In Suburban Atlanta, New Models Build Capacity to Address the Housing Crisis

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  • May 27, 2014

Barbara Ray

When the Atlanta Neighborhood Development Partnership (ANDP) was formed in the early 1990s, its focus was on building affordable housing in disadvantaged neighborhoods in Atlanta proper—part of a national trend among community developers in the United States to aid urban dwellers.

Then in the late 2000s, the foreclosure crisis hit, leaving roughly two-thirds of Atlanta homeowners underwater on their mortgage and thousands more losing homes to foreclosure.

However, the housing crisis was not confined to the city. The vast majority of foreclosures in the region occurred in Atlanta’s suburbs, and contributed to rising poverty rates there. Today, more than 80 percent of the region’s poor individuals live in the suburbs.

It was this spreading crisis that led ANDP to begin to rethink its focus, John O’Callaghan, president and CEO of ANDP, told me. In the suburbs, the demands were different. They couldn’t simply replicate the models they’d used in the city.

“Strategies are different in the suburbs,” O’Callaghan said. For starters, ANDP would have to work at a much wider scale, geographically, than in the city.

Many Atlanta neighborhoods had citywide expertise and nonprofit organizations on the ground to help residents navigate the crisis. The situation in the suburbs was a stark contrast. “These municipalities had never managed a federal housing program like the Neighborhood Stabilization Program,” one of the main federal initiatives targeting foreclosures, O’Callaghan said. “They lacked the capacity and were looking for strong nonprofit partners.”

Another strategy change was ANDP’s shift from building new affordable housing to rehabbing existing housing. Where in the city they might build affordable townhomes to counteract gentrification, in the suburbs, that kind of concentrated, single-project approach wasn’t the right tool to bolster neighborhood-wide property values.

“A scattered approach [in housing and community development] over a larger geography is more effective than it is in inner-city neighborhoods,” O’Callaghan said.

Developers at ANDP focused their efforts on lower-middle-class, African American, suburban-style neighborhoods (including some in the City of Atlanta) that had been targeted by subprime lenders. They assumed that if they could slow the neighborhoods’ decline and stabilize the area, other factors such as school performance and declining property tax revenue would rebound.

ANDP started with a six-home rental pilot, but quickly saw the value of using their model for homeownership. In some neighborhoods or subdivisions where ANDP had a small cluster of three to four homes, the value of each climbed even amid a stagnant housing market. After initial declines in value, the properties began to turn around.

Developers at ANDP also examined the property values systemically. It was becoming apparent that throughout the region there were problems with property value assessments. As the housing market tumbled, valuations weren’t keeping pace, and property taxes were no longer aligned with the market value of the home. Many residents were paying overly high property taxes—which is often the final straw for vulnerable homeowners.

But not everyone was overpaying, says O’Callaghan. “Research revealed that if a person lived in a low-income neighborhood in the metro area, the appraised value of his or her home was often higher than market value, whereas in higher-income neighborhoods, it was below market value.”

Indeed, as research commissioned by ANDP was beginning to show, in the ZIP codes where foreclosures were concentrated, residents overpaid by significant amounts.

As real home values and tax valuations were increasing, ANDP and others took another step. They advocated for, and received, an increase in the local Homestead Exemption, which helped keep lower-income families in their homes.

But it wasn’t enough. Nine months into the foreclosure crisis, ANDP knew the problem was greater than they alone could address, and larger than the foreclosure crisis. Poverty in the suburbs was exposing systemic issues that needed to be addressed. Addressing these growing problems would require greater collaboration with other organizations and interests to keep families in their homes and neighborhoods strong.

Therefore, ANDP helped create a collaboration of for-profit, nonprofit, and government agencies to focus on solutions. ANDP took on the much-needed quarterback role.

“We wanted to be sure that locally and regionally focused businesses were changing their game plan to respond to the quickening foreclosure crisis,” said O’Callaghan.

“Housing groups could better coordinate getting the word out on resources. Local governments, which didn’t always have a great track record with federal housing programs, got together with the metropolitan planning commission to share best practices and plan together and support one another,” he said.

The result of all of these efforts, O’Callaghan says, is incremental change at a regional level rather than targeted neighborhood change. That said, incremental change is nothing to sniff at.

“ANDP has purchased and rehabbed homes in about one-quarter of Douglas County neighborhoods,” said O’Callaghan.  “The sale of our homes in these neighborhoods has significantly lifted market values, in some cases by as much as $15,000 or more per property.”

Most recently, ANDP has joined with The Reinvestment Fund (TRF), a national community investment group that works across the mid-Atlantic region. TRF will provide needed back-office expertise so ANDP’s community development financial institution (CDFI) loan fund can continue to grow. “A year ago, we had little capital to lend and we couldn’t invest in our own growth,” said O’Callaghan. “TRF has all the skill sets we need and the systems in place.” In turn, ANDP can help TRF and its lending resources get to critical community development projects.

“TRF has a tremendous track record in serving at-risk families and their communities,” said O’Callaghan, “and that’s going to help us be better in every way.”

Nearly six years and 440 rescued homes later, ANDP has learned some key lessons about how to most effectively tackle systemic problems in the suburbs. It’s not an easy feat, given the scale of the problem, the lack of capacity, and inexperience in this new field of suburban poverty. Ultimately, however, it took an experienced organization with roots in the city—with a little help from its friends—to create tailored suburban solutions.

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