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On Monday, the Atlanta City Council passed legislation to help protect affordable housing in Southwest Atlanta.
The initiative, introduced by Councilwoman Cleta Winslow, creates what’s called an “Urban Enterprise Zone” (UEZ) — an area where real estate developers can earn tax breaks in exchange for investment — in Mechanicsville, a neighborhood immediately southwest of where Interstate 20 and the Downtown Connector meet.
Now part of a UEZ, two existing affordable housing developments on the 200 block of Richardson Street are expected to be rehabbed and return priced for families earning 60 percent of the area median income or less.
Combined, the complexes total 181 affordable units in need of an update, Winslow told SaportaReport in a recent interview. She said the impetus for the new UEZ initiative stems from a need to protect existing affordable housing options, adding that a developer has already been enlisted to tackle the rehab work.
The UEZ system, which Winslow said was popular in Atlanta in the 1990s but fizzled after the Great Recession, seems somewhat reminiscent of the Federal Opportunity Zone program, which offers tax incentives to developers who invest in low-income communities that might otherwise go overlooked.
In Mechanicsville, real estate firm Jonathan Rose Companies is poised to take on the restoration job. But Atlanta Housing CEO Eugene Jones has told SaportaReport in the past that he’s skeptical of the standard OZ model — and apparently the UEZ model, too — which he says doesn’t adequately entice developers to build equitably and hasn’t worked to produce mixed-income communities as expected.
Additionally, The New York Times editorial board, in a November opinion piece, said OZs “let the wealthy avoid capital gains taxation by investing in projects or companies in designated geographical areas… In reality, the tax break is being used to juice the profit margins on projects like a proposed luxury condominium development at a “superyacht marina” in ritzy West Palm Beach, Florida.”
During a recent interview, Jones told SaportaReport he thinks city officials are “going to tie this [legislation] to opportunity zones because now you have to find syndicates that want to do a deal … they’re all based on [return on investment]. What are these investors going to get?”
Jones added that creating new UEZs seems superfluous, considering the city has already enacted inclusionary zoning policies that require developers seeking tax breaks to earmark some residential units for affordable housing.
“We’ve already got [inclusionary zoning policies] and all that,” Jones said. “What is this going to add, and how much is it going to cost us? And how do you compel a developer to do something? How do you keep their feet to the fire?”
Winslow, however, said she believes the more mechanisms for producing and preserving affordable housing the city has at its disposal, the better. “In places where we can keep it affordable, we want to be able to do that,” she said. “We don’t want to be like D.C.”