Preservation Challenge Winners: More tools, resources needed to meet the need
L to R: Sara Haas and Meaghan Shannon-Vlkovic of Enterprise Community Partners announce the winner of the Atlanta Affordable Housing Preservation Challenge. Jon Toppen and Andrea Rattray accept the award on behalf of Tapestry Development Group
Jon Toppen, Managing Principal, Tapestry Group
With due respect to existing affordable housing programs such as Low Income Housing Tax Credits, “filtering” is the de facto affordable housing policy in the United States. Filtering is the concept that new Class A, privately-financed housing construction is a benefit not just for higher income earners, but for the entire housing market, as older housing becomes a little less competitive in the housing market, leading to lower rents over time. In Metro Atlanta, much of the lowest cost rental housing today is apartments built in the 1960s and 1970s that were the luxury housing of their time. Filtering can help bring affordable housing to housing markets when unmet housing demand is modest and incremental.
Even a casual follower of in-town real estate development knows of the boom in new luxury multifamily developments in metro Atlanta, mostly inside of the Perimeter. In Metro Atlanta, however, post-recession demand for housing in many submarkets has been remarkably strong, and therefore rents are increasing on older housing as well. In some locations in recent years, landlords of older housing do cosmetic improvements and then successfully obtain rent increases of hundreds of dollars per month.
In other words, little filtering is occurring.
To counteract market forces that are eliminating affordable housing, two main efforts are essential. First, there is need to preserve affordable housing—that is, properties that have maximum allowable rents from the use of public financing programs, such as those financed through Low Income Housing Tax Credit program. These properties had long-term commitments to keep the property affordable that are now expiring.
Secondly, we need to preserve rental housing where market rents are affordable to its residents. This housing, often called “naturally-occurring affordable housing” (“NOAH”), is when households pay less than 30% of its income on rent on privately financed housing. NOAH properties are increasingly scarce and can raise rents when their locations see new investment and gentrification.
We at Tapestry Development Group were deeply honored to receive the Atlanta Preservation Challenge award at the June 2017 Atlanta Regional Housing Forum. Tapestry is a 501(c)(3) non-profit developer based in the Atlanta area, and we have had affordable housing preservation as part of our mission since our founding in 2010. We have helped preserve over 1,200 units of affordable housing in our history, excluding thousands of former public housing properties we have helped housing authorities preserve across the county. Receiving this award will help us expand our mission to preserve even more housing in new and innovative ways.
We know the existing affordable housing tools, including those offered or administrated by the Georgia Department of Community Affairs, Local Cities and Housing Authorities, HUD, Federal Home Loan Banks, and many others. However, these tools are typically highly competitive and bring heavy regulatory oversight and compliance, which affordable housing owners understand but many other multifamily owners do not. Many have high costs of capital or are otherwise unavailable to smaller multifamily owners. There is a need for new capital that works with existing affordable housing but also privately financed housing, offering true options and incentives to NOAH property owners.
This Challenge grant will help Tapestry conduct some further research and analysis to expand its capacity to preserve housing in the following ways:
- We will research existing moderate rehabilitation affordable housing programs around the United States to understand program requirements, timing, and utilization of funds.
- We will seek new and additional capital funding. The City of Atlanta has a growing number of programs that we could use. The greatest opportunities may come from the philanthropic community. One new promising concept is Program-Related Investments (“PRIs”). These are investments made by private foundations that require a return of capital from a public charity but at below-market loan or equity terms. We seek to find or create similar programs for for-profit owners in exchange for long-term affordability commitments.
- We will research properties with expiring affordability restrictions in Metro Atlanta. We will seek owners of NOAH properties, which we have never done extensively before. When we identify interested property owners, we will help assess the capital needs of the properties, identify currently available funding sources, and try to match sources of capital to the property and owners’ needs.
We welcome comments from the general public and especially seek opportunities to talk with multifamily property owners that we may be able to help. Thanks to Enterprise Community Partners, the Georgia Department of Community Affairs, Georgia ACT, and the J. P. Morgan Chase Foundation for sponsoring this grant and their commitment to affordable housing preservation.
Learn more about Tapestry Development here: www.tapestrydevelopment.org