Politics & Government

Affordable housing is a city priority. Developer may get millions without including it.

The Charlotte City is considering closing part of Greenwood Cliff Drive to make way for a new mixed-use development. The city and county may also give the developer more than $4 million in property tax rebates.
The Charlotte City is considering closing part of Greenwood Cliff Drive to make way for a new mixed-use development. The city and county may also give the developer more than $4 million in property tax rebates. Steve Harrison

The Charlotte City Council has said building affordable housing is one of its highest priorities, especially in the wake of the civil unrest after the Keith Lamont Scott shooting.

But a proposed taxpayer-supported development near uptown raises questions about the council’s commitment to low-income housing, and whether the city will come close to its goal of building 5,000 subsidized units in three years.

Developer Peter Pappas is planning a $200 million mixed-use project near Pearl Street Park, just outside of Interstate 277. The project would include a 170-room hotel, retail, office and 250 apartments.

No affordable units are planned.

And the city and county haven’t made it a requirement – despite a tentative agreement that calls for taxpayers to give the developer roughly $4.4 million in tax rebates.

The project illustrates the city’s often inconsistent stances toward developers, in which some builders are pushed into including affordable housing while others are given a pass. For instance, council members this year approved a rezoning for a new residential development near SouthPark mall when the developer agreed to set aside 55 apartments as affordable housing for those making less than 80 percent of the area’s median income.

As the city has considered the Pearl Park project for a year, council members have so far focused more on giving the developer tax money rather than ensuring it has affordable housing.

“This project would seem like an inviting target for the people who are usually bringing this up,” said Republican council member Ed Driggs, a member of the council’s economic development committee that’s reviewing the project.

We need to make it clear from the get go that we are going to ask these questions. My answer to that is when we look at the project we have to talk about affordable housing somewhere in that project.

Democratic council member Julie Eiselt

Driggs was referring to Democratic council members on the economic development committee who are most vocal for building affordable housing, such as Vi Lyles and LaWana Mayfield.

Driggs said he’s glad council members haven’t made low-income housing a condition because he said the city’s usual approach with developers is “arbitrary” when some are asked and some aren’t.

“We have a big issue we need to solve, but we need to be fair,” he said. “Otherwise you have an environment that’s unfriendly to business. We need to be more transparent.”

Democratic council member Julie Eiselt, a member of the economic development committee that has reviewed the project, said council members occasionally discuss affordable housing at the site, but “we keep dropping the subject.”

Eiselt said the city needs to think more about affordable housing in the future.

“We need to make it clear from the get-go that we are going to ask these questions,” she said. “My answer to that is when we look at the project we have to talk about affordable housing somewhere in that project.”

Affluent area, attractive site

The 5.2-acre site is home to the Charlotte Regional Realtor Association office that would be torn down and rebuilt under the plan. It’s near the Metropolitan development that Pappas Properties also built a decade ago.

The area is now one of the most desirable parts of the city.

When a developer seeks a rezoning, it’s illegal for a council member to demand a quid-pro-quo of including affordable housing in a project in exchange for an approval. (Council members sometimes suggest it, however, and developers agree.)

The Pappas Properties project is different. The developer isn’t seeking a rezoning. The negotiations have instead been about receiving property tax rebates for the project, and the city is allowed to insist that affordable housing be a part of any final deal.

Pappas Properties would like the city to close part of Greenwood Cliff Drive. That would make it easier to build the mixed-use project because there won’t be a public street dividing the property.

Besides having the city vacate the street, the developer has asked that taxpayers pay to move the water and sewer lines under Greenwood Cliff Drive to a new location.

The developer would like $4.4 million in property tax rebates.

In exchange, Pappas Properties would extend Pearl Park Way from Kenilworth Avenue to Dilworth, which has long been a city goal. The developer would also build Berkeley Avenue inside the development, though it would be a dead-end street.

Much of the road infrastructure is critical for the project to move forward, though a portion of Pearl Park Way wouldn’t need to be built.

In many other projects across the city, developers have had to pay for similar construction themselves.

The developer would also make improvements to Pearl Park, in addition to new streetscape and lighting on roads nearby.

From an affordable housing perspective, the site is ideal. Residents could walk to work. It’s an affluent area, so it wouldn’t create a new concentration of poverty.

But council members and the city haven’t made any significant effort for Pappas Properties to include “workforce housing,” which is for people earning 60 percent of the area median income. For a family of four, that’s someone making about $40,000 a year.

The city had a goal of building 5,000 affordable housing units in five years. After the Scott shooting, council members boosted that to 5,000 units in three years.

That’s a difficult task. In the past 14 years, the city has financed 5,500 affordable units and completed 4,640.

Land swap

Mecklenburg Commissioners have approved their part of the tax rebate plan. The city’s economic development committee must still take a final vote on the proposal before sending it to the full council.

Pat Mumford, who heads the city’s Neighborhood & Business Services department, vetted the Pappas Properties proposal for tax rebates. He said the city discussed having affordable housing in the project, but he said the developer wasn’t interested.

“We had talked to the development team that it’s important to us,” he said.

A spokesperson for Pappas Properties, Burt Phillips, said “the rising costs of both land and new construction make affordable housing really difficult to achieve particularly in infill areas.”

Mumford said he still believes the project could yield affordable housing.

Besides tax rebates, the proposal calls for a land swap between the county and the Charlotte Housing Authority, which owns land nearby in Dilworth. That land could ultimately be used to build affordable housing.

Cheron Porter, director of public relations for the Charlotte Housing Authority, said the organization is reviewing the proposal, but said “there are no immediate plans for anything.”

Trevor Fuller, Mecklenburg Commissioners chairman, said the county was focused on making sure Pearl Park was preserved and enhanced – not on housing.

“We didn’t really discuss the affordable housing piece of it,” he said. “Should we push more (for housing)? The answer to that has to be yes.”

Lyles, the city’s mayor pro tem, said she thinks the land swap would allow for hundreds of affordable units to built, and said Charlotte won’t solve its housing problem by building a few units at a time.

But there is no guarantee that more low-income housing would be built nearby.

Securing financing and tax credits for affordable housing is difficult, and projects can languish for years.

An example is a plan for Pappas Properties to build 80 affordable housing units as part of a mixed-use development at the Scaleybark light-rail station.

The city entered into a deal with Pappas Properties to build the apartments in 2008. The city used $2 million from its Housing Trust Fund to help the developer buy the land.

But so far, no part of the mixed-use project at Scaleybark has been built. The site is vacant.

If the apartments aren’t built by the end of 2017, the original deal for the developer to repay the city the $2 million.

Pappas Properties did develop Ashley Park in SouthPark, which has 36 subsidized apartments out of 176 units.

Steve Harrison: 704-358-5160, @Sharrison_Obs