Case Studies in Local Government Housing Efforts

Scott Mooneyham, NCLM Director of Political Communication & Coordination

Over the last few years, the housing affordability crisis has brought increased scrutiny to local land-use regulation. In the eyes of some critics, zoning is a primary culprit explaining the increase in housing prices. It’s a narrative that ignores the simple economics of supply and demand: that more people want to be closer to the amenities found in cities and urban areas and the jobs that they attract. Really, cities have become victims of their own success. The critics also have ignored how homebuilders see the opportunity for making the most profit by meeting the needs of more affluent home buyers, typically in high-demand areas where land prices are high.

What has also been clear for years, is that local city and town councils have been on the forefront of trying to address the need for affordable housing, even as they do so at considerable political risk. In the back-and-forth between the NIMBYs (Not in My Back Yard) and YIMBYs (Yes in My Back Yard), it has often been local elected officials caught in the crossfire. That hasn’t kept them from looking for innovative ways to try to bring more affordable housing to their cities and towns. Here is a look at a handful of those efforts through a group of case studies that NCLM has compiled. These case studies will be included in a larger, upcoming report from NCLM and the NC Association of County Commissioners examining housing affordability, local regulation, and some possible solutions to help address the problem.

Raleigh: ADUsThat Work for You

The City of Raleigh is one of several cities and towns that have recently agreed to allow denser development in traditional single-family only zoned neighborhoods, a move that includes allowing so called accessory dwelling units (ADU), or “granny flats.” In fact, in a survey conducted as part of the larger study referenced above, more than half of municipal and county jurisdictions that responded now allow these free-standing structures built alongside existing homes in their residential zoning areas. Raleigh has gone a step further in attempting to help residents utilize ADUs as a potential solution to housing affordability. Its planners have created 11 pre-approved ADU plans, with the plans costing between $400 and $1,200. While residents will still have to go through a site assessment to ensure setbacks and other regulations are met, building code issues will have already been resolved through the pre-approved plans. This should assist in helping the city meet its goal of doubling the number of ADUs, which polling has indicated are a favored solution among seniors for their housing needs, over the next few years. “ADUs are a small but significant part of the solution to housing affordability. It creates opportunities for folks at all parts of the income spectrum and all parts of the age spectrum,” Pat Young, Raleigh’s Director of Planning and Development, told WUNC Radio.

Asheville: Incentives and “Microhousing”

For over a decade, the City of Asheville has been utilizing its Land Use Incentive Grant program to address housing affordability and encourage the development of new housing. The program works by providing incentives to private developers in which at least 20% of the development’s units are offered to those making 80% or less of the area median income, and with at least 50% of units allowing rental assistance of some type. The grants amounts are then determined based on a points system rewarding affordability. They are paid out as property tax rebates. To date, 11 projects have been awarded the subsidies. The latest is perhaps the quintessential dense development—an 80 unit “microhousing” development in which each unit is only 250 square feet but will have communal kitchen and living areas. The developer describes the project as “reasonably priced workforce housing” with proximity to downtown amenities.

Apex/Wake County: Affordable, Accessible Apartments

In many respects, the Broadstone Walk apartment complex planned near downtown Apex is not very different from many of the developments designed to address housing affordability in communities across the state. These projects typically work only through the careful cooperation of local governments and non-profit or private developers, with those developers often utilizing tax credits provide by the NC Housing Finance Agency. In the case of Broadstone Walk, Wake County and the Town of Apex provided $7 million in financing to non-profit developer DHIC Inc., that in turn helped it secure other loan financing. The 164-unit complex will offer 60 of those units to families making less than 50% of the area median income (AMI). A crucial part of the develop is also its location. The one-, two-, and three-bedroom apartments are near grocery stores and other retail stores, as well as bus transit lines, ensuring that residents have ready access to their workplaces and shopping.

Wilmington/New Hanover: New Housing for Areas Hit Hard by Hurricanes

When Hurricanes Florence and Matthew hit eastern North Carolina, the loss of rental housing was substantial, particularly as it affected workers crucial to the local tourism economies. In response, local governments have been working with the state and developers to rebound that rental housing stock. One example is the Starway Village planned for Wilmington. The 278-unit multi-family development is being funded with a $9 million award from the NC Office of Recovery and Resiliency, as well as $3.5 million from the City of Wilmington and $1.89 million from New Hanover County, with both utilizing their ARPA awards. The developer, Bradly Housing Developers, is constructing the project on the site of an old drive-in movie theater, which is accessible to nearby shopping and transit routes. Families who make 60% of the area median income (AMI) will be eligible. The project is similar to those taking place in Morehead City and Greenville, which also suffered middle-housing losses due to the storms.

Housing Bonds: Cities Invest in Housing

The housing affordability crisis may have become more widespread over the last few years, with smaller communities and those with tourism-based economies now seeing the need for more workforce housing and middle-income housing. Still, it isn’t new, especially in our larger cities. That is why North Carolina’s largest cities and their residents have approved housing bonds—typically by overwhelming majorities—for several years now. Some of the more recent approved bond issues to address housing affordability include, in 2022, $50 million in Charlotte, $30 million in Greensboro, $12 million in Fayetteville, and $40 million in Buncombe County and Asheville; in 2020, $80 million in Charlotte; and in 2018, $95 million in Durham. It is important to understand that these bonds are typically approved in the context of larger housing plans adopted by the cities that are intended improve housing opportunities across lower and middle incomes. Besides direct construction of low-income housing, typically aimed to help those making 30% or less of the local average median income, assistance also can targets middle-income residents with funding for down payments and other assistance. Land banking and other measures are often a part of the housing plans, seeking to leverage private investment than can help a range of residents and the larger economy. In total, these local taxpayer investments have created thousands of additional residential housing units that would not otherwise exist.