Affordable Housing Institute : US

Because affordability always costs money, and the local resource menu is limited, often an innovative locality has to use several different programmatic interventions in an overall strategy:

 

I like my tenure mix shaken, not stirred

 

– as illustrated by this enterprising effort described in the Atlanta Journal-Constitution:

 

The Atlanta Housing Authority announced a program Wednesday to provide up to 5,000 newly built apartments to people who earn what teachers and nurses do.

 

As I’ve documented at length, workforce housing remains a major local issue — and, remarkably, not yet a national one, which means that localities have to scramble to get enough resources to make a meaningful dent in the affordability problem:

 

Income price increases!  Scramble!

 

Many people at this income level are shut out of in-town living because of Atlanta’s spiraling housing prices.

 

Lost among all the press coverage of the subprime shakeout is the underlying dynamic: most home prices are still at historically high levels, placing a strain on those seeking to move up the housing ladder:

 

The median rent in the city is $770 a month [HUD’s FMR is $779 — Ed.], and the median value of a house is $218,500, according to the 2005 American Community Survey.

 

There continues to be a huge divide between the owns and own-nots, as illustrated by some basic arithmetic:

 

It’s very amusing to watch you calculate

 

Rent.  The Federal affordability standard is 30% of income for rent (including utilities), so $770 a month rent is affordable to a family earning $30,800 or more, or less than 45% of the $67,100 median income (click here for detailed calculations).

 

Homeownership.  As a rule of thumb, first-time buyer normally can afford a home roughly three times her annual household income, so a $218,500 house implies a $72,500 family as its buyer.

 

Don’t think; the thumb rules!

 

As we saw above, the median Atlanta family’s income is $67,100, just over the homeownership threshold.  No surprise, therefore, that just under 50% of all Atlanta households are homeowners — the numbers largely check out.

 

A recent study by Atlanta showed that many city employees are priced out of homes in the city.

 

Roughly half, I’d say.

 

Is that good news for affordability, or bad news?

 

“What we’re trying to do is leverage all the tremendous development that’s going on in Atlanta,” said Renee Glover, executive director of the Atlanta Housing Authority.

 

Renee Glover, trying to lever development

 

“The question for providing housing for Atlanta’s work force is to close the affordability gap as land costs and construction costs keep going up.”

 

Good for Atlanta for creating a program.  What are the elements?

 

The housing authority’s program, called rental assistance, will provide developers with an incentive to build affordable units.  Developers whose apartment projects are approved by the authority will be guaranteed 10 years of rental subsidy.

 

In effect, the AHA is underwriting a ten-year lease, backed by Section 8-type income subsidy.  Makes perfect sense.

 

The approach is different from the housing voucher program, also known as Section 8. Vouchers are assigned to residents, who can move from one residence to the next. Rental assistance will create apartment complexes that will serve lower income workers for 10 years, Glover said.

 

To prevent developers from building housing projects, like those the housing authority has been tearing down for more than a decade, the new program will require that no more than 40% of the units be affordable.

 

Thus AHA is explicitly embracing income mixing, and deconcentration of poverty, converting itself from simply being a housing provider to a housing facilitator.  It will be this kind of thinking that will cut public housing’s Gordian knot:

 

The restriction won’t apply to apartment complexes built for the elderly, which are open to those 55 and older who meet income requirements, Glover said.

 

About 3,000 units are expected to open in the next two years, Glover said. The housing authority will subsidize the rent of a family of four with an annual household income of up to $40,260.

 

That’s 60% of median income, equivalent to the LIHTC credit cap — so what we have here is an Atlanta-based home-grown variation of portable Section 8 (albeit tied to a specific property for ten years, akin to project-based vouchers).

 

The housing authority unveiled the program the day before its leaders are to appear at a specially called session of the Atlanta City Council’s Community Development Committee.  Among other issues, the committee wants to discuss the authority’s recent and controversial decision to demolish its remaining dilapidated multifamily complexes and two senior residences within the next several years.

 

The signs have been present for years

 

More evidence of forward thinking: some properties need to go somewhere to die. 

 

Today is a good day to demolish bad public housing

 

Good for Ms. Glover for having the guts to do the right thing, all of which is part of a decade-plus long plan:

 

In 1994, an Inspector General’s Audit Report on AHA found conditions unsafe, unsanitary, and poorly managed.  Eighty-eight percent of inspected units did not meet minimum safety and sanitary standards, and there was a backlog of 7,100 maintenance work orders.  Many units were boarded up, and others had missing or defective windows and doors, electrical hazards, leaking and backed up toilets, rodent infestations, and lead-based paint.  AHA’s larger housing projects displayed signs of severe social distress.  In some projects, residents lived in constant fear of gunfire, violence, and victimization, and drug traffickers operated out of the housing projects, often using children as lookouts (HUD, 1994).

Neighborhood kids watching a suspected drug dealer being searched

After several attempts to rehabilitate the housing projects failed to produce any noticeable improvement in the social conditions of households, AHA embarked on a strategy to demolish the properties and replace them with mixed-income communities.  The mixed-financing model (Boston, 2005) was intended to make the communities as self-sustaining as possible. To facilitate this, each community employed a mix of subsidized units and market-rate units.

[…]

AHA converted the Clark Howell Homes public housing project into Centennial Place. Centennial contained 41% public-housing-eligible units, 17% rent-subsidized units, and 42% market-rate rental units. 

 

Educational scores at Centennial Place

 

John Eagan Homes was converted into Magnolia Park, with a 40-20-40 mix. AHA revitalized East Lake Meadows into The Villages of East Lake, with a 50-50 mix of public-housing-eligible units and market-rate units (AHA, 2002).  In fiscal year 2005, these communities created a $1.1 million operating surplus that partially offset the $2.4 million operating deficit of its conventional public housing projects (AHA, 2005).  Each property is now managed by a private management company as a market-rate community.  The affordable units “float,” meaning that public-housing-eligible units are integrated throughout the property.

 

[…]

By 2005, AHA had completely demolished and reconstructed six public housing projects, and four more were under construction. The completely revitalized properties have 3,404 rental apartments, of which 40.6% are reserved for public-housing-eligible residents, 23.1% provide rent subsidies for low-income households, and 36.3% are leased at market rates. Ultimately, AHA will replace 6,418 rental units originally designated as public housing with 5,837 mixed-income rental units, 2,256 of which will be reserved for public-housing-eligible households. Housing vouchers are the primary means of assistance provided to households that do not move into mixed-income communities.  In general, there is a strong preference for housing vouchers among currently assisted households and those seeking housing assistance for the first time.  For example, as of December 31, 2004, there were 21,387 households on the waiting list for vouchers.  Households displaced by revitalization are moved ahead of wait-listed households.

 

Ms. Glover’s been at it for a dozen years.  Judging by her track record, she knows what she’s doing, and Atlantans benefit.

 

A right to smile

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