Charlotte needs new tools for affordable housing

The Observer editorial board

NASCAR Sprint Cup Series driver Kasey Kahne helped build a low-cost Habitat for Humanity house in this 2014 photo.
NASCAR Sprint Cup Series driver Kasey Kahne helped build a low-cost Habitat for Humanity house in this 2014 photo.

We don’t doubt that the members of Charlotte’s City Council sincerely want to build more affordable housing.

We do, however, doubt their ability to follow through consistently and effectively in pushing for more of it.

Last week’s approval of $4.4 million in property tax rebates for Pappas Properties’ $200 million mixed use development in midtown vividly snapped their shortcomings into focus. The project, located just outside the Interstate 277 loop, would have been a perfect opportunity to add more affordable housing to the city’s thin stock.

Except developer Peter Pappas’ firm said no thanks when city staff raised the affordable housing question. And the City Council never bothered to ask – even though it could have, since this wasn’t a rezoning situation. (The city lacks the necessary state legal authority to force affordable housing commitments as a condition of zoning approval).

In fairness, Pappas is building new roads and handling other infrastructure needs for the city at the site. Still, it seemed surprising that the council didn’t push for affordable housing, given how strongly it says it wants more units.

Council member Ed Driggs was right when he said the city’s approach with developers is too arbitrary. Some get asked to do affordable housing. Others don’t. That needs to change.

Interim City Manager Ron Kimble said Wednesday that it’s time for the city to write affordable housing requirements into city policy, mandating it as part of all mixed-use developments involving tax increment grants. (In such deals, the city and county pledge back to the developer a portion of increased property taxes paid on a new development).

Here’s another idea: Give local property tax rebates or abatements to developers who build affordable housing. This would need legislative approval, according to Christopher McLaughlin, a law and government professor at UNC Chapel Hill.

How would it work? An example: If an apartment developer sets aside 20 percent of his new units for 15 years for renters making 80 percent or less of the median household income, the developer gets a 10 percent tax abatement for five years.

Given the frosty relations between Charlotte’s Democratic leadership and the legislature’s Republican leadership, getting such a law passed would be no easy feat. But real estate leaders seem open to the idea.

Tax abatements for affordable housing have enjoyed success in other parts of the country, said Joe Padilla, head of the Real Estate and Building Industry Coalition. “We’d obviously have to look at the specifics of the proposal,” he told the editorial board in an email, “but we’re always open to exploring programs and policies that would incentivize the construction of affordable housing.”

After the unrest sparked by the Keith Lamont Scott shooting, the City Council said it wants to build 5,000 affordable housing units in three years. It took 14 years to build the last 4,600. We need stronger incentives.

These two ideas are a good place to start.