Shortly after his election as mayor of Atlanta in 2021, Andre Dickens realized one of his core campaign promises – to create 20,000 new units of affordable housing – might be hard to keep. Estimates from his staff showed the city would fall more than 4,000 units short.
His options seemed limited. The low-income housing tax credit supports the building or restoration of much affordable housing in America, but the federal tax incentive is curbed by volume caps each year, and voters are often skeptical of other potential sources of funding, such as bonds.
While researching various models, Dickens and his team were inspired by Copenhagen. Four decades ago, officials in the Danish capital created a publicly owned, privately run corporation to redevelop public land and infrastructure.
In Atlanta, they inventoried all of the publicly owned land. Cities typically own large amounts of land, but as long as this public land remains siloed in different departments – the fire department here, the school district or transit authority there – it’s hard to see how all real estate assets can contribute to an overarching goal, like building more affordable housing. So they also created a housing strike force to break down silos between departments and then launched a new non-profit corporation, the Atlanta Urban Development Corporation (AUD), to attract private financing and expertise.
The result has been a surge of development – 40 public land projects are under way, with 10,000 new affordable housing units finished or under construction – that represents a striking example of how cities can use creative strategies to expand their supply of affordable housing. Staff in dozens of other cities around the country are said to be taking note.
“Atlanta has definitely cracked the code on public assets,” said Bruce Katz, co-founder and director of the Nowak Metro Finance Lab at Drexel University. “I think this will become a new model that gets repeated all across the country.”
In Atlanta’s Thomasville Heights neighborhood, the city owned roughly 100 acres (40 hectares) of vacant land spread across five different agencies. After consolidating the ownership under the new AUD, they rezoned the land. A redevelopment plan includes a new grocery store, a new early childhood education center, an elementary school and about 3,000 units of new housing, of which roughly 30% will be affordable, prioritizing families that make less than 50% of the area median income.
“We had a lot of underutilized space in the city, underutilized land,” Mayor Dickens said. “So we started looking at publicly owned assets and underutilized publicly owned assets. When you can take publicly owned land, you have more control. That then can allow for more units of affordability, or more deeply affordable units.”
In another neighborhood, West Midtown, a city-owned facility on almost 10 acres of land is used to store new trash cans before they are delivered to residents. “It’s not the highest and best use of the land, but we’ve been doing it for decades,” said Josh Humphries, the mayor’s senior policy adviser on housing. “We have a lot of things like that, which make a lot of sense for housing, or grocery stores, or other key amenities that residents need.”
The trash cans will either be moved to a new facility, or an existing storage depot.
The model is not without risks. In one high-profile case, CIM, which invests in commercial properties, received roughly $2bn of tax breaks and incentives as part of a 2018 deal to redevelop a section of downtown Atlanta known as “the Gulch”. In return, the developer agreed to make 20% of its residential unit affordable, or pay fees to the city for each affordable unit it declined to create. Not only did the group opt against the affordable units, but the fees it paid the city were based on outdated property values for each unit, suggesting that the company enriched itself while shortchanging the city.
“City officials should conduct extensive research on the private institutions they plan to partner with,” said K Agbebiyi, senior housing campaign coordinator with the Private Equity Stakeholder Project. “Deals that the city has with corporations must maintain enforcement mechanisms reflective of up-to-date research on housing value.”
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But city officials point to promising projects elsewhere. Early in the new mayor’s term, Humphries called the chief of a fire station in the city’s bustling Midtown neighborhood. The fire chief wanted a renovation for his station, and the mayor wanted affordable housing. The site of the fire station was less than an acre, but just the land alone was worth nearly $20m because of its prime location.
“I called the fire chief and was like, ‘I think there’s a way we could get you a brand new fire station, as long as you’re willing to put 30 stories of new neighbors above you.’ He’s like, ‘as long as I get a new fire station, I don’t care what you put above me,’” Humphries recalled.
John Majors, CEO of the AUD, expects the final design for the tower above the new fire station to be completed in 2025. The AUD can offer private-sector partners an exemption from property taxes, so long as at least 30% of the units in new developments are affordable, with 20% of units reserved for people making less than 50% of area median income, and another 10% reserved for those making below 80% of the area median income.
The current fire station in Midtown has room for 10 to 12 firefighters and two bays for engines, according to the station chief, Rod Smith. After the renovation, the station will be roughly twice as big and able to accommodate 15 to 18 firefighters. Smith grew up in Atlanta, and over his lifetime he has watched its population explode, leaving behind its past as what he calls a “small big city”. While he thinks growth is ultimately good for the city, the rising cost of housing puts pressure on everyone, including public servants such as firefighters.
It’s possible, once the new fire station and housing high-rise are completed, that some of the firefighters could even live in the affordable units upstairs. “That would be a great commute,” Smith said. “They should never be late for work, right?”
