As part of the city of Atlanta’s inaugural Affordable Housing Week, planning department leaders offered a crash course on how to become a residential developer.
The vast majority of residential developments sprouting across Atlanta command rent prices out of reach for lower- and middle-income tenants, because affordable housing developments almost never deliver a return on investment as high as for market-rate options. What’s more, public incentives to build affordable units are scarce and funding sources few.
To qualify for government and private funding for affordable housing, developers must aim to rent some percentage of the units in a mixed-rate complex to households earning no more than 80% of the area median income (AMI), which for Atlanta is about $77,000 for four people. Housing for sale must include units affordable to first-time homebuyers earning no more than 120% of AMI, which is just under $116,000 for the same size family.
Compounding the fiscal challenges are the zoning and permitting hurdles every developer faces. Plus, “getting the community’s buy-in is crucial,” Inyo Cue, a project manager for Atlanta’s Department of City Planning said during the Feb. 15 seminar — and obtaining the public’s blessing can be especially difficult due to the stigma associated with the term “affordable housing.”
Each step of the multifarious development process can be snagged by bureaucratic red tape or disgruntled neighbors — folks who adhere to the NIMBYist (not in my backyard) philosophy that’s long stunted affordable housing development in Atlanta.
The city’s Affordable Housing Week event, called “So You Want to be an Affordable Housing Developer,” broke down the complex path from project idea to leasing out units into five (theoretically) navigable steps. It drew a couple dozen metro Atlantans, some touting development experience and others bringing only ambition, to City Hall.
Faster permitting
The hour-long tutorial accompanied the launch of the city’s new streamlined permitting process — dubbed Welcome HOME (Housing Opportunity Moves for Everyone) — in a push to make it easier for both budding real estate developers and seasoned industry professionals to break into the low-income housing field.
The city’s planning department, said Atlanta Mayor Andre Dickens before the event, “has gathered a dedicated team to guide affordable housing applicants through the permitting process going forward.”
Planning department spokesperson Tameka Ojior told Atlanta Civic Circle that the city had just issued 13 permitting certificates for affordable developments already in the works during a Jan. 15 permitting assistance event.
As part of the new Welcome HOME program, developers can also schedule meetings with the planning department’s Concept Review Committee to get guidance navigating the rezoning and permitting process. Those meetings occur on the second and fourth Friday of every month.
Five steps to affordable housing
First comes the conceptualization phase, which can take as little as a year or as long as three, Cue, the city planning official, told the audience last Thursday.
Would-be affordable housing developers must first map out the broad goals for a project, which includes finding a development site, determining what the price per unit could be, and researching a parcel’s zoning designation. It also means identifying possible architects and grant writers.
One audience member encouraged inexperienced developers to diligently vet any grant writers they’re considering bringing aboard. “When you hire a grant writer, make sure the grants they’ve written have actually been awarded,” she said, adding that it’s important for them to understand the ins and outs of U.S. Department of Housing and Urban Development (HUD) regulations and other red tape.
Next, would-be developers have to analyze a project’s feasibility. This phase calls for assessing the cost to buy a property and build, comparing that to potential income, determining whether rezoning would be required and, perhaps most importantly, finding out whether a development would garner community support.
Cue said fostering community support is vital, because early-stage projects must be approved by local neighborhood planning units (NPUs) and then the Atlanta City Council. That includes winning any needed building permits and zoning variances – for instance, to build a four-unit apartment building in a neighborhood zoned for residential single-family.
“We try not to make that [zoning] process that much of a headache,” Cue said, but he advised finding a site ready for development.
Rounding out the feasibility phase, project leaders must consider the total costs, including the price tag for permit applications, design, and construction — and determine who will foot the bill, be it philanthropic organizations or government agencies.
Then it’s time to structure the deal that will become a master development agreement. By this point, developers should be applying for grants and subsidies from public and private sources.
Cue urged attendees to appeal for funding from HUD or state and local governments — including the Fulton County Development Authority, the city’s development authority Invest Atlanta, and the Georgia Department of Community Affairs.
“They’re always looking for qualified landlords,” Cue said of the government agencies that subsidize affordable housing. “It’s low-hanging fruit.”
The penultimate phase of this years-long process is when shovels actually hit dirt and people finally begin applying for residency: Construction and lease-ups.
“Construction is an exciting time when, finally, the physical development begins to emerge,” Cue said. It’s a hard-earned reward after negotiating community input, zoning and permitting issues, and financial closings.
Finally, in the operations phase, developers must acquire a certificate of occupancy from the city. From there, Cue said, it’s up to the development team to manage or find management for their property.
Ricky McKenzie, a commercial office developer in attendance, said the seminar better prepared him to wade into affordable housing development — but as simple as the city might make it seem, he knows it won’t be a walk in the park.
“The fact that [the city] put forth the effort to try to have these programs is good,” he said after the event. “It’s a start. At the end of the day, the city can’t do it all.”
Would-be affordable housing developers seeking direction from the city should visit the city of Atlanta’s housing website here.
What developer in their right mind would become an affordable housing provider? If you’re one of the unfortunate landlords for that section 8 or other government funded housing by city of ATL you were stuck in a bad spot. Last time I checked the city of Atlanta nor Fulton county paused or abated property taxes.
And the rental assistance was a joke a lot of it did not reach the landlords.
The city keeps having all these pitiful initiatives of generating affordable housing with a public/private partnership. The city just needs to build its own apartment complex and manage it. But they know as well as any competent business person managing apartment complex is difficult. I’m waiting to see what they do with that big tower they bought as they say they’re trying to find a partner but they’re really looking for is a patsy.
There’s a lot of adus in the city just people aren’t using them and if you do happen to build one Im sure the city will find the way to over regulate it. Bring the public housing back and let’s get these people housed.