By David Pendered
Atlanta’s latest affordable housing development is the first of its kind in the city, a potential model for a new generation of public/private efforts to address the housing shortage.
Nothing special is built into the structure of the deal for the planned Trinity Central Flats, across Trinity Avenue from Atlanta City Hall. The deal is a straightforward public/private partnership to build an eight-story apartment building, with 186 affordable units in a structure with a total of 218 units. Amenities are to include retail shops on the ground floor, a rooftop solar array and a rooftop garden.
The deal is set apart by the assemblage of its component parts. In addition, the financing aspect of the deal speaks to both the complexity of affordable housing development and the potential for innovative uses of government programs.
For starters, the city owns the land that’s to be beneath Trinity Central Flats, located at 104 Trinity Ave. A development occurring at this site breaks Atlanta’s long-standing tradition of holding onto property, as evidenced in major pieces including Underground Atlanta and Atlanta Civic Center, which stayed on the books for years as under-performing assess. Atlanta has 877 acres of land suitable for affordable housing, according to a study released in Spring 2021 by Atlanta’s City Planning.
This tract on Trinity Avenue has been vacant for nearly 20 years. It often had been cited as the type of parcel the city could provide for free to help lower the cost of creating affordable housing. Land is a major expense in any property development.
No action had occurred with city-owned property until 2021. In May 2021, the administration of former Mayor Keisha Lance Bottoms prevailed in its call for the land at 104 Trinity Ave. to be developed as affordable housing. The Atlanta City Council agreed to sell the parcel to Invest Atlanta, the city’s development arm. The council instructed Invest Atlanta to broker a deal for a mixed-use, mixed-income development.
Invest Atlanta will retain ownership of the land and is to sign a 99-year ground lease with the developer. The lease is to ensure apartments remain affordable for the duration of the ground lease, according to terms.
Invest Atlanta named two developers. One is an affiliate of a Missouri-based developer, Vecino Group, which was developing the Intrada West project, located at 2174 Donald Lee Hollowell Parkway.
Now complete, Intrada West was a $42.6 million project for 143 apartments that was to pay Vecino Group a developer fee of $2.9 million. Intrada West was financed with $16.5 million in bonds sold by an affiliate of Invest Atlanta, the Urban Residential Finance Authority. The bond package showed additional funding came in the form of low-income housing tax credits, at $22.6 million, plus $1.5 million of Atlanta’s Housing Opportunity Bonds – the $100 million package that was central to Bottoms’ promise to induce the development of affordable housing.
The second developer named by Invest Atlanta to the Trinity Central Flats project is a faith-based community development corporation.
The Capitol Hill Neighborhood Development Corp. is a non-profit entity established by three churches – Central Presbyterian and Trinity United Methodist churches, and The Catholic Shrine of the Immaculate Conception. Over the course of three decades, the organization has influenced a number of developments that affect the ministries and congregations of churches that have served the neighborhood for more than 150 years.
The financing structure for Trinity Central Flats will enable some units to be rented at deeply discounted prices. This is partly a function of the types of public subsidies that will help pay for the project, which costs out at $68 million.
Rental rates are to be determined by income averaging. Some rates will be at 60 percent of area median income. Some rates will be up to 80 percent of AMI. Market rates are to be charged for the remaining units. The mix of rates is to be determined during negotiations over the master developer agreement, terms show.
A federal loan to finance nearly a third of the development has no income limit for occupants. Other benefits that come with the HUD 221(d)(4) loan include the allowed use of low-income housing tax credits, a fixed-rate, 40-year repayment period with a clock that begins after a three-year construction period, and legal protection for developers and investors if they default on their mortgage – the lender cannot try to repossess personal property to repay the loan, according to a description of the HUD 221 program.
Low-income housing tax credits are to provide a total of $41.4 million. LIHTC is the nation’s primary method of lowering costs to build and renovate affordable housing. The program works by providing federal tax credits to developers who agree to set aside a certain proportion of affordable units. The developers sell the tax credits to syndicates. These cash payments to developers provide low-cost construction financing.
The project’s timeline includes a year to secure financing. This length of time is in keeping with HUD 221, which advises applicants that processing can take up to a year. The developer fee is set at $3.5 million.
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