With shortfall looming, Mecklenburg considers spending more on affordable housing

With tens of thousands more affordable housing units needed for low-income Mecklenburg residents, the county is preparing to take a more active role in an area that’s traditionally been the purview of city, state and federal governments.

Mecklenburg County commissioners reviewed preliminary plans Tuesday to directly fund more affordable housing, rent subsidies and efforts to head off evictions. The county’s current role in affordable housing is largely indirect, as Mecklenburg funds social services to help people facing homelessness, eviction or unstable housing.

Mecklenburg spent $6.8 million last year on such efforts. But the county wants to do more.

“Our goal is to find places where we can add value and fill gaps,” said County Manager Dena Diorio. “The program and priority decisions, we still have to make.”

Commissioners were enthusiastic, and said they support the county taking a more active role in affordable housing. There’s no cost estimate yet, however. That will come as the county’s budget process proceeds over the next few months.

“We have a lot of capacity, and if we can help, we should help,” said commissioner Trevor Fuller. “I think this is a subject we need to stretch on, even if some people see it as swimming outside our lane.”

He said the county should look for ways to “attack the system” and create bigger changes going forward.

Commissioners said their constituents bring the issue up frequently.

“The No. 1 item I hear about is affordable housing, and what are you going to do,” said commissioner Mark Jerrell.

Chairman George Dunlap told Diorio: “This county commission is committed to helping out with affordable housing...We would love for you to pursue all of these avenues.”

The county’s role has been limited with affordable housing. The city of Charlotte has usually taken the lead on funding affordable housing locally, administering developer subsidies from the Housing Trust Fund. Voters approve bonds for the fund every two years. This past year, they approved $50 million, triple the usual amount.

The state administers federal tax credits, deciding which developers get the credits to subsidize new buildings. And the Charlotte Housing Authority oversees the federal voucher program, known as Section 8, that subsidizes rent for some low-income tenants. In 2017, the federal government spent $40 million on rent subsidy payments in Charlotte.

In a presentation, county staff said there are about 22,000 fewer housing units than there should be for very low-income residents, those making 30 percent of the area’s median income or less (about $25,100 for a family of four).

Some of the strategies under consideration by county commissioners, such as direct rent subsidies and increased eviction aid, could help such low-income people. Others, such as developing “residual” land around the perimeters of some parks with new affordable housing, would likely help people with higher incomes who are still making less than the area’s median income.

Among the programs the county is considering:

▪ Setting up a trust fund to subsidize rent for low-income tenants. This was among the most ambitious of Diorio’s suggestions, and would involve some financial maneuvering.

“There are not nearly enough rental subsidy dollars in this county, and we think we can make a difference,” said Diorio.

Here’s how it could work: When the county issues bonds, Mecklenburg sometimes receives a premium over face value in exchange for a higher interest rate. For example, in the most recent bond sale, the county received an $11 million premium on $150 million worth of bonds.

Those funds can’t be used directly for rent subsidies, however, since bond money must go to capital projects.

But the county could transfer money from other capital projects that it would have otherwise paid for out of its annual budget. That would free up money in the county budget to create a trust fund to subsidize rent payments.

“This is a very creative funding mechanism,” she said. Rental subsidy dollars can potentially go farther than money spent underwriting new developments. “We know you cannot build your way out of this crisis.”

Dunlap said he supports that idea.

“I love the notion we can take those funds and put them aside for affordable housing,” he said.

▪ Expanding projects like eviction legal help and MeckFUSE, which provides rental assistance and supportive services to homeless people who would otherwise be likely to end up in jail or the hospital. The county spent $867,000 on MeckFUSE this year to serve 50 people. Mecklenburg also gave Legal Aid of North Carolina $309,000 to represent tenants at eviction hearings, since such tenants rarely have representation and landlords usually do. Legal Aid represented 250 people facing eviction, a small fraction of the more than 29,000 annual eviction cases in Mecklenburg.

Diorio said those programs could both be expanded if the county increased funding.

“If we know this works, we should take the opportunity to expand it,” she said.

▪ Using “residual” land around parks to build more affordable housing. Mecklenburg could sell the perimeter land around some parks for low cost to developers to build affordable housing. County staff cited the example of Firestone Park, between NC 16 and Beatties Ford Road, where selling the northern edges of the park could provide 43 home sites around the perimeter.

Commissioner Vilma Leake urged her colleagues to act fast on implementing the suggested programs.

“We take too much time sitting at the table to discuss it,” she said. “We need to move quickly.”