Atlanta’s latest affordable housing plan calls for borrowing $100 million

Note to readers: This story was updated Thursday with comments from Atlanta City Councilmember Matt Westmoreland.

By David Pendered

Atlanta’s new affordable housing proposal envisions borrowing up to $100 million to establish “nearly 3,500” affordable residences. Annual payments are projected at $2.5 million, according to legislation submitted Monday.

Atlanta City Councilmember Matt Westmoreland said Thursday he intends for the city to repay the bonds, interest and related expenses with little or no use of property taxes or other revenues in the general fund.

Westmoreland is the lead author on the measure and chairs the committee that will review it before the council’s consideration. The first deliberation could occur as early as Aug. 25, in the Community Development and Human Services Commission.

The first $28 million in payments are to come from the $28 million housing trust funds that’s to financed through six annual installments by the developer of the Gulch, according to the legislation. The remainder of the bond repayment is to come from a source, or sources, to be determined, Westmoreland said.

The terms of the bond that travel with the legislation pledge the city’s full taxing authority, on all taxable property, to repay the debt:

• “The obligation of the City to make the payments required to be made hereunder from its general funds shall constitute a general obligation of the City and a pledge of the full faith and credit of the City to provide the funds required to fulfill any such obligation.”

Although the legislation states the bonds could have a maturity date of up to 40 years, Westmoreland said he intends the bonds to be repaid within 20 years.

Initial story resumes here.

This proposal, introduced Monday, is half the sum the Atlanta City Council was considering four months ago. The mayor in April scuttled the proposal to $200 million in bonds to fund an affordable housing program at time the municipal bond market was collapsing and uncertainty surrounded city revenues.

The market has since recovered and investors are seeking long-term instruments in an era of uncertainty, according to a report this month by Blackstone, a multinational investment management company.

Now returning at the mayor’s original $100 million figure, proceeds of the bonds are to create affordably priced residences, and to maintain existing residences so they don’t become uninhabitable, and to purchase land for development of affordable housing. The program is titled, Building the beloved community housing affordability initiative. 

Planned expenditures cited in the legislation include:

• “deferred loans to longtime residents needing to make repairs to their home;
• “construction of multifamily developments for permanent supportive housing for Atlanta’s homeless;
• “acquisition of key land tracts across the city that can be developed and then kept affordable – forever….”

This proposal would be the city’s third bond sale this century to fund affordable housing. The first, in 2007, was for $35 million. The second, in 2017, was for $63.7 million, which included a sum to refinance the 2007 bond, according to a bond document.

Atlanta City Councilmember Matt Westmoreland introduced the legislation that is to be heard Aug. 25 by the committee he chairs, Community Development and Human Resources. Six councilmembers signed the paper – Andre Dickens, Natalyn Archibong, Joyce Sheperd, Marci Collier Overstreet, Michael Julian Bond and Dustin Hillis,

Bond cited the improving bond market in his comments Wednesday in support of the paper:

• “I’m very excited that conditions have changed and we are able to move forward with this initiative. The need was great before the pandemic, and the need is becoming exasperated. Being able to provide this kind of opportunity and relief will help ease the housing crisis in Atlanta.”

The financing plan envisions the sale of up to $100 million in taxable revenue bonds. The interest rate is not to exceed 5 percent. Bonds are to mature in no more than 40 years. In practice, governments routinely extend the maturity of bonds by refinancing them during their lifespan.

This interest rate is within the margin cited in Blackrock’s August update. An interest rate of 3.74 percent was cited for July, year to date and based on S&P indices, according to Blackrock’s report.

The history of this legislation began in February. Bottoms’ administration submitted a $100 million proposal. The council doubled the amount, through the action of two committees. The mayor withdrew the proposal in April.