Rent: City turns to apartments in housing crunch

Posted by Dan Whisenhunt October 10, 2013

There’s a rush on Decatur real estate right now, and it’s putting the city further out of reach for people who aren’t rich.

That includes people like me. I like living here. I’d like to start a family here. It’s not going to be easy. The red hot market drives up the housing prices. The housing prices keep driving up taxes because of increased property values and that drives up rents.

There are three apartment projects in the works and the city’s top economic development official thinks they could bridge that economic gap.

As a renter, that has a certain appeal.

But I also can appreciate that apartments attract controversy. We’re all familiar with the older garden style stock in North Fulton that officials there want redeveloped. Apartments that once looked like a decent place to hang your hat got older and didn’t hold up well.

The apartments coming to Decatur will be different, Assistant City Manager Lyn Menne said.

“The value of our property is high which requires a high value project to be built,” Menne told me recently.

Menne, who oversees Community and Economic Development for the city, sees apartment projects as a means of leveling the playing field for people like me. The developments will also help secure the city’s long term future, she said.

“Fifteen percent of our tax base comes from commercially zoned properties,” Menne said. “The rest is single family. That’s way out of whack.”

Here’s a map of the projects in development. The last apartment project was the Ice House Lofts, completed in the early 2000s.
DecaturApt (2)When these three are completed, there will be over 600 new apartment units in the city of Decatur. That number will almost certainly grow. The city recently announced its closing on a deal to buy the Callaway Building from DeKalb County, which will be sold to a developer for a mixed-use project.

Menne said if the city holds up multifamily development, “We’re going to turn ourselves into a super wealthy community that very few people can afford to live in.”

Essentially everything that makes Decatur a neat place to live would go away, she said.

Menne said without affordable living options, people working at the courthouse, low-level jobs at Emory or in one of Decatur’s many service gigs are out of luck. Apartments will keep the city diverse, Menne said.

You don’t have to look very far to see the truth in what Menne’s saying. At the Oct. 7 City Commission meeting I attended, city commissioners discussed a moratorium on tear-downs. The tear-downs are replaced with bigger, more expensive homes which drive everyone’s property values up. My Realtor friend Jon Effron said the average sale price in Decatur these days is around $450,000 and he could easily see it increasing to $500,000.

I asked him how Decatur’s housing inventory is doing lately. He said if you want to buy a home, it’s hard to find. In the second quarter of this year, the city saw an average of 35 home sales a month. There are 39 houses on the market as of Oct. 9, which amounts to about one month of inventory, Effron said.

“A ‘balanced’ market is six months of supply,” he said. “Anything over six months is going to be a buyer’s market. Anything under is a seller’s market. (Having) 1.1 months of supply is, in my opinion, an extreme sellers market.”

Sometimes the market gets so extreme, people feel their only choice is selling their home and moving outside city limits.

I reached out to the Oakhurst Neighborhood Association group the other day, via their Facebook page, and asked if they could help me find anyone who left the city because of high taxes. Almost instantly, I got a message from Deb Crislip.

She lived in Oakhurst for 15 years on a single income but eventually couldn’t afford the taxes, so she moved to East Lake.

“But I dropped my taxes from $4,000 to $1,000, moving seven blocks,” Crislip told me in an email.

Wow, I thought. That’s a big difference.

So what are these apartments going to look like, again?

I shot an email over to Carter USA, the developer behind the 315 W. Ponce project, already under construction. There could be leasing activity as early as 2014. There will be 235 units when it’s all done. Residents living near the project sued over disagreements with the project, but Carter USA was eventually able to resolve it out of court.

Like home sales, apartments experienced a slowdown when the recession hit.

Carter tried to get the project off the ground several years ago, but the economy put the plans on hiatus. The same was true for the Trinity Triangle development, a 210 unit project that’s in permitting now.

The lack of people buying homes created a demand for apartments and an opportunity for developers.

Carter USA put me in touch Conor McNally, the company’s Chief Development Officer and a Decatur resident.

McNally told me that the company is creating a project that will fill a need in this city.

“We’d had our eye on Decatur as a market that was very underserved as far as apartment complexes,” he said.

The 315 W. Ponce apartments will offer up all kinds of amenities, aside from the obvious perk of being walking distance to the square and a MARTA station. There will be a secured parking deck, two outdoor recreation areas, a fitness center, a bicycle repair shop (Editor’s note: hipster apartment complex is hipster.), and a fitness center.

Rents will start around $1,100 a month and go as high as $2,500 depending on the number of bedrooms, McNally said.

He is optimistic about how apartments will affect Decatur’s housing market. He said that besides growing the tax base, the additional people and lighting could also deter crime

But what are the potential risks?

One common concern I’ve heard, both on local message boards and the Oct. 7 meeting, is the idea that people will rent apartments for the sole purpose of sending their kids to school here and won’t actually live in them. It’ll overload a school system already bursting at the seams, the argument goes.

McNally said that’s unlikely at 315 W. Ponce.

“Our 1B units average $1,270 per month,” he said. “If someone did what you heard, it would cost $15,240 annually. That is an extremely large sum to pay (on top of whatever other real estate taxes that person pays elsewhere) to send their kids to public school. It’s basically what it costs to send a kid to a top tier private school. That suggestion is completely ridiculous and should called as such.”

Menne said apartments don’t add as many students as people might expect.

She said the apartment complexes generate far more tax revenue for schools than single family homes, but don’t generate as many students.

“We pulled the school system addresses,” Menne said. “For these multifamily units, 3 percent of the units had generated school-age children, as opposed to a single family house which you can guarantee is going to generate school-aged children.”

I asked the schools for information about the number of students in multi-family, but haven’t heard back. It’s obviously something they’ll need to research. I’ll let you know when I hear from them and what they tell me. It never hurts to compare notes.

Getting back to the taxes for a second, I asked Menne for some more information about tax revenue from apartments, versus single family.

Give me an apples-to-apples comparison, I said.

“If you assume that a $600,000 home generates one or two school aged children and that same home generates $6,000 per year in school tax, then it isn’t covering the cost to the schools,” Menne told me. “We have been told that the school system spends $7,500 to $10,000 per child per year. So even one child is costing more than the home is generating. However, a multifamily development is valued at $40 million producing approximately $400,000 in school tax revenue.”

The city says the buildings won’t tower over the square either. Decatur has a height restriction, limiting the complexes to no more than about six stories. Apartments are also restricted to 70 units per acre.

So let’s keep this important bit of context in mind, particularly in light of the proposed moratorium on tear-downs in the city that came up at the Oct. 7 City Commission meeting.

As the economy improves, the debate about housing prices in the city is picking up right where it left off in 2007.

In 2007, preservationists tried and failed to convince the City Commission to designate Oakhurst as a historic district. That would’ve thrown up a road block for builders looking to buy and demolish older single family homes.

Builders and residents showed up to the Oct. 7 meeting and one of the builders there mentioned the Oakhurst controversy. I wasn’t here in 2007, but I’m told it tore the community apart. Judging by the tone of the conversation surrounding it, I’ll bet it did.

So how do builders and residents feel about apartments?

I stuck around after the meeting to ask and found a surprising amount of agreement on both sides of the tear-down argument. The one person with anything negative to say asked that I not quote him.

Tom Atkinson, a member of the Glennwood Estates Neighborhood Association, spoke against the tear-down moratorium. He thinks apartments are a fine idea, particularly with the city’s development standards.

“It contributes to diversity in the community,” he told me.

Steve Provost, who lives in Oakhurst and spoke in favor of the moratorium, likes the apartment idea, too.

“I’m all for rental property,” he said. “It’s difficult to maintain a diversity of residences here.”

I’ve contacted neighborhood groups that I know have raised issues with the city over apartment complexes, but haven’t had any luck reaching them. I welcome their perspectives on this.

My experience here may not mean much to some of you who have lived in town for years, but for what it’s worth, I haven’t quite settled on the idea of rentals as a way to make the city more accessible. I mean, if the city taxes are so high that residents can’t afford them, it raises an obvious question. Why not simply lower the tax rate?

Now I’m sure some of you are laughing, because I don’t know what that would mean for the school system or city services. But we’re all pretty much on the same page that taxes are a persistent problem, by the sound of it.

Menne said it best I think. It’s boring living in a place where everyone looks and thinks the same. We like the city because it’s a nice mix of people in a cool urban environment.

Without diversity of incomes, it will become a pretty uninteresting place.

How we increase diversity is something that city leaders are thinking about. This moratorium is one sign of that. There will be more forthcoming on this issue, I am sure.

I want to hear from you. What do you think about more apartments in the city? Good idea? Bad idea? Please post your thoughts in comments or shoot me an email:

Editor’s note:

So there’ve been some condos developed over the last decade, which tend to be owner occupied but can be rented too. This article was complex enough without getting into all that, but I’ve included the list here for people who were wondering.

Development name                 Units

Town House Condominiums   112

The Clairemont                            66

Renaissance Condos                 169

335 Ponce de Leon                       70

The Artisan                                     162

About Dan Whisenhunt

Dan Whisenhunt is editor and publisher of

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  • FedUpInDecatur

    Well said, David. Apartments in downtown cannot really be an honest answer to preserving diversity in Decatur. Also an Oakhurst resident (and gasp, renter with a family) Oakhurst and Decatur in general are no longer the richly diverse, slightly weird and very special place we moved into many years ago. The tear downs and proliferation of gigantic homes have been built for the profit of a few local builders and at the expense of everyone else. I don’t know what the answer is but I can guess that creating a chilling effect on the building madness could perhaps help? Perhaps that just further drives up property values, I don’t know. However, I can say that it is unlikely we’ll stick around long enough for our youngest to get through the school system. The educational experience of our youngest (young elementary) and that of our oldest (older high school age) will undoubtedly be a dramatically different, far more homogeneous experience. Very “rich” in all the wrong ways.

  • Keith

    The new apartments are a great idea. There are not enough apartments in the City at any price. I am a 15 Yr. homeowner who recently renovated and moved my family of four into an apartment. I shopped around but found little available if we wanted to stay in the City limits. We did find an older one but had plenty of roaches as roommates. The new apartments will increase the number of younger residents in the City which is a good thing. I would also say that these residents can spend more of their income on rent given the walkablility and public transportation access in this City. The City has tried to preserve economic diversity in Single family with current zoning. Many City lots are so small that only 1500-2000 SF can be built at a maximum. This does limit the maximum value of a Property although that limit seems to keep rising. The City could do a lot more to preserve older homes. Unfortunately economics works against this. It is cheaper to scrape a lot and build new then preserve and renovate. I would like to see the City grant more variances to those who renovate. The biggest problem we have in Decatur, since we only 4 square miles, is that our large neighbors (Dekalb and Atlanta) have decimated their own school systems which is driving any intown resident with children to our City. There are some great neighborhoods in Atlanta but their schools are a disaster.

  • Hess

    I would love to live in Decatur but I still think the rent would be too high for me in the area. I am a 28 year old social worker living close enough to ride my bike 15minutes to the city of decatur. My current rent is $775 could not afford and would not want to pay $1,100 for just 1 bedroom. You could get a nice apartment in the city of Atlanta for that price. Will be interesting to see what types of people the property will attract.

    “Rents will start around $1,100 a month and go as high as $2,500 depending on the number of bedrooms, McNally said.”

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