LOADING

Type to search

Columns David Pendered

Atlanta’s break-the-mold affordable housing project may become model for future

Foreground: Planned site of affordable housing development near Atlanta City Hall. (Photo by David Pendered.)

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.

Documents cited in this story:

 

Tags:
David Pendered

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow.

    1

You Might also Like

4 Comments

  1. Sean McCormick February 8, 2022 12:00 am

    What is so ‘break the mold” about this development, the fact that churches are involved? Nice grabbing headline with little substance. Probably the fault of the editor, not the writer.Report

    Reply
    1. David Pendered February 8, 2022 9:55 am

      Hello, Sean,
      Thanks for reading and posting a great question.
      The primary “break the mold” aspect of the deal is the use of surplus city property to provide a pad for affordable housing. The former mayor highlighted this aspect of the deal. Mike Dobbins, in his guest column, cites the role of public land as a necessary resource. Atlanta leadership has discussed such a use for years. Now it has happened.
      Another aspect is the use of the 221(d)(4) loan, because of the terms it provides to borrowers. This funding source isn’t common in Atlanta’s capital stack for affordable housing projects. And it’s not designed for every deal. In this case, the finance team determined the upsides outweighed the downsides. These are parts of the reason it is cited.
      Plus, as you noted, the Capitol Hill Neighborhood Development Corp. is part of the team. The organization brings significant resources to the project.
      As for the headline, I take full responsibility.
      Best regards,
      DavidReport

      Reply
  2. Dana Blankenhorn February 8, 2022 10:12 am

    This is going to end in tears. Atlanta has never been a smart property developer.Report

    Reply
  3. Jim Bob February 11, 2022 9:08 pm

    The more complex a business deal is, the more it cost. I have done several commercial real estate deals over the last few decades. The amount of wasted money on administration and legal fees will be astronomical in this development. Hope the taxpayers of Atlanta get the real numbers and can make a decision if this type of deal is worth the price.Report

    Reply

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.