When Synco Properties decided to redevelop the aging Colony apartments in SouthPark into a major new mixed-use center with apartments, a grocery store, offices, shops and restaurants, the developer did something unusual: Agree to include workforce housing without city incentives.
The company agreed to set aside 55 apartments out of 990 new apartments for those making less than 80 percent of the area’s median income, which helped Synco win Charlotte City Council’s approval.
But at a forum on affordable housing Tuesday, Tim Hose, CEO of Synco Properties, said the cost of setting aside those apartments below market rate will run to $600,000 per year, every year. That’s according to his company’s estimates.
“We were able to make a decision that we’ll just give up that cash flow every year,” Hose said, speaking at the CREW Charlotte luncheon. “That doesn’t work on other people’s balance sheets.”
Hose said Synco, a privately held company, doesn’t have to worry about satisfying shareholders and can take the hit. Giving up the future income, Hose said, was worth it to help secure City Council’s approval during the 15-month rezoning process.
“We will have no financing benefit from delivering affordable housing,” said Hose. “That just has to be factored into the underwriting.”
Affordable housing, of course, has been a major focus in Charlotte, especially since the protests and riots following Keith Lamont Scott’s September shooting death laid bare socioeconomic gaps in the city. City Council set a goal last year of getting 5,000 affordable housing units within the next three years, but it’s unclear how they’ll reach that number, or who will pay.
Hose doesn’t think many other developers will agree to include affordable units voluntarily.
“To do that is a huge challenge, and I don’t see it happening unless there’s some kind of incentive,” said Hose.
Another problem: The kind of apartments Synco is including, dubbed “workforce housing,” are reserved for people making 80 percent or less of the area’s median income. That works out to about $52,600 a year for a family of four in Mecklenburg County. Using the government’s standard that people should spend no more than 30 percent of gross income on their housing each month, that works out to $1,340 a month for someone at 80 percent of the median.
That is helpful to nurses, teachers, public employees and others in that income range, but many earn far less than that. At 50 percent of the area’s median income, annual income is about $33,500 – meaning housing costs shouldn’t be more than $837 per month.
At 30 percent of the area’s median income, you’d be earning about $20,100 a year. That’s around what many low-wage service workers make, and housing costs for someone at that income level shouldn’t be more than $502 a month, per government guidelines.
“You can see quickly how difficult it becomes,” said Robin Haddock, of RLH Development.
Liz Ward, of the Charlotte-Mecklenburg Housing Partnership, said about 37 percent of the households in the Charlotte region make less than $40,000 a year. That includes low-wage workers, the unemployed and people on a fixed income.
“A lot of people lose sight of the magnitude of that,” said Ward. “The demand on the city is tremendous, and that is jacking up rent...The needs are growing and our funds are falling short.”