Talking about affordable housing can leave your eyes glazed over: Strings of acronyms, a confusing swirl of numbers and percentages, intricate discussions of land-use regulations and a hodgepodge of federal, state and local agencies.
But at its core, the problem is simple, and obvious: Many people in Charlotte are struggling to find somewhere they can afford to live, a byproduct of a fast-growing city where a surging population is driving up prices.
Various studies bear this out. A consultant last month told Charlotte City Council that the city has a 21,000-unit shortage of rental houses for very low income residents, those making less than half of the area’s median income, or roughly $35,000. Other studies have pegged the gap at 34,000 housing units for all low-income residents in Charlotte.
Sunshine Cunningham, a resident at the Twin Oaks apartments, described the anxiety of learning the apartments are being redevelopment and she had a month to find somewhere else she could afford.
“We’re losing our homes,” Cunningham said, standing outside a City Council meeting with a group of activists. “When you get thrown out, then what?”
The issue has gotten attention in the past year, after the Keith Lamont Scott shooting. Some activists linked the unrest and protests to the lack of affordable housing in the city as an underlying cause, and City Council promised to build more in response.
But officials say there is no silver bullet. Charlotte is booming, and developers are making big profits building luxury housing. Local governments in North Carolina can’t require developers to set aside a certain percentage of new housing for low-income residents, and many of Charlotte’s older, “naturally affordable” apartments are privately owned – and tempting targets for redevelopment.
So what are some strategies that could make a difference? Here’s a look at five:
Alternative and nonprofit investors
One of the major obstacles developers who want to build low-income housing face is the difficulty of finding a source to fund them. Even with subsidies such as tax credits, developers still need capital for their projects – and most sources, such as private equity, insurance companies or banks, expect a return on their investment. That means developers have to charge high enough rent to generate the cash to pay investors.
Nonprofits, wealthy philanthropists and institutions such as churches can bridge that gap and step in, with funding they don’t expect to generate a high rate of return. This week, Covenant Presbyterian Church announced a $2 million investment in a Charlotte Mecklenburg Housing Partnership development on Freedom Drive that will include 129 apartments reserved for low-income renters. It’s the church’s first such investment. Other investors in the project include the Movement Foundation, affiliated with Movement Mortgage.
Land trusts are common in some other cities, such as Boston, but they are an untried strategy in Charlotte. The nonprofit organizations buy housing and land in fast-changing, gentrifying neighborhoods to prevent it from being redeveloped. Often the owners own the houses while the trust owns the underlying land. That holds down property values.
A new nonprofit, called The West Side Community Land Trust, is trying to bring the practice to Charlotte. They’re trying to raise money and buy land in Enderly Park, where prices are rising, and later work with nonprofit real-estate developers to build affordable housing.
The arrangement can face opposition from owners skeptical of putting their property in a trust, however, and criticism that the structure asks owners to forgo building up equity.
Growing the city’s subsidy fund
Charlotte’s main vehicle for subsidizing developers who want to build low-income housing the Housing Trust Fund. It’s funded by bonds that are on the ballot every two years. Currently, the city asks voters to fund $15 million each time, meaning there’s effectively $7.5 million worth of bond money in the Housing Trust Fund every year.
As it stands, the Housing Trust Fund could soon be tapped out. City Council is set to vote Sept. 25 on a plan to subsidize 769 new apartments with almost $21 million, using up most of the fund until the next election in 2018.
Local officials have been saying that amount isn’t enough, and that it needs to be increased to something more like $30 million or even $50 million every two years. The higher amount would give the city the ability to fund more new developments.
Using publicly owned land
Local government entities, including the city, Mecklenburg County and Charlotte-Mecklenburg Schools, often sell surplus land. One idea that’s gained traction is requiring some affordable housing to be built as part of new developments on publicly owned land that’s sold to the private sector.
The county is considering formalizing that aim with a new policy that would require developers to set aside 10 percent of new units for affordable housing when it sells land. The county is considering selling an acre of land on South Graham Street at Third Street, next to BB&T Ballpark, in which the developer would build 40 affordable units and 40 market-rate units.
Other local government entities could formalize such policies. As it is now, each land sale is typically an ad hoc negotiation with the developer, in which requirements such as affordable housing units are hashed out anew each time.
Developers frequently complain about the red tape involved in building in Charlotte: Rezoning, community meetings, permitting are all processes that can create uncertainty, add cost and make developments take longer.
One suggestion – popular with developers – is to create incentives for those projects that set aside a certain number of affordable housing units. For example, an apartment building that includes a percentage of units reserved for low-income renters could get permitting fees waived, or an expedited track through the multiple layers of bureaucratic review required at each step of the process. An “overlay” district could be created for certain areas allowing developers to build affordable housing wihtout going through the whole rezoning process.
Such policies would amount to a non-cash subsidy, and they might prove more attractive to developers who want to get projects off the ground quickly.