‘Nobody really knows:’ Affordable housing safeguards at some Meck County sites are ending.
With affordable housing safeguards at many sites ending or already expired, advocates are concerned about the fate of several properties around Mecklenburg County and the state.
One of those, the Bungalows in Davidson recently was listed for sale. While affordability restrictions are secure for now, new ownership would create an uncertain future for residents who have endured rent increases.
A similar concern could be faced in the coming years for thousands of affordable housing complexes built in North Carolina through the Low-Income Housing Tax Credit program.
“What we’re starting to see now unfortunately is that there are a lot of different complexes where those use restrictions are expiring,” Isaac Sturgill, attorney with Legal Aid of North Carolina, said.
The 32-unit in Davidson is among dozens built in the 1990s using this federal program. It requires these properties to remain affordable for 30 years after being built and has been the preeminent program to help create affordable housing, Sturgill said.
Developers sell the tax credits they receive to investors for cash to build the units, Sturgill said. Units are then restricted for households that earn 60% or less of the area median income, or around $50,000 for a family of four in Charlotte.
In Mecklenburg County, affordability requirements at two complexes expired last year, according to a list compiled by the North Carolina Justice Center. At least six more complexes in Mecklenburg County are expected to see the requirement expire in the next four years, according to the list.
Over the next five years, requirements for 164 properties across North Carolina will expire placing over 7,000 units at risk, said Bill Rowe, general counsel for the North Carolina Justice Center. Over the next 10 years this could double placing upwards of 15,000 units at risk of no longer being affordable, Rowe said.
“That’s a huge hit and nobody really knows this is going on,” he said.
The Bungalows opened in 2000 with its affordability requirement through the federal program set to end in 2030. But in December, residents learned their rent would increase $50, the highest in at least five years. This came after being told the majority property owners would sell the site
California-based Highridge Costa Housing Partners, LLC is the majority owner. Minority owners Davidson Housing Coalition and Mosaic Development Group manage the Bungalows.
The Charlotte Observer reached out to High Ridge Costa CEO Michael Costa last week and again on Tuesday, but has not received a response.
Meanwhile, the Davidson Housing Coalition started a temporary, year-long rent assistance program to help residents with the rent increase, said Margaret Martens, board chair of the David Housing Coalition. A portion of the $115,000 raised through DHC’s Holidays for Hope and Housing campaign last year funded the program, she said
The program starts in March and allows residents of any of DHC’s properties to receive a 50% discount on the rent increase, Martens said.
“We needed to be equitable in our offer so we needed to also offer assistance to our other properties,” she said.
Shelli Roberts, a longtime Bungalows resident, said the move provided a feeling of satisfaction, but not security with the impending sale.
“They’ll hold our fates in their hands at any given time after 2030,” Roberts said.
‘Unique set of circumstances’
Scott Farmer, executive director of the North Carolina Housing Finance Agency, which oversees sites built using the tax credit, said properties may face additional restrictions depending on their funding.
Property owners using the tax credit program also can reapply after the 30-year window. Some have even come back in to receive a second round of tax credits, he said.
“But it is quite frankly a growing concern as these properties age as to what will happen with some of these if they chose not to remain affordable,” Farmer said.
Investors only receive a tax credit for 15 years, he said. Typically they transfer the property over to the developer or property manager after that period. t
But the Bungalows was a “unique set of circumstances,” Farmer said, when the principal owner did not transfer it to the Davidson Housing Coalition.
Martens said it is still DHC’s intent to become owners of the property. The coalition hired Liz Ward, founder of Give Impact, an affordable housing advisory service, to assist them in purchasing the property, she said.
Even if there is new ownership, the Bungalows is restricted to remain affordable, she added. A second condition on the deed states “the property may be used for such other public purposes.” After 2030, it’s not clear if this second condition would affect the property.
Developers, state and local officials will have to work together as more properties are set to expire, Rowe said. It’s important local officials learn how many of these properties’ affordability requirements are set to expire. Giving property owners incentives to keep them affordable will be key, he said.
“The rooster is coming home to roost now but what’s the plan?” Rowe said. “You have real people and families that could be displaced.”
Correction: This story has been updated to reflect that a temporary year-long rent assistance program to help residents would provide a 50% discount on the amount of the rent increase.
This story was originally published February 22, 2023 at 6:30 AM.
