Is affordable housing really as bad as it’s made out to be?
Debunking the myths of affordable housing developments
By A. Kelton Longwell, Director
Coats Rose - New Orleans
The need for affordable housing is urgent as the cost of living continues to rise at a higher rate than the adjusted increase in salaries and wages. Many fear that, with the introduction of more affordable housing developments, crime, lower property values and other related problems will plague the area. However, there are many common misconceptions about affordable housing – including its exact definition.
Affordable housing is defined as apartments and owner-occupied homes sold or rented to people meeting income criteria as established by the state or federal government. For the most part, the people who qualify for affordable housing have incomes of 80 percent or below the average median income for the area. This is not to be confused with Section 8 housing, which is subsidized by the federal government and allows for those with the lowest-level of income to pay a reduced rent – not to exceed 30 percent of their annual income. Like Section 8 housing, affordable housing costs do not exceed 30 percent of the tenant’s income, but it is the result of financial assistance on the part of a local or state government.
Developers utilize subsidies like the low income housing tax credit and HOME loans to produce housing that will be marketed to tenants who make less than 60 percent of the average median income for the market. The mere mention of an affordable housing project being built can bring opponents out, despite the fact that they often do not even understand what they are opposing. Opponents argue that these developments are gateways for gangs, drugs and crime. These types of concerns are being raised to officials, but these fears are unfounded. In fact, many studies have shown that affordable housing developments can actually increase the property values of nearby residences, and often spur economic growth and development in an area.
Most affordable housing properties look no different than the market-rate properties in the area. Instead of criminals, today’s affordable tenant is likely to be a secretary, a sales clerk or a dental hygienist – people who work hard every day, yet make less than the average income for the area. Today’s affordable housing is targeted to the workforce, giving them a stable home environment without requiring a substantial increase in wages. The trend in affordable housing is to produce mixed income housing, where affordable tenants live next to tenants who pay full freight for their units without disclosure or discrimination.
The fact that subsidies are utilized to develop a project does not mean that property values will decrease. The problems with affordable housing developments do not result from the subsidies that are utilized or the tenant population that is targeted. The key to a successful affordable housing development is selecting the right property manager for the project. Most affordable developments require specialized management, including a social services component to assist tenants. Additionally, tenants in mixed income developments and affordable development may be required to meet the same tenant qualifications as market rate tenants. It is poor management that creates the havens for undesirable tenants – not the affordable housing designation.
For a successful affordable housing development, building a good product and good property management will ensure the project is successful. We’ve seen much of this in New Orleans along Tulane Avenue, a rich historical district that was badly damaged by Hurricane Katrina in 2005. The redevelopment of Tulane Avenue – which features six projects in 12 blocks – is critical to the rebirth of New Orleans, and a catalyst for development in the historic and deeply meaningful corridor. Hard working residents of Tulane Avenue bring an unrivaled vitality to the city, which wouldn’t be possible without the availability of affordable housing developments.