The Atlanta City Council on Tuesday unanimously approved a $790 million budget for the 2024 fiscal year, including $8 million to the affordable housing trust fund created in 2021. Some critics have lambasted the city for earmarking such a small chunk of its largest-ever spending plan for housing initiatives, but others ask if tapping the general fund is the best way to fuel the trust, which funds a variety of programs to build affordable housing and protect tenants.
Although funding affordable housing from the municipal purse is well-intentioned, “it is not the optimal solution,” said Sherman Golden Jr., a senior attorney at Thompson Hine and the city’s bond counsel from 1993 to 1997. “The principal problem with this approach is that affordable housing dollars have to compete each year against other critical financial needs of the city,” he told Atlanta Civic Circle in an email.
Instead, Golden proposes earmarking taxes or fees specifically for the housing trust. He noted that the 2021 city council ordinance that formed the trust—which aims to direct a full 2% of the general fund to it by FY25—includes too many caveats determining whether or how the city should fund it.
The legislation says the city is only required to put money into the housing trust fund when it’s on solid financial footing. When housing advocates complained that allocating $8 million for the trust in FY24 would shortchange the goals established by the ordinance, Mayor Andre Dickens’ office blamed inflation.
The $8 million allocation for FY24 represents just 1% of the general fund, not the 1.5% target in the legislation, which would total $11.5 million. To rectify that, council member Jason Dozier proposed legislation on June 20 to add another $3.5 million to the housing trust in FY24 from the general fund’s uncommitted fund balance.
But the problem, Golden said, is that the trust fund’s “priority is lowered depending on the availability of funds for other uses, so that, from year to year, the available funding varies and is rarely likely to meet the percentage targets set out in the legislation, due to competing needs.”
Instead, he suggested the city find a new, dedicated funding source and proposed a few potential revenue streams: A “litter tax” on fast-food restaurants, convenience stories, and liquor stores; additional taxes on short-term rentals or real estate purchases; increased parking fees; or, perhaps most controversially, an “upzoning charge.”
Golden said “a formulaic fee imposed upon any requested increase in density of use of any parcel in the city, except uses related to providing affordable housing and eliminating homelessness,” could spur a windfall of funding for housing initiatives.
“This would include all commercial uses and all non-affordable residential uses,” he said, asserting that “increases in density are one of the root causes of lack of affordability,” because they can raise property values.
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But Alison Grady, a co-founder of the urbanist nonprofit Abundant Housing Atlanta, said complicating residential upzoning efforts would be a step in the wrong direction.
She told Atlanta Civic Circle that Golden is correct about upzoning’s capacity to boost land values, “but land is not homes.”
“If a plot of land is only zoned for one home, then the total cost of that property is accounted for in that one home,” Grady said in an email. “But if now there are, for example, 12 homes that can be legally built on that same plot of land, then each of those homes can be built to be much more affordable than that one, as the value of the land is divided amongst those 12 homes.”
“We desperately need more funds for affordable housing,” she added. “New smaller homes (like duplexes and townhomes) are almost always less expensive than new, detached single family homes. Why would we add a tax burden to those homes that are more affordable and discourage their construction, while not doing the same for their large, very expensive, detached counterparts?”
Grady said she and Golden agree that the city is in dire need of more funding for affordable housing and services for people experiencing homelessness. Perhaps commercial properties should bear more of that responsibility, she said.
“Commercial properties in Fulton County are being valued at far less than what they are worth, resulting in millions of dollars in lost revenue for the city of Atlanta every year,” Grady said, echoing calls for increased taxation from housing and policy experts like Georgia State University urban studies professor Dan Immergluck and former Invest Atlanta board member Julian Bene.“Ensuring that commercial properties pay their fair share could fill at least some of the gap needed to ensure that we fund the development of the affordable housing that we need,” she said.
Atlanta Civic Circle is publishing this story as part of ATL Budget, a civic engagement project 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.