Atlanta Looks to Europe for a Solution to Affordable Housing

The city of Atlanta is taking a page from Europe’s playbook to confront its housing crisis. Later this month, the mayor’s office will begin to form an “urban development corporation” to eventually produce a type of mixed-income housing never seen here before.

The Atlanta Urban Development Corporation (AUDC) will be “an operationalization of the Affordable Housing Strike Force,” Mayor Andre Dickens’ chief housing advisor, Joshua Humphries, told Atlanta Civic Circle this week. Dickens created the strike force last year to bring various municipal housing efforts under one city hall umbrella. 

In forming the AUDC, the city is essentially launching a development group that will initially be funded by the affordable housing trust fund and eventually be staffed by real estate professionals and supported by city employees. The goal is to consolidate publicly owned property, partner with private developers, and build housing that’s affordable to Atlanta’s middle- and low-income residents.

Development corporations are ubiquitous in European countries, Humphries said, and the city of Atlanta is especially eyeing the so-called “social housing model” embraced in places like Copenhagen, Amsterdam and Vienna. “Social housing takes the best pieces of U.S.-style public housing and the best pieces of private-market housing development and brings them together,” he said. “This allows for a higher percentage of market-rate units in a project than you would see in traditional public housing.”

The AUDC would spawn residential complexes often owned—at least partially—by the city. At least a third of the units would be affordable for households earning no more than 80% of the area median income (AMI)—or about $77,000 for a family of four. At least half of those affordable units would be earmarked for households earning 60% of the AMI or below.

Currently, affordable housing projects in the metro area primarily depend on financial help from the Georgia Department of Community Affairs. But with the state’s Low Income Housing Tax Credits (LIHTCs) becoming increasingly competitive, the goal of the AUDC is to devise a development model less reliant on public subsidies. “We have less availability to use the primary tool that’s created affordable housing units in the city,” Humphries explained. “I think it’s incumbent on us to do everything we can to create new affordable housing units—using different models and different sources than we historically have.”

And having some market-rate units spread throughout an otherwise public housing development “actually helps cross-subsidize within the project itself, so once you get the thing going, you can perpetuate the affordable housing units over time.”

Georgia State University urban studies professor Dan Immergluck, one of the most ardent critics of the city’s housing policies, is cautiously optimistic about the AUDC plan. “I actually like this concept,” he told Atlanta Civic Circle in an email, noting that the model has been tested domestically, too—in Maryland, Rhode Island, Washington and California. “There is an emerging trend toward building public/social housing development entities around the country to get government back in the business of building deeply affordable housing through a mixed-income housing approach.”   

Immergluck warned the city to prioritize transparency as its development corporation takes off and said “deep affordability and production volume” should be top of mind. 

“The concept of using market-rate housing to develop income to help cross-subsidize deeper affordability on public land makes sense, as long as substantial numbers of deeply affordable units are built,” he said. “Sixty percent AMI is not as good as 50% AMI is not as good as 30% AMI, where the greatest needs are.”

Terri Montague, a senior lecturer at Emory University School of Law and an expert on housing, agreed that the AUDC could “help broaden the city’s finance capacity beyond its historical reliance on tax-driven tools,” like LIHTCs, tax allocation districts and tax-exempt bond issuances. 

“The AUDC would build on Atlanta’s history of using redevelopment authority subsidiaries and public-private partnerships to advance innovative or large-scale public purpose projects,” she wrote in an email. “To the extent that this new entity can generate or draw new funding sources for Atlanta and avoid cannibalizing local philanthropic and low-cost private loan funds that existing city housing partners depend on, the AUDC could prove beneficial to existing developers and projects, as well.”

Immergluck admonished the city for its “very poor track record” with public-private partnerships, asserting that the municipality too often affords developers public incentives disproportionate to the public benefits: “The private partners get most of the upside, and the city gets most of the downside. So it’s good to see that the city aims to have this be permanently staffed, but I fear the partnerships with private developers will be one-sided in favor of the private partners,” Immergluck said. “The devil will be in the details.”

This article originally appeared at atlantaciviccircle.org.

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