Jacksonville Responds to Needs for Housing Supply, Affordability

July 18, 2024Atlanta Fed president Raphael Bostic and Dawn Lockhart, chief executive officer of the Nonprofit Center of Northeast Florida, participate in a discussion about affordable housing during his visit to Jacksonville, Florida. Photo by Stephen Nowland, Federal Reserve Bank of Atlanta.

Jacksonville, Florida, has two notable responses to a question vexing cities across the country: What can be done to help residents of blighted neighborhoods stay in their homes as developments revitalize communities and property taxes rise?

The first response is to ensure an adequate supply of existing and new dwellings that low- and middle-income households can afford to maintain. The second is to focus attention on preserving affordability in neighborhoods where prices are likely to rise, which in Jacksonville involves the catalytic effect of the Emerald Trail linear park.

Atlanta Fed president Raphael Bostic spoke with about 20 Jacksonville civic and business leaders about these efforts in May during an outreach visit with Bank experts on housing and urban development. The visit's purpose was to learn about the local economy from people living in it and to provide the Bank's insights on local concerns.

Bostic evaluated Jacksonville's housing affordability situation with the eye of a former key adviser to the secretary of US Department of Housing and Urban Development (HUD). He said it appears that top priorities in Jacksonville include revitalization and helping existing residents stay in their homes.

"A lot of this seems to be about preservation," Bostic said. "How do we keep people in the communities where they've had a lot of experiences and long lives and actually feel a natural part of it?"

"A lot of this seems to be about preservation. How do we keep people in the communities where they've had a lot of experiences and long lives and actually feel a natural part of it?"
-Raphael Bostic, Atlanta Fed president and CEO

Community leaders who gathered around the table know they're in a race against time. Home prices have more than doubled in some intown neighborhoods during the past five years, according to research presented at the forum by the nonprofit Reinvestment Fund. The Atlanta Fed's Home Ownership Affordability Monitor shows a family making the median income in the Jacksonville region would need to spend more than 38 percent of its annual income to own a median-priced home in the region, well above HUD's 30 percent affordability threshold.

Chris Crothers, director of impact investing for the Jessie Ball duPont Fund, attended the roundtable and committed to carrying the discussion forward. The duPont Fund and the Community Foundation for Northeast Florida have partnered with a number of city officials to create an idea they think can move the needle on the affordable housing supply.

The idea is to establish a local version of the State Apartment Incentive Loan program that has induced development of affordable rental housing. Jacksonville's version is to be structured as a public/private impact investment to provide low-interest loans to take the place of the government subsidy often used to leverage financing from the federal Low-Income Housing Tax Credits program. The money could go toward preserving existing dwellings or building new ones.

"The question has been, 'How can we make it easier for market-rate developers to move into the affordable housing space?'" Crothers said. "Gap financing was a stymie that we think we can overcome."

Proponents hope to create a $40 million fund comprising $10 million from the City of Jacksonville and $30 million from the private sector. Crothers said at least $15 million in private pledges have been soft committed, with another $15 million in pledges pending the city council's final decision on the allocation provided in the mayor's proposed budget. The city's decision is due by September 30.

Funding alone won't solve all problems. Regulatory requirements are often cited as an impediment to affordable housing development due to their effect on costs and timelines. Examples are the time needed to obtain building permits or to resolve rules for off-street parking in residential areas.

The second piece of Jacksonville's response centers around the ongoing construction of the Emerald Trail, expected to be complete in 2029. It is designed to extend 34 miles through neighborhoods near downtown that have historically held Jacksonville's most affordable housing. A substantial number of affordable residences could be retained in these neighborhoods. Data from the Reinvestment Fund show that home prices in some of these areas have risen more than 150 percent in the past five years.

Preservation efforts led by LISC Jacksonville and Groundwork Jacksonville, the organizations responsible for building the Emerald Trail, are already underway. They have supported homeowners' efforts to remain in their homes through a home repair program and assistance for heirs' property prevention and remediation. The Atlanta Fed has highlighted heirs' property as a potential threat to a family's ability to build economic mobility and generational wealth.

The potential price pressure on these neighborhoods may escalate quickly. In March, the Emerald Trail was awarded $147 million in construction funding by the US Department of Transportation, a grant intended to enable the city to build 15 miles of the trail, portions of which have already opened. New parks have a proven record of spurring economic development that raises taxes on nearby properties in Sixth District cities including Atlanta, Chattanooga, and Miami.

The US Department of Transportation's Reconnecting Community and Neighborhoods program funded the Emerald Trail grant. Its purpose is to knit together communities divided by past infrastructure projects. In Jacksonville, construction of I-95 fragmented some Black neighborhoods; the trail is to help reunite them and others and mitigate environmental problems.

The trail expansion's expedited schedule adds to the challenge facing affordable housing advocates to quickly finalize and execute their plans. "One thing I noticed here is that a lot of the 'stable markets' are surrounded by high-pressure places," Bostic said after the Reinvestment Fund's market value analyses. "My expectation is that they are not going to stay stable for long."

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