One of the nation’s most prominent apartment developers is calling on politicians to do more to make housing affordable, including doubling the federal subsidies developers can get for building affordable housing units.
J. Ron Terwilliger, who is in Charlotte to speak to the Urban Land Institute and Charlotte City Council, told the Observer Monday that the U.S. is in a “silent housing crisis,” with more than 20 million families paying over half of their income for housing.
“We’re short on affordable rental housing now, woefully short, and we’re getting shorter,” said Terwilliger. He said three-quarters of the approximately $200 billion spent annually on housing subsidies in the U.S. goes to homeowners, much of it in the form of tax deductions for mortgage interest, and said more should go to renters.
“I think we’re in a crisis that very few people realize we’re in,” he said.
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Terwilliger is chairman of Charlotte-based Terwilliger Pappas, an apartment company that’s building or plans to build high-end Solis complexes in Dilworth, SouthPark, southeast Charlotte’s Waverly development and South End, totaling more than 1,000 units. He’s also the former head of Trammell Crow Residential, one of the largest apartment developers in the nation, and a major philanthropist, whose gifts include a $100 million endowment to Habitat for Humanity.
Like other developers, Terwilliger Pappas is bullish on Charlotte’s apartment scene. The city is in the grip of its biggest-ever apartment-building boom, with more than 10,400 units under construction and an additional 10,000 planned. Most of the construction underway is in higher-priced, close-in neighborhoods such as Dilworth, NoDa and South End.
That’s one reason the building boom hasn’t made housing more affordable, even as vacancy rates creep up, Terwilliger said. Earlier this month, Charlotte-based apartment-tracking service Real Data reported the city’s apartment vacancy rate rose to 6.7 percent. But average rent in the city is up 3.1 percent over the past year, to $938.
“New construction is all high-end construction,” said Terwilliger. Without subsidies, such as tax credits developers can receive in return for building apartments restricted to renters making a certain percentage of the area’s median income, Terwilliger said the market will produce mostly high-end units that rent to affluent professionals.
“You have to pay the rate for concrete, you have to pay architects, you have to pay interest, you have to pay framing, you have to pay for mechanical,” he said. “The return that capital requires on that does not reach the people we’re talking about. It’s got to be subsidized in some way.”
Terwilliger said he hopes the issue can get bipartisan support. Although federal politics have only become more polarized in recent years, Terwilliger said he thinks the issue can be framed in a way that appeals to Democrats and Republicans. On the right, he said the issue can be framed as a cost-effective way to generate jobs and avert other costs, such as more public assistance for families down the line, while on the left, Terwilliger said such subsidies can be portrayed as helping the poor instead of as a handout to developers.
Terwilliger said he plans to question presidential candidates in primary states to stimulate discussion of a major housing reform bill, and he hopes to introduce such a bill to Congress in 2017.
“We’re going to make a run at it,” said Terwilliger.