational type in official tender documents
a	Companies with models of tenant participation in asset value, such as cooperative shares (Mietshäuser Syndikat, cooperatives, limited partnership)
b	Companies with a state, municipal, or church mandate to provide services of general interest for residential use
c	Companies whose purpose includes the promotion of social, ecological, cultural, or comparable socially oriented projects (reference projects are required)
d	Companies providing housing for their own employees, drawn from professions essential to the functioning of public infrastructure and social services (e.g., emergency services, nursing staff, educators, and care services)

Lowering the entry barrier

With an eye towards the limited financial resources of the actors the city aimed to attract, the tendering process was organized in several phases. In the first phase, applicants were asked for a plausible description of the building project and its financing, rather than formal planning and financial documentation. Proposals were then comparatively assessed by a commission with regard to their contribution to the neighborhood, project quality, and feasibility.

This lower threshold proved successful in attracting a diverse field of projects and practitioners. Following the commission’s recommendation, the city allocated plots to five cooperatives, three housing projects of the Mietshäuser Syndikat, two foundations, an association, one project driven by a church-related company, and one that is best characterized as investor-driven. In addition, the municipal housing company Freiburger Stadtbau and the Federal Agency for Real Estate Tasks each received two plots outside the concept tender process. Among this diversity of developers, it stands out that roughly half are genuinely community-driven.

Financing: the final boss

Despite the carefully designed process, financial pressure remains a persistent challenge. Community-driven projects such as small cooperatives and Mietshäuser Syndikat projects are funded mostly through small direct loans and equity contributions from future residents and supporters. The very qualities that define these projects, namely operating outside the logic of profit and market-rate rents, make the path to realization all the more difficult.

While no project has officially failed at the time of writing, the city’s flexibility in extending the 12-month reservation period may not prove sufficient for some projects to secure financing. Other supportive measures, such as a city subsidy for additional voluntary rent caps, come too late. Paid out only once homes are rented, they cannot ease the initial financing burden. There would have been potential way out, but one that is structurally challenging: heritable building rights (leasehold). 

An opportunity lost to structural pressures

Originally, it was planned to not sell the plots in Kleineschholz but to grant heritable building rights, keeping the land in public ownership. This, however, came with an important caveat: while heritable building rights generally work on the principle of continuous payments, the arrangement in Kleineschholz required a single upfront sum equivalent to the full property value. This was tied to the financing structure of the project: managed as a separate account outside the regular municipal budget, Kleineschholz already draws an annual subsidy of just under three million euros from the city’s core budget. To prevent a further deficit, the full land value had to be recovered in one go with the transfer of the heritable building right. Combined with further disadvantages in the context of bank loans and public subsidy programs, this made the leasehold model effectively impossible for the financially weaker projects.

Consequently, the city introduced a modified purchase option that included a right of repurchase for the city, and this option was selected by all project groups. While this avoided additional financial strain, the central advantage of heritable building rights was lost: the ability to lower the initial burden by spreading payments over time (see figure 3). This would have been particularly valuable for community-oriented actors with limited equity. The core difficulty for such projects lies in the early years, when loan repayments are at their highest. Over time the situation generally improves as debts shrink, until rents need only cover ongoing costs. But reaching that stage requires weathering a steep initial financial burden, one that would have been considerably lower had the projects not also needed to acquire the land outright.

Can we afford to save in the long run?

The municipality’s own scope for action is also constrained. Higher levels of government keep a close eye on municipal budgets, and the room for municipal debt is narrow. This points to a broader issue that runs through the Kleineschholz case and beyond: short-term financial calculations tend to crowd out decisions that would be more beneficial in the long run, not only socially but eventually economically as well.

Housing development illustrates this tension particularly well. Developing housing with profit-oriented investors may bring private capital to the table and can secure a defined share of affordable units for a defined period. But as soon as conditions allow, rents revert to market rates. Housing is treated not as a public good but as an asset, with consequences that are all too familiar: displacement, instability, and the erosion of the very communities and neighborhoods that make cities worth living in.

Enabling community-driven actors to create genuinely affordable and inclusive housing is therefore a task that falls on all levels of government. Federal and state authorities need to ensure adequate municipal financing and create funding programs that support common good oriented actors. Municipalities, in turn, need to do everything within their power to act with foresight, using the tools available to them, from concept-based tendering to land retention, to shape development before market pressures foreclose the options.