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COLUMBUS, Ga. — City Manager Isaiah Hugley recently persuaded city councilors to bail out a failed housing development project after its shortsighted financing plan predictably collapsed.

The financially-failed project, known as Elliott’s Walk, is being carried out by NeighborWorks Columbus: a nonprofit organization operating under the legal name of Columbus Housing Initiative, Inc. The project was intended to build new-construction ‘affordable housing’ units on undeveloped land in South Columbus between Bull Creek and Victory Drive. 

The project is literally a stone’s throw from the site of a recent triple-murder and several other shootings that all took place at the local Motel 6. It’s also a short distance from a recent drug bust on Fort Benning Road that yielded 31 grams of trafficked meth, 2 grams of heroin, illegal firearms, and other assorted drug paraphernalia. 

 Built in phases, the proceeds from the sale of the first few completed homes were supposed to be reinvested to help finance the construction of the rest of the project — though the area’s extreme rates of violence, drug use, and general depravity have made selling units to qualified buyers predictability difficult, despite NeighborWorks’ naive intentions.

As a result, city manager Isaiah Hugley used a presentation from NeighborWorks to appeal to city councilors' emotions in hopes of having them apply for a state grant to bail out the predictably-failed project. Without even realizing that the project isn’t eligible for the grant they were being asked to apply for, councilors took the bait.

THE PREDICTABLE FISCAL PICKLE

Predictably, NeighborWorks is having extreme difficulty selling the 1,200 square-foot homes at the $150,000 starting price in one of the city’s most dangerous and crime-ridden areas, proving the obvious true: 

If private developers aren’t champing at the bit to build on undeveloped land — during a housing shortage in a seller’s market —  there’s probably a really good reason why. 

That reason, predictably enough, is that the majority of buyers willing to apply for a home in the most dangerous part of the city — by and large — cannot qualify for the loan nor provide the down payment; the houses will sit unsold as the rest of the project remains unfinished. What a surprise.

According to NeighborWorks themselves, that is exactly the reason why they are unable to continue the project without a financial bailout from the state: because they stupidly chose to invest millions of dollars into building rather-expensive homes in a crime-ridden neighborhood, and banked on using the proceeds from sale to complete the project. Talk about an unsound business plan. Sheesh. 

The current phase of the project seeking the bailout requires a total of $6,714,803, of which $2,256,463 is for neighborhood infrastructure like sewers and gutters, and $4,458,340 is for the actual construction of the homes.

Since NeighborWorks has not been able to sell enough of the homes to cover the cost of their own construction, their funding plan is short by a whopping $3,256,463 — which is entirely due to their own predictably-poor business decisions. 

As a result, NeighborWorks sought to divert the cost of having to financing a loan and pay interest on their own bad decisions by turning to you instead: the Georgia Taxpayer.

During the July 11 city council meeting, NeighborWorks President & CEO Cathy Williams gave a presentation to city councilors in hopes of having CCG apply for a state-funded grant to bail out the difference for them. 

The problem, however, isn’t only that the project’s financial predicament was predictably their own fault — it’s also that the project doesn’t even meet the criteria for the grant they just conned city council into applying for. 

Nonetheless, Hugley coaxed city councilors into approving the grant application for the insolvent and unqualified project under the guise of “saving tax dollars from being used on the project” — which is ironic, as that is precisely the opposite of what seizing state funding for a bailout does. 

THE RURAL WORKFORCE HOUSING GRANT

The grant Hugley put on his typical song-and-dance routine to convince councilors to apply for is funded by the Georgia Department of Community Affairs. 

Titled the “Equity Fund Rural Workforce Housing Grant,” the funding is governed by Georgia Rules & Regulations to provide taxpayer dollars for exactly what the title implies: the development of “critically-needed workforce housing for rural counties of the state.”

The NeighborWorks project, however, is not in a rural county nor is it for critically-needed workforce housing. It is merely a bailout for NeighborWorks’ predictably-poor financial and development decisions. 

According to Georgia Rules & Regulations Chapter 413-1-.09(1)b, applicants for the grant must meet the following threshold criteria to even have their application considered for review:

“The project takes place within a rural county —or— a county with a population of less than 500,000 that shares a border with a rural county which has endorsed the project and also demonstrates sufficient quantifiable public benefit (as defined in Section 413-1 .07(7) to the rural county to qualify as a regional application.”

The term “rural county” is also defined by Chapter 413-1-.02(2), as follows:

“‘Rural County’, which is not defined in O.C.G.A. 50-34-2, shall be defined using the most recent data and estimates from the U.S. Bureau of the Census to mean a county with a population less than 50,000 where 10% or more of the population lives in poverty.”

NeighborWorks’ grant application, which was presented to city council by Hugley on pages 81-91 of the July 11 meeting agenda packet, clearly states in their own words why the project’s location, conditions, and fiscal insolvency do not meet the criteria for the grant they applied for. Given the clearly-stated criteria of the grant funding, it takes about ten minutes of googling to determine that NeighborWorks is merely seeking a “Hail Mary” pass by applying for a grant it knows darn well it isn’t qualified for. 

Those reasons are as follows:

• Muscogee County is not a rural county, as it has more than the maximum number of 50,000 residents to qualify;
• NeighborWorks did not include any mention of “quantifiable public benefit” to any other abutting rural county, which would have been included in a grant application that specifically requires it;
• NeighborWorks did not include any mention of “a rural county which has endorsed the project,” which also would have been included in a grant application that specifically requires it;
• NeighborWorks did however specify that the project is suffering financial difficulties due to their own inability to sell the homes they chose to build in one of the most dangerous parts of the city; they are not seeking funding for “the development of critical workforce housing development in rural counties of the state.”

NeighborWorks’ project at Elliott’s Walk does not meet even the basic qualifying threshold to have their grant application reviewed for consideration, let alone to compete for limited funding against actual qualified rural counties across the state.

By having the audacity to apply through a Muscogee County municipality — the second largest in the state — while knowingly not meeting the very clearly-stated basic criteria for the grant, NeighborWorks and City Manager Isaiah Hugley demonstrated their willingness to attempt to deprive other actual qualified rural applicants from their rightfully-deserved funding; they are essentially robbing qualified counties of the opportunity.

If you ask us, that’s a rather despicable thing to do — especially when you’re falsely marketing your organization as “building affordable housing” while insolvently delivering the exact opposite.

‘AFFORDABLE’ HOUSING?

At an average of roughly $130/SF, the homes also do not even meet the federal definition of ‘affordable housing.’ 

According to the U.S. Department of Housing and Urban Development (HUD), ‘affordable housing’ is defined as:

“Housing on which the occupant is paying no more than 30 percent of gross income for housing costs, including utilities.”

 NeighborWorks’ pricing model for the $130/SF housing units — even at the very onset of the project — far exceeds their so-called claims of ‘providing affordable housing.’ 

Here’s why.

The homes at Elliott’s Walk start at a $156,000 price tag for just under 1,200 square feet, so we’ll use that as our baseline example to be as generous as possible. 

With a 20% down payment of $31,200 on a 30-year fixed-rate mortgage financed at 6.037%, a buyer would incur  an estimated $922/month payment on mortgage principal, interest, taxes, and fees. Adding a generously-estimated $100 for electricity, $50 for water, and $50 for internet brings the total HUD-defined housing cost to $1,122 per month.

Bear in mind that for every less dollar that is placed on a down payment  — as well as for every mil of a percentage point in higher interest rates for lesser-qualified buyers — that monthly housing cost increases.

Multiplying the $1,122 monthly housing cost by 12 months yields an annual housing expense of $13,464.

With a median household income of just $22,063 per year for the project’s 31903 zip code, the annual housing costs make up a staggering  61% of the area’s median gross household income — which is more than double the percentage allowed by HUD’s definition of affordable housing.

In order for the NeighborWorks project at Elliott’s Walk  in the 31903 zip code to meet the HUD definition of affordable housing, the organization would have to sell the 1,200 square-foot home used in our example for roughly half of what they currently are. 

They are not — by federal definition — ‘affordable housing.’ They are new-construction middle-class homes forcibly smacked into the middle of a gang-ridden wasteland, attempting to be sold at the above-average price of $130/SF. 

We’re sure NeighborWorks took that financial reality into account when they planned their finance stack for the project’s development around having to use the proceeds to finish the job. Not. 

Nonetheless, the organization maintained their ‘affordable housing’ claim to seek state funding through Hugley’s office in hopes of having taxpayer money bail out their own poor decisions through a multimillion-dollar grant that the project is not even qualified to apply for.

Way to go, guys.

THE BOTTOM LINE

According to NeighborWorks’ own grant application as presented to city council by Isaiah Hugley, there is allegedly a housing shortage of roughly 16,000 homes in Columbus. 

Nonetheless, given the current extreme seller’s market conditions and undeveloped land, private developers were not willing to build and have avoided the area like the plague. 

There is a reason for that. It’s because it’s a really financially stupid idea. 

Nonetheless, NeighborWorks stupidly decided to defy the market’s invisible hand and play stupid games by spending tens of millions of dollars to build middle-class homes smack-in-the-middle of Gangland, U.S.A. while banking the project’s completion on its ability to sell. 

They are now winning the stupid prizes associated with their own market-defying decisions, and frankly that’s not the taxpayers’ problem. It’s theirs.

Perhaps if city officials wish to truly develop the city, they ought to create the conditions required to incentivize private builders to want to do it themselves instead of trying to force Adam Smith’s invisible hand through fiscally-ridiculous subsidized projects.

If private builders aren’t champing at the bit, perhaps that ought to tell you something: if you have to subsidize it, the market — by the very definition of the word subsidize — cannot support it. You can’t just skip to real estate development if the area itself is a broken trainwreck of crime and depravity. Think about it. 

Perhaps officials ought to fix the rates of murder, poverty, drug use, labor force participation, and homelessness first before chasing the pipe dream of $40 million in property tax revenue over the next 20 years through TAD District 8 and the “River District Resort” — especially given the city’s track record of maintaining its current Civic Center and adjacent infrastructure, let alone building another one. 

You can’t grow fruit from bad soil, you can’t make bricks without clay, and you can’t skip over the hard problems to simply get to the good results — no matter how many corners you cut, shortcuts you try, or hard work you procrastinate and avoid. There are no shortcuts; trying to take them only makes the problem worse while wasting precious resources in the process that you aren’t even entitled to in the first place. 

Do we see the decade-long patterns of causally-ridiculous behavior yet?

Grow up, CCG. It’s time you started behaving like an adult instead of a lazy teenager in need of his father’s discipline.

Go break us off a switch while you’re at it.  

How aMaZiNg. 

Facts are stubborn things — and we’ll keep publishing them, whether city officials like them or not.

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