DHIC project DOA for now

Last week, the N.C. Housing Finance Agency announced its list of tax credit Nancy Oateswinners for affordable housing projects. DHIC was not on it. Recall that Town Council had agreed to sell 8.5 acres of vacant cemetery land to DHIC for $100 if the nonprofit would build workforce and affordable senior apartments there. DHIC said it would do so if it got a state grant, and council used DHIC’s grant application deadline as an excuse to push through the poorly thought-out Ephesus-Fordham form-based code.

Then DHIC failed to include a letter of financial commitment in its application package, and the state tossed it out as incomplete.

So, what’s next? Loryn Clark, executive director of the town’s Office of Housing and Community, said it’s up to council members to decide what to do with the land now. The presumably mortified DHIC isn’t talking, but Clark said she believes DHIC plans to resubmit its application next year.

That’s another year’s delay in providing workforce housing. DHIC won’t proceed with the project without the grant, and the grants are “extremely competitive,” a DHIC press release said in February. Chapel Hill, with its high Area Median Income, doesn’t engender much sympathy as an underserved community, leaving us with the likelihood that next year at this time, DHIC will not get the grant and will abandon the project altogether.

Builders I’ve communicated with don’t rule out the possibility that the project could be done without a grant, providing the town throws in the land for free and maybe some other entitlements. Infrastructure costs, impact fees, utility connections, red tape and delays from town staff and concessions to Town Council all contribute to the expense of construction. But there is precedent for the town and council to mitigate some of these costs.

For instance, the town could partner with a for-profit developer, as it did with RAM Development in making 140 West happen, by offering a 99-year leasehold for $1. The town went on to give RAM several other concessions, including more than $7 million for parking, and toxic-waste site cleanup that we may still paying for, about 7 years later. The town could also offer to use taxpayer money to build roads for the project, a perk it offered Roger Perry to develop his for-profit venture of luxury apartments in Ephesus-Fordham. Because the cemetery property has been rezoned already and is part of the expedited approval that form-based code secures, a developer would not suffer any extra expense of dickering to make council members happy.

If Town Council is serious about creating workforce or affordable senior housing, it has options. And I’d be willing to bet, not a single community member would rise up in opposition.
– Nancy Oates

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  1. Terri

     /  August 25, 2014


    How do you distinguish between workforce and affordable housing?

    Also, please note that while the developers of 140 West received a lot of perks from the town for providing a small handful of “affordable” units, the price of a 2 bedroom unit is in the $400,000 range–above the median, a factor which continues to increase the cost of housing for all who don’t qualify for subsidy.

  2. David Schwartz

     /  August 26, 2014

    I don’t know how the experts define “affordable housing” and “workforce housing,” but it seems reasonable to suggest that in a well functioning housing market a household earning the median income ought to be able to afford the median priced home.

    In Chapel Hill the median household income is around $60,000 (not sure whether this includes college students). Using the rule of thumb that one’s debt-to-income ratio ought not exceed 33%, and assuming savings of $30,000 to spend on a down payment and 1.67% property tax, our median household can purchase a house that costs around $300,000. Unfortunately, the median house price in Chapel Hill is around $376,000, which means a household earning the median income can not afford the median priced house.

    As I’ve written elsewhere, however, measures of central tendency such as the median are not informative about the Chapel Hill housing market because the distribution of housing prices is bimodal: The average recent sales price of houses built between 1960-1990 (about 40% of all houses sold between 2000-2010) was around $250,000. By contrast, the average selling price of houses built after 1990 is around $400,000.

    This suggests that Chapel Hill actually does have a sizable stock of affordable housing, but, if current trends continue, investors will buy them up, renovate them, and put them back on the market at prices well beyond what households earning the median income can afford.

  3. Terri

     /  August 26, 2014

    “This suggests that Chapel Hill actually does have a sizable stock of affordable housing, but, if current trends continue, investors will buy them up, renovate them, and put them back on the market at prices well beyond what households earning the median income can afford.”

    Or they will be torn down to make way for new….

  4. David – I find it easiest to break down affordable housing into subsidized, workforce and student housing. Of course the student housing market is cannibalizing the others.

    Workforce typically refers to teachers, police, fireman, carpenters, etc. I don’t know what the numbers are, but I believe that most of our workforce lives elsewhere. So even though we pay a living wage, there’s better value elsewhere.

    Subsidized housing is where the section 8 issues are occurring as landlords are opting to no longer accept vouchers. My mother lives in senior affordable housing in Carrboro. You need to make less than 25 or $30,000 to live there, and if your income is a lot lower, you qualify for a Section 8 voucher which pays for part of your rent, Rents are about $750/mo for one bedroom; $850/mo for 2 bedrooms

    You’ll find much more affordable housing in the county and Hillsborough. OCS g

  5. many

     /  August 26, 2014

    Hi David, reasonable assumptions all. Your analysis is exactly why the argument becomes circular though. The need is all well below the median.

    What is being suggested here by Nancy and others, (myself included) is that housing stock (mostly rental) for those below the median is being bought up by developers with the sole purpose of renovating them and increasing rent to meet market demand. By the way….. this is what is happening all over the triangle and all over the country.Nancy feels that caring and acting on this sort of discrepancy is what used to set Chapel Hill apart. I am not so sure.

    Nancy’s and others, (again myself included) further complaint is that this gentrification being done with the tacit support of the town officials, who out of the other side of their collective mouths is saying how much they are worried about the less economically advantaged people losing their homes.

    Now where I probably differ with Nancy just a bit is that my biggest annoyance is not the people being displaced (although that is grievous), it is the hypocrisy of the town and their willingness to use an ill defined issue as a reason to not only do nothing, but to further exacerbate the problem.

    I am less willing to indite a business person for trying to meet the market and much more willing to criticize the government (duly elected, I might add) for allowing it to happen without either an alternative or at the very least owning up to the decisions while at the same time paying lip service to how bad the disruption is.

    The old saw is that the electorate get exactly what they deserve. If it happens that an informed electorate chooses ambitious people who are willing to do the deeds necessary to advance their personal status on the backs of those who are powerless……..or not, then so be it. The electorate have spoken. I just think (hope) the problem is that the electorate is simply not informed.

  6. Bonnie

     /  August 26, 2014

    Many – great explanation, that’s why the penny for affordable housing is a laughable,

    I wanted to add ( my last comment got gobbled up by my IPAD), there’s a lot more workforce and low income housing in the county and in Hillsborough. You can buy a sweet Habitat home in Efland for $50,000. There’s senior affordable housing in Hillsborough and affordable housing planned in the town’s new development projects. Don’t know the owner/rental mix.

    OCS has 3 Title 1 schools and a better track record with the Achievement gap.

    When a town gets it right, it shows.

  7. Anita Badrock

     /  August 27, 2014

    David, I think 33% is above what many banks would allow. And total debt to income is another factor. When people have large student loans, car loans, etc, that can cause problems with obtaining financing. Total DTI to qualify for a conventional loan at many banks, including one’s housing, is 36%. That is counting minimum payments on all debt, including student loans.

    Just FYI look at loans from the North Carolina Housing Finance Agency. They are somewhat more generous with their terms. Their Home Advantage loan is available to households earning up to $85,000. Many banks participate in this lending program. check out more info at

  8. David Schwartz

     /  August 27, 2014

    “I just think (hope) the problem is that the electorate is simply not informed.”

    I predict that between now and November 2015 the electorate is going to get a lot more informed. I know a lot of thoughtful, concerned Town residents who have learned the lesson of the last few election cycles and intend to mount a serious, organized effort to elect new leadership. Let’s hope they succeed.

  9. bonnie hauser

     /  August 28, 2014

    The Chamber’s state of the Community Report – begs the question – why pay a premium to live in Chapel Hill, if low income kids get a better education in a place where their parents can afford to live? Kudo’s to Orange County Schools- BTW.


  10. many

     /  August 28, 2014

    @David, I hope so as well. From what I see, we have over rotated on the buttressing of the wealthy in the post recession economy. In my mind this is not due to Fed policy per se, but the lack of complementary fiscal policy action at the Congressional and NC Leg. Gridlock in Washington is hurting the middle class badly. As I said earlier, we live in disruptive times, and disruption is not over by a long shot.

    Again this is not a Chapel Hill only issue. I was only able to listen to a small part of the Diane Rehm programme today on affordable housing but the phenomenon we are seeing here is apparently pretty wide spread. They seemed to focus on mortgage rather than rent but I think the problem is actually worse in the rental market because renters are competing more directly with large private capital.


    From what little was able to absorb today, the points were pretty high level. I am hoping there is more detail and definition when I have time to listen this weekend.