Affordable housing developer, PRI, going out of business after 25 years

By Maria Saporta

The demise of Progressive Redevelopment Inc. — once the largest nonprofit owner and developer of affordable housing in the state — is a sad commentary of our times.

Specifically, it points to the nearly insurmountable hurdles that exist to provide supportive housing to those with the greatest needs — especially during trying economic times.

A reflective Bruce Gunter, one of PRI’s co-founders and its CEO, is now working without a paycheck, expecting to phase out what’s left of the organization within the next six months.

Bruce Gunter of Progressive Redevelopment Inc.

Bruce Gunter of Progressive Redevelopment Inc.

Because Gunter, his staff and his board have had several years to face the inevitable reality, they have been able to minimize the hardships for their ultimate clients — their residents — by transferring ownership and operations to others — insuring that the housing and support services will continue.

“Most of them are stronger,” Gunter said of the restructuring. “Most of them are going to be even better.”

Of their 27 developments, one dilapidated one was bulldozed in DeKalb County and has been turned into green space. Another one in East Point that couldn’t be saved will be bulldozed and turned over to a land banking authority.

That leaves 25 properties that will continue to fulfill the mission that brought PRI to life on Dec. 3, 1987 — 25 years ago.

In a letter to colleagues, Gunter recalled the early days when he, Rev. Craig Taylor and Ernie Eden took on City Hall, Central Atlanta Progress, the banks and power structure “issuing a clarion call for social justice.”

They never gave up on their ideals, even after they “joined the establishment” and became developers working hand-in-hand with social service agencies to provide supportive housing  — “a format which we largely pioneered in Atlanta.”

The theory was that it was not enough to provide shelter for the poor. It had to be combined with drug and alcohol rehab programs, job training, mental health services and health care. In communities with families, other services, such as childcare, were needed.

PRI’s high point was reached in 2009 when it had 150 employees and $17 million in revenues.

In 2010, PRI delivered its last housing development. By then it had developed — either by itself or more commonly in partnerships — 4,188 affordable housing units.  Eighty percent of them in metro Atlanta, and the rest in other Georgia cities. In all, they housed more than 10,000 residents — mostly in multi-family developments.

“We left behind some great housing — the owned properties such as the Imperial, Hope House, Welcome House, Adamsville Green, Huntington Court, and Maxwell House in Augusta, and consulting projects such as Sustainable Fellwood in Savannah, the Chris Kids facility in east Atlanta, and the mammoth renovation of the Campbell Stone seniors’ property in Buckhead,” Gunter wrote in his letter to colleagues.

The financial began to unravel in 2008 when the housing market was flooded, and “PRI had sustained too much damage to be able to raise needed capital for new projects that fed its revenue stream. Eventually, the numbers told the tale — our cash flow could not support the organization much less recapitalize our struggling properties.”

That’s when PRI adopted a “Wind-down Plan” to go out of business.

Answering his own question about what he learned, Gunter said: “In a nutshell, we learned that owning a portfolio full of older properties with a predominance of very-low income residents is not a recipe for surviving a full-bore recession.”

Gunter said that arranging public and private financing for affordable housing adds tremendous complexities to the process.

“Helping very- low income people with their housing needs requires assistance from multiple public agencies, each with thick and multiple rule books,” he said. “We experienced the inevitable result that from such complex financing structures come forth regulatory compliance mistakes (and accompanying penalties), which triggered a downward spiral that was extremely hard to reverse, especially in a recession.”

Developing market-rate housing usually requires only one level of financing which reduces the costs of building a project.

“The further down you go, the more layers of financing you have to get,” Gunter said, meaning the poorer the population, the higher the financing costs, making it more difficult to build affordable housing. “It may be the same as complaining against gravity.”

Looking to the future, Gunter remains committed to creating healthy communities that include people of all income groups.

He is particularly impressed with the work of Purpose Built Communities, the national nonprofit started by developer Tom Cousins aimed a replicating an East Lake success in communities across the country.

He also believes there’s great promise in transit oriented developments — giving Atlantans an opportunity to live and work next to transit.

“I don’t know what’s next,” Gunter said. “I want to stay in this kind of work. It can be a nonprofit or a for-profit. But it’s got to have an impact.”

Maria Saporta, Editor, is a longtime Atlanta business, civic and urban affairs journalist with a deep knowledge of our city, our region and state.  Since 2008, she has written a weekly column and news stories for the Atlanta Business Chronicle. Prior to that, she spent 27 years with The Atlanta Journal-Constitution, becoming its business columnist in 1991. Maria received her Master’s degree in urban studies from Georgia State and her Bachelor’s degree in journalism from Boston University. Maria was born in Atlanta to European parents and has two young adult children.

18 replies
  1. kevinalynch says:

    As the staff developer on the above-mentioned CHRIS Kids project near East Lake, I had the good fortune to have PRI’s development arm on our team as development consultant. They brought incredible value to the deal – we couldn’t have done anything near the level of quality without them. That team was spun off into Tapestry Development Group, and is one of the success stories in Atlanta’s affordable housing world post-recession – http://tapestrydevelopment.org.Report

    Reply
  2. JEC says:

    Having observed Atlanta’s affordable housing community for the past 10 years, I would argue that Bruce and the entire staff at Progressive Redevelopment were some of the most dedicated and inspiring folks in the business.  They took on the biggest challenges so they could serve people with the greatest needs.  To look at the end of something is instructive, but it also misses the bigger picture.  Thousands of individuals and families in metro Atlanta benefitted from PRI’s work.  Good luck Bruce with your next endeavor, and thanks for all you’ve already done for Atlanta. 
    – Jason ChernockReport

    Reply
  3. Burroughston Broch says:

    It’s interesting to note that the demise came when President Obama was in his first term and interest rates fell to all time lows. Washington talk is cheap.
    I guess PRI was not considered too big to fail. A pity.Report

    Reply
  4. Barbara Aiken says:

    Barbara Aiken
     
    Bruce and his staff were some of the most dedicated and talented folks I ever worked with.  Their loss is Atlanta’s loss.  I feel sure Bruce will land somewhere where he will continue to contribute to those in our community who need it most.Report

    Reply
  5. ChuckSteffen says:

    Gunter is now prepared to admit that a market-driven approach to low-income housing can’t work in the face of a recession like the one that destroyed PRI. Duh! You don’t have to be a Marxist (though it might help) to see that economic crises are an intrinsic part of capitalism, and have become more frequent and more intense with the coming of the neoliberal sword that now hangs over our heads. But the humbled chief of PRI is not yet ready to consider an alternative model of low-income housing that is not based on the ups and downs of a real estate market fueled by speculative capital. Gunter’s dilemma is telling. Social entrepreneurs seem stuck on Step 4 of their 12-step recovery program: they won’t do “the searching and fierce moral inventory” of themselves that will lead to lasting sobriety. If they did, they would have to reassess their efforts over the last thirty years to delegitimate the very idea of housing as a right rather than a commodity.Report

    Reply
  6. Hattie Dorsey says:

    I had the great opportunity to work with Bruce to voice the need to build affordable housing in Atlanta and throughout the region during my tenure as President of the Atlanta Neighborhood Development Partnership (ANDP).  His success at convincing policy makers, the development community, and donors about the need to provide affordable housing for the homeless, low-income (mostly single heads of household) at a time when few options for decent housing existed in too many neighborhoods. I believe his voice and his passion will find another venue to continue his mission in life.  Sadly, the job is even more urgent and there are too few Bruce Gunters stepping up to meet the need.  God will continue to bless you and as my father would say “He will make a way somehow”.Report

    Reply

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