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Kemp's New Rural Workforce Fund Doesn't Address The Heart Of Georgia's Housing Crisis

When Georgia Gov. Brian Kemp included $35.7M in this year’s proposed state budget for rural workforce housing, it was a turning point for a governor entering his second term: the first time he dedicated significant state taxpayer dollars toward an affordable housing program.

The state has received nearly a billion dollars in federal aid over the last three years from pandemic-related relief bills and has set up programs to funnel its annual allocation from the Department of Housing and Urban Development toward needy households. But no dedicated funding was allocated to subsidize new affordable housing or ease Georgians' rental burdens.

Georgia was also among the slowest states in the nation to spend its federal pandemic windfall and responded to criticism by sending heaps of aid directly to localities last year, which had less than 12 months to spend it. Earlier this month, Atlanta returned to the federal government $10M in rental assistance funding it had received from the state in March 2022.

Georgia Gov. Brian Kemp takes the oath of office in 2019.

The lack of affordable housing has become an acute condition in Georgia. Since Kemp was inaugurated as governor in 2019, fair market rents for a two-bedroom apartment in Metro Atlanta have jumped nearly 35.9% to $1,503 a month, according to HUD. In a December article, Bloomberg CityLab called the region "the poster child for the U.S. housing crisis."

Other major metro areas in Georgia also saw sharp increases in rent: a 26.75% jump to $995 a month for the Athens MSA, a 23% rise to $969 per month in Macon and a 34.5% climb to $1,200 a month in Gainesville.

The average home price throughout the state rose from $369K in the first quarter of 2019 to $582K at the end of 2022, according to the Federal Housing Finance Agency. Housing prices have been skyrocketing throughout Metro Atlanta, but especially in the outskirts as people look farther afield for affordable housing prices.

Amid this surge of unaffordability, Kemp’s administration didn’t allocate any state funding toward housing assistance. The state spent $903M of federal funds between 2020 and 2022 from the Temporary Assistance for Needy Families program, which includes rental assistance, according to a 2022 state expenditure report by the National Association of State Budget Officers.

Georgia was one of over a dozen states that didn’t contribute additional assistance, but the majority put millions of their taxpayer dollars to work alongside the federal funding. Eight of the 12 states in the Southeast in the report contributed some general fund or other state dollars to TANF, including Arkansas and Florida, which spent at least $100M each in 2022, according to the NASBO report.

In contrast, under former Mayor Keisha Lance Bottoms, Atlanta established a $1B plan to create and preserve 20,000 affordable units in the city, which her successor, Andre Dickens, has vowed to accomplish in eight years.

Leaders, particularly in the Southeast, are beginning to feel more public pressure to go beyond doling out federal assistance to address the housing crisis as population flows from the Northeast to the Sun Belt, said Jenny Schuetz, a senior fellow focused on housing policy and affordability at Brookings Metro.

“This has spilled over to be a broad enough problem, a problem not just for poor people but middle-income people and companies needing workers,” Schuetz said.

A First Step

Kemp’s proposal would establish a rural workforce housing fund, providing grants to rural municipalities and development authorities to help install infrastructure at sites to encourage developers to build workforce-level housing.

The program is included in the budget state lawmakers agreed on last week, and it would be operated through the Georgia Department of Community Affairs’ OneGeorgia budget and funded by dollars obtained through a national tobacco settlement

Municipalities and development authorities could apply for funding for infrastructure projects such as roads, sewers and water on potential housing development sites around parts of Georgia that have captured major economic development deals, Kemp press secretary Garrison Douglas told Bisnow.

New home signs dot an intersection in Flowery Branch, Georgia, a city 40-plus miles from Atlanta.

“As we grow business opportunities across the state, affordable housing for our workforce will continue to be a growing need,” Kemp said in the fiscal year 2023 to 2024 budget proposal.

While the affordability crisis's center of gravity is in Metro Atlanta, the delta between housing supply and demand is a problem throughout the state, and not just in areas that will be home to new electric vehicle plants or battery manufacturing facilities.

The Georgia House of Representatives issued a report in November focused on the housing crisis. In it, housing experts detailed the growing gap between housing supply and demand throughout Georgia. The findings were stark:

  • To prevent the housing gap from widening further, homebuilders needed to deliver 60,000 to 65,000 new units throughout the state in 2021. They delivered 53,400, according to the Homebuilders Association of Georgia.
  • There were about 57% fewer homes available on the market than in 2019.
  • The state added more than 1 million new residents between 2010 and 2019, but homebuilders added fewer than 387,000 new houses over that period.
  • By 2032, Georgia is expected to see an additional 1.2 million residents while supply is projected to continue to fall behind the demand.

“I believe we need to expand, especially if you’re just targeting rural [areas],” said Georgia State Rep. Debra Bazemore, whose 63rd District covers parts of Downtown Atlanta, including portions of College Park and East Point.

Bazemore sits on the House committee that issued the report.

“I know we’re the No. 1 state to do business, but we also have to be the No. 1 state to provide reasonable housing and to make sure our constituents have what they need," she said. "This is a problem that’s statewide, so we can’t just target [rural areas]."

Many have directed blame for the housing shortage at municipal building codes and local zoning laws that restrict new development or at least make it difficult for developers to build units that could be affordable to first-time buyers. 

That is a problem that is universal throughout the country, said Roger Valdez, the director of the nonprofit housing advocacy group Seattle For Growth and its research arm, the Center for Housing Economics.

“Nobody’s doing it right,” Valdez said. "Local government has got to stop regulating housing supply and then come to the government to ask for money for their bad decisions. Maybe the housing crisis has something to do with supply and demand. And maybe the housing crisis has to do with it's so damned hard to get a permit to build housing.”

That said, Valdez said Kemp’s proposal could be a step in the right direction, focusing on incentivizing one of the big costs associated with development: infrastructure.

In general, rural residents don’t make enough money to pay what it costs for new housing today, and local zoning and code requirements make it too expensive for developers to pencil out new projects affordable to middle-class workers, like those at a new factory. 

But subsidizing the cost to add sewers and roads to prepare land for new development means those costs come back to earth, Valdez said, especially if coupled with more lenient permitting and zoning codes.

“Because people earn less money in rural areas, they can’t cover the costs of construction, land and operations,” he said. “You can upzone those areas all you want. If there is no infrastructure there, no one is going to build housing. So building the infrastructure underneath it helps the private side subsidize the development costs.”

Construction workers help develop a new townhome community on the outskirts of Atlanta.

Local Obstacles

While Kemp is taking steps to spur new housing in rural Georgia, many experts say local governments are stifling it closer to Atlanta.

Last year, the city of Roswell placed a moratorium on new apartments. Leaders with the neighboring city of Sandy Springs voted to oppose new apartments for up to three years. And in January, Henry County placed its own moratorium on new apartment construction.

Kemp told business leaders in January that he would back any legislation that would relax local zoning laws in order to encourage more affordable housing.

Some owners of existing housing are contributing to the crisis as well. 

While 5,000 Georgia households are on a waitlist for the Section 8 housing voucher program, which Georgia operates using federal money, the state is unable to utilize all of its available vouchers because of high rents and a “lack of interested landlords,” according to the House report.

The dynamic means more than 1,000 families have been unable to use Section 8 vouchers and another 738 emergency vouchers have gone unused. Georgia offers a low-income housing tax credit and provides first-time homebuyer mortgages through select banks, but neither program uses state funds, Kemp's spokesperson said.

The deepening crisis is starting to motivate state lawmakers to think about taking action, said Marji Stagmeier, the managing partner with the Atlanta nonprofit TriStar Real Estate Investment, which develops affordable housing complexes and establishes services for residents as well.

“They are starting to really pay attention,” Stagmeier told Bisnow in an email. “Housing is emerging [as a] bilateral political issue in the Georgia legislature as both sides of the aisles are realizing the vital importance of an affordable housing supply to attract new industry.”

State Rep. Dale Washburn drafted a bill that would force local governments to grant single-family permits for houses between 1,200 and 2,500 SF and prevent them from applying regulations that would increase construction costs, such as demanding certain building materials. 

Washburn told the Georgia Recorder the legislation would allow developers to increase the supply of affordable houses to first-time buyers.

State Reps. James Beverly, Karen Bennett, Spencer Frye and Solomon Adesanya also are proposing a bill that would expand the state’s tax credit for low-income buildings to include single-family houses in rural parts of the state that are sold to lower-income families. 

Far more action has come at certain local levels, particularly in Atlanta. The city purchased an empty office tower from the state of Georgia with plans to convert it into a mixed-income community.

But even Dickens hasn't been without his critics as it relates to housing: He didn't include $7M in recurring housing funding, already approved by the Atlanta City Council, in his initial 2022 budget last spring. After receiving pushback, he included the funding in the city's final budget.

“It’s very encouraging to see that the state is going to engage in expanding its investment in housing,” Stagmeier said. “I don’t think the local government can ever throw enough money to solve housing. The solution needs to come from a consortium of sources.”