In this second installment of the McKinsey Action 9 Fireside Chat series, McKinsey partner Darius Bates talks with Westside Future Fund (WFF) CEO John Ahmann about addressing racial disparities in housing on the westside of Atlanta, Georgia. Ahmann lives and works in Atlanta’s historic westside, near the former home of Martin Luther King Jr. Westside Future Fund is an organization founded by public, private, and philanthropic local partners in Atlanta. The organization is committed to the revitalization and development of Atlanta’s westside neighborhoods through initiatives focused on housing and mixed income communities, education, health and wellness, and safety. The following topics are covered:
- overview of the unique challenges in West Atlanta
- successful strategies deployed by the Westside Future Fund to tackle housing inequity and its impact
- key learnings that can be extended to communities outside of West Atlanta
This transcript has been edited for clarity and length.
Darius Bates: Hello everyone, and welcome to the McKinsey Action 9 Fireside Chat series, with conversations on place-based efforts to improve equity outcomes for people of color. We aim to surface and share key insights, successes, and challenges from leaders, in hopes that these learnings will deepen and accelerate impact across numerous geographies.
I’m Darius Bates, a partner in McKinsey’s Atlanta office and the partner lead for our action 9 commitment. For this series, we will focus specifically on action 9—McKinsey’s commitment to put $200 million toward pro bono work globally over ten years to advance racial equity and economic empowerment among Black communities. This action falls into the fourth bucket I mentioned earlier and deals with investing McKinsey resources to advance racial equity.
As we partner with organizations to bring about equitable outcomes for Black communities, we wanted to create a forum to highlight the work and learnings from those efforts, which brings me to our guest for this conversation today. I’m pleased to welcome John Ahmann, president and CEO of Atlanta’s Westside Future Fund. John is in his seventh year leading the Westside Future Fund. He has deep ties to Atlanta and has many roles serving the community. Prior to the Westside Future Fund, John was the executive director of the Atlanta Committee for Progress, working with CEOs and university presidents to advise the mayor of Atlanta on economic priorities. He was also a senior vice president of the Metro Atlanta Chamber of Commerce. John, it’s great to have you here.
John Ahmann: Great to be here. Thank you.
Darius Bates: John and I first met in 2016, when he was working to set the strategy for the Westside Future Fund, and we stayed in touch over the years. When we thought about doing this series, he was one of the first people to come to mind because of his dedication to the work on the westside and also because of the fund’s impact. Let’s start with the basics. Three context-setting questions: What is Atlanta’s westside? How did you get involved with the Westside Future Fund, which we will refer to as WFF for the remainder of this conversation? And how do you think about the mission and impact aspiration of the organization?
John Ahmann: What is the westside? The city of Atlanta is divided east and west by the highway system, interstates 75 and 85. Technically, everything west of 75 and 85 is Atlanta’s westside. There are parts of the westside that have been historic. Right after the Civil War, there were limited places that African Americans were allowed to buy land and certain neighborhoods on the westside were those places.
Over time, especially neighborhoods focused on now by the WFF, there were neighborhoods that had robust mixed income communities that were all Black. For example, in 1960, the neighborhoods we’re focused on had over 50,000 residents, but for the wrong reasons, those reasons being Jim Crow and segregation. When barriers came down, such as the start of the Civil Rights Act and other structural barriers such as jobs moving out of the downtown area, the neighborhoods depopulated and became very disinvested. This was in addition to past practices that drive place-based inequity. So you have lots of issues of disenfranchisement in our neighborhoods, and the Westside Future Fund is for historic neighborhoods just west of downtown Atlanta.
I’m an Atlanta native, and through my career, I’ve been really inspired by the role that Atlanta played in getting itself on the right side of racial equity history.
Remembering that Atlanta was burned in a civil war because it was the supply capital of the Confederate Army. Remembering the 1960s, when many civil rights leaders who advanced federal laws at that time came from Atlanta, such as Dr. Martin Luther King Jr. or our White mayor at the time, Ivan Allen Jr.
Atlanta’s journey in racial equity has always been something that has touched me. When the WFF was stood up, we went back to the community where Dr. King went to high school; it was the last community where he and Coretta Scott King bought their home in 1965. I had the opportunity to be part of that advancing equity part of Atlanta history. As a native Atlantan, that’s what really called me to the WFF, the right side of history.
In terms of our mission and impact, we’ve been going strong now over six years, and we’ve raised a lot of awareness and championed a lot of different issues. For the WFF, what I’m most proud of is our Home on the Westside program, which tries to ensure that members of the community or those with a connection to it can be a part of the community through a housing program.
Darius Bates: That makes a lot of sense. Recent data suggests that housing affordability is a growing challenge across the US and in Atlanta, specifically. The median US home price has risen to nearly $430,000. To afford a home at this price, homeowners would likely need to be in the top 10 to 15 percent of earners in the US. Up to 85 percent of Atlanta residents might struggle to purchase a home at this price. You recognize this challenge and understand the importance of housing to extend beyond affordability. How did you realize that housing should be a lead focus of your work at the WFF? What are the core dimensions of the housing challenge that your team is working to solve?
John Ahmann: We did the Westside Land Use Framework Plan to imagine how the community would like to develop, the design standards, the type, the different densities, and because the neighborhood has depopulated, it went from over 50,000 residents down to 15,000 now. There is a lot of abandonment.
One thing the community said is they want people to move back into the area to get the vibrancy you need for a built-out neighborhood. But what we’re concerned about is residents being pushed out, commonly referred to as gentrification, where a higher-income population—traditionally majority White—replaces the local Black population. But you also need that influx of residents to lift up the neighborhood.
We realized then that all these jobs are coming back to downtown Atlanta’s urban core. For example, in the past couple years, Microsoft announced on the westside. They’re going to repopulate, which we want to leverage because we need that private investment. But how do we ensure that legacy homeowners and those with a connection to the community can be a part of it? That’s where we launched our Home on the Westside program.
In the housing mix, we realized that only a small percent of residents were homeowners living in their home. Fourteen percent of the time, over 60 percent of the residents were renting from private investors. The housing was affordable because it was substandard in the neighborhoods that people didn’t want to live. We then said we need to go out and buy a lot of land and develop that affordably, so we can have that affordable housing as the neighborhoods repopulate. But the key strategic insight was, one, realizing the neighborhoods would repopulate and, two, if we want to deliver that affordability, we had to go buy and control more land.
Darius Bates: That sounds like it’s a capital-intensive endeavor. You and I talked a lot about the capital you need to actually pursue a strategy like this. So how did you think about that? More specifically, structuring your capital stack to maximize your ability to drive the impact on the housing that you’re after? Can you say a little bit about the different types of capital and why each is important?
John Ahmann: Yes. One, given that a lot of the land that we wanted to get a hold of for affordable housing was privately owned, in Georgia, public officials don’t have any ability to go condemn land for economic development purposes. It’s not allowed. We realized we have to go buy it, and most investors will not sell at appraised value. So using traditional financing, like public financing, which doesn’t like to go above appraised value or bank-backed loans, wasn’t going to work.
We needed a flexible source of very cheap cash. We learned from a group out of Cincinnati called 3CDC. Here, ten Atlanta corporations pledged cash off their balance sheet to put together investment funds, $120 million commitment from ten Atlanta corporations such as Coca-Cola, Delta, Home Depot, Chick-fil-A, and others. We pledged to those corporations a return of their capital, but not on their capital. We didn’t want to make any money on their money, but that money comes to us as WFF as low-cost loans to do land acquisition.
For example, with the loans we bought over 37 acres across the neighborhoods of abandoned, blighted land. We were able to hold on to that and develop it for affordability. So one part is low-cost, 2 to 4 percent financing. The second is, to deliver deep, permanent affordability, we have to have philanthropy in our capital stack. The federal housing program is oversubscribed, so to add more high-quality, affordable housing, we need philanthropy.
We’ve now raised $35 million in philanthropy to help underwrite mostly our multiunit portfolio, but also down payment assistance. The flexible impact fund to go buy land quickly, the philanthropy to help make it affordable, then we have public funds to help round out some of the renovation cost, as well as helping offset some of the costs through vouchers. The key was that low-cost capital provided by the private sector.
Darius Bates: That makes sense. You’ve talked about properties that you all have acquired to the end of preserving affordability, etcetera. Long term, who’s going to own those properties? And as we know, homeownership is such an important part of long-term wealth creation for families. Is WFF doing anything to make it easier for residents on the westside to become homeowners and begin to accrue wealth long term for their families?
John Ahmann: Yes. Our vision statement is, “A community Dr. King would be proud to call home.” I’m thinking about that word, community, to first answer your question. When we first were buying up vacant, blighted lots, people said, “Who’s going to go in that house and who’s going to be coming to our community? Some people that look like me from the east side of the Atlanta, how are they going to be connected to our current community?”
Our vision statement is, ‘A community Dr. King would be proud to call home.’
To prioritize who goes into our housing, we developed community-retention guidelines. Anyone who goes into our rental housing or our for-sale ownership housing needs to have lived in one of the neighborhoods, needs to be working in one of the neighborhoods, and graduated from Booker T. Washington High School or one of the historically Black colleges: Morehouse, Spelman, Clark University, Morehouse Medical School. We’re ensuring people who are going into our housing have a connection to the community through those criteria.
Back to racial equity: these neighborhoods were historically Black and are overwhelmingly Black today. It’s not 100 percent, but it’s pretty close. Anyone who goes in our housing will also be Black because of the history and current configuration of the neighborhoods. We were super intentional about those community-retention guidelines, because we could have just done affordability and said, “First come, first served.” But the community-retention guidelines were a critical overlay.
Regarding homeownership, we support folks who are coming through our pipeline. For example, take Kevin, a teacher in Fulton County who was renting in the AUC [Atlanta University Center] neighborhood and went through a homebuyer readiness program. He qualified for a mortgage and we developed a single-family home built by Atlanta Habitat for Humanity. Even when we just want to get our development cost and land and build costs, for a three-bedroom, two-bath home, it exceeded what would he qualify for in a mortgage. Being a teacher, he can qualify for a mortgage. To make that happen, we now layer in down payment assistance from our philanthropy.
Our philanthropy is linked to how much you earn. At the highest level, you get $60,000 in down payment assistance as part of that buy-down. In Kevin’s case, he received a $40,000 grant from us, layered on top of a grant from the city so he could afford to be in that home. A lot of the folks who are taking our housing are just first-generation homebuyers and maybe don’t have a family that can help them buy their home. That down payment assistance reduces over ten years.
Darius Bates: That’s really thoughtful and encouraging to hear that you all have taken the time to think about how to keep folks connected to the community and how to put people in position to build wealth. Let’s talk a little bit more about impact. What are some of the accomplishments of the WFF that you’re most pleased with, and what are some of the things your team has done to ensure the change sticks?
John Ahmann: When I first started work on the WFF, what we talked about was, would we be rejected? Could the community say, “No, thanks, we don’t want you here; we don’t trust you; get out”? If that had happened, we couldn’t have sustained our work. Not that the community agrees with everything we have done, but we earn the trust of the community by delivering on the things that they said they wanted. The fact that we’re still here, for me, that’s a big strategic win.
The other is, now that I’ve been in the community a bit, meeting and knowing some of the people that we’re helping. When I first started, there was a young woman who had her own on-demand shuttle service serving neighborhoods. With some of the philanthropy we raised, we did a low-cost loan program for entrepreneurs on the westside. We gave her a loan to help her expand her business. She also wanted to become a homeowner, so she’s been in our home-buying program and she qualified for a mortgage. She closed on the note today and she’s buying a home. Seeing it come full circle, and more stories like that: some of the residents we’ve helped put into higher quality, better housing and what that can mean for their life has been, for me, the best part of the work.
Darius Bates: That’s really inspiring. You’ve been at this for some years now, but if you had to rewind the tape to the first act, what are some of the things you wish you had known at the start, or that you maybe would have done differently to get after some of the outcomes you just described a bit more quickly?
John Ahmann: Early days, we would have been clear about what exactly the role of the WFF is versus the roles of the others that are here. Because people kind of rolled up a lot of the different needs into our umbrella, and that may be an insider answer to your question. Knowing what we know today, I wish we had tied down ongoing public assistance from the city and to help us maintain or remove blighted property.
When we first started, something that we could do that the city was not equipped to do was to buy vacant property, primarily on English Avenue. We spent nearly $25 million on land acquisition. We bought over 106 lots that are both multifamily and single family, but when we acquire a lot, we pay the cost of demolition if needed. And unlike outside investors, we pay to secure the property so people can’t access it and hurt themselves. We pay for trash, cleanup, lawns mowed, etcetera.
Our holding cost on our undeveloped land portfolio is about $800,000 of philanthropy a year. I would love to have gone back to the city to say, “Hey, could you help us out?,” because most people look at blighted property and say, “That ought to be a public purpose to get rid of that blighted property, buying that blighted property and holding on to it so it can be redeveloped.” So I wish we could say to the city that after we buy a piece of property, we want help to offset our cost of maintaining it until it’s developed and sold.
Darius Bates: In our prior conversations, one thing we talked about is some of the complexity in getting hold of the critical land that’s needed to do some of the work that you all aspire to do once people hear that the investment is coming. I would imagine in the early days that there might have been even more investors that tried to buy things up and drove prices up. Did you all experience that, and how did you navigate that piece?
John Ahmann: We definitely experienced it. Buying, ideally, should be quiet. To buy a property from the owners without telling them we’re doing it would be ideal, so they don’t inflate it knowing there’s concentrated effort. The flip side is, if we’re buying a property and the community doesn’t know, but then finds out, they’re not going to trust us. Doing it covertly and then being discovered by the community would probably undermine our trust.
An example of that is, we bought a multifamily property, and initially our real estate team considered putting it into a nonprofit, so it would be in our name but could pretend we didn’t own it. I said, “The community is going to find out anyway, and then because we were acting like we didn’t own it, it’s going to undermine our trust.”
Darius Bates: That makes sense. You talked about how important it was to win the trust of the community. I could imagine a little bit of the concern on the front end was positioning WFF to be an agent that was reflecting what the residents viewed as what they wanted for their future and the transformation. As opposed to trying to do a transformation to the residents or, as some would say, “save” the community. How did you navigate that piece to ensure that they understood that their voice would be included in the solution and the plan for the westside?
John Ahmann: Once we understood the community concerns, to build trust strategically is to earn it. We were very strategic about the first programs we announced. The first program from the WFF was our Anti-Displacement Tax Fund. For legacy homeowners who have 100 percent of median income or less, if they qualify with those two criteria, WFF would pay all of their taxed appreciation. We announced that program in the front yard of an Atlanta Habitat homeowner who worked as a nurse for the VA [Veterans Affairs], Renee. We did that using philanthropy. So that was a big trust-builder once homeowners found out about it.
The next thing we did was, APS [Atlanta Public Schools] reopened a school in the Vine City neighborhood. We went to that principal and said, “What do you really need to help support the school?” There was lots of suspicion in the neighborhood that the WFF would try to make it a charter school or something that we controlled, but we didn’t. We tried to work with the principal on what they wanted, then we raised funds to help put more teachers in the classrooms. McKinsey helped us figure it out by working with the principal at the time. The principal needed more teachers in the classroom, more support services. Once we raised those funds and were done, the community saw we were helping their community school.
The next big thing we announced was that we’d raise funds to acquire a dilapidated, abandoned multifamily building that we were going to rehabilitate affordably. Over time, we built trust from the community by doing things that it said it wanted done. That’s not to say you can’t find members of communities who say we could have executed this or that better. But overall, when you look at how our resources have been spent, it really aligns with the needs of the community.
Darius Bates: What’s next on the horizon of impact for the WFF? If you had a magic wand, what impact would you unlock and why? And then, what are some of the obstacles that may be in the way of that impact that you’re working to solve?
John Ahmann: So far, we have 200 units of high-quality multifamily property across seven multi-tenant properties in the pipeline. I’d like to see that quadrupled over the next six or seven years so it gets to 800. We’re taking vacant, blighted land and redeveloping it. The amount of assets we put on the ground in neighborhoods, which is being leveraged in ways to benefit the community, is probably $60 million to $70 million in value. I’d love to see us help 300 to 400 or more homeowners with their homes from our Home in the Westside pipeline program. That would affect a couple thousand people through that program.
Part of the win for me—back to some of the justice part of it—is that these neighborhoods’ home appreciation is rising. For residents to be living in these neighborhoods and accruing the benefit of that appreciation is another big win. Just doing more of what we’re doing is what I’m hoping we can accomplish. The biggest thing we need, in addition to executing well, is to continue to have philanthropic and public resources to help support the work.
Darius Bates: What I’ve learned in doing more of this work over the past few years is there’s a lot of really motivated folks trying to drive impact, but the level of coordination could be higher, the level of knowledge sharing could be higher. A lot of what we want to do is just get the thoughts out.
I can think of the number of times I’ve asked you to come talk to folks I’ve been meeting with in different geographies to say, “Listen to what they’re working on at the WFF, there are learnings there.” We want to do a better job of creating a central repository of that thinking for the benefit of all the players that are trying to improve the equity outcomes in the space. This has been a fantastic conversation. Hopefully we can get you back for another conversation as you all are further along in the journey on the westside.
John Ahmann: Absolutely. What is so important, too, is—and I appreciate the kind of work you’re doing here—it’s not what you do but how you do it. Were you compassionate, were you loving, were you trustworthy, how did you treat others? So, thank you.
It’s not what you do but how you do it. Were you compassionate? Were you loving? Were you trustworthy? How did you treat others?
Darius Bates: What a wonderful way to wrap up. Thank you so much, John.
John Ahmann: You too, thanks.
Darius Bates: Thank you all again for joining us for this conversation. We look forward to coming back with additional topics on our place-based work. We encourage you to stay tuned to McKinsey’s 10 actions site for additional conversations and content. Once again, I’m Darius Bates and this has been the Action 9 Fireside Chat series. See you again soon.