Published on August 31st, 2017 |0
Bisnow panelists address needs, solutions for affordable housing in city
More cooperation among involved parties, cheaper costs, less bureaucracy and continued tax credits were just some of the solutions proposed to solving the growing crisis of affordable housing during an Aug. 30 Bisnow program on “Atlanta Affordable Housing.”
First off, was defining it. Officially a person or family whose income falls below 80 percent of the Atlanta Metropolitan Statistical Area Median Income (AMI) qualifies for subsidized housing. In Atlanta, for a family of four the median income is about $67,500. Under the usual standard of one-third of one’s income come goes for housing costs, $24,300 a year should be spent for housing with an average rent of $680 per month. Subsidies can lower rents by a couple of hundred dollars.
“What’s even scarier that in some places like South Florida, the percentage of income to housing is getting up to 50 percent and growing,” says Gabe Seghi, vice president of Hunt Mortgage Group, a New York City-based provider of real estate financing services with a commercial loan portfolio of $12.5 billion.
Seghi was one of the panelists on the Bisnow program on “Atlanta Affordable Housing,” which was sponsored by Arnall Golden Gregory (AGG). Sehgi’s panel, “Cost-Saving Considerations and Financing on Affordable Housing”, also featured Chuck Young, SVP of development for the Prestwick Development Co., Margaret Stagmeier, president TI Asset Management and founder of TriStar, John Moore Jr., founder and president of Highland Commercial Mortgage, and moderator AGG Partner Althea Broughton.
While the affordable housing name and definition is set legally, there is a perception — or misperception — that affordable housing harkens back to the Section 8 housing days, with an
underlying connotation of housing projects, drugs, crime and a transitory population. To counter that perception, many are now dubbing affordable housing as “workforce housing” or “transit-centered” housing.
The panel was quick to point out the challenges as well as some of the solutions. Young, whose company develops senior and family housing communities, said that construction costs are unbearable. “It used to be we could develop a garden apartment for $65 a square foot; now it’s $100. No one can develop affordable housing without subsidies.” Stagmeier noted land costs are “astronomical. We can only really do deals where the land is donated. We have to get more creative to get deals done.”
Moore cited “nepotism” and bureaucratic entanglements as issues. “To get a deal done, you have so many, state, local, federal, private entities, banks involved and they all have their bases they need to get covered and it can slow things up even though we’re all working toward the same goal.” Stag Highland Capital Mortgage is a fully approved HUD MAP multifamily, health care lender and loan servicer headquartered in Birmingham, Al.
Stagmeier told the standing-room only crowd at the Westin Buckhead Atlanta Hotel that her company partners with schools. One 446-unit blighted apartment complex in Cobb County cost $7 million to renovate. “The school’s biggest problem was turnover—67 percent turnover of students every year,” she explained.
“We renovated and worked with the school to have longer afterschool programs and the school went from being one of the worst to a Title 1 school of distinction,” Stagmeir said. “Five years later the complex was sold, the new owner raised the rents $100 and its back to being a failing school and area. We have to address the interrelationship between housing and education.”
On the issue of affordable housing in the Trump era, Seghi said that after the election the affordable housing market dropped and several of his deals didn’t close. “It has come back but there’s some trepidation going forward concerning tax reform,” he said.
Young added that it’s “tougher to buy credits because no one knows about tax reform that may or may not be coming.” However, Moore believes that “sanity is now coming back into the market” and questioned whether any action on tax reform would come soon.
Going forward Stagneir would like to “push the envelope and maybe have adjustable rates that can be turned into a fixed rate later,” while Seghi wants a more strategic approach. “Look at what you want out of this deal, why you want it in your portfolio and what you’re going to do with it,” he said.
The panel agreed that income averaging in complexes would help those whose income is slightly over the cut-off point but disagreed about the value of renovation or preservation of existing housing. “Bulldoze it,” Moore simply said.
Regardless of the possible solutions, the need for affordable – and affordable senior housing – is on the rise. “We’re going to have two million more people coming into this area in the next 20 years and we need housing,” says Young. “We have Baby Boomers who haven’t prepared for retirement and will need affordable housing. We have to address these issues now.”
The second panel on the program was “Macro Outlook: Development and Building Communities.” It included panelists: Atlanta City Councilman Andre Dickens; Catherine Buell, CEO, Atlanta Housing Authority; Eddy Benoit, CEO, The Benoit Group; Michael German, HUD’s State of Georgia Field Office Director; Andrew Smith, regional director/principal Jordan & Skala Engineers and Sara Haas, director, Enterprise Community Partners. AGG Principal Orlando Cabrera moderated.
Buell started the discussion by mentioning that market forces have reduced the number of affordable units both nationally and locally and the preservation of current affordable housing should be a “significant focus.”
Dickens stressed the need for “diverse housing for a diverse population. All income groups live and work in the city and bank tellers need housing. Traffic in Buckhead is bad because all the workers at Lenox Mall and the hotels don’t have the ability to live here.”
Dickens wants “balanced growth” that would provide housing for those on a teachers salary as well as below the poverty level. He also wants to develop projects on the Southside of the city, which can stimulate job creation.
Benoit said there is a “huge gap” for housing and public/private partnerships should work on new construction and mixed used “workforce housing.” He cited 180 units of senior housing by Big Bethel Church and Wheat Street tower as examples. “We’ve got to get sellers to understand that those in the affordable market can’t do deals in 60 days because not all the pieces will come together that soon. It’s not realistic and too risky for developers. Sometimes sellers can be difficult,” he added
Smith, the self-dubbed “nerdy engineer,” said that modern technology must be used when developing or renovating current affordable housing in order to cut costs in such areas as electricity and heat. Parking spaces should be reduced in many cases and, in fact, parking garages can be repurposed.
It all goes back to need and language, said Buell. “We have to stop segregating our populations,” she stated. “It’s a culture of language. Whether it’s ‘working family’ housing, senior housing, transit-oriented housing, it is needed housing for people. We need student housing. We need to be inclusive and we need more housing,” she said.