Thursday, November 03, 2005

Atlanta City Council Scuttlebut - Infill Housing

Driving through the upscale Buckhead neighborhoods you see all sorts of election signs in anticipation of the 2005 Atlanta City Council elections. I see many signs about one person and issue in particular.

Looks like a major issue of contention is something called infill housing. Councilwoman Mary Norwood heads up the Infill Task Force.

With undeveloped land inside Atlanta's I-285 Perimeter almost gone, builders are focusing on redevelopment and infill. Often paying top prices for old houses only to tear them down, builders are clustering up to four new houses on previously single-home lots. Within Atlanta city limits, where new home permit issuance jumped 127 percent between June 1998 and June 1999, the huge demand for infill housing is fueled by well-paid young professionals fed up with "wasting time in their cars" and looking for houses "as close to their offices as possible." And the infill houses aren't cheap. Even small ones can easily exceed $300,000. 9/13/1999

The likely point of contention over this issue is the likelihood of government subsidies of future residents as part of infill projects.

A typical infill site, by virtue of its central location, would usually command a very high price on the open market. However, in a strange combination of policies, smart growth advocates call for a significant percentage of the rental units built on these expensive locations to be reserved for low-income residents as part of the Low Income Housing Tax Credit program. So we would have housing built where land is the most expensive and then specifically allocated to lower income residents -meaning we have to subsidize residential rents for those living on some of the highest-priced real estate in a metropolitan area. Much of this is occurring in the San Francisco Bay Area, the priciest area in the state and perhaps, the nation. Expensive neighborhoods in San Francisco, San Jose, and even Carmel have apartment projects with a "low-income" component. The price tag for these tax credits statewide is nearly $65 million annually, not to mention an additional $50 million granted in federal tax credits.

Simultaneously, relatively cheap land on the urban fringe remains vacant-land that could be developed to allow subsidy-free homeownership opportunities for families with low to moderate incomes. It is clear that promoting infill rental housing over "for-sale" housing located on the urban perimeter is a more expensive alternative to society and hurts overall long-term housing affordability.

Should be interesting to see how this issue unfolds over the election.