Lake Norman & Mooresville

Davidson offers builders an option to affordable homes

The impact of a recent settlement in a developer’s legal challenge of Davidson’s affordable housing rules is reaching far beyond the development at the center of the lawsuit.

The town’s agreement with Davidson-based builder Artisan Knox LLC has become the framework for changes in the town’s planning ordinance that will allow developers to pay their way out of building price-controlled housing in future subdivisions.

Davidson’s housing ordinance requires that 12.5 percent of homes in new subdivisions be affordable. Thirty percent of those affordable homes must be rented or sold to individuals or households making 50 percent of the area median family income, as defined by the U.S. Department of Housing and Urban Development. The other affordable homes must go to people or households whose annual gross income does not exceed 80 percent of the area’s median family income.

Artisan Knox argued in its lawsuit that because the town had relaxed its requirements for certain developers in the past, there were no effective standards at all and the builder should not be obligated to include any affordable housing in the second phase of its Davidson Wood subdivision, east of downtown between Bailey and Concord roads.

In the settlement, filed this month with Mecklenburg County Superior Court in Charlotte, the town and developer agreed that Artisan Knox could make payments to the town in lieu of building any affordable housing. The total payments of $143,100 worked out to about $26,000 per price-controlled home that Artisan Knox would have been required to build.

At its July 14 meeting, the Davidson town board unanimously approved an amendment to the planning ordinance that will allow any developer to opt out of including affordable housing by paying the town $26,000 for every price-controlled home it would have been required to build.

“We felt it would be fair to apply that (payment-in-lieu option) to all developers and not just to the parties in the lawsuit,” town attorney Rick Kline said.

Beyond fairness, the change could protect the town from future legal challenges to its affordable housing rules, said Commissioner Jim Fuller, a lawyer, law professor and former judge.

In the settlement, filed this month with Mecklenburg County Superior Court in Charlotte, the town and developer agreed that Artisan Knox could make payments to the town in lieu of building any affordable housing. The total payments of $143,100 worked out to about $26,000 per price-controlled home that Artisan Knox would have been required to build.

“We are wrestling (with how to provide affordable housing) but we have to follow constitutional guidelines,” Fuller said.

Commissioner Rodney Graham, a homebuilder who has included affordable housing in some of his company’s developments, voted for the change but questioned whether the town was giving up too much.

“That might buy some nice carpet,” Graham said of the $26,000.

The town’s planning board agreed with that concern when it voted not to send the proposed change to the town board with its approval.

Planning board member John Kennedy told commissioners during a public hearing that according to building industry standards, $26,000 would pay for a 14-foot-by-15-foot home.

Developers’ paying their way out of including price-controlled homes also would lead to “clustering of standard and clustering of affordable housing,” Kennedy said. “Separate is not equal.”

But Davidson Affordable Housing Coordinator Cindy Reid said the ordinance change gives the town more flexibility in meeting a growing demand for lower-cost rental units and options for senior citizens.

“The (change) will allow the town to take a more active role in locating affordable housing through the community,” Reid said. “The payment-in-lieu funds give the town the ability to partner with other developers who are experienced in developing low to moderate income housing.”

For example, when coupled with U.S. Housing and Urban Development funds, those $26,000 per-home payments could be worth much more, Reid said.

“If the town is able to support a low income housing tax credit project, the number of affordable units will significantly increase, and the location of the units will be close to transit,” she said.

Fifty-six Davidson homes are now part of the town’s affordable housing program. While the homes are owned by the residents, the town oversees the resale of the properties to ensure the prices remain affordable.

John Deem is a freelance writer: john.deem@outlook.com.

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