Mecklenburg plans to spend millions for rental subsidies. But who will get them?

Mecklenburg County plans to expand its role in affordable housing over the next year by allocating millions for rental subsidies for the first time. Now officials must decide how the funding will get into the hands of county residents.

Commissioners approved $22 million for affordable housing on Tuesday — including $11 million for rental subsidies — as part of the county budget.

But the county hasn’t yet determined how the subsidy program will be structured, including whether the county or nonprofits will administer the program. Also up for debate is whether the money will go first to those with the lowest incomes or to a mix of incomes.

Commissioner Mark Jerrell said Thursday the allocation demonstrates commissioners’ commitment to affordable housing.

“I characterize (the funding) as a reflection of the need of the community, and the board is responding,” he said. “This issue is not just a city issue, it’s a community issue. It’s important that we step up and we lead.”

Jerrell, a District 4 Democrat, said it will be critical to connect participants with existing county programs and social services to ensure they can be financially independent after receiving subsidies.

“It’s not just keeping people subsidized forever. That can’t be the approach,” he said, noting an exception for seniors. “This is a way to lift people out of these circumstances. So, what other services can we provide coupled with this program to help lift them out of being permanently subsidized by Mecklenburg County taxpayers?”

He’d like to see most of the money go to those making up to 50% of annual median income, or $37,050 for a family of four. That could include teachers, first responders, and professionals with similar incomes who, Jerrell said, are often priced out of the city they work in.

Jerrell said he expects county staff to recommend program parameters that commissioners will ultimately approve. He wants the county to be aggressive.

“I don’t want to just be conservative and nitpick at the problem,” he said, adding he’ll be especially focused on the proposed scale of the program and how many people can benefit.

“This is going to be the air let out of the balloon if we cannot help a significant amount of people,” he said. “That’s what you’ll hear me addressing. I want to see the data and the numbers of who we can impact.”

Charlotte would need roughly 34,000 more units of affordable housing to meet the need, mostly for families and others who make less than $25,000 a year, according to a city report. Proponents say rental subsidies would provide immediate assistance before more housing could be built.

County Manager Dena Diorio said in a statement the county will consider other programs it provides, such as child care and workforce development, to offer “a comprehensive approach to serving families” in addition to the rental subsidy funds.

“Our affordable housing strategy is designed to plug-in and add value where resources are currently not being deployed,” she said. “We will analyze all the rental subsidy programs across Mecklenburg County, determine if there are underserved populations and develop a program accordingly.”

Other subsidy programs

Mecklenburg County joins several other local governments offering rental subsidies. A 2014 study by the National Low Income Housing Coalition found more than 150 state or city-funded rental assistance programs, which vary by eligibility, structure and funding model.

In notoriously expensive Seattle, a combination of levy dollars and city general funds provide rental assistance for tenants most at risk of homelessness.

A city report there shows the program helped more than 700 households last year avoid imminent eviction or move into a rental unit from a shelter, vehicle or the street.

Deciding on a target population is important when building a rental subsidy program, said Jess Chow, a planning and development strategist for homeless strategy and investment for the city of Seattle.

“That’s where agencies and jurisdictions can really struggle. You’re saying, ‘yes’ to one group, you’re saying ‘no’ to another group in need. How are they going to get support?” she said. “You have to be willing and able to have hard conversations.”

The Seattle program uses a rubric to determine who is at highest risk of homelessness. Participants must be at 50% area median income or below, and are eligible for up to six months of subsidies within a 12-month period. That cap has proven sufficient, she said, as most participants use the subsidies for about 90 days.

How to structure Mecklenburg’s program

Commissioner Susan Harden said she’s listening to local affordable housing groups for guidance on how to structure the program.

“One of the big questions outstanding is: do we decide to create a self-funding mechanism like an endowment with a bond premium or do we use the entire $11 million and expense it?” she said.

Housing advocates offered benefits and drawbacks to each method. An endowment model ensures available funding that grows for years to come, but less money is immediately available. Treating the funding as a budget item to be spent in its entirety could fund more vouchers but would have to be sustained through additional county investment or other means.

Angie Forde, a longtime affordable housing activist, lauded Mecklenburg County’s budget allocation, calling rental subsidies an “extremely valuable option,” to immediately help close the gap between available housing and those who can’t afford it.

“It is to me such an obvious addition to the things we’re already doing,” she said of the subsidies. “We cannot build our way out of (the problem).”

As county officials discuss how to administer funding, Forde pointed to existing programs like A Way Home as inspiration. A five-year pilot provided rental subsidies and support services to 114 families to move into market rate units.

The program tracked the families’ progress for two years after the two-year subsidy period ended. About 75% are paying rent without assistance, maintaining employment, and have not had a subsequent eviction.

Judy Seldin-Cohen, board chair for A Way Home, said the group is already in conversations with the county, calling it “a great partner” in the pilot program.

“The county has been eager to be in partnership with us to figure out how to best use this new funding stream,” she said. “The county understands the value of utilizing infrastructure that is already in place.”

Seldin-Cohen said she is in favor of an endowment model for the county’s funds.

“We are always going to be faced with the issue of homelessness, which is sad but it’s reality,” she said. “The beauty of a trust or endowment is that they grow over time. It is truly a visionary moment where we can provide for the future.”

Peter Kelly, co-founder of affordable housing advocacy and education organization Equitable Communities CLT, said the problem is too dire to wait for an endowment to earn interest.

“I have a strong belief that if we’re in an affordable housing crisis, act like it,” he said, though he stressed the importance of a long-term financial commitment from the county to continue providing subsidies.

Setting program parameters won’t be easy, Kelly said, which is why he advocates for county officials to take 60-90 days to hear from local experts and form a detailed plan.

“These are tougher questions we haven’t dealt with,” he said. “I don’t think anyone should make a long-term policy decision off the cuff.”

This work was made possible in part by grant funding from Report for America/GroundTruth Project and the Foundation For The Carolinas.