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Dear Decaturish – Lack of creativity and political will stalls affordable housing options in city of Decatur

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Dear Decaturish – Lack of creativity and political will stalls affordable housing options in city of Decatur

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Dear Decaturish,

High land prices, limited supply, and rapidly rising construction costs are combining to make development of new affordable housing units financially untenable for developers in urban centers, according to Conor McNally, a partner in a local real estate development firm and a member of Decatur’s Downtown Development Authority (DDA). [1] He suggested that City of Decatur leaders may need to look beyond inclusionary zoning or other incentives that target new development if they want to keep the city more affordable for middle income residents. McNally offered the case of Mill Creek Residential, the developer behind a planned mixed use development on the Bank of America lot that recently received a green light from the City of Decatur to proceed with this development with no units of affordable housing included. [2]

The inclusion of affordable units in every new development should not be abandoned by the city, despite the difficulties identified by developers. In other markets, even more expensive than Decatur’s, the following mechanisms accompany the affordability requirement and make it feasible to developers by allowing the developer to:

– Pay a fee to the City instead of building the affordable units (called in-lieu fee); this money can support affordable development elsewhere.

– Convert existing units s/he owns to affordable housing rather than building new ones.

– Substitute or apply affordable units from a previous project to comply with affordable unit requirements in a current project.

– Donate developable land to the jurisdiction or designated housing developer for future construction of affordable housing.

– Construct the required affordable units on a different site than the market-rate units.

Clearly the city cannot depend upon just one mechanism to increase the supply of affordable housing. A robust strategy could include the mandatory inclusion of affordable units in every development PLUS some of these complementary measures:

– Provide incentives to landlords to improve current rental properties instead of selling them.

– Implement a split-rate property tax system, also known as two-tiered property tax reform, which would differentiate property taxes into a lower tax rate for buildings and a higher tax rate for land. The objective is to encourage the improvement and renovation of buildings while creating a disincentive for land speculation and vacant buildings. (Info obtained from the Urban Institute’s report “Keeping the Neighborhood Affordable” 2006).

– Secure alternative funding from the foundation community, especially to support development of affordable housing options through the existing land trust in the City.

– Establish a Housing Trust Fund with a dedicated financing source to fund additional housing owned and operated by the Decatur Housing Authority for people at and below 50 percent of AMI. In-lieu fees could be placed in the fund.

– Preserve existing affordable housing, not build it, as laid out in this article: https://shelterforce.org/2019/02/19/preserving-affordable-housing-by-buying-not-building/

The city of Decatur has an affordable housing crisis. To abandon any one mechanism, such as requiring an affordable contribution of units in some fashion when any new development goes up, will only exacerbate the crisis rather than contribute to solving it. If some of these above mentioned policies had been in place when the project on Bank of America’s property came up, then more affordable units could have, at least, been developed elsewhere, if not there.

– Marty Collier

Marty Collier is a housing policy analyst and affordable housing advocate. She is currently the Housing Coordinator for the Statewide Independent Living Council of Georgia and may be reached at [email protected]

[1] “Decatur Development Authority explores affordable housing options”, by Cathi Harris April 15th 2019 Decaturish.com

[2] “Decatur City Commission approves Bank of America project changes” by Dan Whisenhunt Apr 14, 2019 Decaturish.com

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