I admire Charlotte Mayor Vi Lyles’s endeavor to increase the Housing Trust Fund to $50 million, but it isn’t bold enough.
Today Charlotte needs upwards of 34,000 more affordable homes. With the average cost of a new apartment home close to $200,000 per unit, we have a $6 billion-plus problem. At the same time, we must provide housing for the 60 new residents who arrive here on average every day. At that pace, the average new apartment community would be filled in 4.5 days, requiring more than 80 new apartment communities a year. Many of these new arrivals are young millennials. Based on reported income, 80 percent of millennials cannot afford the average price of a new apartment. As more people fight for the limited supply available at reasonable rents, our housing affordability gap is growing dramatically.
To create the kind of scale necessary to prevent the problem from getting significantly worse, government has to leverage the private sector, keeping in mind several important considerations.
First, the Housing Trust Fund should be a joint public/private endeavor with a goal of $250 million and a transparent, published process that encourages all developers to include an affordable housing component in their new projects, not a negotiated process that potentially favors some.
Second, Housing Trust Fund dollars go further by leveraging the private sector. As one of the largest contractors in Charlotte often puts it, the least affordable projects he builds are so-called affordable housing under government programs. A typical affordable housing unit costs about 20 percent more than the same unit built privately because of the bureaucratic costs of dealing with the government.
Third, developers are like water – they flow to the path of least resistance. If developing in Charlotte gets too onerous, they will develop in cities that are more accommodating. Impediments range from impact fees to the time required to secure entitlements to building code inspections. An attitude of helping find solutions at every step is critical.
Fourth, we need to quit discriminating against multi-family dwellings. For example, trash pickup only costs the city $56 for a multi-family unit versus $186 per unit for a single-family home. Urban land is scarce, and we should not penalize developers for maximizing dense development, but reward it and penalize those who under-utilize land sites.
Fifth, parking is one of the most expensive components of housing, costing $20,000 to $50,000 per space in urban areas. In new projects, we should be encouraging less parking, not more. World-class bike infrastructure would be a cost-effective way to create more density in our city while reducing our parking and driving demands. A bike lane is capable of carrying more than 5,900 commuters per hour versus a car lane that can carry only 1,300 per hour, but streets must be safe for bikers.
Housing is a supply-and-demand problem. We have demand that has significantly outstripped our supply, which has caused the average monthly rent for a new apartment to approach $1,400. A robust Housing Trust Fund that includes the public and private sectors will allow us to increase our supply dramatically in order to minimize the rate at which rents are increasing.