The “economy” is doing better but I am seeing more homeless in Atlanta

I am seeing more homeless people in my West End Atlanta neighborhood. I have seen at least one sleeping in his vehicle. Others make use of the parks to sleep at night.  What I see on the ground does not coincide with the claims made in Washington of a booming economy.

WABE, citing data collected from the city of Atlanta, reported that the homeless population numbers around 3,000 people and is allegedly on a decline.  And last year, the Atlanta Journal Constitution reported that Atlanta ranks among America’s neediest cities based on 21 metrics including child poverty and the number of uninsured. Homelessness is the result of a number of factors including the lack of affordable housing, poverty, discrimination, and shifts in the economy. Can city policies adequately impact these factors?

Take the factor of affordable housing. Atlanta mayor Keisha Lance Bottoms has made affordable housing one of her top public policies, but it appears to me that such an approach falls out of line with one important goal of a city: to generate tax revenue necessary for providing the amenities that keep citizens interested in living in Atlanta.  Land owners want to see property values rise and see an increase in the revenues that their properties generate.

Also, as city leaders continue their efforts to make Atlanta a job center, they have to keep in mind that as part of the efficiencies offered by a city is the location of housing close to job centers.  Housing located close to job centers may also end up being some of the most costliest housing.

I ride into Buckhead every day from southwest Atlanta. I have blogged before about how the MARTA train feels more like those conveyor belts loaded with coal that go into a furnace to fuel a production facility.  In this case the human coal are the lower and middle income individuals heading into Buckhead to work a job that, ironically, may be on the chopping block in a few years due to artificial intelligence.  If these people can’t afford to live close to an employment center where they can walk to work, the pressures of living will really increase when they have to find alternative employment.

But even with current employment, there may not be enough affordable housing available because landlords will be under pressure to meet rising property taxes resulting from the increased values of their properties, at least in the short run. This rise in value and ensuing property taxes will result from increased demand for housing that Atlanta expects to face over the next ten years.

Let’s not forget the upward pressure expected on interest rates over the next two years.  Property owners will have to increase rents in order to cover higher mortgage rates.  For the city of Atlanta it means higher bond servicing costs as the city continues to raise money through bond issues for its development and operational needs.

Affordable housing, because of the above pressures, won’t increase in supply.  Only an economic downturn may bring about cheaper rentals but even that will be short lived because a downturn in the economy means a slowdown in hiring and the specter of non-affordability due to increased lost income.

Politics wise, it is time for elected officials, particularly Democrats, to eliminate the affordable housing mantra from their campaign slogans.  They won’t be able to achieve it at any meaningful scale.

 

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Urbanization: Atlanta isn’t Delhi … yet

According to economist Dambisa Moyo in her book, Edge of Chaos: Why Democracy is Failing to Deliver Economic Growth and How to Fix It, 55% of the world’s population lives in urban areas and that number is rising.  In this Bloomberg podcast, Stephanie Flanders provides some insights into the inequality brewing in urban areas while at the same time serving as a hub for attracting workers seeking higher incomes.

In the podcast, Ms.. Flanders uses Delhi, Mumbai, and other cities in India as case studies for urban population and economic growth, the problems with governance, and income and wealth inequality. I don’t have to travel to south central Asia to witness inequality.  Living in Atlanta I see inequality everyday where a significant population of Blacks and Latinos take the train into Atlanta’s core to go to work.  Cranes are everywhere downtown as the city continues to put up new office and residential buildings.

And just this evening, Atlanta’s city council heard over seven hours of public comment before approving a proposed project that would turn 40 acres of downtown space into a complex of residential and commercial space.

The concerns about inequality have leaked into public policy proposals, including promises in 2017 by then mayoral candidate Keisha Lance Bottoms to increase the amount of affordable housing in Atlanta.  Today, Mrs. Bottoms is mayor and, to her credit, has made affordable housing the tip of her economic development spear.  Late last evening Mayor Bottoms scored big in persuading Atlanta’s city council to approve the $5 billion project.  One condition of project approval was for developers to set aside a required minimum affordable housing units of 20% or 200, whichever is larger.

I think even with these efforts, Atlanta is on its way to being unaffordable for middle income residents.  Buckhead, Midtown, and soon downtown will be out of reach for the middle class.  Even residential areas in the southwest and southeast quadrants of the city may be unaffordable for an increasing number of residents as people moving back into the city with either sufficient capital or credit have been able to take advantage of low rates and purchase homes in the West End, Westview, and Adair Park sections of the city.

What should Atlanta policymakers do? Nothing. A tax and income redistribution scheme may only provide very short term relief to the middle income populace. Higher property taxes would threaten housing values and give homeowners second thoughts about maintaining residence in Atlanta.  Requiring developers to set aside affordable units for each of their projects can only go so far given the limit on the number of appropriate projects in the first place.

As Ms. Flanders points out in her podcast, municipalities in the United States may have a bit more independence and flexibility to effect affordable housing policy but eventually the market for housing, available capital, and credit markets will limit the availability of units overall and affordable housing in particular making urbanization a difficult environment for the middle class.