A month after developers and local officials cut the ribbon on the first phase of the Front Porch affordable housing and retail project in the Sweet Auburn neighborhood, it is already showing signs of trouble.

Heralded as a catalyst for the historic community’s revival, Front Porch's efforts to fill its apartments and ground-floor commercial space have been thwarted by concerns over a homeless encampment behind the building, its developer tells Bisnow.

Historic District Development Corp.'s $37.5M Front Porch project has 10K SF of ground-floor retail and 33 fully furnished coliving units with 67 bedrooms, 75% of which are reserved for lower-income residents.

HDDC CEO Cheneé Joseph said an average of three residents move in per week since it opened, with occupancy now at 15%, but the dozens of homeless people living in tents on Old Wheat Avenue have “affected us negatively.”

“That does take a toll on the property and its perception,” Joseph said. “We also had leases canceled because they had some concerns about the community. It’s been very difficult.”

The retail space remains vacant, even though multiple businesses have signed letters of intent to take the space, Joseph said.

Atlanta City Council Member Liliana Bakhtiari alluded to troubles with the Front Porch project during a Community Development/Human Services Committee meeting on Tuesday, saying the developer was in a “holding pattern and trying to figure out what to do.”

Joseph confirmed that the planned second phase, which would include a slightly smaller building with apartments over retail, is on hold. Bakhtiari didn't respond to a request for comment.

“Obviously, there are difficulties of getting people to move in because of the complexities of that location,” Bakhtiari said at the meeting. “If that anchor project does fail, I believe it will be very bad for the corridor.”

Joseph said Mayor Andre Dickens' office has vowed to rid the area of the encampment but has taken little action. She said she wants the city to prioritize the area with “visible” and “on-the-ground” resources to “help us get to the point where we’re marketable.”

She said the camp has grown from a handful of people to nearly three dozen. The city conducted a bulldozer sweep of the encampment in January but paused the action after a homeless man was killed.

A city spokesperson didn't respond to Bisnow's request for comment.

HDDC spends $7K per month on security at the building, a meaningful sum for a nonprofit, Joseph said.

“We’re not Cousins [Properties], we're not New City, we’re not Jamestown. We’re none of that,” she said. “There’s very little philanthropy in this project.”

The project sits a few blocks from the Ebenezer Baptist Church, where the Rev. Martin Luther King Jr. preached. Its past as an example of a successful, heavily Black neighborhood has given way to a present of disinvestment. Front Porch was supposed to help turn that around.

HDDC, a nonprofit developer founded by Coretta Scott King in 1980 to revitalize the Old Fourth Ward neighborhood, partnered with Atlanta-based contractor Sovereign Construction & Development on the project.

The developers received $4M in Eastside Tax Allocation District funding to help finance the project and keep rents down. It broke ground in 2022 as the first redevelopment along the 1.5-mile Auburn Avenue corridor since 2007.

Besides housing and retail, it also has a rooftop community garden. Invest Atlanta officials said when approving the public funding that Front Porch was intended to be a “gathering space” for the Sweet Auburn community that will “imbue the neighborhood economy with critical elements of environmentally and economically sustainable infrastructure, urban agriculture and commerce.”

The Philadelphia-based Reinvestment Fund provided a $20M construction loan that matures in 2026, Joseph said. Refinancing that loan will be an uphill battle, especially if the project continues to tally high vacancy rates.

Joseph said HDDC isn't current on its debt service, and past project delays have only added to the developer’s struggles.

“Thankfully, we’re having conversations with our lenders, and they understand our challenges,” she said.

Reinvestment Fund didn't respond to a request for comment before publication.

Joseph echoed Bakhtiari’s concerns about the future of the neighborhood if the project ultimately fails.

“We’re setting the standard for what true revitalization looks like,” she said. “For us to be working as hard as we are to basically create this gift to this city — this is literally a gift to Atlanta — for it to not be supported would be a travesty.”