Atlanta fund to put “patient” capital to work for affordable housing near transit
By Maggie Lee
In a city that’s building a lot of new transit but not a lot of new low-cost housing, an Atlanta agency is trying a new loan fund that would link one to the other.
Atlanta’s certainly not as expensive to inhabit as cities like New York. But as long as metro Atlantans want to get to work in a timely manner, few can skip owning a car.
The cost of transportation plus housing is complicated: it varies by metro Atlanta neighborhood, and data is usually a few years old by the time it’s published. But by one estimate, once you add together the cost of housing plus the cost of transportation lately in the metro area, a “moderate” income family, making about $47,000 a year, can expect to spend 63 percent of their income on housing plus transportation.
That leaves only about $17,000 for everything else.
That number has got the attention of people like Eloisa Klementich. She’s president and CEO of Invest Atlanta, the city’s development authority.
“If you want to make the biggest impact to someone’s life, you lower both of those costs,” housing and transportation, said Klementich. “So by creating affordable housing near transit, that means that potentially they won’t need a car.”
Last week, Invest Atlanta’s board members (acting as the Urban Residential Financing Authority), voted to pledge $4.5 toward a total $15 million loan fund that would help get below-market-rate housing built near transit stations in so-called “transit-oriented developments.”
A good example of a TOD is at MARTA’s Lindbergh Center station, where apartments, restaurants, offices and shops are stacked closely around the train and bus stops, knitted together with fairly small and leafy streets.
The idea is that coming to the table with capital means Atlanta and the other partners in this fund should be able to get developments that will include affordable housing near transit for folks who make below-median wages.
“If we come in at the very beginning, we can be able to influence the term of affordability, what levels of affordability,” said Klementich.
That is, influencing how many units will be below market rate, and how long they’ll stay that way.
It’s early days to start talking about how many years the apartments would stay below market rate, what rents would be exactly and which stations the agency would target. Klementich said the idea is that the affordability duration should be as long as possible. She also said the rents should be affordable for people making less than 80 percent of the area median income, maybe as little as 50 percent of it, if other partners come in. (That means rents from roughly $935 per month to about $1,500 per month for a family of four as of 2018.)
The capital would be “patient,” said Klementich, low-cost and easily accessible. It won’t be chasing the fastest, biggest profit out there.
One of the other partners is the Enterprise Community Loan Fund, one of the Enterprise Community Partners family of companies. ECP is a national nonprofit that works with local partners across the country to create opportunity through affordable housing that’s linked to good schools, health care and jobs.
ECLF participates in about 10 transit-oriented funds like this one nationwide, said Meaghan Shannon-Vlkovic, who heads Enterprise Community Partners’ Atlanta office.
For example, a fund in the Denver, Colorado region in which they participate has closed on 16 loans, which have created or preserved 1,354 affordable homes, a new public library, commercial space and more, according to ECLF.
Public transit gets people to jobs, better health care, quality schools, said Shannon-Vlkovic.
“So we see this as an access point to economic mobility and opportunity as well for our low-income families,” she said.
There’s another partner that’s going to help figure out what’s the most equitable fit for the folks who live around MARTA’s planned or existing stations.
Some station areas might lack shops, others might lack housing, some might lack any place to work, said Odetta MacLeish-White, managing director of the TransFormation Alliance, a collaboration of metro organizations that are working on developing mixed-income developments anchored by transit. All the stations (or would-be stations in a MARTA expansion) are different.
TFA will score proposed developments. They’ll look at what exists around each station, public data about the neighborhoods and score a given development against those needs.
“It’s about how well can this project serve what we know about the equity needs of the half-mile around the station area?” MacLeish-White said.
MARTA has already used this “equity scorecard” method, said MacLeish-White, and it grew out of equity measurement work that started at Southface Energy Institute, an Atlanta-based nonprofit that promotes sustainability.
For this transit-oriented loan fund, if a proposed development’s score is a little lower than the city and its partners would like, maybe the plan could be tweaked to provide more of one thing, less of another. The idea is that the city and its partners will have some capital at the table, some negotiating power to ask for what a neighborhood needs that the rest of the market might not provide.
TFA also wants to be a voice advocating for public engagement that’s authentic and meaningful, but yet doesn’t slow what’s supposed to be a rather nimble fund.
“TFA wants to be the thought partner about making that process the best it can be,” she said.
The loan fund will start out at $15 million, with ECLF and another organization, Low Income Investment Fund, providing about two-thirds of the capital.
Based on that initial capitalization in today’s cost environment, the fund might be able to get something like 800 to 1,000 units, said Alan Ferguson, Invest Atlanta senior vice president for community development.
It sounds like a lot and is a lot, but the affordability problem is large in Atlanta.
By one estimate, the city is losing about 1,000 affordable rental housing units per year due to “natural” attrition: fall into disrepair, get replaced by something more expensive or the rent just rises.