Redevelopment of Bethel Homes given green light, will receive tax credits

The North Downtown Athens Project has been approved by the Georgia Department of Community Affairs for an award of Low-Income Housing Tax Credits. This is a crucial milestone for the project, which will completely redevelop Bethel Midtown Village and the surrounding area.

North Downtown Athens Project Area

While the exact amount of the tax credit award is yet to be decided, it will likely yield tens of millions of dollars — enough to get the North Downtown Athens Project off the ground. Once its design is complete and approved by the mayor and commission, construction of phase one can now begin as early as the middle of next year.

How the Low-Income Housing Tax Credit works

The Low-Income Housing Tax Credit is a federal program designed to encourage private investors to contribute funds to the construction of new affordable housing. It’s a bit complicated, but here’s quick rundown on how this federal tool will help us build affordable housing in Athens:

The federal government distributes tax credits earmarked for affordable housing to the states based on population. In 2018, states received $3.1 million total or $2.70 per capita, whichever was larger. For example, Georgia received roughly $28.6 million in tax credits in 2018, based on our population size of about 10.6 million.

The Georgia Department of Community Affairs receives the credits from the federal government and is responsible for evaluating developers who apply for them. Developers must agree to several conditions before their proposed projects would be eligible to receive credits. These conditions include keeping at least 40% of the proposed new units affordable for those at 60% of the area median income or under for a period of at least 30 years.

Once these conditions are met, the Georgia Department of Community Affairs ranks all applicants for that year’s batch of tax credits according to a long list of other criteria. Then the credits are granted out, starting with the highest ranked projects first.

This year, the North Downtown Athens Project ranked high enough to receive an allocation of tax credits. That means we won’t have to wait for another round before starting construction.

Tax credits of this kind are quite valuable to high-income individuals and especially to financial institutions like banks. The Athens Housing Authority doesn’t fit either of these descriptions, but the credits are still valuable to them because they can be sold on the open market.

Some buyers looking for tax credits might be willing to pay 96 cents on the dollar or more for the federal credits. In addition, state tax credits can be sold for 50 cents on the dollar, netting the Athens Housing Authority a cash total amounting to 146% of the tax credit award. 

For a bank, these credits are as good as cash because they can reduce the bank’s tax burden dollar for dollar over the next ten years (these credits are usually awarded in ten-year chunks). This means many millions will become available for the North Downtown Athens Project right up front. 

When the money gained from selling the credits is combined with the $39 million available for this project through SPLOST 2020, the Athens Housing Authority will have enough to get started on the project’s first phase. They’ll have to wait for another round of tax credits to become available before starting phase two — it will take several years and several rounds of tax credits before this project is completed.

One downside here is that our SPLOST dollars will have to be prioritized for this project first in coming years over some others that might be equally (or more) popular. This is because Low-Income Housing Tax Credit dollars can’t legally be used for land acquisition and infrastructure improvements, both of which will be needed up front.

Why is the North Downtown Athens Project important?

Bethel Midtown Village, which sits on some prime real estate downtown (it’s right next to Hotel Indigo), is home to about 190 individuals and families living in permanently-affordable apartments ensured by the Section 8 Housing Voucher Program. 

Unfortunately, Bethel is also quite literally falling apart. 

Residents complain of major maintenance and pest issues, even though the Athens Housing Authority and its business partners doubled the number of maintenance workers employed there after buying the property earlier this year, as reported by Flagpole. It was neglected for decades by the previous owner, who is located in Atlanta.

Bethel rescued from private developers

Even worse, the owner was in the process of selling Bethel to developers when the Athens Housing Authority and the local government intervened. These developers might have renovated the area but they also might eventually build luxury student housing or something similar on this site, which would displace everyone living there.

Thankfully, that won’t happen. The Athens Housing Authority outbid the other developers to purchase Bethel with the help of Columbia Residential and Jonathan Rose Companies. Once SPLOST dollars are available, the Athens Housing Authority will buy Bethel from them, bringing it into full public control. This will prevent it from being used for housing focusing on the needs of wealthy students now or anytime in the future.

After acquiring the property, the Athens Housing Authority could choose to do a renovation instead of the complete redesign which this project will end up being. Although more expensive, the complete redesign option has some big advantages over a less ambitious renovation.

The number of subsidized units on site will double

Although the final design is not yet completed, it will likely contain at least twice the number of subsidized units now present. Nearly all of Bethel’s 190 units meet the federal definition of affordability, meaning Bethel residents pay at most 30% of their income on rent. As a tenant’s income changes, their rent also changes; for example, if they lose their job and their income falls, their rent will fall as well.

Rick Parker, Executive Director of the Athens Housing Authority

These truly affordable units will remain in the final design, and their number might even increase slightly. Adding to that, there will be about 200 additional moderately subsidized units once construction is complete, according to Rick Parker, Executive Director of the Athens Housing Authority. These new units are paid for by the Low-Income Housing Tax Credit. They won’t meet the federal definition of true affordability, but they’ll be guaranteed affordable to someone making 60% of the area median income for at least thirty years, as explained above.

In Athens, the median income was $36,637 in 2018, meaning rent in these units could be no more than $550 per month (i.e. $36,637 x 0.6 x 0.3 / 12).

Market-rate apartments and retail space will also be available

Another 200 market-rate units are expected to be added to the mix as well. The development will likely cover a much larger area than Bethel currently occupies. For example, it may include public housing north of Bethel and it might open up future redevelopment possibilities for the local government-owned properties to the south and west as well.

The new buildings will essentially extend downtown northward, providing new ground-floor retail space and all the jobs that come with it. All of this new development will be on a transit line and will serve to increase density in Athens’ city center, something valued by city planners.

Criticisms of the North Downtown Athens Project

Despite the project’s benefits, it has faced some criticism and distrust from the greater Athens community. Some have compared it to the urban renewal period of the 1960s, when the homes of Black Athenians were forcibly seized and destroyed (sometimes to make room for UGA student dorms). 

The tragic displacement of these Black families and the destruction of their neighborhoods is part of the ongoing legacy of white supremacy in Athens. Even today, the University of Georgia still refuses to recognize the harm they caused with their urban renewal developments in collaboration with the local government, insisting that these Black families were adequately compensated for their property.

That being said, there are some important differences between what happened during urban renewal and what lies ahead with the North Downtown Athens Project. Parker has assured residents that, while they may have to leave during construction, they will be guaranteed the right of return when the project is complete. Furthermore, he says that all moving expenses will be paid by the Athens Housing Authority. Residents’ rent will not increase either during the move or when they return to the new and improved Bethel.

Parker also says his team has spent 2020 gathering input from residents about their vision for the new development. Previously, he had promised “dozens and dozens” of meetings, but this has been greatly complicated by the COVID-19 pandemic. There have been only four meetings to date. The project was actually put on hold for several months as the housing authority kept trying to gather resident input, which they consider essential to the development’s success.

Lastly, it’s worth noting that the North Downtown Athens Project’s steering committee includes both residents from inside Bethel and from a nearby street, showing that the Athens Housing Authority made a legitimate effort to include their voices in the process throughout, not just during input sessions.

However, it’s true that families now living in Bethel will face significant disruption to their lives for years as the new buildings are constructed. It’s also true that getting their informed consent for this potentially painful transition has been very challenging during the pandemic.

Next steps

Timeline and concept maps below via

This project has been delayed, as you can see in the graphic above (notice that review of the conceptual plans was scheduled for October / November, but hasn’t started yet). Even so, with the award of tax credits granted in November, the future of the North Downtown Athens Project looks secure.

According to Parker, the Athens Housing Authority will be taking public comment on the concept drafts sometime this month or early next year. Then, the drafts may be revised based on the public’s input before eventually making it before the commission for their final approval.

Once approved, the transformation of north downtown can begin.

For more information, you can check out the North Downtown Athens Project website here.

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