Twelve million people. 588 square miles. 19 percent poverty. The Western Hemisphere’s biggest city. São Paulo, Brazil, is famously (or infamously) a city of superlatives. Its metropolitan population of 20 million makes up a sprawling, decentralized megalopolis. Urban planners here face formidable challenges: addressing a much-publicized water shortage, retrofitting the concrete jungle with green space, improving mobility across a chaotic urban footprint. But perhaps no task is more daunting, or more central to the city’s success in the 21st century, than that of fixing housing. Affordability is, of course, a challenge for any growing, global city. But what exactly does housing justice look like in a metropolis where the wealthiest commute via helicopters while the poorest live in shantytowns perched on riverbanks?

This is the question confronting embattled outgoing São Paulo Mayor Fernando Haddad, whose administration has fallen dramatically short of a campaign promise to deliver 55,000 affordable housing units, creating only a tiny fraction — roughly 4,944 according to official city data — of the anticipated units. Today, the city is facing a housing shortage ranging from 100,000 to 500,000, depending who you ask, and some 1.2 million Paulistanos live in either favelas — the concrete-and-corrugated-iron Brazilian shantytown of popular global imagination — or in downtown squats called “cortices,” illicitly occupied abandoned buildings.

That’s down from over 2 million in 2000, but it’s still 10 percent of the population (and growing) in a city whose economic output is roughly equivalent to Austria’s.

Re-election looks unlikely for Haddad, whose left-wing Workers’ Party is embroiled in a national corruption scandal. So in the last year of his term, the mayor is setting his sights on the future — to the year 2030, to be precise. He and top administration officials are making the rounds to promote the controversial new 15-year master plan for Sampa, as the city is known locally.

Their promise? Nothing less than to “humanize and rebalance” São Paulo for the 21st century. To that end, it commits the city to building an ambitious 717,000 new housing units by 2030, some 240,000 of which will be affordable, primarily in areas well served by public transportation.

For its proponents, the master plan, or “plano diretor,” has the potential to change São Paulo’s urban design “in a revolutionary way,” Haddad told the BBC. “Today, private investment does whatever it wants in the city,” he added. “It builds where it wants. It destroys neighborhoods, creates pockets of skyscrapers and overloads urban infrastructure.” It’s this kind of unregulated development that not long ago led The New York Times to dub São Paulo a “case study of dystopian sprawl.”

But to the master plan’s critics — including the real estate sector, wealthy citizens well served by the city as is and the substantial majority of Paulistanos that frown on Haddad’s administration — the mayor is overreaching, pushing a 200-page blueprint for noise, increased congestion, decreased quality of life and crime.

Political rivalry, economic interests, and finite time, space, and money — these are the issues that make affordable housing so complex in every capitalist democracy, whether New York or London. But São Paulo, city of extremes, is taking them to the nth degree. It’s the richest city in a country suffering a spiraling corruption scandal and deepening economic crisis. It has a full half-million homeless or precariously housed people. And it’s got a divisive mayor so embattled that he once called critics of the master plan he’s promoting a “myopic elite … rich in material wealth but poor in spirit.”

Against such a backdrop, even the best-laid plans can easily go askew. But this plan is a good one, collaboratively developed and passed with broad-based support. And this man, politically speaking, has little to lose. Before the law can be implemented, Haddad just needs city council to pass a set of complementary land-use and zoning reforms before the end of his term in December.

PLANNING IN A CITY OF EXTREMES

“The new master plan tries to resolve one of São Paulo’s biggest challenges, which is its decentralization,” says Mauricio Bronzini, executive coordinator of Rede Nossa São Paulo, a network of urban policy groups that worked closely with the Haddad administration on the master plan’s sustainability and transparency initiatives. “The city has 96 districts that are unequal socioeconomically as well as in terms of access to public services.”

The disparities are starkly evident in the interactive maps launched to accompany the master plan. From favelas and homeless encampments to vacant buildings, a click of the mouse exposes the bleak living conditions of 1.2 million Paulistanos; adding layers reveals railroad tracks, metro lines and bus routes that snake through the city and intersect, mostly miles from poor areas. The master plan calls for reversing this trend through transit-oriented development — that is, increasing population density in the city center and in areas well served by public transportation.

It will do so largely by expanding and honing the controversial Zonas Especiais de Interesse Social, or ZEIS, swaths of the city defined as having “special social interest.” While in the United States these areas might be deemed “low-income” or “underserved” neighborhoods, in São Paulo some ZEIS are now in prime, high-value neighborhoods like centrally located Bela Vista. As in the U.S., developers who seek to build or otherwise develop a ZEIS lot are subject to certain affordability requirements and eligible for related incentives.

The ZEIS, which were introduced in 2001, previously came in four flavors: favelas in need of physical upgrading and those in environmentally sensitive zones, undeveloped peripheral areas and derelict downtown neighborhoods with good bones. São Paulo’s new master plan adds 33 square km of new ZEIS, including a fifth kind of zone — that of low-density areas with good access to public services slated for “social interest housing” development.

Unlike in many resurgent U.S. cities that struggle to carve out even a small space for poorer residents in a world of ever-rising rents, São Paulo’s ZEIS “puts the interests of low-income residents front-and-center in conversations about changing city neighborhoods,” says Robert Hickey, a Washington, D.C.-based housing expert. “That’s distinctive and, I think, helpful.”

In total, special social interest zones have increased by 117 percent. Ten percent of the city’s territory is now zoned for affordable housing — including, crucially, more downtown neighborhoods like Campos Eliseos and Bela Vista. Between 1980 and 2000, center city São Paulo lost 230,000 residents, or 30.4 percent of inhabitants. Today, it contains 17 percent of jobs but only 4 percent of the city’s population.

Historically, the ZEIS have a mixed track record. Since being introduced in 2002, the policy has worked well to improve living conditions for poor people in favelas that got city-sponsored upgrading, but was much less effective in creating new social interest housing. According to a 2013 analysis, less than 50 percent of those ZEIS areas were ever built out.

“We hoped the market would develop them,” says Anacláudia Rossbach, regional advisor for Latin America and the Caribbean at the Cities Alliance, who worked for the São Paulo housing department when the ZEIS plan was launched. “But in the end, basically only the government built low-income housing projects. Private companies just didn’t want to get involved.”

As of 2010, São Paulo still had 515,000 empty lots, or 14.5 percent of total stock. Empty buildings and unused spaces are an uncommon bounty for a thriving global city, but only if they can attract developers.

To stimulate redevelopment in these low-density ZEIS, the city will waive fees so that developers can build higher and bigger. But to do so, they must price 60 percent of all units for the lowest-income households (those earning under three times minimum wage of 880 reals per month, about $228 U.S.), up from 40 percent affordability requirement under the previous master plan. Twenty percent may be priced for low- to moderate-income residents, and another 20 percent may be commercial.

In non-ZEIS areas within designated growth corridors, the master plan activates a so-called “solidarity quota,” which requires all large-scale developments to include a percentage of social interest housing. Modeled on housing policies commonly used in Spain and France, the solidarity quota may also be more familiar (albeit with a less catchy name) to New Yorkers: Mandatory inclusionary zoning is the key tool in Mayor Bill de Blasio’s contested new housing plan.

Land-use and zoning changes currently in the end stages of debate, such as removing height restrictions and allowing commercial strips in residential zones, will make the housing strategy legally viable in designated growth zones. A master plan mandate for the city to create affordable housing in unoccupied buildings in the low-density city center, where real estate is still affordable, will be supported by funding from the Urban Development Fund — the new account into which wayward builders who opt out of affordability requirements must pay their exception fees. São Paulo will also remove parking minimums and levy fees for parking overages in ZEIS and other growth zones, provisions that both discourage driving and allow denser construction.

Ideally, all of this should reduce average commute time in metropolitan São Paulo, currently estimated at 2 1/2 hours, by bringing workers closer to their jobs and to public transit. Some of them, officials hope, will even be able to walk to work, a refrain of the administration’s master plan PR. Either would represent a significant quality of life change for those residents who, lacking helicopters, have had little choice other than Sampa’s traffic-choked streets.

“Some of the plano diretor’s proposals are already affecting the lives of everyday people in the city,” says City Councilman Nabil Bonduki, who helped negotiate the solidarity quota. “Especially their mentality [about] transit and the use of public space.”

PARTICIPATORY POLICYMAKING

Unlike New York, where community boards unanimously opposed mandatory inclusionary zoning, citing fear of displacement (in low-income neighborhoods) and quality of life issues (in wealthy areas), São Paulo’s master plan is “considered a good plan by a large part of society,” Bronzini says.

The blueprint was developed and negotiated in a broadly consultative way, in keeping with the Haddad administration’s emphasis on government transparency. For more than a year between 2013 and 2014, the master plan was debated fiercely, first in city council and then in community boards. After 114 public hearings attended by a total of 25,000 people, the city had received 10,147 recommendations for improvement, revealing an array of concerns and conflicting interests. It was finally passed on in July 2014.

Some Paulistanos remain dubious about how the plan re-envisions their city. Some communities, such as the leafy Jardins district, have balked at the rezoning of their districts from “strictly residential” to “predominantly residential” — a change required to add the proposed commercial corridors to create mixed-use neighborhoods. They dread noise, pollution, skyscrapers — the end of Jardins village life as they know it. (“What does ‘predominantly’ even mean?” grumbled one resident to O Globo newspaper. “The law doesn’t say!”).

“Political rivalry, economic interests, and finite time, space, and money — these are the issues that make affordable housing so complex in every capitalist democracy, whether New York or London. But São Paulo, city of extremes, is taking them to the nth degree.”

Others have noted that transit-oriented development assumes there’s a functional transportation system. With only 45 miles of subway to serve a metropolitan area of 20 million people, São Paulo’s metro, though speedy, is notoriously overloaded; at rush hour, it makes a sardine tin seem comfortably snug. The bus system, while improved by the addition of bus rapid transit under Haddad, fares little better. For density increases in transport corridors to have any practical effect, the city will have to continue apace with the construction of several new subway lines currently underway and continue its expansion of BRT, neither of which were certainties even before Brazil’s economy collapsed.

Also complicating Haddad’s vision of a denser 21st-century city is the specter of scattershot overdevelopment. The mayor and his team have had to reassure residents that their pleasant, low-rise neighborhoods won’t be “taken over by skyscrapers,” saying that the city learned its lesson from areas like Moema and Perdizes, where anonymous gray concrete towers proliferated in the 1970s and ’80s. Landing at São Paulo’s Congonhas domestic airport, the view is more Hong Kong than Chicago — not a skyline per se but a daunting expanse of high-rises in every direction, as far as the eye can see. It’s easy enough to understand why residents lucky enough to live in low-slung areas would jealously guard their breathing room.

There is also plenty of straightforward NIMBYism. Residents of newly rezoned areas blanch at the notion of public housing going up in their neighborhoods. An April 2015 article in El Pais entitled “Public Housing in Elegant Areas — No Way!” documents the backlash against the plano diretor in wealthy neighborhoods. In Vila Leopoldina, in São Paulo’s west side, residents of a luxury condo building (think tennis courts, swimming pools and million-dollar flats) claimed that a ZEIS public housing complex planned for a former bus parking lot would lower home prices, increase crime and cause current residents to flee. A “note of repudiation” sent by the neighborhood association of Parque Continental says the master plan “allows the invasion of upper-class and middle-class areas.”

São Paulo’s real estate industry also managed to whittle away at the affordability requirements of the solidarity quota during the plan’s negotiation process. Originally, it called for a mandatory 10 percent of low-income units in all projects 10,000 square meters or up, in exchange for a concession of more buildable land. The final version raises the floor to 20,000 square meters and offers alternatives of either building the affordable housing on a completely different lot or paying into the new Urban Development Fund a fee “equivalent” to the cost of the unbuilt affordable units. The former, say critics, renders moot the goal of mixed-income inclusion, while option two avoids building low-income housing entirely.

New York City’s experience with optional inclusionary zoning — and common sense — indicates that developers are likely to choose the most profitable options. Under the administration of Mayor Michael Bloomberg, the real estate industry undermined optional inclusionary zoning via technical loopholes as ingenious as they were distasteful, such as building so-called “poor doors” — separate entrances for residents of affordable units — in mixed-income buildings. In other cases, developers also opted to build the required affordable units on other lots in different, often poor, neighborhoods.

Compromise and concessions are a part of the political game, and were particularly inevitable in this case, Bonduki says. “[Critics] have no idea how difficult it was to get approval … of the solidarity quota. It was a big deal that we did it … considering the force of the real estate industry here. The final result is … an improvement over the original proposal that came from city hall.”

Most housing advocates agree that the plan that ultimately resulted from this participatory, multisector process was the better for it. “It wasn’t a top-down plan from the mayor’s office,” says Simone Gatti, a professor of architecture at the University of São Paulo and a researcher for urban watchdog The Polis Institute. “Universities, social movements, the private sector all participated. And much of what was discussed in the public hearings ended up in the plan.”

“It represents a major advance in urban policy,” Bronzini says.

The LONG GAME

The master plan builds on a progressive urban planning agenda that has helped dramatically reduce inequalities in São Paulo over the past 15 years. In 1988, Brazil, three years after reestablishing democracy, penned a new constitution. Responding to decades of swift urbanization that had spawned countless favelas, it included a recognition that slum dwellers had the right to remain on their land.

But it wasn’t until the passage of a 2001 law commonly known as the “city statute” that local governments had a federal mandate to create concrete legal tools to address the problem of “irregular” urban property. The city statute ordered municipalities to “combat segregation, territorial exclusion and the prevalence of inhumane, unequal and environmentally predatory” living conditions, according to a 2010 Cities Alliance analysis. And it gave municipal governments “a legal basis for investing in an area, providing the opportunity to build, invest and redesign, even where property title is unclear” as it often is in informal settlements, says Rossbach, a co-author of the report. Essentially [the statute] was a national call for favela upgrading.”

Under Mayor Marta Suplicy, then of the Workers’ Party, São Paulo jumped at the opportunity. At the time, inequality was extreme. A 2002 report by her administration used the United Nations human development index to determine that Moema, Sampa’s richest district, had a higher standard of living than Portugal, while the Marsilac favela complex was worse off than Sierra Leone, the world’s poorest country.

The city created a strong slum-upgrading investment program. Rossbach was on the team that in 2002 mapped the entire city — including, for the first time, its slums. They designated 138 square km of urban land as ZEIS, including 122 square km of existing slums to be upgraded and protected and 13 square km of vacant or underused land slated for new social housing developments.

Over the past decade, São Paulo has made strides in improving living conditions in its favelas. Almost all now have water and electricity, Rossbach notes, and forced evictions have declined, thanks to increased recognition of tenancy. The city’s GINI coefficient, a measure of inequality, has declined to .5 — in line with the Brazilian national average and better than Rio de Janeiro. In the U.S., that’s roughly equivalent to Los Angeles (which is nonetheless highly unequal by rich-world standards).

But new affordable housing did not progress apace. Many ZEIS were located in districts of more real estate speculation, says Patricia Samora, a professor of architecture and urban planning at the Pontifica Universidade Catolica in Campinas. She worked for the city’s housing department from 2001 to 2004.

“Developers much preferred to build shopping centers, or offices in those places — anything but low-income housing,” she says. As the real estate industry lobbied (generally unsuccessfully) to get the then-novel ZEIS designation removed, “development in these areas remained frozen.” Today, says Samora, “redevelopment in areas with transit and access to jobs is the [new] theory of ZEIS. But in practice, if the market [once again] doesn’t respond, poor people will continue to find housing only in remote areas without urban infrastructure.”

Brazil lacks national subsidies, such as vouchers, that could provide poor people access to a wider array of housing choices. The only federally funded housing program, “Minha Casa, Minha Vida” (My House, My Life), subsidizes construction of affordable housing, but a 2008 government analysis, the most recent available, shows that those units have rented to families earning on average twice minimum wage, out of the poorest families’ reach.

The new master plan closes loopholes that had similarly left the lowest-income households out in the cold. Previously, the 40 percent of construction on ZEIS land priced for “low-income” tenants lumped together residents making under minimum wage with those earning up to six times minimum wage (about $1,340 a month U.S.).

Developers exploited this ambiguity “to build exclusively for the highest earners within that bracket — those earning three to six times minimum wage,” Gatti says.

Technically, developers were fulfilling their legal obligations. But, Gatti says, “most of the new social housing built by the private sector in the past decade has been priced beyond the means of the city’s poorest residents.” Going forward, 60 percent of all social interest housing must be built for the poorest residents, and the income cap is three times the minimum wage.

Even so, some segments of the population still are unlikely to be able to access affordable housing. For example, São Paulo’s substantial homeless drug-user population is unlikely to benefit from the master plan, even though numerous lots near the city’s so-called “Cracolândia” (Crackland) in downtown are designated as ZEIS and homeless movements were major players in the master plan debate, says Bruno Gomes of the nonprofit Centro de Convivencia E de Lei.

Gomes, who works in Cracolândia, says drug users have been largely excluded from the process. “The biggest urban social movements [today] are related to housing, and typically the people who participate in those movements get a house first. [But] usually,” Gomes says, “they don’t accept drug users.”

Still, despite gaps, question marks and real challenges to implementation, the ZEIS-plus-solidarity vision is a wonky one-two punch poised to redefine what progressive housing policy can — and maybe should — look like, in developing countries in Latin America and beyond.

The New Urban Agenda, in Practice

With its custom-tailored renditions of such fashionable concepts as adaptive reuse, transit-oriented development, mixed use and inclusionary zoning, the master plan is remarkably consistent with the international best practices that emerged from the United Nations’ recent updating of the Millennium Development Goals, which created the new Sustainable Development Goals (SDGs).

Among the 17 SDGs, which were adopted universally in September 2015, is a call to member states to “make cities inclusive, safe, resilient, and sustainable.” That goal, number 11 on the list, gives cities targets to meet by 2030, including adequate, safe and affordable housing for all (including slum upgrading), equal access to public transit, inclusive and sustainable urbanization processes, and increased capacity for participatory planning. A separate goal calls for reducing inequality within and among countries.

With provisions aimed at meeting numerous criteria of these goals, Haddad hopes São Paulo’s master plan will garner interest from other cities at the Habitat III global conference in Quito, Ecuador, in October 2016. As one of the first UN global summits to be held since the adoption of the post-2015 development agenda in September 2015, Habitat III should provide an opportunity to discuss how to actually implement such lofty goals.

“Both ZEIS and the city statute will be important Brazilian inputs into the debate,” says Rossbach, who has been working on the sustainable development goals for Cities Alliance. “Recognizing the right of slum dwellers staying where they are as well as reserving land for social housing,” are notable achievements, whose implementation over the past 15 years offers crucial lessons to other developing countries.

For example, São Paulo’s master plan demonstrates that in order to actually upgrade its slums, a city must first map them, then formalize them and, last but not least, protect residents from displacement.

“You don’t see that in other countries,” Rossbach says. “Many don’t even count slum residents in their national census … . I hear mayors saying things like, ‘oh, we cannot provide water to this family because this settlement is illegal.’ [Brazil] overcame that with the city statute.”

Based on reactions she’s already seeing in the Habitat III planning process, Gatti also anticipates that despite their untested nature, São Paulo’s ideas will gain notice from developing world governments at Habitat III. “The plano diretor has managed to turn the statute into practical applicable tools. The ZEIS is something people have never seen anywhere in the world.”

ZEIS is an interesting counterpoint, for example, to Chile’s affordable housing policies, which are subsidy based but include no right to the city, and have thus continued existing social segregation.

Hickey, the U.S. housing expert whose recent research has focused on inclusionary zoning, highlights a lesson ZEIS could offer even to the developed world. “The history of the ZEIS in Brazil seems to acknowledge that different neighborhoods require different housing strategies,” he says. “This is instructive for U.S. cities, as most would benefit from a multipronged housing strategy that doesn’t rely on just one housing policy to meet a city’s diverse housing needs.”

AN UNCERTAIN FUTURE

But any plan is only as good as its execution. The tensions embedded in São Paulo’s urban fabric —luxury versus low-income, status quo versus change — already promise to complicate, slow and probably amend the Haddad administration’s vision over time.

“The fact this is the law now doesn’t mean it will be implemented,” Gatti says. “Much of the master plan’s success will depend on the next government.”

There is little indication that Haddad, whose approval ratings hover around 15 percent, will be leading it. Beyond that relative certainty, a deepening national crisis about kickbacks to the state-run oil company Petrobras has turned everything else onto its head. In December 2015, impeachment proceedings were launched against Brazil’s president, Dilma Rousseff, of the Workers’ Party; her predecessor, Luiz Inácio da Silva, who was once wildly popular, is under criminal investigation for misuse of power. The scandal is taking down the Workers’ Party with it, and current polls show Haddad in last place, behind frontrunner Celso Russomanno of the Brazilian Republican Party and former Sampa mayor Marta Suplicy, who left the Workers’ Party last year for the Brazilian Democratic Movement Party.

In general, Brazil has “a structural problem with continuity of projects when there’s a transition of power in the executive,” notes Bronzini. In this case, continuity is particularly challenging because the master plan will require vigilant monitoring and enforcement to work. Housing advocates note that even under a populist mayor like Haddad, São Paulo has shown weak enforcement of the private sector that allowed much of the ZEIS’s potential to go unrealized.

“The difficulties of implementing [the plan] are numerous in a context with little market regulation,” Samora says. Without strong oversight, developers “in São Paulo or any city with high land values will only produce housing in peripheral areas without making use of ZEIS for their new projects.”

Gatti agrees. “The ZEIS is a very strong instrument with great potential to bring poor people into areas that they don’t currently live, to fill vacancies and utilize underused areas. It’s great, but alone it’s not enough,” she says. “On top of a [ZEIS] designation, you need to regulate those areas. We have to ensure that public funding earmarked for ZEIS actually goes to ZEIS, that there’s a public investment in public housing. In the U.S., you have this whole municipal management structure — huge housing projects that are paid for, maintained and overseen by city agencies. In Brazil, there’s no such thing.”

Additionally problematic are Brazil’s crumbling finances. The master plan was written as the country’s economy grew at a clip of 4 to 5 percent annually. In 2015, the economy actually contracted by 3.7 percent, the currency lost nearly 50 percent of its value, and the prognosis for 2016 is little better. Federal funds once destined for urban initiatives around transit and subsidized housing have not arrived. The next administration will almost inevitably have to tighten purse strings.

“The economic crisis is making housing production more difficult,” Bonduki affirms. “We anticipated the difficulties stemming from [the master plan’s] basic concept, because it breaks with socio-territorial segregation and [challenges] the real estate market. With political will and boldness those could be dealt with. [But] we didn’t envision this scenario in 2014 when the master plan was approved.”

With so much uncertainty, for São Paulo, the participatory process that the Haddad administration insisted on for the development, negotiation and approval of the plano diretor may be one of the plan’s most lasting achievements.

“The next government may give more or less importance to specific reforms Haddad has made,” Bronzini says. “But there was a lot of buy-in to this plan. Civil society will want continuity. If the next mayor doesn’t prioritize it, that would probably become a major problem for that person. Haddad has instilled in this city a political culture of participation. That will be difficult to roll back.”