Affordable housing is in short supply across the US. Atlanta may have found a

Shortly after his election as mayor of Atlanta in 2021, Andre Dickens realized one of his core campaign promises – to create 20,000 new units of affordable housing – might be hard to keep. Estimates from his staff showed the city would fall more than 4,000 units short.

His options seemed limited. The low-income housing tax credit supports the building or restoration of much affordable housing in America, but the federal tax incentive is curbed by volume caps each year, and voters are often skeptical of other potential sources of funding, such as bonds.

While researching various models, Dickens and his team were inspired by Copenhagen. Four decades ago, officials in the Danish capital created a publicly owned, privately run corporation to redevelop public land and infrastructure.

In Atlanta, they inventoried all of the publicly owned land. Cities typically own large amounts of land, but as long as this public land remains siloed in different departments – the fire department here, the school district or transit authority there – it’s hard to see how all real estate assets can contribute to an overarching goal, like building more affordable housing. So they also created a housing strike force to break down silos between departments and then launched a new non-profit corporation, the Atlanta Urban Development Corporation (AUD), to attract private financing and expertise.

The result has been a surge of development – 40 public land projects are under way, with 10,000 new affordable housing units finished or under construction – that represents a striking example of how cities can use creative strategies to expand their supply of affordable housing. Staff in dozens of other cities around the country are said to be taking note.

“Atlanta has definitely cracked the code on public assets,” said Bruce Katz, co-founder and director of the Nowak Metro Finance Lab at Drexel University. “I think this will become a new model that gets repeated all across the country.”

In Atlanta’s Thomasville Heights neighborhood, the city owned roughly 100 acres (40 hectares) of vacant land spread across five different agencies. After consolidating the ownership under the new AUD, they rezoned the land. A redevelopment plan includes a new grocery store, a new early childhood education center, an elementary school and about 3,000 units of new housing, of which roughly 30% will be affordable, prioritizing families that make less than 50% of the area median income.

“We had a lot of underutilized space in the city, underutilized land,” Mayor Dickens said. “So we started looking at publicly owned assets and underutilized publicly owned assets. When you can take publicly owned land, you have more control. That then can allow for more units of affordability, or more deeply affordable units.”

In another neighborhood, West Midtown, a city-owned facility on almost 10 acres of land is used to store new trash cans before they are delivered to residents. “It’s not the highest and best use of the land, but we’ve been doing it for decades,” said Josh Humphries, the mayor’s senior policy adviser on housing. “We have a lot of things like that, which make a lot of sense for housing, or grocery stores, or other key amenities that residents need.”

The trash cans will either be moved to a new facility, or an existing storage depot.

The model is not without risks. In one high-profile case, CIM, which invests in commercial properties, received roughly $2bn of tax breaks and incentives as part of a 2018 deal to redevelop a section of downtown Atlanta known as “the Gulch”. In return, the developer agreed to make 20% of its residential unit affordable, or pay fees to the city for each affordable unit it declined to create. Not only did the group opt against the affordable units, but the fees it paid the city were based on outdated property values for each unit, suggesting that the company enriched itself while shortchanging the city.

“City officials should conduct extensive research on the private institutions they plan to partner with,” said K Agbebiyi, senior housing campaign coordinator with the Private Equity Stakeholder Project. “Deals that the city has with corporations must maintain enforcement mechanisms reflective of up-to-date research on housing value.”

But city officials point to promising projects elsewhere….