Making Housing and Community Happen

Mr. Kim (center), shown with volunteers, is a contractor partnering with Charis to renovate abandoned homes.

This blog is one of a series on Charis Community Housing. Here, we look at some of the details of how vacant properties are turned into attractive homes. (Click here to read about how the ministries began, and here to learn how they work to develop affordable housing.)

As part of its mixed-income strategy to help neighborhoods succeed, Charis has set a five-year goal to help the South Atlanta neighborhood reach 60% in market-rate and workforce (moderately priced) homes and 30-35% affordable homes. Most South Atlanta homes are rentals, and 75% of lower-income residents are renters. About a third of the 2,000 residents are low-income.

Charis’ current housing work centers on foreclosure remediation. Roughly 150 homes are vacant due to the ongoing foreclosure crisis. The organization buys abandoned properties, renovates them, and resells them to families as a mix of moderate-rate and affordable housing.

A shift from construction to renovation

Previously, Charis also built new affordable homes for families earning between 50-80% of the median area income. Eligible homeowners could make a down payment, put in some “sweat equity,” and receive a 20-year interest-free mortgage, made possible by donor funding.

But when the mortgage crisis hit in 2008, Charis needed to change its tactics. “We knew that the neighborhood was suffering from an incredible increase in vacant houses — over a quarter of homes,” says Christy Taylor, assistant director of community development. “No resident escaped the impact. Crime skyrocketed.”

With residents asking for neighbors for the vacant homes, Charis put new construction on hold and asked a group of developers to find a creative solution. The result: an LLC (limited liability company) funded by investors, which enables Charis to purchase and reclaim several vacant houses at a time.

An abandoned and stripped home.

“Just about all of these vacant houses need major renovation,” Christy notes. The homes have either been neglected for many years, or were stripped by looters of copper wiring and other valuable fixtures, leaving huge holes in the walls.

Charis can buy abandoned homes for around $25,000 and fix them up for $60,000 to $70,000. Because the funding comes from an investment pool and the ministry must be able to quickly buy foreclosed homes to secure them, the renovated homes are currently sold on the open market for around $120,000 to $132,000.

To attract higher-income buyers, these moderate-rate homes include “nice finishes, such as solid countertops, tile bathrooms, and hardwood floors,” says Jim Wehner, executive director of Charis. The organization receives a fee from the sale when possible, and the remaining profit is reinvested back into the pool for the next purchase.

Relationships are still the key to success

Because of Charis’ relationships, even several lower-income families have been able to afford these homes, averaging about $125,000. In these cases, the purchase is made possible through partnering with two local housing counselors, who connect homeowners with federal down payment and mortgage assistance programs. “We had one single grandmother raising her children who at the end of the day paid around $60,000 for her two-story home!” says Christy.

Previously, by providing its own loans for new affordable homes, Charis had developed long-term relationships with homeowners, says Jim. Staff have often become more than just the mortgage lender — they celebrate with homeowners when loans are paid off, and walk alongside them in times of hardship.

Now, to maintain relationships with buyers of renovated homes (whose loans are from other lenders), Christy offers each a Charis welcome packet. The kits include a “South Atlanta” house sign from the neighborhood Civic League, along with letters from the Civic League president and Christy that introduce newcomers to neighbors, local history and resources, and ways to get involved.

Although Charis’ interaction with homebuyers has changed somewhat, the current focus on foreclosure renovations has had many benefits. The LLC funding strategy opened the way for Charis to work with moderate-rate housing (which they hadn’t done before), while providing an excellent 3-4% return to investors.

Most importantly, turning vacant properties into beautiful, moderately priced homes is luring new residents and lowering crime. The work has helped Charis move toward the goal of mixed-income housing throughout South Atlanta.

“These homes are more affordable than market rate but let us bring in higher-income neighbors,” Christy notes. In turn, by lifting up the entire neighborhood, “That helps the true affordable homes to be sustainable” – ensuring that homes are available in a safe, strong community for families at all income levels.

*Atlanta Habitat for Humanity, which partners with Charis in South Atlanta, builds homes for residents below 50% of median income.

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The story of how FCS Urban Ministries and Charis began is featured on pages 81-86 of Making Housing Happen. Read an excerpt of the chapter here, and purchase the book from Wipf and Stock Publishers.

A formerly foreclosed South Atlanta property that Charis purchased and renovated as a workforce (moderately priced) home. The organization aims to help neighborhoods reach a mix of about 30% affordable, 30% workforce, and 30% market rate homes.

In a previous blog, we shared about the beginnings of Charis Community Housing, whose affordable housing work in Atlanta inspired Making Housing Happen. Here, Jim Wehner, Charis’ president, describes some of the ministry’s philosophy and method.

After the completion of the GlenCastle apartments, Charis was invited to take part in the East Lake Community. This affordable housing initiative was spearheaded by Tom Cousins, an Atlanta business leader and philanthropist.

“Tom got the idea to buy and renovate the Bobby Jones golf course, and decided to try housing with this huge asset,” Jim said.

Lower-income residents were able to buy a home in East Lake with the help of “sweat equity.” In this model (similar to that of Habitat for Humanity), future homeowners help build their own homes as part of the purchase agreement.

They also lease for one year and take classes on homeownership before receiving a 20-year, no-interest mortgage loan. Charis has provided hundreds of these loans over the years in East Lake, which is considered its most successful development to date.

Over time, Charis leaders have learned that mixed-income neighborhoods fare better than ones that are mostly low income. “Some call Bob [Lupton] ‘the gentrifier,’” Jim noted, referring to the organization’s founder. “But Charis isn’t afraid to say that community development and revitalization really have an economic component.”

In areas such as South Atlanta, whose population is historically African American and lower income, “gentrification” has a negative connotation. Basically, it means white homeowners moving in, and black renters having to leave because of higher rents.

From their experience, though, Charis believes that “If you really want to move the poverty needle, you need to desegregate,” says Jim. He notes that most Section 8 (federally subsidized) rentals are located in low-income communities.

“Bob recognized early on that you have to mix income levels because when you have people with means, they can help lift the neighborhood along. It’s an economic driver, and lower-income families benefit too.”

Toward that end, Charis aims for a mix of roughly 30% affordable, 30% workforce (moderately priced), and 30% market rate homes. “Each type of home should be spread out evenly in the community and not clumped together,” explains Christy Taylor, Charis’ associate director of community development. This strategy helps combat pockets of poverty in neighborhoods while stabilizing affordability over time.

At the same time, Charis works to maintain affordability with tactics such as:

• Green housing standards, which help keep utility costs down and offset rising taxes
• The Homestead Exemption, a state law that lowers the taxable assessed value of an owner-occupied home
• Ensuring that affordable, moderate, and market-rate homes look similar, without outward signs of price differences

Notes Christy, “All these are creative ways to help keep neighborhoods affordable while counterbalancing the downsides of gentrification.”

What are your thoughts? You can read more about the idea of “gentrification with justice” in these resources:

• FCS Urban Ministries, “Gentrification with Justice”
• Bob Lupton, “Gentrification with Justice”
• Bob Lupton, “Harnessing Gentrification for the Sake of the Kingdom”
• Bob Lupton podcast, “Gentrification with Justice”