Who’s to blame? Fight over affordable housing tanks massive uptown development plan
When Charlotte government and business leaders set out to redevelop two largely dormant blocks uptown, they vowed to create a hub of shops, restaurants, high-rise buildings and some low-income apartments.
Mecklenburg County, the city of Charlotte and other partners offered to sell property along North Tryon Street between Sixth and Eighth streets to private developers. They sought to revitalize a portion of what the city has called the largest remaining development opportunity uptown, now home to McGlohon Theater in Spirit Square, several aging buildings and surface parking lots.
But the deal officials worked on for more than two years has collapsed. And the county manager now says affordable housing, once heralded as a key element of the project, is no longer economically viable on site.
A dispute between Inlivian, formerly the Charlotte Housing Authority, and other Charlotte leaders over 2 acres occupied by a dilapidated former hotel torpedoed the plan.
Officials from Mecklenburg County and Inlivian each blame the other for sinking the deal, part of one of Charlotte’s biggest redevelopment plans.
Under the deal, Mecklenburg County, the city of Charlotte, Charlotte-Mecklenburg Library, Bank of America and Inlivian all agreed to offer property they own along North Tryon Street to a master developer for a plan that would include affordable housing among new market-rate apartments.
Officials eliminated affordable housing — one of the city’s most pressing needs — from the uptown site plans after Inlivian decided it would only lease its property rather than sell outright, according to four people with direct knowledge about the deal or who have been briefed on negotiations.
They requested anonymity because they feared reprisals from others involved in the project for discussing negotiations, which have remained shielded from public view.
The decision to change the project followed intense debate among government and civic leaders about whether to put low-cost housing along North Tryon Street or take money from the land sale and use it to build affordable housing elsewhere in the city, where costs are lower and more units can be built for the same price, they said.
Though officials have not publicly disclosed the master developer, several sources identified it as Virginia-based Metropolitan Partnership.
Seeking to buy land along North Tryon Street, Metropolitan said it would need as much as $35 million in public money to subsidize affordable housing and parking, according to people familiar with the talks and records viewed by The Observer.
In response to questions from The Observer, Mecklenburg County Manager Dena Diorio said in a written statement that the original plans to sell and develop the two blocks have been shelved. Diorio acknowledged the rift between Inlivian and the other landowners involved in the deal.
Diorio said the landowners are now negotiating to sell 1.5 blocks without Inlivian’s land, and officials would use proceeds from land sales to build affordable housing outside of uptown.
“After pursuing many options, it became (apparent) that delivering affordable housing on the site in Uptown was simply not economically feasible,” Diorio said.
She did not say how many units would be built, specify where they would be located or when construction would start, but said moving them out of uptown would allow for “three times the number of affordable housing units.”
The decision to relocate the affordable units stands in contrast to previous statements by public officials and corporate leaders who highlighted the importance of having apartments priced for a variety of incomes within the development.
When Bank of America announced last year it would donate land at Seventh and Tryon, Charles Bowman, the bank’s Charlotte market president, told The Observer that the bank was exploring projects that would combine a mix of uses, such as arts facilities and other development, and would include affordable housing.
And when the Seventh and Tryon landowner group solicited proposals from developers in 2018, they said they wanted at least 30% of the project’s housing to be priced below market rate.
Inlivian Chief Executive Officer Fulton Meacham said he believes that goal is still achievable.
Meacham said his agency, until recently, had been in discussions with the master developer and had submitted a proposal to be the project’s affordable housing provider.
“We have a program that is financially feasible,” he said of keeping affordable housing in the project. “Should it be in uptown Charlotte? It absolutely should be in uptown Charlotte.”
But Diorio said the landowner group studied at least six different alternatives to include affordable housing in the uptown project and none would work financially.
From May 2019 until January, she said, the master developer has tried to reach an agreement with Inlivian on its property.
“Inlivian was unable to produce the necessary evidence of capacity, particularly the ability to finance the project in a timely manner,” Diorio said. “While Inlivian was able to move some obstacles forward, the organization did not meet ANY deadline during that period of time.“
A long-stalled vision
For years, some of Charlotte’s largest companies and public officials have sought to revitalize the 50 square-block region of “North Tryon,” which has lagged behind other parts of uptown despite the city’s real estate boom.
In 2015, owners of land around Seventh and Tryon streets — considered crucial to implementing that larger vision — formed a stakeholder group to decide how it should be developed.
They said they would transform the aging buildings and surface parking lots into pedestrian-friendly streets with a new library, smaller blocks and public spaces. Late last year, the library unveiled the $135 million plan to overhaul and reduce the size of its main branch, a key part of the so-called “North Tryon Vision Plan.”
Metropolitan Partnership, which develops retail, offices and other buildings, did not respond to multiple requests for comment.
In an emailed statement, Bank of America spokesman Mark Pipitone referred a reporter to Diorio’s comments. He would say only that the bank is still committed to providing the value of the property to “the cause of affordable housing in Charlotte.”
Property records show the half a block the bank said it would donate has a tax value of $10.3 million and contains surface parking and a building used by the Charlotte-Mecklenburg Police Department.
Should affordable housing go uptown?
When Metropolitan Partnership told Charlotte leaders it would need at least $30 million to include affordable housing and parking, some officials involved in the talks started suggesting alternative sites for affordable housing outside of uptown, according to people familiar with the discussions. Representatives from UNC-Charlotte, Center City Partners, Bank of America, the city and county government were among those who participated.
But advocates have long argued that putting affordable housing in close proximity to jobs, public transportation, education and other opportunities uptown could help lift people out of poverty. A Harvard and UC-Berkeley study found poor children in Charlotte are less likely to escape poverty than their peers in America’s 50 largest cities, citing a lack of affordable housing as a major factor.
“You have to caution against saying we’re going to build as many units as we can on the cheapest land available if at the end of the day that’s not actually providing that household or that family with real opportunity,” said Christopher Ptomey, executive director of the Terwilliger Center for Housing at the Urban Land Institute in Washington.
Diorio said the alternate sites for the affordable housing are in areas of “high opportunity.”
Meachem, however, said it’s important that affordable housing remains in the uptown project. Despite uptown’s rapid growth, he said, those who work in the hotels, restaurants and other retail jobs can’t afford to live close to work.
Charlotte lacks about 34,000 affordable housing units, according to a city study. Many renters put more than 30% of their income toward housing, a figure the federal government considers unacceptable because it can mean people don’t have enough left over for food, clothes, medicine and other basics.
The landowners also rejected a plan that would have put the affordable housing uptown, but in a separate building from the market-rate apartments in the redevelopment, said two people with direct knowledge about the deal. Some officials concluded that would not represent true “mixed-income” housing, they said.
Mecklenburg County previously has faced questions about affordable housing in uptown redevelopment projects, including Brooklyn Village. That $683 million development with minimal below-market units is poised to be built on what was formerly Brooklyn, the city’s largest black neighborhood destroyed under urban renewal in the 1960s.
Mary Kelly, a co-founder of advocacy group Equitable Communities CLT, said officials owe the public an explanation for why the Seventh and Tryon project will not include affordable housing on site.
“Otherwise public trust for all these elected officials will go down the tube,” Kelly said. “Whenever the public bought into this four or five years ago, the whole idea was having affordable housing in uptown.”
Who’s to blame?
In separate public statements this week, Diorio and Meachem pointed fingers at each other over the failed attempt to redevelop the two blocks together.
The other partners all agreed to transfer ownership of their land to a private developer, Diorio said, while Inlivian officials offered a ground lease.
A typical ground lease allows the property owner to lease the land for a price — usually for somewhere between 50 and 99 years — but retain ownership. In exchange, the tenant can construct a building on the property.
Unable to come to an agreement with Inlivian, Diorio said the other landowners are pursuing a plan that would redevelop 1.5 blocks instead of two.
However, Meachem said, Inlivian has been consistent in its desire to retain ownership of the land with a ground lease, saying it was important for the long-term prospects of affordable housing in the area. The property includes the now-empty Hall House, formerly the Barringer Hotel.
“In the next 80 years, it will be very difficult for us to afford land in uptown Charlotte,” he said. “We wanted to hold onto the land for this particular site.”
Metropolitan, the master developer, asked Inlivian about incorporating its land in the redevelopment deal after the split with the other landowners, Diorio said.
Meachem said Inlivian submitted a proposal to Metropolitan Partnership outlining how it would develop mixed-income housing, a boutique hotel and parking. Inlivian estimates it needs $10 million taxpayer money to complete the project.
The housing plans would meet the request for the proposal’s target: 70% at market rate and 30% below market rate, Meachem said. Of those affordable units, 30% would be for households earning 30% of the area median income, currently $23,700 for a family of four.
Meachem said Inlivian is still committed to the project.
“We don’t walk away from the opportunity to build affordable housing,” Meachem said. “Of course it has to be feasible, (but) we wouldn’t walk away from something like that in uptown Charlotte.”
This work was made possible in part by grant funding from Report for America/GroundTruth Project and the Foundation For The Carolinas.
