HousingPolicy.org Forum

Preserving affordable rental housing near transit is becoming increasingly urgent. Changing demographic trends, traffic congestion, and high commuting costs are resulting in increasing demand to live near transit. As the market for housing near transit heats up, the threat exists for many affordable apartments to be converted to market rate housing. Are there specific strategies states and localities are adopting to preserve affordable housing near transit?

Views: 112

Replies to This Discussion

Todd, are you aware of the BeltLine initative in Atlanta? They are working to create permanent affordable housing around the BeltLine (Altanta's new transit system). Essentially 15% of all TAD bond proceeds are put into an affordable housing trust fund. The BeltLine Affordable Housing Advisory Board consists of housing and community leaders who advise Atlanta BeltLine, Inc. on how to best leverage the trust fund. Then there is the Denver initative...those are the two I can think of...
Hi All:

Thanks Anne Marie! I thought I would share a little more about the BeltLine Affordable Housing Trust Fund in Atlanta.

The BeltLine is a redevelopment project with 22 miles of transit, trails, and parks around downtown in Atlanta's core intown neighborhoods. The primary financing mechanism for the overall project is a Tax Allocation District (TAD), or Tax Increment Financing.

As part of approving the TAD at the outset of the project, community advocates and City Council required the establishment of the BeltLine Affordable Housing Trust fund to ensure affordable housing options around BeltLine transit - especially since we expect land values to rise around the corridor.

The BeltLine Affordable Housing Advisory Board was also established to advise implementors on recommendations for the Trust Fund.

Over 25 years, the Trust Fund is expected to generate $120 million dollars and create or preserve 2,800 units of affordable housing. The vast majority of the land in the TAD is vacant and underutilized industrial, but there are a few multi family properties that could be candidates for preservation. There are very few single family properties in the TAD, which makes it diffcult to address the foreclosure crisis.

There are three main Trust Fund policy components: development incentives, downpayment assistance to purchase condos/townhomes in the TAD, and property acquisition for future affordable housing development.

These funds will provide affordable opportunities for those who could potentially be priced out of their current living situations. Downpayment assistance is targeted to residents that are impacted by the BeltLine. 20%+ of families around the BeltLine are under 30% of AMI, so projects that provide 10% of their units below 30% of AMI receive a large scoring bonus.

We are still figuring out our targeted property acquisition for affordable housing around the BeltLine and potentially near transit stations. I'd love to hear examples of how this has worked elsewhere - especially unsing tax rxempt bond financing....

1. Does the transit developer typically purchase the land and then grant it via an RFP? Purchase then lease at a nominal rate? Purchase then joint develop?
2. When are other agencies purchasing land in the transit development process?


Thanks!
Denver, Colorado is in the process of creating a $15 million TOD Fund that will ensure the preservation and development of affordable housing along our bus and rail corridors. Denver's rail system is undergoing the largest expansion in the country, with plans to add 5 new lines over the next decade. The Fund is a creative response with support from local government, foundations and banks to allow properties to be purchased and held for three to five years. This longer than standard acquisition hold should allow us to get in ahead of anticipated escalation in property costs while being sure that affordable opportunities will be preserved or created. We expect to implement in mid-2009. Concurrent to implementation of the Fund, the City of Denver is reviewing and preparing to improve its "early warning" strategies, to be sure that preservation opportunities in transit corridors are not overlooked.
At the request of Chairman Olver, the GAO is investigating FTA and HUD policies on TOD and the preservation of affordable rental housing near transit. They are focused on the New Starts program. The report should be out later this year.
The Government Accountability Office (GAO) recently released the analysis on TOD and affordable housing that Erika is referring to. Notably, the study suggests that securing project-based Section 8 properties in transit-oriented development is integral to ensuring the ongoing availability of affordable housing near transit. The GAO report can be downloaded here: http://www.nhtinc.org/policy/GAO-09-871_Affordable_Housing_in_Trans...

The traditional property tax is a barrier to the preservation of affordable housing.  Although it is typically only 1% or 2% of value, it is applied not only when an improvement is made, but every year thereafter so long as that improvement adds value to the property.  Using a net present value calculation, the property tax on improvements has an economic impact equivalent to a one-time sales tax of between 10% and 20% on construction labor and materials.  That's a significant barrier to maintaining and improving affordable rental housing.

 

Fortunately, some jurisdictions have remedied this situation by reducing the property tax rate on building values.  This makes it much cheaper to maintain and improve buildings.  These jurisdictions maintain needed revenues by increasing the property tax rate on land values.   Counter-intuitively, higher taxes on land motivate development of high-value sites, discourage the hoarding of vacant lots and boarded-up buildings, and actually help keep land prices more affordable.

 

Thus, by reducing the property tax rate on building values and increasing the tax rate on land values, jurisdictions can help preserve and maintain affordable rental housing near transit.  For more information, see http://www.justeconomicsllc.com

 

RSS

© 2014   Created by Center for Housing Policy staff.

Badges  |  Report an Issue  |  Terms of Service