City Leaders Plot How To Spend $125 Million For Housing
Charlotte leaders spent 2018 talking about how to speed up development of new affordable housing units and save existing ones. In 2019, there will be more money, new partners and new processes for achieving that goal. City leaders now are discussing how to carry out the unprecedented $125 million plan and what it's paying for.
At the Charlotte City Council budget retreat last February, speakers outlined strategies for creating affordable housing. One idea was to boost the size of the city's biennial housing bond referendum. Another was to raise a fund from corporations and other private sources. Brian Collier of the Foundation for the Carolinas told council members then the need was urgent.
“Charlotte is not a city in decline, you are a city that is advancing on many, many fronts. But we have so far to go. And we need to start today,” Collier said at the time.
Fast forward 12 months. The council now has adopted a new affordable housing policy. Voters in November approved $50 million in housing bonds — more than triple the previous amount. And millions of dollars in pledges have come in to start a new private-sector affordable housing fund. Altogether, Collier now says, the city and its partners will have $125 million to build and preserve affordable housing.
“Still a drop in the bucket for the total need. But massively different from where we were even six months ago,” he said in a recent interview.
Most of that money would go toward reducing the up-front development costs of affordable projects, which allows for lower rents. Gifts of land, cash grants, and tax credits can also make a difference.
For example, one recently announced west Charlotte project will cost $31 million for 185 units. Thanks to all those non-traditional funding methods, monthly rents will average less than $900. That same project with more traditional financing would require market-rate rents averaging $1,500 a month.
PUBLIC AND PRIVATE MONEY
The $125 million includes:
- The $50 million in city bond funds.
- $50 million to be raised from foundations, corporations and houses of worship.
- And $25 million dollars pledged by a new partner - Local Initiatives Support Corp., or LISC. It's a New York City-based nonprofit Community Development Financial Institution hired by the city and private groups to help finance and manage the affordable housing effort.
LISC executive Denise Scott said they'll raise money for Charlotte projects from investors around the country.
“We come into a market to be additive,” Scott said. “So we're not coming in to just share in the resources that are there but rather to work in a way in bringing and formulating strategies within the market that will be additive.”
Charlotte will be the 33rd city where the nonprofit lender now operates.
ADDRESSING A BIG NEED
The goal of all this: Chipping away at an affordable housing shortage that city officials estimate at about 24,000 units.
The Charlotte City Council began focusing on the problem after the police shooting of Keith Scott and street protests three years ago. In 2016, the council set a goal of creating 5,000 new units within three years. That's nearly done, said city housing director Pamela Wideman.
“At last count, we've met 96 percent of that goal. So it wasn't just all building new,” she said.
Besides new construction, the total includes low-rent units developers agreed to build to win rezoning approval, and older affordable units rehabilitated and preserved with city funds. And some are single-family homes that low-income buyers have purchased with help from the city's down payment assistance fund.
Year-end numbers are expected any day now, and Wideman expects the city will have met that goal. But 5,000 units is still far short of that 24,000-unit gap - and the city is losing more units daily to redevelopment and gentrification.
WHAT DOES $125 MILLION BUY?
So how much farther down the road will this $125 million get us?
City officials are reluctant to put a number on it. Wideman said only that they're expecting "a significant increase" in the amount of financing they can provide to developers.
Collier, of the Foundation for the Carolinas, is more straightforward. He expects about 20 new projects.
“We're hoping that that will result in about $400 million worth of construction projects. That will provide about between 2,000 and 2,200 units of a wide variety of mixed-income opportunities,” Collier said.
Scott also said she expects the effort to produce 1,500 to 2,000 new units.
That's a start. But now the work begins: Turning all those ideas and commitments into actual housing.
Wideman says the city will continue its process of seeking proposals for state and federal tax credits to help lower the cost of new affordable housing projects. Last year, 11 Charlotte projects with 1,332 affordable units won tax credits through the N.C. Housing Finance Agency. More proposals will be reviewed in 2019, including those that didn’t win tax credits in the last cycle. Those proposals are reviewed by city housing officials and the council's housing committee before going up for a full council vote.
WHERE WILL PRIVATE FUNDS GO?
What's less clear is where all that new private-sector money fits in.
“Quite frankly that's still being worked out,” Wideman said. “And so we can't really speak to how exactly how that money will be leveraged with the city and the process for doing so.”
So far, commitments to the private sector fund total $12.5 million, including $5 million each from the Foundation for the Carolinas and Wells Fargo Bank and a $2.5 million gift of land in west Charlotte's planned River District from Crescent Communities.
Collier promises a big announcement this month on more.
“The goal is to complete the fundraising by June of 2019. And I think we're on track for that,” he said. “My pie in the sky dream would be that we not stop at 50, that we figure out a way to go above that because certainly the need is out there.”
The foundation and LISC also will need to decide where to invest those funds. LISC is hiring staff and expects to announce a Charlotte executive director soon. For now, it's funded by both the city and the private sector, though eventually it expects to stand on its own.
LISC's Scott said they'll set up three advisory boards — one comprised of local leaders and funders to review proposed projects; a credit committee to review project financials; and a third community board that will be more "grassroots," she said.
“We want to make sure that we are getting advice from the various sectors throughout the community,” Scott said.
THE NIMBY CHALLENGE
With all the new energy and money, there's definitely a lot of momentum right now for Charlotte's affordable housing efforts. But one other challenge could be the stickiest one for city leaders — neighborhood resistance.
Charlotte is still a place where angry movements spring up overnight when the words "affordable housing" are mentioned.
“Education is critical, right?” Wideman said. “So continued education to the community about what affordable housing is. It's continued education about what the benefits of affordable housing are to a community.”
The city has tried to quell fears in recent years by encouraging more developments to include units for a wide range of incomes. Council member Lawana Mayfield has promoted the term "diverse price point housing." Think of new neighborhoods like Renaissance West in west Charlotte, or Brightwalk in the North End.
And advocates note that affordable units are aimed at everyone from minimum-wage retail and restaurant workers to police officers and teachers. They're available to those who make less than the federally-set Area Median Income, or AMI. That figure is set annually by state and federal officials, based on U.S. Census income data and the number of people in a household.
Affordable units are typically designated for those below certain income levels — such as 80 percent, 60 percent or 30 percent of the AMI. The formulas are complicated, but for example, a four-person household making up to $44,460 a year would qualify for a 60 percent unit. An income half that would qualify for a lower-rent 30 percent unit.
COUNCIL ‘HAS TO DELIVER’
As the housing initiative proceeds, city council members like James "Smuggie" Mitchell say the city must be clear about the process and accountable to voters.
“I think we've got to deliver,” Mitchell said. “The citizens did not go to the polls for us to sit on $50 million. They went to the polls to say, 'This is your No. 1 priority, behind safety.' We've got to do something."
Local leaders say there's no doubt that the city will be able to spend the whole $125 million in the next few years. In a New Year's Eve press conference, Mayor Vi Lyles said the work is just beginning.
“There's more to do," Lyles said. "I expect in early 2019 to actually have a metric that you'll be able to hold us accountable for when we talk about what kind of housing we are going to build and where we will locate it.”
The city council will have its first affordable housing discussions of the new year over the next two weeks. And you can expect announcements soon from the city's private partners about leadership, more funding, and how it's all going to work.