Cities and Towns Lead the Way on Affordable Housing

Scott Mooneyham, NCLM Director of Political Communication & Coordination

In the face of a complex and far-reaching issue, cities and towns are not sitting on the sidelines.

In 2018, Durham officials faced tough decisions. City council members and staff had been examining zoning changes that they hoped would increase the city’s housing supply and create more affordable housing options.

Doing so, they faced a difficult balancing act: How to increase density without damaging neighborhood character and the values of existing homes and take actions that actually achieved their goal of creating more housing options that residents across income levels could afford.

The Expanding Housing Choices initiative that was ultimately approved in 2019 was less aggressive than some advocates wanted. It was, though, begrudgingly accepted by residents in affected areas, who by and large understood the need, did not want to be accused of being NIMBYs (“Not in My Backyard”), and wanted their home values and neighborhood character protected from incompatible uses.

The resulting EHC plan allowed for more density in areas near downtown Durham, with duplexes and so-called accessory dwelling units in those neighborhoods.

Durham’s experience is not unique. In recent decades, cities across North Carolina and across the nation have led the way when it comes to looking for ways to try to meet the housing needs of residents, at both the lower and middle levels of the income spectrum. Those efforts have included targeted density changes for specific developments or larger areas, voter-approved bond issues specifically supporting affordable housing ($95 million, Durham; $80 million, Raleigh; $50 million, Charlotte; and $25 million Greensboro), and various incentives for developers to build houses and apartments sold or rented at below-market rates or below median income thresholds.

The three recent bond issues in Durham, Raleigh and Charlotte represent more than the state of North Carolina currently sets aside annually for affordable housing.

Attempts to meet the differing housing needs of residents is not confined to North Carolina’s larger cities. Officials in mid-sized municipalities and smaller towns increasingly recognize that many workers struggle to find safe housing which they can afford, as older housing stock often has not been adequately maintained. In tourism communities, the service workers who fill jobs catering to tourists often cannot afford to live in those same communities as the demand for real estate in picturesque beach and mountain towns increases.

That growing focus across the state and across cities and towns of different sizes is why NCLM’s members adopted two legislative goals this year focused on affordable housing:

  • Revitalize vacant and abandoned properties with enhanced legal tools and funding; and,
  • Increase state and federal funding for affordable housing.

Legislation moving in the House, HB 336/SB 363 Uniform Partition of Heirs Property Act, would help accomplish that first goal by offering the owners of properties with multiple heirs an easier path to clearing titles and selling the properties. Under current law, properties in which the original owners left no wills and were then inherited by multiple heirs—sometimes over generations—will often become vacant and rundown due to the inability of those heirs to clear the legal hurdles required to sell them. If the homes remain occupied, the lack of clear title can cause them to fail to qualify for disaster programs and other funding that might go toward repairing them.

NCLM is also optimistic that state legislators and Gov. Roy Cooper will put more money into existing programs that help to incentivize affordable housing, as federal COVID relief is creating more available funding.

Amid these efforts, other legislation was filed this year purporting to assist in creating more affordable housing by essentially ending all single-family zoning across the state. Advocated by homebuilders groups, SB 349/HB 401 Increase Housing Opportunities also would restrict conditional zoning and take other steps that could stifling mixed-use developments and limit the ability of neighboring property owners to weigh in on development.

NCLM has characterized the bill as the latest attempt “to extinguish local authority when it comes to determining how growth and development proceed” while being “cloaked in the language of affordable housing.”

Cities and towns across the state have joined in the call, passing resolutions and making statements referring to the legislation as a “radical approach.”

Beyond stripping away local authority, it also is highly suspect that more density alone will solve the challenges of creating more affordable housing.

In 2019, Oregon became and remains the only state to adopt a similar statewide approach to residential zoning. In 2020, home prices in Portland increased by over 15 percent. Home prices in Raleigh and Charlotte rose by 11 and 13.6 percent, respectively, last year.

While homebuilders have attempted to blame local permitting costs on those increases, housing experts note that income and population growth are the primary drivers of housing costs. Put more simply, supply and demand determine prices in housing markets, just as in other goods and services markets.

Rising income levels and population levels create more demand for real estate and housing, and that demand increases the closer land and housing is to job sites and urban amenities.

Most builders, meanwhile, want in on the more lucrative market of filling the housing needs of wealthier residents.

These market pressures occur as housing experts peg housing affordability to 30 percent of a family’s income, regardless of income level. That means someone living in Raleigh will need to make at least $17 an hour to rent an average-cost apartment.

Samuel Gunter, one of the state’s foremost experts on affordable housing and executive director of the N.C. Housing Coalition, recently told Spectrum News, “The housing supply does not work for people at the lower end of the income spectrum.”

But what can work?

The answer is obviously complex, and it is hard to ignore the income and wealth side of the equation.

Durham Mayor Steve Schewel, during the debate over that city’s Expanding Housing Choices plan, pointed out that the issue is wrapped up in past discriminatory actions that had disparate effects on housing.

“We must be cognizant of the systemic issues that helped perpetuate the fix we find ourselves in today,” he said.

While people are generally aware of the term “red-lining,” many are unaware that federally-backed home loans, going back to the 1940s, were tied to whether a home was outside of a red-lined neighborhood. African-Americans often made up the largest segment of residents living in the red-lined neighborhoods. The result was that those homes declined in value, and their owners did not experience the same ability to build wealth through home ownership.

As difficult as that past may be, and as difficult as addressing the present need is, cities and towns are not sitting on the sidelines. That includes municipalities of all sizes, not just the big urban areas.

While Raleigh, Durham and other larger cities have passed bond referendums and taken a number of other steps to address affordable housing, other smaller municipalities have worked closely with developers by creating incentives to build housing that is sold or rented at below market rates.

In Davidson, a community partnership involving the town, two nonprofits and a developer recently announced the building of several affordable housing units as part of a larger 81-unit townhouse development. Those units will be targeted at families whose income falls between 50 and 80 percent of the area’s median income. The location of the townhomes is within walking distance to public transportation, employment, grocery and other stores, Main Street, and Davidson College.

“We heard the feedback from the community loud and clear and believe that incorporating AH into the Hoke Townhome plans is the right thing to do,” said Jacob Anderson, owner and broker-in-charge of Alliance Group of NC, the project developer. “The best thing we can do to bring value to the Davidson community is to be responsive to clearly-identified needs and desires.”

While assisting only a handful of families, the town hopes the project will serve as a model.

In Belmont, the local government, Habitat for Humanity, and private developers recently came together to build the Dixon Village Development, a pioneering project that includes housing targeted at residents of different income levels.

These efforts do not fully address the need, and municipal leaders would never argue that they do. They can, though, set the stage for more cooperative work, across levels of government, nonprofit organizations, and the private sector to address the need in real and substantial ways.

These local efforts—big and small—are a recognition that the need for affordable and workforce housing is extensive across the state. They also are a statement that cities and towns are committed to leading the way in addressing that need.