Who wins?

You can’t make this stuff up. The Urban Land Institute of the Triangle lists Timber Hollow Nancy OatesApartments as a nominee to win an award for affordable housing. Ron Strom of Blue Heron Asset Management self-nominated his project, which Blue Heron sold to Eller Capital (after pocketing nearly $6 million profit from his $12.6 million investment that the investors held for 18 months, according to Orange County records). Triangle ULI also chose Roger Perry over Clay Grubb for a prestigious Community Builder Award.

Eller Capital bought Timber Hollow, Foxcroft and Timberlyne, three relatively affordable apartment complexes, earlier this year, spruced up some of them, jacked up the rents and stopped accepting Section 8 vouchers, effectively booting out longtime residents who relied on the government subsidy for decent housing. In short, Eller has done more to eliminate affordable housing in Chapel Hill than any developer we’ve seen in a long time. Yet if the audience at the ULI awards banquet selects Timber Hollow, someone from Eller will go on stage to accept the award.

Though Dwight Bassett, Chapel Hill’s economic development officer, sits on the awards committee, he did not nominate nor decide the winners. The seven-member jury selecting the winners has only two members on it well-versed in building and planning.

“Timber Hollow Affordable Housing,” as ULI bills it, stems from a density bonus Town Council granted Strom in exchange for renting, for 30 years, the 14 additional units at a rate affordable to people earning no more than 80 percent of the federally set Area Median Income, which happens to be more than the rent on Timber Hollow apartments at the time. Town attorney Ralph Karpinos admitted the deal may not be legal. And stipulations in the Special Use Permit allow Timber Hollow to rent the units at full market rate if a “qualified” tenant is not found within 30 days, a loophole that allows the complex owner to avoid renting out any units at below-market-rate rent.

With the “affordable” density bonus, Eller will reap millions in additional rent from those extra units. Eller will make millions more by displacing dozens of working-class renters from Timber Hollow and his other two complexes by raising the rents.

At the same awards banquet, Roger Perry is set to receive the J.W. Willie York Community Builder Award. Granted, Perry has produced some good projects in town in decades past. But his competition for the award included Clay Grubb of Glen Lennox redevelopment fame, the gold standard for redevelopment in Chapel Hill. Grubb is the type of developer we want to attract. He worked with the community to come up with a redevelopment plan that preserves workforce and senior rental housing, adds office and retail space that will be tax revenue positive, and showed respect for ecology and the environment, even though it cost him some profit.

The Town of Chapel Hill is listed as the lead sponsor for ULI’s awards banquet on Sept. 25. Coincidentally, Perry’s East West Partners was the lead sponsor on the Chapel Hill-Carrboro Chamber of Commerce’s recent State of the Community presentation. Perry is chomping at the bit to implement his vision for Obey Creek held up by procedural disagreements with a community committee appointed by Town Council. Clay Grubb, on the other hand, quite likely won’t take on another massive development in town.

All of this seems a little too cozy for my comfort. What does this say about the direction town officials want development to go in Chapel Hill?

The awards dinner invitation promises “delicious food and good laughs,” the latter evidently coming from the list of people and projects being honored. Tickets for nonmembers are $135, in case you want to cast a ballot.
— Nancy Oates

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33 Comments

  1. Terri

     /  September 8, 2014

    The Urban Land Institute is an organization of real estate professionals, so their criteria for “community builder” and especially “thriving communities” is probably very different from what you and I would consider, Nancy.

    Here’s a description of the award Perry is being given: “J. W. Willie York Community Builder Award. ULI Triangle proposes developing an award program to honor the best examples of land use named after Willie York, a prominent Raleigh developer and lifelong ULI Member (father of Smedes York, past Chair of ULI). The J. W. Willie York Community Builder Award will be given to those individuals who have made outstanding contributions to the creation and continued vitality of thriving communities in the Triangle Region. Those contributions can take the form of real estate development, professional services, nonprofit work or public service that is reflected in the responsible use of land. Special emphasis will be placed on contributions that benefited from the relationships, programs and sharing of best practices through the Urban Land Institute.”

  2. Tom Field

     /  September 9, 2014

    If forced to nominate just one person for the person most harmful to Chapel Hill award, it would have to be Mr Greed: Roger Perry.

  3. Bruce Springsteen

     /  September 10, 2014

    Oh please! I know little about Roger Perry but does he go around preventing people from expressing opinions he disagrees with? Is he a person with local political power that uses said power to prevent change? How much ignorance and dogma has been spread around here by Roger Perry? Whatever problems we have around here, the Roger Perry’s of the world aren’t the source of.

  4. many

     /  September 10, 2014

    I agree with Bruce. I think the notion that there are serious problems is a bit hyperbolic. Chapel Hill is a wealthy highly educated town, with a terrific university, youthful enthusiasm (at least when the students are here), an engaged population and a wide range of choices (except in places to buy underwear). Most towns would love to have the means and assets of Chapel Hill.

    What is at issue is the towns character, how to broaden the tax base, job opportunities and housing choices so as to maintain a diversity and balance, rather than becoming an overly insulated and exclusive enclave of navel gazers.

    These are for the most part, choices in elected officials and codified checks and balances to the market forces.

    I will say it again; the current Chapel Hill leadership lacks the vision that reflects the function that precedes the form needed to support the character. That is ultimately the fault of the electorate.

  5. Phsledge

     /  September 10, 2014

    Cronyism is alive and well in Chapel Hill.

  6. Fred Black

     /  September 10, 2014

    The manager at the local Stein Mart wants to know why people say that there is nowhere to buy underwear in Chapel Hill.

    http://www.steinmart.com/men/underwear-loungewear/cat-25-catid-1011

    http://www.steinmart.com/women/lingerie/cat-25-catid-2014

    But to the larger point, “In a democracy, people get the kind of government they deserve.”

  7. “The Town of Chapel Hill is listed as the lead sponsor for ULI’s awards banquet on Sept. 25. ”

    The ethical problems with this sponsorship are really reflective of broken our local government has become.

    It doesn’t matter if it’s one dollar or a thousand, but, that said, Nancy any idea how much taxpayer lucre is being thrown at this self-serving event?

  8. DOM

     /  September 10, 2014

    A little bit paranoid, aren’t we? Greed and corruption at every turn!

  9. Fred Black

     /  September 10, 2014

    When I read what Nancy said about who selected Roger for this regional award (The seven-member jury selecting the winners has only two members on it well-versed in building and planning.), I wondered who they were. I think given the broad experience this group has, the fact that they are all not planners or builders in the strict sense is good.

    From their website:
    “The awards jury was chaired by York’s son and York Properties chairman, Smedes York. Other jury members included Emil Malizia with UNC-Chapel Hill’s Department Of City And Regional Planning; Joyce Fitzpatrick of Fitzpatrick Communications; Patricia Healy of Hyde Street Holdings; Orage Quarles III, publisher of the (Raleigh) News & Observer; Frank Daniels Jr.; retired owner of the N&O; and Phail Wynn Jr. of Duke University.”

  10. many

     /  September 11, 2014

    Gee wiz. Bonnie had it right it’s BAU, not a conspiracy, not cronyism except as a circus of shameless self-promotion.

    Community Builder Award is the Grammy and Roger is a Kardashian.

    BTW Fred; boxers or briefs? (just kidding)

  11. Nancy

     /  September 30, 2014

    At the Sept. 29 Town Council meeting, Sally Greene referred to Ron Strom as a developer of affordable housing. Strom, who was clear that Timber Hollow was a private equity investment deal for him, who pocketed a 50% profit of $6 million by selling Timber Hollow to another developer who has forced out modest-income tenants by doubling rents and no longer accepting Section 8 vouchers at his other Chapel Hill properties. Fortunately, Matt Czajkowski called her on her erroneous notion. What is scarier: that Greene might actually believe what she’s saying, or that she thinks voters and fellow council members are so gullible they might believe her?

  12. many

     /  September 30, 2014

    Ahhh the old question of intention or ignorance…. both equally scary in my book. “Man keeps looking for a truth that fits his reality. Given our reality, the truth doesn’t fit.” ― Werner Erhard

  13. Fred Black

     /  September 30, 2014

    Nancy, you know that Ron Strom pocketed a 50% profit of 6 million how?

  14. Nancy

     /  September 30, 2014

    Public records, Fred. Orange County Register of Deeds.

  15. Fred Black

     /  September 30, 2014

    Does your cited $12.6 million investment you got from OC include everything he put into the project prior to the $18 million sale? If not, there probably is not $6 million in profit.

  16. DOM

     /  September 30, 2014

    I don’t understand how this blog gets away with making such outrageous and erroneous statements. Does anyone believe this stuff?! Ms. Oates, please provide the public record you mention regarding Mr. Strom’s ‘profits’.

  17. Nancy

     /  September 30, 2014

    DOM, welcome back! I’ve missed you. Here’s the link: http://server2.co.orange.nc.us/OrangeNCGIS/default.aspx
    Fred, the town paid for 2/3 of the energy-efficiency updates for Timber Hollow, and Strom raised the rents to cover his costs. And, no surprise, the rents never went back down.

  18. DOM

     /  September 30, 2014

    Nancy

    This link didn’t get me anywhere; it’s a default.

  19. Nancy

     /  September 30, 2014

    Try googling Orange County NC Interactive GIS. Then click on the link that comes up and accept the disclaimer. You’ll need Timber Hollow’s address: 101 Timber Hollow.

  20. DOM

     /  October 1, 2014

    I find it astounding that you can see how much “profit” was made by looking at these numbers. You’ve made absolutely no attempt to include how much was spent on the project. At best, disingenuous.

  21. Terri

     /  October 1, 2014

    DOM and Fred,

    Do either or both of you agree with Sally Greene that Ron Strom is a developer of affordable housing?

  22. many

     /  October 1, 2014

    OK. PIN # 9789376215 and the financing is very researchable, and there were partners such as QVT MOUNT AUBURN REAL ESTATE CENTURY LLC, and hedge/dark pool real estate investment firm in LA (legally, a Delaware corp.) and BH-EAST OF NORTH, LLC (BH = Blue Heron which is foreign owned, with Ron Strom being a principal, but clearly has other private investors). I expect the investors got a cut of any profits.

    IMNSHO, we are out in the weeds on this profit angle. Profit is the way things work in the country (more now so than ever). If someone has a problem with that, I suggest that you should aim higher than Roger Perry, Ron Strom, East-West, BH-EAST, QVT or even the banks. Perhaps, instead you should be addressing the people who are supposed to be representing you locally, or perhaps Raleigh or Washington?

    The complaint that resonates with me is the towns lack of definition, accountability and creativity when it comes to “affordable housing”. Granted the town lacks power to control rents, but does have the power to control the sales price. They also have the power to partner with other entities or create their own which can control or supplement rents. Why have creative solutions such as an affordable housing endowment not been explored? It seems to me that an endowment might afford tax benefits that could solicit even more generous developer contributions as well as tax free contributions from others. I think it would certainly be better for the community and might even be more satisfying than self-congratulatory $135 per plate award diners.

    From:

    http://www.townofchapelhill.org/Modules/ShowDocument.aspx?documentid=20566

    Option 1: Permanently affordable condominium units – Affordable units for ownership shall be provided according to the Inclusionary Zoning Ordinance or other affordable housing policy in place at the time of conversion. An Affordable Housing Plan shall be approved by the Town Manager prior to recordation of the condominium plat.

    Option 2: Payment-In-Lieu with Condo Conversion – If a payment-in-lieu of affordable ownership units is proposed, the payment shall be calculated at such time the development converts to condominium ownership. The additional payment-in-lieu shall be provided to the Town’s Affordable Housing Fund prior to recordation of the condominium plat. The number of affordable units and the per unit payment amount shall be determined by the Inclusionary Zoning Ordinance or affordable housing policy in place at the time of conversion. The current payment-in-lieu amount is $85,000 per unit.

    The word “affordable” occurs 127 times in that document, yet it still failed many people who relied on affordable housing. What galls me (and apparently some others) is that the peoples representatives have not made the connection to the real people being displaced by developments such as Timber Hollow as a part of their planning and SUP. For example, how hard was it to predict the number of section 8 vouchers being displaced and to include a modicum of planning for relocating these folks? I would think that just a tiny bit of research would have yielded an accurate assessment of the impact.

    Now, presuming that the Ron Strom and Blue Heron opted for the payment-in-lieu amount, 14 * 85 = $1,190,000. Where is that money now? That won’t completely solve the problem, but could be a pretty effective start to an affordable housing endowment, that might even be used to provide public transit, enabling other areas affordability.

  23. Fred Black

     /  October 1, 2014

    Terri, the point to me is not about Ron or what kind of developer he happens to be. Nancy throws out what I see as constant “cheap shops” in almost every one of her Blog posts to make a point that supports her position. She of course is free to do that but for me as a reader, it takes away from the argument she is trying to make. Some see my comments as nit-picks, but since these things will be around forever, the fact that someone took exception should be part of the record.

    Interesting that her editors at the CHW didn’t let he do the “cheap shots.”

  24. Terri

     /  October 1, 2014

    I understood that point before I asked my question, Fred. But the concern should also apply to an elected official awarding a honorable label to someone who may not deserve it. What you and DOM want (and I agree with) is that claims should be supported. So if Nancy is to be chastised for making an unsupported claim, then Sally should be too. Wouldn’t you agree?

  25. Fred Black

     /  October 1, 2014

    I agree with your point Terri, but this Blog is not the means that I choose to use to voice my concerns with the comments of a Council Member.

  26. DOM

     /  October 1, 2014

    Terri –

    Whether I call Ron Strom an affordable housing developer or not is totally beside the point. I have no dog in this fight other than to call out hypocrisy and misinformation when I see it.

  27. Terri

     /  October 1, 2014

    I’m not sure how a public reprimand of Nancy when you agree with one part of her premise is much different than what Nancy did–both are framing of information to fit a personal perspective, not an unvarnished truth.

    Obviously, with my numerous posts objecting to Don’s and many’s posts, I am reminding myself of this same thing so this isn’t a public rebuke of Fred or DOM. It’s an acknowledgement/reminder that blogs are “a personal website or web page on which an individual records opinions, links to other sites, etc. on a regular basis.” Blogs aren’t newspapers; Nancy and Don are their own editors.

    However, I strongly disagree with DOM’s claim that Nancy is being a hypocrite, and his accusation is just another illustration of how you can rebuke someone for one thing while doing the same thing yourself (propagating misinformation in this case). Nancy has been calling attention to the impact of losing Timber Hollow as affordable housing for several years now. She is being consistent. She may have exaggerated a detail on the extent of profit, but not the basic underlying principle–Ron Strom isn’t an affordable housing developer. There’s no way to see hypocrisy in her post on this issue.

  28. DOM

     /  October 1, 2014

    Terri –

    You are right, I stand corrected; I used the word ‘hypocrite’ incorrectly. That said, I still say she regularly dispenses misinformation in order to bolster her point of view. This diminishes her credibility and is the reason I don’t often visit this site any longer if I’m looking for accurate and useful information about the community.

  29. Sally Greene

     /  October 2, 2014

    I spoke too quickly and my error was quickly corrected. The discussion was about the makeup of the mayor’s committee on affordable rental housing. What was behind my singling out Ron Strom is that I found him to be sincere and consistent, throughout the course of our committee meetings, in his advocacy for creating and incentivizing affordable rental housing.

    His ideas went beyond talking about his own Timber Hollow project—which the committee knew about but did not make a recommendation on one way or another. He was advocating a kind of either/or zoning process involving what he called an “overlay zone,” which turns out to be much like the voluntary incentives for affordable rental housing that we considered in Ephesus-Fordham. Although we rejected that approach for the FBC district that we did pass, we will be considering just that sort of approach for the parcels on the south side of Elliott Road. I credit Ron with advancing that conversation.

    There were a number of affordable housing nonprofits represented on the mayor’s committee. CASA, for one, is a developer of housing for very low-income people based in Raleigh, with around 300 units under management regionally. They have properties in Chapel Hill and would like to increase their presence here. (I believe they have submitted letters of interest re two other town properties that were identified as properties we could sell.) Other developers of affordable housing on the committee included Habitat, the Home Trust and Empowerment, Inc.

    The suggestion was made at Monday’s Council meeting that the mayor’s committee was improperly swayed toward DHIC because Gregg Warren was on the committee (and that there were no other, potentially competing, major developers of affordable housing on it). This has no basis in fact.

    During a Council hearing at one decision point in the process of working with DHIC, when members of the committee stood up in support of it, a councilmember asked if there had been concern on the committee that (in my paraphrase) DHIC was getting a development privilege that should have gone to somebody else. The answer was unequivocally no. The process by which the Council chose DHIC as a partner was open, deliberative and fair.

  30. Fred Black

     /  October 2, 2014

    Thanks, Sally.

  31. Terri

     /  October 2, 2014

    Where do these non-profits get their funding? I know CASA does a great job and keeps rents very low, but I don’t know how they do it.

  32. Nancy

     /  October 3, 2014

    This all sounds good, Sally, but “overlay zone” is a meaningless term. Does the LUMO even give council the authority to do something like that? As for Ron Strom and Timber Hollow, Strom inserted clauses in the SUP, which council approved, that enable Timber Hollow to avoid providing any discounted units, despite the density bonus. In Timber Hollow, council had the opportunity to set a standard of expectations to let developers know council is serious about providing affordable housing, yet council squandered that opportunity. Ironically, the two council members who seem willing to negotiate strongly for affordable housing — Jim Ward and Matt Czajkowski — are not the two lawyers on the dais. Please listen to Ward and Czajkowski and learn.

    Monday night, council had the opportunity to see what other developers of low-income housing could bring to the table, but council decided to delay providing affordable housing by at least a year to give DHIC another chance to try for a grant that only one in four applicants receive. That strikes me as another opportunity council squandered.

  33. David

     /  October 6, 2014

    Sally wrote, “Although we rejected [the voluntary incentives] approach for the FBC district that we did pass, we will be considering just that sort of approach for the parcels on the south side of Elliott Road. I credit Ron with advancing that conversation.”

    Sally, how exactly did Ron Strom advance the conversation regarding the use of density bonuses to incentivize affordable housing provision in Ephesus-Fordham? As you know, I, together with Tom Henkel, Brian Wittmayer, and several other residents, researched the use of incentives in form-based codes around the country and proposed a specific scheme for the Ephesus-Fordham FBC, a scheme that, had it been adopted, might have generated over 200 new units of affordable housing in the district. We even drafted the precise language to include in the code. Ron Strom had nothing at all to do with that effort. I didn’t even know who he is until recently. So what was his contribution to developing the ideas, that Council rejected, about how to design an incentive scheme within form-based code to encourage provision of affordable housing?

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