HUD secretary says taxes from rising property values caused by urban renewal can fund affordable housing

By David Pendered

Twenty years ago, the media gathered in Atlanta’s East Lake neighborhood likely would have there to report a homicide.

On Tuesday, the media was there to cover Atlanta Mayor Kasim Reed and U.S. HUD Secretary Shaun Donovan proclaiming the renewal of the once-blighted community as a national success story about public private partnerships.

HUD Secretary Shaun Donovan (center) was the keynote speaker at an event in the East Lake neighborhood attended by (left to right) Ed Jennings, regional HUD administrator; Carol Naughton, Purpose Built Communities; Mayor Kasim Reed; Lillian C. Giornelli, Cousins Foundation; Greg Giornelli, Purpose Built Communities; Daniel Shoy, East Lake Foundation. Credit: Tkeban Jahannes

HUD Secretary Shaun Donovan (center) was the keynote speaker at an event in the East Lake neighborhood attended by (left to right) Ed Jennings, regional HUD administrator; Carol Naughton, Purpose Built Communities; Mayor Kasim Reed; Lillian C. Giornelli, Cousins Foundation; Greg Giornelli, Purpose Built Communities; Daniel Shoy, East Lake Foundation. Credit: Tkeban Jahannes

The transformation of the old East Lake Meadows housing project is so profound that nearby homes are now priced at up to $775,000. Donovan said rising property values are a good thing in a city, and that the increased property taxes enable local governments – such as Atlanta’s – to provide programs that keep such neighborhoods affordable to households with a mix of incomes:

  • “The reason you create affordability problems in neighborhoods is because a rising tide lifts boats.
  • “By creating that value, what you are doing is helping everyone in Atlanta, and the city, by creating an asset that will raise property taxes and a whole range of things that the city can help bring to the table.
  • “But you do have to make sure it stays that way [through] an approach that says, ‘Look, we’re not going to go back to the old days where every low income person, every poor family, is going to be shunted away in some marginal neighborhood in the city, with no access to good schools, no access to transportation and jobs. Instead, we’re going to create an innovative model.’
  • “Atlanta has been a national leader on this, on mixed income housing, where we’re going to make sure there is a diverse group of folks in a neighborhood with access to grocery stores, transportation to jobs. We know that model works. We’ve seen it here. We’ve seen it around the country.
  • “We need to make sure we put in, like the mayor said, not just the short term of building it, but also protections that keep that mix over time, because we don’t want to go back to the old things that we’re demolishing everywhere around. That would be the wrong direction, and Atlanta is a model in showing the right direction.”

The venue for the media event was the Charles Drew Charter School, which is a focal point of the East Lake community that was turned around through a partnership of the Atlanta Housing Authority, HUD’s HOPE VI program, and the foundation established by Atlanta developer and philanthropist Tom Cousins.

A few minutes before Donovan outlined his thoughts on the affordability issue, Reed had reminded the audience that it wasn’t so long ago, at a time he was coming of age, that East Lake was known by nicknames that included Little Saigon and Vietnam.

The price of houses in the East Lake neighborhood have increased significantly since the area was improved by a partnership including Atlanta Housing Authority, HUD, and the philanthropy of Atlanta developer Tom Cousins. Credit: zillow.com

The price of houses in the East Lake neighborhood have increased significantly since the area was improved by a partnership including Atlanta Housing Authority, HUD, and the philanthropy of Atlanta developer Tom Cousins. Credit: zillow.com

“We really don’t remember where we are,” Reed observed, standing in the school’s media center, with elementary pupils studying at desks a dozen feet behind the podium.

Signs of renewal have become so established over the past two decades that East Lake appears to have always been a comfortable neighborhood.

A mile away from the Drew school, preparations were underway at the East Lake Golf Club for the final four days of the Fed Ex Cup golf tournament, which starts Thursday. A purse of $1.4 million and the final trophy of the 2013 season are on the line at the home course of golfing legend Bobby Jones, according to bleacherreport.com. Admission on weekend days is priced at $75, plus taxes and fees.

Home prices have increased dramatically over time around the former East Lake Meadows housing complex, a place once so crime-ridden that mothers told their children to hide in closets when they heard gunfire.

A price of $775,000 hangs on one home built in 2006 on Memorial Drive, according to zillow.com. One on Alston Drive is priced at $550,000. One on Hudson Place is available for $599,900.

Reed and Donovan said part of the challenge of urban renewal is making sure that surrounding communities remains affordable for a broad array of incomes.

“We simply call it,” Reed said of the government’s ability to help enforce affordability.

Reed said developments have become so costly that developers will increasingly seek financial assistance from local governments. When they come forward, as was the case in the Ponce City Market development along the BeltLine, the city can require that a certain number of units be affordable to households at certain income levels.

In Atlanta, such aid is provided through Invest Atlanta, which has several financial tools available to help a developer get a out of the ground.

Donovan also used the occasion to call on Congress to fund requests from the Obama administration for the Choice Neighborhood program. Atlanta received a Choice Neighborhood planning grant in 2011 and met most recently, on Aug. 22, to discuss the program.

The secretary added that he said a related program, Promise Zone, can help communities in other cities replicate the turn-around that was achieved at East Lake.

 

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. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

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