Does Atlanta’s proposed FY24 budget underfund its affordable housing trust?

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For the city of Atlanta to properly fund the affordable housing trust it created in late 2021, it should allocate nearly $12 million—or 1.5%—of the $790 million proposed budget for the 2024 fiscal year that starts July 1.

So says the Atlanta City Council ordinance that created the trust, which is the only line item in the draft budget specifically designated for affordable housing.

But the draft budget released May 1 calls for only an $8 million infusion—or about 1% of the total. That exceeds the $7 million initially allocated this year by some 15%, but falls well short of the annual funding expectations laid out in the ordinance.

In a joint statement emailed to Atlanta Civic Circle on Wednesday, the city’s chief financial officer, Mohamed Balla, and Dickens’ senior housing advisor, Joshua Humphries, blamed that on inflation.

Balla and Humphries highlighted in the statement that the $8 million earmarked in the FY24 budget is still an increase over the $7 million FY23 allocation, adding that the housing trust fund—which includes money from the Gulch redevelopment deal—currently contains $26 million for existing city of Atlanta programs, such as owner-occupied rehab, anti-displacement tax relief, and public land development for housing.

They also said the city is funding affordable housing through a proposed new $100 million bond issuance awaiting the city council’s approval—and that there’s also $94 million still available from a 2021 Housing Opportunity Bond.

The legislative language matters

Atlanta Mayor Andre Dickens almost didn’t fund the trust at all last year, until housing advocates and constituents pressured him to allocate the $7 million for FY23, saying they didn’t want to see any affordable housing funding source shortchanged. They still don’t.

The 2021 measure funding the affordable housing trust was sponsored by most of Atlanta’s 15 city councilmembers—including Dickens. It said the goal, to be phased in over three years, was to appropriate 2% of the city’s general fund budget every year for affordable housing.

The ordinance says the general fund should earmark 1% for the affordable housing trust in FY23, 1.5% in FY24, and a full 2% by FY25 and thereafter—barring any extenuating economic circumstances, such as inflation outpacing revenue growth. 

But that language is found in a nonbinding “WHEREAS” clause—a paragraph meant to lend context to legislation—and that clause is what all the fuss is about.

Balla and Humphries implied in their May 10 statement that inflation is preventing the city from meeting the 1.5% goal of $12 million for FY24. 

They said the current inflation rate for metro Atlanta is 7.2%, according to the U.S. Consumer Price Index, which compares with a proposed Atlanta budget increase of just 4.7%.

Even so, the city is committing $8 million, according to Balla and Humphries’ statement, “despite the parameters suggesting no increase to the housing trust fund.” 

Policy experts push back

Kyle Kessler, the policy and research director for the nonprofit Center for Civic Innovation, told Atlanta Civic Circle that the city’s interpretation of the ordinance—and the part of the city charter it amended—is discouraging. He doesn’t think the inflation caveat is valid.

“If we’re going to stay on trajectory to getting to the 2%, which is what the charter says we need to get to [by FY25], then 1.5% is a great intermediate step so it’s not such a shock to the system to the future budget cycle,” he said in an interview. By falling short in the upcoming FY24 budget, he added, “We’re kicking the can down the road.”

If the city cannot feasibly meet the current $12 million funding goal for FY24 that’s prescribed by the housing trust’s enabling ordinance, then Atlanta’s chief financial officer must explain why to the city council, Kessler said.

He pointed to the legislation’s language in Atlanta’s municipal code: “The chief financial officer shall present a report to the City Council addressing any concerns or considerations during the annual budget adoption process and making a recommendation to approve, reject, or modify any appropriations.”

“Apples to oranges”

Kessler said he doesn’t doubt the Dickens administration’s commitment to ameliorating Atlanta’s housing crisis, mentioning the city’s announcement earlier in May of $300 million to build and renovate affordable housing—the proposed $100 million in city bond funding, plus $100 million in grant funding from the Community Foundation of Atlanta and another $100 million that the nonprofit plans to raise.

“Housing is clearly a focus of this administration,” he said. “I don’t think that’s in question. But the city council, through legislation, has put mandates in place, and we need to make sure we’re addressing those as well.”

What’s more, Kessler said, the proposed $300 million will be directly dedicated to building and preserving housing, whereas the trust fund is used for complementary initiatives, like funding for the Atlanta Volunteer Lawyers Foundation’s eviction prevention efforts, or Wholesome Wave Georgia, a nonprofit which helps low-income Atlantans access healthy food.

“It’s apples to oranges,” Kessler said. “We need to do both of these things, not let one take the place of the other.”

What about the lowest-income renters?

Dan Immergluck, a Georgia State University urban studies professor, agreed with Kessler, saying in an email that grants from the trust fund are better suited to help Atlanta’s poorest residents than loans in the form of bond funding for housing development projects. 

“Bond funding alone is limited in its ability to provide the sort of deep affordability for people making less than $30,000 in the city,” he said. “The bond money to projects will be made mostly in the form of loans which have to be paid back. The money to the trust fund does not have to be paid back, so it can be provided to projects as very low-cost financial equity or grants, which are critical for projects where rents are lower—more deeply affordable.”

Immergluck added that the city shouldn’t rely on an “inflation loophole” to excuse itself from its commitment to the trust. “If the administration is going to use loopholes to try to worm its way out of a clearly intended commitment, it seems that deeply affordable housing is no longer a high priority,” he said. “Or perhaps the city is not committed to helping low-income families live in the city, and will focus more on projects that appear to count as affordable housing, but don’t serve those most in need.”

With property values on the rise, Immergluck added, “it seems that the city can devote a modest portion of that increased wealth to help the folks who are most hurt by rising values and rents—low-income renters.”

Are there better funding streams?

Another frequent critic of the city’s housing policy, former Invest Atlanta board member Julian Bene, said the nearly $4 million shortfall for the housing trust in FY24 is small potatoes; instead the city should be pressuring Fulton County to adequately tax commercial properties and use that some of revenue for affordable housing initiatives. 

“The difference in the money involved seems too small to have any real impact,” he said in an email. “Why expend energy over crumbs? The mayor’s office knows the only source of real money to address affordable housing is to get commercial properties paying property tax closer to market value.”

That could unlock hundreds of millions of dollars for the city, the county, and metro-area public schools, Bene said, “but the challenge is how the city and the public can get Fulton County to get off their duffs and do their job on taxing trophy towers at their real value.”

Atlanta Civic Circle is publishing this story as part of ATL Budget, a civic engagement project done in partnership with Capital B, Canopy Atlanta, and the Center for Civic Innovation, to help you understand where your tax dollars will go—and how you can have a say about it. To keep up, follow #ATLBudget on Twitter and Instagram.