New homes affordable for the local work force
By AIXA M. PASCUAL
The Atlanta Journal-Constitution
Published on: 07/04/05
Halfway between downtown Atlanta and Marietta, a developer, six builders and more than 40 subcontractors and suppliers are coming together to build 31 homes with $150,000 price tags.
Developer Bobby Lunceford convinced everyone — including an exterminator and security system provider — to offer their services for free or at a discount. By keeping the cost of the cottage-style homes low, he reasoned, they could be affordable to police officers, teachers and others who work in the community.
“I have the vision for what we can do here,” said Lunceford as he scanned the bare lots on 9.5 acres near the intersection of Mableton Parkway and Veterans Memorial Highway in Cobb County. “It’s a miracle.”
It’s at least a novel idea. While work force housing — homes for middle-income earners — in metro Atlanta has mostly taken form in mixed-income and mixed-use developments, this small subdivision is 100 percent work force housing. As resistance to townhouse developments has eased, real estate consultant Ken Bleakly sees something similar happening in work force housing, with higher density projects and streamlined zoning approval becoming more commonplace.
“There is a movement to address work force housing,” said Bleakly, president of the Bleakly Advisory Group, a real estate consulting firm based in Sandy Springs. “It’s a new market.”
Across metro Atlanta, exclusionary zoning has been the major barrier to developing affordable housing.
“It’s difficult to create single-family homes from one lot for $150,000,” said Dan Reuter, chief of land use planning for the Atlanta Regional Commission, the regional planning agency for the 10-county area. “To make housing affordable, you need to encourage a little bit more density than is typical in the Atlanta region.”
But now, jurisdictions slowly are starting to develop inclusionary zoning policies that allow for higher density developments and more affordable housing.
Last summer, the city of Decatur passed an ordinance that gives developers a density bonus for building work force housing. DeKalb County is considering a similar initiative.
Fulton County, which is looking into an inclusionary zoning ordinance, just completed its first work force housing development of 95 single-family units in south Fulton, said Camilla Moore, director of the Fulton County Office of Housing.
The houses at Kensington Heights range in price from $140,000 to $160,000. The project was built on 37.5 acres off Welcome All Road in College Park. Fulton County’s Community Housing Development Corp. provided $348,000 to buy land, provided sewer installation and waived 95 percent of the development fees.
The Atlanta Housing Authority, which develops and operates affordable housing for low-income families, has developed seven mixed-income communities for homeowners, with subsidized home prices at about $140,000. The percentage of homes reserved for work force housing ranges from 20 percent to 45 percent of the total units, depending on the community, according to the AHA.
“Land prices in desirable communities drive the pricing of homes,” said Larry Gellerstedt, a developer who is building work force housing in Decatur. “In Atlanta and other intown communities, the economics of development make it incredibly challenging to include affordable housing.”
Reuter said 80 percent of the jobs in the region are in the five urban counties — Fulton, DeKalb, Gwinnett, Clayton and Cobb. “We’re fighting the economics of our region,” he said. “The cost of land and homes in those five counties is just prohibitive.”
The average metro home price is $180,000, according to 2002 figures from the Atlanta Neighborhood Development Partnership Inc., a nonprofit builder and developer that develops mixed-income housing. And while one-third of households in metro Atlanta earn $40,000 or less, very little housing is being built for these families.
With 2.3 million people expected to move to the area in the next 25 years, the need for affordable housing will continue to grow. “The greatest need in our region is rents or mortgages that go from $300 to $600 [a month],” said M. von Nkosi, director of the mixed-income communities initiative at the ANDP. “There’s very little of that.”
He estimates there is a shortage of about 189,000 units of affordable housing for working families in the area.
Affordable housing, by federal standards, should cost no more than 30 percent of a household’s gross income. By that measure, a majority of low- to moderate-income households are straining to pay for housing, said the ANDP.
And it’s not a problem exclusive to metro Atlanta. The Washington-based Center for Housing Policy released a study in April indicating the number of working families nationwide paying more than 50 percent of their income for housing grew by 76 percent, to 4.2 million, from 1997 to 2003.
Home costs ‘out of reach’
Lunceford, 53, has been building custom, high-end homes in Cobb County for 34 years. The homes he builds sell for $500,000 to $1.3 million — “the kind of [home] you can’t afford on a $30,000- to $40,000-a-year salary,” he said.
While he makes his living building luxury residences, he sees a need for affordable housing for people who work in the community. Lunceford, a board member of the nonprofit Cobb Housing Inc., who in his free time has helped build 12 churches, said he’s making homes for those who don’t get paid what they deserve.
“In Mableton, Marietta and Atlanta, the folks who work there can’t afford to buy homes there,” Lunceford said. “The cost of land and the cost of construction is pushing the cost of new homes out of the reach of our work force community. . . . That’s what this effort is all about.”
His work force housing project is called Mitchell Chase. The subdivision is financed partly by $500,000 in Department of Housing and Urban Development funds from the HOME program, which provides grants to state and local governments to create affordable homes for low- and moderate-income families.
The homes will be targeted to households making 80 percent of the median income for metro Atlanta, about $70,000.
A marketing brochure for Mitchell Chase promises: “Priority will be given to individuals who contribute to our everyday quality of life (i.e. firefighters, police officers, nurses, schoolteachers, etc.).” Cobb Housing has already contacted the Cobb County school district to help market the homes to Cobb’s teachers.
Those who qualify to buy at Mitchell Chase will have down payment and closing cost assistance, including $7,500 interest-free HOME loans. Construction began last week on the first homes.
R.C. Cole, a Cobb police officer who lives in Mableton, said a project like Mitchell Chase would be a good addition to a neighborhood that is improving. He thinks the homes also should be made available to students and single mothers. “You can find affordable housing [in Cobb], but a brand-new house [for $150,000], that’s on a different scale,” Cole said.
David Gallmon, a policeman who lives in Douglas County, said the homes would be appropriate for newly recruited police officers. The starting salary for an officer in Cobb is just under $35,000. “Something like this might be an option for young officers just starting out,” he said, glancing at the brochure.
But not every middle-income earner wants to live close to where they work.
Stacey Bowlware, a firefighter who works at a station about a quarter-mile from the property, looked at a brochure and thought the houses were “real nice.” But she wants some distance between her home and job. “If I could afford that,” she said about the $150,000 price point, “I’d buy it somewhere else.”
Bowlware, who just bought a home in Austell for $112,000, didn’t even look in Mableton — where she believes there are burglaries and gang activity — when she was hunting for a house.
Some of Bowlware’s colleagues expressed similar skepticism. Jon Redwine doesn’t mind commuting about 45 miles each way from Bremen in Haralson County, where he owns a 3,000-square-foot home. He moved from Acworth five years ago so he could get away from the traffic and find a slower pace of life.
“I’d rather drive in and make the commute than live here,” he said. With 24-hour shifts and 48 hours off, Cobb firefighters don’t have to drive in to work every day.
Subdivision wins award
Mitchell Chase won one of six “Innovation in Workforce Housing” awards given in January by the National Association of Home Builders.
“This is a great model for the greater Atlanta area [and for the rest of the country],” said Blake Smith, director of smart-growth communications for the NAHB, about Mitchell Chase.
The Mitchell Chase model, however, offers no incentives to developers, Lunceford said. And it’s a project that may not be easy to replicate “because it takes hard work to form the coalition,” Smith said.
That’s where local governments come in.
Last summer, the city of Decatur passed a “lifecycle” zoning ordinance that allows developers to build 20 percent denser projects than current zoning allows if 75 percent of those additional units are affordable rather than market price.
“There were no incentives as far as encouraging developers to build affordable housing,” said Lyn Menne, assistant city manager for economic and commercial development. So far, the ordinance has created about 100 units of affordable housing, according to Hugh Saxon, deputy city manager. A third project will be considered this month.
“The goal is to create a community where the number of auto trips is reduced and one of the best ways to assure that is to ensure that people live close to where they work,” Menne said.
One of the two Decatur projects, a 90-unit condo development on Tally Street whose construction starts this month, is being developed by the Decatur Housing Authority. All of the additional units allowed by the density bonus, instead of just 75 percent, will be work force housing, said executive director Paul Pierce.
The market price for a one-bedroom unit is $145,000, but the work force housing units are being sold for $115,000. “We’re basically subsidizing that discount by having less in the bottom line,” Pierce said. “The zoning ordinance helps make it possible because we’re able to build more units.”
The first phase of Larry Gellerstedt’s mixed-use development, the Artisan, includes 105 condos atop retail stores. Thirteen of those units meet the work force criteria; they will start in the $170,000s.
“[Most] jobs in metro Atlanta pay less than $40,000 a year. For many of those people to find affordable housing, they have to move far from their jobs, which increases traffic and destroys green space,” Gellerstedt said. “It is critical for the future of our region that we find ways to include a mix of housing types and prices in all of our communities.”