23 Jan Commentary: For Amazon to work in Atlanta, we need a stronger affordable housing infrastructure
Photograph by David Ryder/Getty Images
With all the buzz about Amazon possibly picking Atlanta as its second North American headquarters, the city needs to recognize that it is not in a good position to absorb 50,000 jobs and the attendant households without a major new affordable housing infrastructure. The current national affordable housing crisis has made it clear that, especially in growing cities, local governments need to view affordable housing as critical infrastructure, just as mass transit is. Without a strong infrastructure, events as transformative as HQ2 will lead to substantially higher housing cost stress, especially for lower-income families. This, in turn, will likely result in the displacement of existing families and a decline in the ability of low- and moderate-income families to be able to move into the city.
While continuing to build higher-cost housing would be necessary to absorb the high-wage workers that HQ2 would bring (the average of salary of HQ2 positions is reportedly 100,000), the increased demand for land spurred by such development would increase land costs for any sort of development, including housing affordable to lower-income workers. And make no mistake, tens of thousands of higher-wage jobs in the city will bring with them many lower-wage jobs, including the spillover jobs created indirectly in restaurants, retail, and other service sectors. Without adequate affordability in the city, this will also spillover into transportation problems. If lower-income workers cannot afford to live in the city, a surge in jobs (including lower-wage jobs) in Atlanta would worsen the already considerable transit issues.
Any increased demand for luxury housing will have two key effects on lower-cost housing. First, rents for existing lower-cost rentals will increase at an even faster pace than they have been. Second, many lower cost units will be converted into higher cost-units through purchases and renovation or replacement. On top of this, thousands of subsidized, affordable rental units are scheduled to see affordability restrictions expire over the next ten to fifteen years, making them available to convert into higher-cost properties.
While a call to “build, baby, build” may seem at first to be a potential solution to these problems, it does not address the most severe problem—affordability for lower-income families. Moreover, given the tens of thousands of new luxury apartments added in the city in recent years, there is little evidence of any serious barriers to adding new luxury supply. The flood of this supply over the last five years has only recently begun to slow the increases in rents in the luxury sector, and has had no positive effect on the supply of low-cost rentals, which has continued to shrink. The result is that, according to the 2016 American Community Survey, over 82 percent of renters in the city with incomes of less than $35,000 paid over 30 percent of their income in rent, compared to only 12 percent of renters with incomes of over $50,000.
Unlike cities such as San Francisco or Los Angeles, Atlanta is not highly constrained in its ability to provide more housing for a growing population. Rather, the problem has been a severe mismatch in the pricing of what has been built combined with a loss of affordable units. Without fixing this supply mismatch, Atlanta will have difficulty being a diverse and welcoming city.
Over the longer term, an HQ2-sized situation could cause the affordability problem to climb up the income ladder, affecting more moderate- and middle-income families. One key here will be to address the underutilized supply of residential properties in the high-vacancy sections of the city. In these neighborhoods, the redevelopment of long-vacant properties has been stifled by the city’s inability to acquire and redeploy these properties for new affordable and middle-income housing. The inability to redevelop tax-delinquent and other distressed properties and get them into the hands of responsible owners is a persistent problem that requires much more cooperation from the Fulton County tax commissioner and dedicated city resources.
Going forward, to be ready for an Amazon HQ2, the city needs to focus on building a more robust housing policy that will allow for markets to provide housing for middle-income families while providing ample, income-targeted resources at much greater scale for lower-income families. Some of the policies that should be considered include:
Expanding funding for affordable, low-income housing to much greater levels, focusing subsidies on units for households with incomes below 50 percent of area median income (about $35,000) Expanding the city’s new BeltLine/Stadium inclusionary zoning ordinance to larger parts of the city, particularly to a large radius around the new HQ2 site Providing significant resources to a new Atlanta large-scale community land trust Creating property tax or other incentives for owners of existing rental properties who commit to providing long-term affordable housing Fulton County updating the assessed values of homes and commercial properties in a more regular, consistent, and apolitical fashion
Without such a stronger affordability infrastructure, a shock as large as an HQ2 could dramatically change the nature of Atlanta in ways that will be hard to reverse.
Dan Immergluck is a professor in the Urban Studies Institute at Georgia State’s Andrew Young School of Policy Studies. He researches housing markets, neighborhood change, urban poverty and racial dynamics, financial markets and urban form, and community and economic development practice and policy. He has authored four books, including Preventing the Next Mortgage Crisis: The Meltdown, the Federal Response, and the Future of Housing in America.