Saving grace

On a recent Friday, Mayor Mark Kleinschmidt tweeted that UNC was poised to Nancy Oatesmake a Big Announcement about Northside, leaving us on tenterhooks all weekend. On Monday, the mayor and UNC Chancellor Carol Folt, along with some neighborhood and nonprofit dignitaries, took the stage and said UNC would lend $3 million interest-free for 10 years to “save” Northside, as newspaper accounts touted it. And the town plans to chip in $200,000 initially from its affordable housing fund. (Future allocations will be reviewed annually by Town Council.)

Essentially, the public relations fallout from Folt’s decision not to defend UNC’s Center for Poverty, Work and Opportunity against the Board of Governors shuttering it and another social justice center and an environmental center may have nudged the chancellor to publicly commit some big money to fend off slumlords in Northside.

Admittedly, Folt’s job would have been on the line had she challenged the BOG’s claim that it had the authority to close the centers, so who can blame her? We all know how hard it is for people over 50 to find jobs. Just ask UNC System President Tom Ross. So Folt redirected media attention by committing financial resources to help move forward a plan that Northside neighbors have been working on for three years.

In recent years, predatory investors have bought up properties in Northside from longtime residents ready to cash out or who have died and their heirs have no use for the property. Because town staff do not enforce the ordinance that no more than four unrelated people can share a residential unit, unscrupulous landlords have rented out houses to large groups of students and raked in cash without always maintaining the property to livable standards. Their tenants are kids who put up with the indignities, knowing the housing is only temporary.

At this point, more than half the homes in the historically black working-class community are investor-owned.

Three years ago, the Jackson Center, a community center in Northside, organized a Compass Group to figure out how to reverse the trend. One tool was to ask Self-Help, a nonprofit lender, to establish a land bank by buying properties at the lowest price possible and redistributing them at cost to developers of affordable housing. For instance, Self-Help set up a land bank in partnership with Duke University and found a landlord in Walltown, a low-income neighborhood near Duke, who was willing to sell 30 properties at $5,000 each, which the land bank resold to an affordable housing developer.

The success of the land bank hinges on property owners selling to the land bank at an affordable price, even if investors offer more. And it would restore my faith in humanity if that were to happen. At the same time, the concept makes me uneasy. For most of us, our home is our biggest asset. Is it fair to ask people of modest means to forgo market-rate profits in an attempt to fend off slumlords and developments like the 10-story student apartment building proposed for the lot where Breadman’s is now?

No word on whether any contract has been signed. UNC referred me to Self-Help, who referred me to the Jackson Center, who, I learned from an interview by a colleague, is referring questions back to Self-Help.
– Nancy Oates

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37 Comments

  1. Zach Arble

     /  March 17, 2015

    I take offense to being referred to as a “slumlord” for owning investment property in Northside. I invite you to take a tour of my properties to see for yourself that they are not only well cared for, but in far better condition than any of the owner occupied houses I have seen. I take great pride in how well cared for my properties are, and I always ensure my tenants are good neighbors. These students you so freely disparage are our future leaders and are undeserving of your slights. Perhaps you should actually spend some time getting to know both the tenants and landlords before being so judgmental about both.

  2. Nancy

     /  March 17, 2015

    Zach — Not all landlords are slumlords. But you and I can both name at least 4 who own many properties and violate the town’s no-more-than-4 ordinance and do not keep their properties in livable conditions. I wish there were more landlords like you.

  3. Todd Neal

     /  March 17, 2015

    Nancy, you assertions do not come close to matching the facts. Not sure who you are calling “slumlords” but they would not be found in the mix of investors who have been improving the quality of life for the tenants in the Northside.

    You are further from fact with your use of the term “predatory investors”. If buying and redeveloping abandoned and decaying crackhouses makes one predatory then you are right but I am confident you are using a different definition.

    Throwing incendiary terms like “slumlord” and “predatory investors” around without verification is reckless for anyone but for a journalist it is flat out incompetent. I fear fact checking went the way of print newspapers – dead.

    Here is challenge for you to restore your credibility. Provide actual examples of “slum lords” and “predatory investors” in the Northside.

  4. Nancy,I also have taken offense at you calling us “SlumLords” Please do some research prior to writing your next article. My web site is merciarentals.com. I am one of,if not the largest private landlord in the NorthSide and have worked for 20 years to improve the area. Please review my site with interior pictures from last year and tell me why you consider us to be slumlords.. The issue we have in the NorthSide is because we have taken the time,energy and investment to improve the properties which in turn have increased their value and rents. If you would like to set up a walk around the neighborhood I would be more than glad to do that with you. Thanks Mark

  5. Don Evans

     /  March 18, 2015

    Todd

    Here’s a challenge for you — provide actual examples of “abandoned property” and “decaying crack houses” that were bought and improved in Northside. Give us addresses and dates of purchase.

    If you’re going to attack a journalist for “incompetence,” shouldn’t you at the very least provide data for your own assertions?

    I suspect that when you cite an improved quality of life, you really mean improved quality of life for investors. And I suspect that landlords who ignore town residency laws by allowing more than 4 people to live in a rented dwelling, holding onto deposits well beyond a reasonable period for a refund, and charging residents for maintenance costs beyond damages well-deserve to be labeled as slumlords.

  6. Pamela Zeman

     /  March 18, 2015

    I take offence of Nancy Oakes Journalism skills. I think Nancy Oakes should do her homework before she ever types another word. Nancy’s statements are very incorrect about Northside and I found them to be offensive and untrue. Most of all the investors I know have done an outstanding job at improving a neighborhood that was neglected for many years from Property owners to the Town Of Chapel Hill. Since investors (property owners) have come to Northside, they own 85% of the Homes. Some of the investors live in the homes they have built. Very low taxes and no interest loans will always make these neighborhoods attractive.

  7. JWJ

     /  March 18, 2015

    Others have commented on the intemperate wording of the original post.

    My question is where does the Chancellor of UNC-CH get the authority to become a banker and make $3M “loans”? By my rough estimate about 40% of UNC-CH annual operating revenue comes from state taxpayers and federal taxpayers (assumption is that a good portion of the grant line item is via the federal government). Another rough 10% comes from student tuition. When these funding sources provide money to UNC-CH , is this type of spending their intent?

    If this $3M in spending is worthy over competing funding projects, the taxpayers of Chapel Hill should bear the entire cost. Or the taxpayers of Orange County. If the $3M is to be provided by the taxpayers of North Carolina, the legislature should directly pass a bill authorizing this spending.

    No mention in the article I read about who the heck is going to be auditing self-help and the disbursement of funds? Why $3M, why not $10M?

  8. Don Evans

     /  March 18, 2015

    Pamela

    As with Todd’s post, specifics would be appreciated. Which statements are “very incorrect” and give specifics about what makes them incorrect. Do your homework!

    And check your spelling, please. Incorrect spelling can hamper one’s credibility.

  9. I would like to invite both Don and Nancy to my home in the North Side and would gladly take you for a walk through this great neighborhood and show you the result of 20 years of work. I will answer any questions you would like to ask and show you what ever you would like to see. my email is mpatmore@hotmail.com and my phone number is 919-933-8143

  10. Runner

     /  March 18, 2015

    Don,

    I take offense at you calling Nancy a Journalist. Her posts on this Blog are not Journalism. They are merely commentary.

  11. Nancy

     /  March 18, 2015

    Not to worry, Runner. I’ve been called worse.

  12. Terri

     /  March 19, 2015

    The reality is that investors have purchased low income (affordable) housing and upfit it for their profit and the neighborhoods loss. developer actions have decimated a historically black neighborhood and pushed a very large percentage of the original residents to Durham and beyond, creating problems of social and economic justice for the town.

    I wouldn’t call these developers slumlords but their actions were directed at creating personal profit and nothing else. From personal experience, I agree that the neighborhood had too many crack houses and other uncared for properties. But It’s for the larger society to decide whether we as a community support their business acumen over the social and economic justice challenges their gain has created.

  13. Sorry I have to step in here again. I have compared my rents to those of Empowerment The non profit (LOL) If you adjust my rents for exactly the same building for the same financial conditions. IE Empowerment does not pay property tax, They have been given the money to purchase the property by the tax payers and don’t have to pay it back. If you take my similar building and remove the property tax, interest and the principle from the rent. You will see that actually Empowerment is earning more per month than I am.I will gladly share these numbers with anyone who actually wants to write an honest story about the NorthSide.

  14. Will Clark

     /  March 20, 2015

    Aside from the use of provocative adjectives, I think there’s a missed recognition at the very conflicting goals in this post — specifically the idea that housing should (could?) serve as a community benefit that supersedes any personal benefit.

    Once you get past the pejorative “predatory investors” there’s the phrase “longterm residents ready to cash out”. At base, you have a standard real estate transaction in which the selling party names their price and finds a buyer willing to pay it. I struggle to find what’s objectionable here.

    There’s an acknowledgement that “The success of the land bank hinges on property owners selling to the land bank at an affordable price, even if investors offer more.” That smacks of paternalism — that home owners (or indeed their heirs?) should not benefit from the renewed interest in the neighborhood. Given the central role in housing as the most valuable asset held by most families, isn’t a public good created upon sale of the property? If these properties were truly uncared for, isn’t the subsequent reinvestment and improvement beneficial to the neighborhood, or does the impact of an investor not extend past the property boundary? I rent my house in Southern Village, along with a measurable percentage of my neighbors. Should my neighbors be suspicious? Should we consider my landlord some profit-seeking Legree? To suggest that students, renters, or anyone without a land-based tenure in a home is deleterious to values (home or community) is absurd.

    As to Northside longterm residents being pushed out? I mean this literally — are they unwelcome? This post suggests some type of reverse blockbusting as someone goes around scaring resident homeowners that “students are coming”. Is there no recourse to remaining homeowners? Are police actively ignoring complaints? Are inspectors refusing to cite owners for too many non-related residents? I don’t know and this doesn’t present any evidence that it is. On the other hand, as Lionel Hutz suggested, hearsay and conjecture are types of evidence.

    There’s a message in the post about affordable housing supply and how a town might meet the challenge of preserving it. Unfortunately it’s lost in the needlessly aggressive language and a paternalistic attitude toward Northside residents.

  15. Nancy

     /  March 20, 2015

    Will, inspectors do not enforce the town’s limit of no more than 4 unrelated people living together, nor does anyone enforce the state law of no more than 5 unrelated people living together. Last I checked, the town has not filled the 2 enforcement officer positions it budgeted for. Apparently, the lessons of the 1996 fraternity house fire have been forgotten.

    Since I posted this piece, I have received emails from several Northside investment property owners who don’t want to make their comments public by posting them on the blog. It’s disheartening that so many of them genuinely believe that by making scads of money by driving out the working class and making the properties permanently unaffordable by adding granite countertops, etc., they have done something positive for the community. Money, particularly their own personal wealth, seems to be the only thing that matters to them. It is discouraging that this anti-social mindset has such a strong foothold in the community.

  16. Terri

     /  March 20, 2015

    For those of us who feel that “community” is as valuable, if not more so, than finances, the indirect variables that are pushing individuals and families out of homes that have been in their families for generations. I understand that not everyone shares that value, but to me, that’s the heart of the disagreement on this thread. Gentrification is simply not acceptable IMHO.

  17. many

     /  March 20, 2015

    I have a question about labels and definitions; would people consider what is happening with the buying of properties in Northside by entrepreneurs “Renewal” “Economic Development” or “Gentrification”? Is one possible without the other?

    On one hand I see the concern about change and disruption, on the other I see natural market forces at work. Not sure about this, but I think people that have a stake in the community are much less likely to be absentee landlords and to care about their properties, neighbors and tenants, so how many of the investors live in the community is important.

    When I hear gentrification I think of out of town investors flipping properties, and national corporate interests invading changing the character of the neighborhood.

    When I hear urban renewal, I think government tax incentives and grants, mostly in an effort to improve and stabilize an area, bring jobs, reduce crime etc.

    When I hear economic development, I think of mostly local private investors trying to renovate and invest in the community while keeping it’s character relatively stable.

  18. Typically the houses in Northside are too small to realistically over occupy. The consequence of enforcing that rule would be to put further pressure on the smaller 1 to 3 bedroom properties. By enforcing occupancy the displaced student do not evaporate and disappear. They will simply move into and put more pressure on the available houses. The larger buildings are not the kind of buildings that families are looking for,they are looking for the 2 -3 bedroom places. If the Town actively enforces the occupancy rules rents will go through the roof as the displaced tenants will create more pressure on the smaller houses. It’s a simple supply and demand equation. Lets say there are 100 extra tenants in houses in the North Side and we force them out of those properties. we would have to find 50 two bedroom properties for them to move into. This would force rents up.Its all about bed space,if we reduce the number of available beds then rents will increase on the remaining bed space.
    I’m all for encouraging families to move into the NorthSide. To do this we need a complete change of the Conservation district that will allow families to build here. I live in the North Side and the rules of the conservation district are forcing me out of the Neighborhood and turning my current home into another rental. The Town expects me to move from my 2500 sq ft home into a 1750 sq ft home if I want to stay in the Northside.

  19. Terri

     /  March 21, 2015

    Mark’s answer explains the gentrification issue, Many. Gentrification is what happens when wealthy people decide to move in and change a previously lower income neighborhood. I lived in a similar neighborhood in St. Louis. We went back to visit about 3 years after we moved here and none of our low-income black neighbors were there any longer. The town had decided to “clean it up” and Washington University students (like us) and staff moved in. Northside is proving to be more resilient but in talking to the 3-4 remaining black business owners in that neighborhood, I don’t think they can hang on much longer without pretty drastic changes.

    We lived in the farthest east section of Northside (off Pritchard) when we first moved here in 1976. I couldn’t afford either the rents or the purchase price of a home in that area today.

    Gentrification is complex. It pits socioeconomic justice against American business values. What do we value? Protecting the neighborhoods that undergird the culture of our community or protecting the rights of individuals to profit in any way they can, regardless of intangible costs like the loss of diversity and justice? There are arguments for and against both positions. What isn’t working IMHO is the current approach of trying to have it both ways.

    BTW, I do appreciate the multiple approaches the town government has taken to try and offset the impacts of gentrification. But then they go and approve a monster like Greenbridge and create even greater pressure on the problems they are trying to address. That’s what I don’t understand about their actions.

  20. Nancy

     /  March 21, 2015

    Mark — “Supply & demand” sounds good, but you know as well as I do that the third leg of that model is how much your customer can pay. Students won’t pay more than about $800 a bedroom, and there are many places in town that offer decent housing for that much or less. If the town enforced its own laws, landlords would have a hard time charging more than $3,200 a month. If the town enforced its laws, rents would go down in Northside, not up.

  21. Nancy, We are still cheaper than any of the new buildings going in. We are the affordable student rental area. Typically my rents are 600 or less per bedroom. There are some exceptions to that, but thats the number I aim for. ShortBreads is 800 plus and 100 per car per month per person.If the Town enforces that rule across Chapel hill what would happen is the rents on the “BIG” building would come down. The rents on the 1,2,3, bedroom places will go up. By targeting the “BIG” buildings you will increase the demand for the smaller ones. I can already see that happening. My one bedrooms went up 15% this year because of shortbreads. The tenants who want to live in apartments are not the same people who want to live in houses. The big buildings should not be targeted because they are not the buildings that affordable families are looking for. We should be increasing occupancy of the bigger buildings to reduce the cost and move students out of the smaller buildings to make way for families to move in. Not the other way around. My offer still stands for giving you a tour of the NorthSide to help you understand the dynamics of the area better.

  22. Runner

     /  March 21, 2015

    Nancy,

    Shouldn’t you be focusing your vitriol toward the Town’s management of rental property rules? Maybe you can do some research and then write about what’s really going on here. Now that would be journalism.

  23. many

     /  March 21, 2015

    Mark makes a compelling argument.

    What he says about families (especially with school age children) not wanting to live in apartments resonates with me.

    I think the affordability issue also has a “quality of life” component that for families with kids involves a yard (however small) and a neighborhood, rather than the lobby and hall of a high rise building.

  24. joey

     /  March 22, 2015

    Students will certainly pay more than $800/Bedroom. Shortbread, Warehouse – all more then $800++. The new development next to Franklin Hotel -$1000/BR I would guess when complete. The new proposed “Breadmans” complex will be $900/1000 BR at least. Northside is the affordable rental housing option for students on a budget who want or need to be able to walk to town and campus.

  25. Nancy,I have been doing some number crunching for you. Thanks Joey for your post. I have the largest number of bedrooms in the north side. If I take my monthly gross rents and divide that by the total number of bedrooms(legal occupancy) My average per bedroom rate is $607 per month plus utilities. The Lux another Student rental is $975.00 for a one bedroom plus utilities(electric) $1700.00 for two bedrooms, $2400.00 for 3 bedrooms, $2800.00 for 4 bedrooms.Because these buildings are commercial they do not have to comply with the 4 person occupancy rules in Chapel Hill. They can cram as many students in as they want. We in the NorthSide are cheaper than any of the new buildings that have been built and will be built. As long as we remain CHEAPER we will have students wanting to rent our affordable rental properties.You may not want to admit this but WE are the affordable neighborhood in Chapel Hill.

  26. Terri

     /  March 23, 2015

    Mark–you are affordable for students who are willing to live in quite different circumstances than families. You are not affordable for families. As reference, my mortgage + insurance + taxes comes out to be $302 per bedroom. In this community, it is still cheaper to buy than rent IF you can get the down payment together.

  27. Nancy

     /  March 23, 2015

    Mark, landlords set their rents for the market segment they want to capture. What I don’t understand, and why I’ll never be rich, is that if you want to be seen as someone who is benefiting the community by providing affordable housing, why not set your rents to cover your capital and operating costs, plus a moderate profit for yourself? If you want families as tenants, contact Empowerment, which has a long list of families looking for safe, affordable housing. $2,400 is too much for a 1,750-sft house. During our tour of your properties, I may be able to show you how to cut about $1,000 off the rent.

  28. IF you compare properties to Empowerment”affordable” and adjust mine for the same financial conditions such as no property taxes no interest payment no principle payment you will see mine are less rent. If you would like me to put up the number to show you how Empowerment is fleecing the tax payers I will. There is no point picking a 500k property because thats not a family building. If I reduced my rents which your suggesting all I would get is students paying less rent.lol.
    Terry, its always cheaper to buy then it is to rent.
    I ask this of both of you WHY would I rent my buildings at thousands less????? Than I can get for them. When you come to sell your homes I’m sure you will sell them to Self Help for hundreds of thousands less right?

  29. Nancy

     /  March 23, 2015

    Apparently the expectation is that longtime Northside residents or their heirs sell their properties to Self Help for less than a for-profit investor would offer. As for why you should rent for thousands less, why take advantage of people just because you can? When you rent at affordable rates, you get your pick of tenants. You can chose to rent to people who have chosen careers that will not make them rich but will benefit the community: teachers, nurses, police officers, artists. It’s your prerogative to chose profit, and maybe you will use that profit to benefit others less fortunate. But don’t try to portray yourself as a provider of affordable housing if you’re not.

  30. Terri

     /  March 23, 2015

    I agree Mark–you should rent your building for thousands less. The question is why you felt the need to buy those buildings in the first place. I don’t know you but I can tell from your participation here that you are certainly smart enough to have known your business decision was going to create a negative outcome for the traditionally black owners in Northside.

  31. many

     /  March 23, 2015

    OK. I am confused. How is charging market price taking advantage of people?

    If Mark charges less than market price, and forgoes maintenance and improvements in order to do so, would’t than make him a slumlord?

    I would posit that Mark purchased the properties because he saw it as a good investment opportunity. This is the way the system is set up. Otherwise we should just have state or county run housing projects.

    I think that teachers, nurses, police officers, (possibly not artists, but reality is that it not just the rent that drives out the artists) all get paid enough to afford Marks rents, the problem is they can get a much better deal for their money elsewhere.

  32. Nancy

     /  March 23, 2015

    I’m not asking him to forgo maintenance, Many, but pare some of his profit. It’s a foreign concept to many businessmen, but there are people with different priorities. Kind of like employers who pay a living wage, some landlords charge a living rent to accommodate people in professions that don’t pay a lot. He’ll still make a profit; he just won’t make a killing. Police officers in Chapel Hill start at about $25K, teachers in N.C. start about $35K and nurses about $45K. They can’t afford to pay $2,400 a month for rent, which doesn’t include utilities.

  33. Many of my buildings only make a few thousand profit after expenses. I have some that actually operate at a loss. If the participants on here feel so strongly about this I have a deal for you. Give me the same financial deal as you give Empowerment i.e.:- no property tax,no interest and no principle to pay back and my rents would be cheaper. Nancy,I will be waiting for my check. Also your last post said that the nurses and police officers can’t afford $2400.00 thats a 4 bedroom house with 3 .5 baths. Why can’t they live in my cute 2 bed house for $1250.00 or my two bedroom one bath duplex for $1000.00 or my 3 bedroom 1 bath for $1400.00 these are all renovated with washers dryers,dishwasher,Central heat and air. Lawn care included. They can afford them but why would they want to live here in NorthSide???????? they can get a bigger bang for their buck not living here. In 20 years in business other than med students I have never had a call from a teacher,a Nurse, a police officer etc who wants to live here. Is there any way we can put pictures up on these posts. I would love to put some pictures of the properties I purchased up and you would see that no one would of lived in them.

  34. Terri

     /  March 23, 2015

    Mark–someone making $45,000 per year claiming a single deduction takes home roughly $1200 twice a month. The rule of thumb is that housing & living expenses shouldn’t use more than 1/3 of take home pay. The “most affordable” 1 bedroom house on your website is $800/month which is 33% of $2400 (monthly take home) without food or utilities.

    For students who are willing to share bathrooms and bedrooms, I agree that your properties are good deals (for this area). And I’m sorry this seems like I’m picking on you. But you just happened to step up to have the conversation and I appreciate that. My point all along has been that the community has to decide what we mean by affordability and whether or not we value cultural history. Right now, we are operating at odds with our publicly stated values (as you point out).

  35. But you get what you pay for……Empowerment owns the same building as me on N Roberson Street. Both are exactly the same building. Mine are fully renovated with new wiring,plumbing,kitchens and bath. 100 percent fully done. $800.00 per month. Empowerment owns the building next door the same one bedroom and its a dump. the rent is $570.00 if you add back the property tax that they don’t pay, the interest on the money they were given and don’t pay and the principle that they don’t pay. If you add all those back in at market rates they will be more expensive than my one bedroom places next door.I will gladly show you and let you tour my properties and I’m sure empowerment will let us tour theirs. I have no control of those costs such as principle, interest,and taxes.

    Nurses, teachers and police officers will not move into this area because we (as in the press) spend all their time telling everyone how bad this neighborhood is. We need to stop branding this neighborhood as African American and over run with Drunken hordes of students and focus and market the positives. This neighborhood defeats its self. I have been living here for 20 years and love living here. I can’t compete and overcome the damage the press and Non profits do to putting off families from buying here.I have been fighting the NCD for years to change it to promote families but it has constantly failed and only encourages rental property.This Neighborhood is over 90 percent rental at what point will say maybe Mark has a point 95% 98% or 100% There is only one way that we will change this neighborhood and these are what we will need.

    Re-Branding to undo the damage thats been done.
    Employer or Town rental assistance programs
    Allow use to build the houses families want.

    I live here and I don’t care who lives in my properties as long as they pay the rent and take care of my investment. If your not willing to listen to my guidance and help then there is not much I can do.

  36. many

     /  March 23, 2015

    Hi Nancy,

    What is a reasonable margin including a risk premium? 5%? 10%? I suspect Matt C would say at least 8-10%.

    I have no idea what Mark’s profit is, but I also suspect it is less than you think it is. At least Mark seems to live in the neighborhood.

    What would happen if people took their investment elsewhere? I think despite the best efforts of UNC an local government economic factors would prevail. The neighborhood might well go downhill until prices fell enough for real Gentrification (with a capital “G”) to swoop in. I have seen it happen before elsewhere.

  37. many

     /  March 26, 2015

    Continuing my point; Mr Gates has been successful in projects that are germane to the discussion in the link below. What resonated with me is what he says w/r/t the attitude of the media, the importance of a mesh between developers and neighborhood consciousness and how culture can be used as the glue.

    http://www.ted.com/talks/theaster_gates_how_to_revive_a_neighborhood_with_imagination_beauty_and_art?utm_source=newsletter_daily&utm_campaign=daily&utm_medium=email&utm_content=image__2015-03-26

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