When Charlotte City Council voted to sell seven acres of public land just north of the Interstate 277 loop, members hoped the deal would create affordable housing for families making less than $45,000 a year.
As an incentive, they sold the land for less than half its appraised value.
Now two years later, the developer who bought the land is pre-selling condominiums and townhouses for as much as $232,500 – well above the city's target range of $110,000 to $145,000.
How did this happen?
City staffers who negotiated the deal failed to include price requirements in the contract, the Observer has found.
When told about the townhouse and condo prices, some council members said they would look into what happened.
“I did not know about this, and I am sorry,” city councilwoman Nancy Carter said.
“There are questions that need to be asked,” said councilman Michael Barnes. “There are so many deals where that type of thing has probably occurred. It would behoove the council to set a policy.”
To be sure, the housing project at Statesville and Oaklawn avenues is expected to bring private investment to a struggling neighborhood in the shadow of uptown skyscrapers. It also will clean up a contaminated lot that has sat idle for decades.
But the deal also raises questions about the city's commitment to create affordable housing for those who need it most, critics say.
“A $175,000 townhouse is not affordable,” said Chris Wolf, a widely known local advocate for the homeless.
Businesses razed by bulldozers
The grassy expanse purchased by developer Robert Drakeford has long been the subject of controversy.
In the 1970s it bordered some of Charlotte's most dilapidated neighborhoods. That's when city officials decided to relocate residents and demolish their homes for redevelopment.
Bulldozers razed small businesses that once sat on the property. Residents say they are upset because the land has stood vacant ever since.
In 2004, city officials sent e-mails to 200 businesses soliciting offers for the land. Only two responded, said A.C. Shull, a city administrator involved in the sale.
Tommy Norman, a Charlotte developer, offered to build a grocery store on the site, which is something neighborhood activists have wanted for years. Norman said a Midwest chain had expressed interest in the property.
The other offer came from Drakeford, who proposed building 69 townhomes and condominiums, and 12,000 square feet of retail space, in a project called NorthEnd Square.
City officials said they were reassured by Drakeford's plans to start construction quickly. They feared other developers would buy the land and leave it vacant until property values started to rise years later.
They also thought Drakeford's development would attract jobs and other private investment, Shull said.
A discount to help keep homes affordable
Before council voted in 2006 to sell the property, they received a packet of information outlining the deal. The Observer obtained the documents through an open records request.
The documents show the city agreed to sell the land for $330,620, compared to its $789,500 appraised value. The lower price would help Drakeford sell townhouses at an affordable price.
But none of Drakeford's units cost less than $162,499. The average price is about $193,000, city records show.
The project has a completion date of 2009.
Drakeford said he has broken no promises.
Most of his units, he said, are affordable to people making less than Charlotte's median family income – $64,400 for a family of four. Drakeford said some units are selling for more than his original proposal because of higher construction costs.
Because of the added expense of cleaning up contamination on the site, Drakeford said, he will make a smaller profit on the project. He also said he will subsidize retail space to satisfy neighbors' desires.
“This is a good deal for the city,” he said.
The city's economic development office negotiated the deal. Director Tom Flynn did not specifically address why Drakeford's homes are pre-selling for higher than originally discussed. He noted the contract contains a provision that requires Drakeford to pay the city 4 percent of his gross sales over $8.2 million.
The Drakeford Company projects $15.1 million in sales, which would entitle the city to $300,000, according to a February letter Drakeford sent to city.
Mixed emotions on the City Council
Some council members contacted by the Observer said they were unaware that Drakeford's project no longer catered to families with modest incomes. Others said they weren't bothered because the development would bring badly needed improvements to the area.
City councilwoman Susan Burgess said the city made “a mistake” when it failed to put price guarantees in the contract.
Burgess said she believes the city's affordable housing efforts should focus on families making less than $19,000 a year.
Councilman James Mitchell said the neighborhood already has enough affordable housing. Low-income apartments sit across the street from Drakeford's property, and another planned development nearby will include market-rate and affordable units, said Mitchell, who represents the district.
“I don't need affordability on that site,” he said. “I want a great balance of incomes.”
Councilman John Lassiter said he recalled that the units were aimed at young professionals, not people who needed low-cost housing. The idea, he said, was to lure homebuyers with prices slightly below uptown prices.
“Selling housing for $170,000 within 11/2 miles of Center City is pretty good,” Lassiter said.
City appoints Drakeford to housing board
A month after Drakeford agreed to buy the land, city officials appointed him to serve on the city's Housing Trust Fund board, which advises the city on how to create more affordable housing. In December he was selected to chair that board.
Advocates for the poor say Drakeford's own project does nothing to address the city's chronic shortage of affordable housing.
Half of Charlotte-Mecklenburg renters face housing costs that the federal government considers unacceptably high. A city study shows that Charlotte will need nearly 17,000 affordable housing units by 2010.
The city has spent more than $45 million since 2002 on grants and low-interest loans to help developers build housing for poor and working-class families.
But critics say city efforts often miss the neediest.
Deronda Metz, director of social services for the Salvation Army of Greater Charlotte, questions the outcome of the Drakeford deal. More than 70 percent of the people who need affordable housing can afford to pay only $400 a month or less.
“I don't understand their definition of affordable,” she said of city officials. Drakeford's project “is not affordable to the people we serve, or to my colleagues.”