Developers promised affordable housing, but wouldn't give the city guarantees

Charlotte City Council members faced a tough choice Monday: Vote to approve plans from developers promising affordable housing with nothing more than a "trust me," or vote no and make it harder to hit the city's low-income housing goals.

Complicating the choice is the fact that City Council isn't supposed to consider the price of housing when it approves or denies zoning requests from developers. That left council members in the awkward position of considering projects that developers were telling them would be reserved for affordable housing while formally not factoring in those declarations.

Both apartment projects - 100 units on Mount Holly-Huntersville Road and 180 on West Sugar Creek Road - won approval. Both were opposed by neighbors, who said they worried about more density, increased traffic and, in the case of Hidden Valley, a heavy concentration of low-income renters.

"As a matter of law, we cannot predicate our decision on the price point of the housing," council member Ed Driggs warned his colleagues at one point. But it was clear that affordability was on their minds.

"This petition was in some way around affordable housing," council member Justin Harlow said, discussing the Mount Holly-Huntersville Road apartments.

"Change is coming," said council member Braxton Winston, talking about the West Sugar Creek project. Property values are expected to rise because the Blue Line extension is open now, a mile away.

"In too many neighborhoods in this city we have not gotten out ahead of it. Hidden Valley has changed many times over generations and it will change again. People will be displaced... We have to break the cycle of gentrification and displacement."

But in both cases, the developers - Rea Ventures and C4 Investments - didn't actually commit to building affordable housing. The reason is a product of several complex quirks in the zoning and tax credit subsidy process.

When Charlotte City Council approves a rezoning plan, they can attach conditions that a developer is obligated to follow. If the developer agrees to restrict residences to people making a certain income, that becomes part of the binding site plan attached to that property.

But developers aren't guaranteed to get the housing tax credits they usually require to offset the cost of building affordable housing. Those are handed out annually in a competitive process overseen by a state agency, and only about one in four projects that applies actually receives the tax credits.

That means the developers and landowners can be loathe to commit to affordable housing in the rezoning plan, because if they don't win tax credits, they're left holding land that has to have affordable housing without the subsidy needed to build it. That's what happened Monday: The landowners didn't want the affordable housing commitments written in, in case the developers don't get tax credits, leaving City Council to take developers are their word about what they'll build in the future.

"We are making a commitment to workforce, affordable housing. Period," Tim Sittema, of C4 Investments, told City Council. "If we're buying this property, we're doing workforce, affordable housing."

Despite the assurance, City Council members were surprised to hear that the rezoning didn't have a binding requirement written into the plan.

"I was under a different impression regarding this project," said LaWana Mayfield, chair of the council's Housing and Neighborhood Development Committee. "I think we have a confusion about which we can't really base this decision."

"When this project was presented, it was presented as affordable housing," said council member Dimple Ajmera. "That's how it was presented to me."

Senior assistant city attorney Terrie Hagler-Gray warned City Council they were straying into legally murky waters.

"I don't think that's an appropriate question," she said when Winston asked about the expected rents at the new development. "Price point should not be a consideration. I would reiterate we do need to focus on the land use issue, not the housing type."

This story was originally published March 21, 2018 at 7:30 AM with the headline "Developers promised affordable housing, but wouldn't give the city guarantees."