Leveraging the Private Market to Create Affordable Housing Solutions
By: Atticus LeBlanc, PadSplit and Sarah Butler, Praxis3, co-chairs of ULI Atlanta’s Design for Affordability Taskforce
What if a home could be designed and constructed in a way that provided long-term affordability while also being more profitable for builders or investors than traditional housing options?
Naturally, the result of such designs would be a dramatic increase in the number of affordable housing options available, with the potential to align incentives across seemingly opposed groups of stakeholders.
With these utopian ideals in mind, a committee within the Urban Land Institute’s (ULI) Atlanta District Council has spent the last 18 months exploring design concepts with the potential to provide comprehensive affordability in a variety of urban or suburban environments, that can improve project returns without requiring public subsidy.
We at ULI are the oldest and largest network of real estate and land use professionals in the world with a mission to provide leadership in the responsible use of land and creating thriving communities worldwide. To address the severe shortage of affordable housing options in our own community, we created a task force as part of our Technical Assistance Programs (TAPs) committee , that explored 4 specific concepts that could organically increase the supply of affordable housing by aligning incentives among residents in need of affordability, housing providers seeking viable investments, and cities or communities facing issues of displacement, inequality, gridlock and congestion, environmental degradation, and economic stagnation. See the toolkit here.
We are incredibly grateful for the more than 30 volunteer land-use professionals and public officials who comprised the task force to examine these concrete design solutions that could be applied across income levels, family sizes, and diversity of transportation and employment center access. We also sought to identify specific user groups for each concept to avoid much of the mischaracterization and stigma associated with the generalized “affordable housing” term. In doing so, our hope was to raise awareness of these design solutions while combatting social stigma and advocating for necessary responsible zoning and regulatory policies. Another major focus was around creating holistic affordability for residents that accounted for transportation, utilities, and access to services in addition to the base housing cost.
The 4 design concepts studied included:
- Single Family Co-living, based on the PadSplit model, where one traditional home is converted to a shared living environment to make it more affordable for more people, and more profitable for owners. Furnishings, utilities, and laundry are included while billing cycles can be matched to pay periods.
- Increasing Single Family Lot Density, to include accessory dwelling units (ADUs), duplexes, tri-plexes, or quads, as located in historic neighborhoods around the city. Units can exist as rentals or for-sale units while remaining contextual with their surroundings and providing higher financial yields.
- Micro Units in Multifamily Dwellings, where more efficient space planning allows for higher rents per square foot while reducing total monthly expenses for residents.
- Multifamily Co-living and Co-housing, where apartments or communities are designed around shared kitchens, living areas, and amenities to reduce overall costs for residents while building community interactions and increasing net rents for developers.
Based on our research and reviewing case studies from across the country, all of these concepts can offer the ability to provide holistic affordability for residents, while remaining profitable for the builders and investors that create them. But each design concept faces its own hurdles, whether restrictive zoning definitions, parking requirements, or social stigmas. One of our goals was to address these hurdles in ways that improve community acceptance and build around existing public infrastructure. For instance, one recommendation was to create an overlay district within walking distance of public transit stations, employment centers, or public use trails like the Beltline, where cities could experiment with pilot projects using these design concepts to reduce traffic and leverage existing public infrastructure. In doing so, we believe such policies will allow the public to feel more comfortable experimenting with creative, but feasible, “win-win” housing solutions.
We believe these market-rate design concepts to be a substantive part of our toolkit to address the affordable housing shortage, and our we estimate these 4 solutions alone could account for 9,000 new units of housing in metro Atlanta over the next 10 years. To provide some perspective, the current capital subsidy programs for affordable housing provide between $50,000 – $150,000/unit for construction, resulting in the potential savings of $450 million to $1.35 billion over that period.
With this amount of potential taxpayer savings, the question is not why we need to explore better and more innovative affordable housing solutions. It’s how can we afford not to.
The Design for Affordability Toolkit can be found here: https://32t7od3u4hx32doi7e48jjb7-wpengine.netdna-ssl.com/wp-content/uploads/sites/9/2018/12/ULI-Atlanta-Design-for-Affordability-FINAL.pdf