Hundreds of lower-income families in Gainesville are facing significant rent increases as apartment complexes exit a state tax credit program that kept costs below market rates.

“This is potentially a huge loss of affordable housing for the area,” said Chad McCranie, a staff attorney with the Housing Preservation Project of the Georgia Legal Services Program who works extensively in Gainesville.

More than 50 percent of all renters in Gainesville are considered “cost-burdened,” according to census figures, meaning they spend more than 30 percent of their income on housing.

More than 60 percent of all households in the city limits are renter-occupied.

Dramatic rent increases recently pushed Quionna Gordon, her husband and three children to vacate their two-bedroom apartment at Lenox Park, which has been rebranded The Peaks at Gainesville since being purchased by an Atlanta-based real estate firm this summer.

“We really didn’t want to have to go anywhere,” she said. “But it became completely unaffordable.”

Audubon Communities bought the property in July for $22 million with plans to invest $3 million in upgrades. 

A spokesman for the company told The Times the property was not in the tax credit program when purchased and had fallen into a state of "advanced disrepair."

"Audubon Communities will spend the next 24 months implementing a renovation plan, designed to reverse many years of decline and help improve the quality of life for its residents," the company said. "Since acquisition, Audubon has already addressed badly needed maintenance issues and made improvements to the property, such as the newly constructed playground and upgraded lighting in the parking lots." 

Tim Evans, vice president of economic development at the Greater Hall Chamber of Commerce, said apartment complexes, which are considered commercial properties, are often thought of as an investment to add to an asset portfolio.

“Those get bought and sold all the time,” he said.

According to the state Department of Community Affairs, properties such as Lenox Park that are financed with the housing tax credit are subject to a compliance period of 15 years that holds rents in check for low-income tenants.

An extended use period would maintain these restrictions for another 15 years, but there is an avenue in the tax code for ownership to opt out.

“Basically, they can ask DCA for a ‘qualified contract,’” McCranie said, “which means DCA is supposed to look for someone willing to buy the property and keep it affordable. If no buyer is found within a year, the use restrictions can be terminated before the 30 years are up.”

Lenox Park’s participation in the tax credit program was terminated at the beginning of the year.

The DCA reports that a provision remains that prevents ownership “from evicting or refusing to renew the lease of any existing low-income qualified tenants for a period of three years.” But this doesn’t keep rents from rising.

When families vacate their apartment at these properties, the units then can be rented at or above market rates.

Properties exiting the tax credit program also will no longer accept housing subsidies and vouchers that keep rents affordable for low-income families.

“As we saw with the Atlanta Street relocation, it’s really hard to find housing with a voucher in Gainesville,” McCranie said, referring to the mass relocation of residents from the former public housing complex, which is currently being redeveloped as a mixed-income property with both subsidized and market rate units. “I think a number of former Atlanta Street tenants are going to be affected by this, plus any other voucher holders who were living there.”

Ursula Harris, a social worker with the Gainesville City School System, said she and her colleagues have heard from some families who are being evicted or choosing to move because of rising rates. They have referred a few cases to the Georgia Legal Services Program for assistance. 

 "We are encouraging them to apply for public housing and making them aware of their rights ... regarding school stability," Harris said. "If they are evicted and end up living with another family or in a motel, they would qualify to remain in their schools with transportation provided by the district."

Gordon said she was told her lease renewal in June “went missing” and then she saw a $100 increase in rent. By August, the rent went up again, she said.

When her family tried to find somewhere else in Gainesville to rent, Gordon said they either earned too much money to qualify or their credit score was not strong enough to get approved.

“We were still trying to make it work,” Gordon said, particularly because her husband enjoyed a good-paying job at Kubota Manufacturing.

Eventually, Gordon and her family relocated to South Carolina.

Shila Akbari, a single mother of four, said her rent on a two-bedroom unit at Lenox Park spiked about $400 in September and she had to move.

“A lot of people are moving,” she said. “It’s been hard to find a new place to live.”

Carlos Garcia, whose family still lives at Lenox Park, said he’ll be able to afford rent increases for now, but he has seen dozens of families leave in recent months.

“Things are changing,” he said.

At Orchard Brook, which has been rebranded The Fields Lake Lanier under new ownership from Houston, participation in the tax credit program is scheduled to expire at the end of the year.

And McEver Vineyards, which was purchased by the same Houston firm last December, could be next when its initial tax credit compliance period expires at the end of 2019.

Attempts by The Times to reach the firm were unsuccessful.

McCranie said this pattern could one day affect other rent-restricted apartments in Gainesville.

“They were sold and the property renamed before they exited the program,” he added.

Beth Brown, executive director of the Gainesville Housing Authority, said the waiting list for public housing has spiked to 1,600 from 250 in just a few months as a result of rising rents at formerly low-income complexes.

“The transfer of these complexes from affordable to market rate will contribute significantly to the affordable housing crisis here in Gainesville,” she said.

The Housing Authority was just awarded a third round of tax credits to support the development of Walton Summit, the new mixed-income housing complex on Atlanta Street.

“The addition of these units will help,” Brown said, “but come nowhere near meeting our community’s need for affordable housing. The affordable housing shortage does not just affect welfare recipients and minimum wage earners.”