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For two years, WFAE has reported on the Charlotte area's affordable housing crisis through our Finding Home series. According to the U.S. Census Bureau, since 1990, home values have increased 36%, while median household income has gone up only 4%. The appearance of prosperity with new development masks the fact that people are being priced out of their neighborhoods.

Finding Home: Developers Use Federal Tax Credit Program To Build Affordable Housing

Gwendolyn Glenn
Finishing touches are being put on Magnolia affordable apartments for seniors on Beatties Ford Road

As Charlotte’s population continues to grow at about 60 new residents a day; as rents and the cost of home ownership spiral upwards; as gentrification brings higher housing prices to neighborhoods, the city’s affordable housing stock is dwindling.


One thing that developers are using to produce more affordable rental units is a federal program created in 1986. It provides tax credits to developers when they build low-income housing.

Just off of Interstate 85 in Kannapolis, on a two-lane highway lined with churches and single-family homes, residents and local officials gathered alongside a large tract of land. It’s been cleared for construction of the Prosperity Ridge affordable apartment complex for seniors. Residents, developers and city officials gathered for the ground-breaking.

Credit Gwendolyn line / WFAE
Construction is getting started on a 60-unit affordable housing complex in Kannapolis for seniors. Developers say the federal tax credits made the development possible.

“We’re excited because it’s going to be a beautiful facility and will improve the way things look,” Pastor Christopher Stout said. “It’s a huge need, absolutely.”

Stout’s church sits directly across the road from where the three-level, 60-unit complex of one- and two-bedroom apartments will be built. Rents will range from $350 to $550 a month for people making between 30 percent and 60 percent of the area’s median income.

Kannapolis officials say they need about 2,700 more affordable units like this. Prosperity Ridge is expected to be fully leased before it even opens. That’s why residents like Shirley Stanback and David Perry came to take a look now.

Credit Gwendolyn Glenn / WFAE
Shirley Stanback (l) and Pastor Christopher Stout and his children are excited about the affordable housing for seniors being built across the road from their church.

“From Concord to Kannapolis, they are very excited about it,” Stanback said. “They've been asking me about it — wanting information about who do I sign up for it? When do I sign up? So I’m really thinking about it.”

“Me and my wife both talked about it, so it may be in the plan down the road,” Perry said. “These things going to go like wildfires. It’s going to be beautiful, in a good location near downtown with several churches in the area. It’s going to be real nice."

Credit Gwendolyn Glenn / WFAE
David Perry of Kannapolis says he and his wife are considering putting in an application for Prosperity Ridge, the affordable housing complex for seniors, when it is completed.

Prosperity Unlimited is one of two companies behind the project. President Louise Mack said it took them five years to get this far.

“It is so hard trying to put together an affordable housing complex,” Mack said. “The tax credit was vital in making that work. If we didn’t have what we call free money, this project wouldn’t have gotten off the ground.”

Just over 70 percent of the financing for Prosperity Ridge came from tax credits the developers received through the federal Low-Income Housing Tax Credit program. It’s the primary federal government program for affordable housing construction. Through the program, tax credits are given to state housing agencies each year to be awarded to developers.

The North Carolina Housing Finance Agency received $28 million in federal tax credits this year. Developers receiving the tax credits make out two ways. They sell the tax credits to banks and other investors for cash, which funds most of the construction. They also get a one-time fee of 10 percent to 15 percent of the value of the tax credit award, which is between $800,000 and $120,000 for the $11 million Prosperity Ridge project.

Credit Gwendolyn Glenn / WFAE
Developers Louise Mack and Joel Gilland say it took them five years to break ground on Prosperity Ridge in Kannapolis, an affordable housing complex for seniors being funded mainly with federal tax credits.

“The tax credits — that’s the key piece that makes this work,” said Joel Gilland, president of Wesley Community Development, the other partner in the project. “You don’t have to borrow as much which means you can reduce your rents.”

Developers must submit detailed plans for the affordable complexes they want to build to the state housing agency. Residents can make up to 80 percent of the area median income, but the complex’s average has to be 60 percent.

The projects are rated on the design and amenities, and proximity to grocery stores, medical facilities and other services. They also take into account the targeted income of tenants. The projects also have to stay affordable for at least 15 years, even if they are sold. Scott Farmer, executive director of the state’s housing finance agency, said it’s a highly competitive process.

“You really have to have experience or work with a partner who has had experience in working with the housing credit program to have a chance to compete,” Farmer said. “We had about 170 applications this year, and we will fund between 35 and 40 projects. Fourteen were in Mecklenburg County and it looks like all of those were in Charlotte.”

Credit Gwendolyn Glenn / WFAE
Developers along with city, county and federal officials break ground for the affordable senior apartment complex in Kannapolis.

One of those Charlotte companies is Mosaic Development, which owns the nearly completed senior apartment complex on Beatties Ford Road. The Magnolia apartment complex was awarded tax credits in 2016.

But like Prosperity Ridge, Mosaic’s Executive Director Kathy Stilwell said, “Our Magnolia property will be almost 100 percent leased before it opens,”

“We currently have 72 of the 82 units preleased and enough applications in the pool that we believe will fill the units from the applications we’ve already received." Stilwell said. "The need and demand in Charlotte is incredible.”

Lee Cochran, of Laurel Street Residential, builds affordable housing units with rents as low as $300 in Charlotte and nearby states. Finding tenants is never a concern.

“Our biggest project in Charlotte was finished several years ago — the Renaissance development out on West Boulevard,” Cochran said. “Its 334 units and we typically have a wait list of 2,000 to 3,000 families.”

Over the last two years in Mecklenburg County, 14 projects were approved for tax credits. Five were for seniors and nine were for families. Farmer said some faced opposition because many residents in communities prefer senior complexes over families because they think seniors come with fewer potential problems.

Credit Gwendolyn Glenn / WFAE
Magnolia affordable apartments for seniors on Beatties Ford Road was financed with federal tax credits.

Although the housing tax credit program has had a lot of success, it is not without critics who say developers and banks who buy the tax credits are getting more benefits than residents. Banks get tax write offs for 10 years and credit for investing in the communities where they operate as required by law.

But Michael Daniel, a Dallas attorney who has filed lawsuits against developers in the program, said banks don’t make many loans in the areas where many of the projects are built.

“You just have no idea of the incredible cascade of cash that these things generate and how little of it actually comes down and provides housing for low income people,” Daniel said. 

According to the National Council of State Housing Agencies, the program produces about 100,000 affordable housing units annually. That’s roughly the same amount over the past 20 years, even though the program’s funding has more than doubled. But developers say construction costs have risen significantly and that they don’t want to sacrifice quality rental units for high production numbers. Daniel has a different take.

Credit Gwendolyn Glenn / WFAE
Kannapolis residents showed up to watch the groundbreaking for the affordable Prosperity Ridge apartment complex for seniors.

“One reason the quality is so high is that the more money you spend on it, the more the tax credits are worth and the higher the developer fees. You’re driving up units by concentrating more and more of the money in fewer units,” Daniel said.

Daniel also questions housing finance agencies’ monitoring of the projects to make sure that developers are not pocketing funds — which some Florida developers were caught doing in 2015 — that the complexes are being kept up and that rents are maintained at the proper levels.

The IRS oversees the program. But a 2015 Government Accountability Office report found its oversight lacking, stating that it audited only seven state housing finance agencies since 1986. Farmer said the North Carolina program has never been audited, but he said they have independent auditors who have not found instances of fraud or abuse.

“We’ve not had anybody who has opted to leave the program and taken the units off line during the 15-year initial compliance period,” Farmer said.

Even so, Farmer said the low-income housing tax credit program is not enough.

"By no means is the housing credit program the answer to all the housing needs," Farmer said. "It’s a very limited resource. We’re only a drop in the buck in what is really needed across that full spectrum."

Credit Gwendolyn Glenn / WFAE
Construction is expected to be completed on the affordable apartments for seniors in Kannapolis by early 2020.

Legislation is pending in Congress that would increase funding for the program by 50 percent. But Farmer said that will only mean an additional 20 projects could be funded annually with the tax credits statewide, leaving more than 100 applications still on the table.


WFAE is taking a year-long look at Charlotte's affordable housing problem through our series, Finding Home. Every Monday in 2019, we’ll have stories that examine the problem, seek solutions, and bring you stories from neighborhoods small and large, both in and outside Charlotte. Don't miss a segment. Sign up for the Best of WFAE weekly newsletter to get the latest Finding Home along with the other most important news of the week.

Gwendolyn is an award-winning journalist who has covered a broad range of stories on the local and national levels. Her experience includes producing on-air reports for National Public Radio and she worked full-time as a producer for NPR’s All Things Considered news program for five years. She worked for several years as an on-air contract reporter for CNN in Atlanta and worked in print as a reporter for the Baltimore Sun Media Group, The Washington Post and covered Congress and various federal agencies for the Daily Environment Report and Real Estate Finance Today. Glenn has won awards for her reports from the Maryland-DC-Delaware Press Association, SNA and the first-place radio award from the National Association of Black Journalists.