In Charlotte, the population is on the rise, just like in Atlanta. The North Carolina city is also witnessing big-money real estate investors buy, fix and flip properties, just like they do in Atlanta. All that means, of course, that rent prices, even in long-affordable areas, are skyrocketing, just like they are in Atlanta.
So, when a Fast Company headline read, “Charlotte may have cracked the code on affordable housing. Here’s how,” we at Atlanta Civic Circle took note. After all, what major city could earnestly claim it had wrangled a socioeconomic issue that’s so long plagued so many?
Charlotte’s efforts, unsurprisingly, aren’t the be-all, end-all to the housing affordability crisis. In short, investors and community leaders there focused their attention on preserving what’s called naturally occurring affordable housing — or, NOAHs — which refers to existing housing that remains affordable for lower-income households without government subsidy.
It’s not exactly a novel concept — organizations like the Atlanta Land Trust, Enterprise Community Partners and PadSplit deal with a lot of NOAH properties — but it’s a strategy that’s underutilized in Atlanta. One that has the potential to at least further move the needle on something the city has struggled with for decades.
Per the Fast Company story:
Moha Thakur, policy associate at the National Housing Trust, a national nonprofit focused on preserving affordable housing, says NOAH investments are powerful but rare. ‘Most investors are probably hoping to receive a rate of return that is higher than what is generated by affordable housing, which poses a problem for developers who are trying to seek out funding but also maintain some level of affordability,’ she says. Compared to for-profit real estate investments with returns upwards of 15 percent, the return on investment in naturally occurring affordable housing is typically in the single digits.
It’s a model that clashes with greed, a system that calls on investors to look beyond the possibility of a quick, large return on investment and instead appreciate their capacity to make a difference in the community. By focusing on preserving NOAHs, investors could likely expect a slow, steady trickle of income and provide affordable housing without having to rely on government funding like the Low-Income Housing Tax Credit program.
“What the market sometimes lacks is something of a combination of the two, a developer with experience in the unsubsidized housing but with the dedication to maintain good quality long term affordable housing,” Thakur told Fast Company.
In Charlotte, that mentality translated into the creation of a $58 million “Housing Impact Fund,” which is dedicated specifically to renovating and preserving NOAHs. Additionally, Charlotte’s affordable housing bond program was recently tweaked to include provisions for such preservation projects, not just new construction.
In Atlanta, where city officials recently launched a new $100 million housing opportunity bond program of their own, tens of millions of dollars in bond funding is set aside for preserving affordable housing, but, if Charlotte’s apparent success is any indication of how such an approach works, more private investment could boost that effort.
“The renovation and preservation of existing housing stock is the most efficient way of combatting our affordability shortage,” Atlanta City Councilman Matt Westmoreland, told Atlanta Civic Circle. “The housing bond we passed last month will provide real resources for work in this area. And the city council is committed to establishing a recurring local funding source to provide additional investments.”
In major cities nationwide, three-quarters of the 12 million affordable rentals units remain unsubsidized, according to Harvard University’s Joint Center for Housing Studies. Still, no doubt, Atlanta needs to build, build, build affordable housing. But community leaders can’t overlook the underutilized stock that might be withering away next door.
(Header image, via Atlanta Neighborhood Development Partnership: An affordable home in Atlanta’s Pittsburgh neighborhood.)