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by on May 11, 2015  •  Permalink
Posted in Council Members, Town staff
Posted by Nancy Oates on May 11, 2015

http://chapelhillwatch.com/2015/05/11/learn-from-kilar/

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  1. DOM

     /  May 18, 2015

    Terri –
    ”

    The estimated rent for a 2-bedroom apartment in the High-rises next to Whole Foods and off Franklin…is at least $1200/month–$300 more than the mortgage on my 3 bedroom ranch. ”

    btw, are your property taxes and insurance also included in that $900 mortgage? If so, you’re the luckiest homeowner in CH.

  2. Terri

     /  May 18, 2015

    Yes they are included. I live in a small house in an older neighborhood–a neighborhood faced with gentrification from Obey Creek. No one will consider that losing the affordable homes in my neighborhood (not Chapel Hill) and Dogwood Acres(Chapel Hill ETJ) is a bigger loss than the 5% they will get from Obey Creek. Same for the Ephesus Creek area. If decision makers only look at what the get and not what is lost, there is no understanding or recognition of NET gain/loss.

  3. DOM

     /  May 18, 2015

    Terri –

    Thanks for getting back to me. You ARE lucky. If your property were within CH town limits, it would most likely be a very different scenario, I agree.

  4. bonnie hauser

     /  May 19, 2015

    What’s affordable?

    For what its worth – my mother lives in Carolina Springs – affordable senior housing in Carrboro. Rent for a small two bedroom apartment (maybe 700 sq feet) is $800. The building is HUD subsidized, and they accept Section 8 vouchers.

    A similar property in Mebane rents for about 1/3 less

  5. David

     /  May 19, 2015

    DOM,

    Terri’s situation is not so unusual. I live inside the city limits in an older (i.e., 1957) Chapel Hill neighborhood. Within the past two years, three homes in my neighborhood—all sturdy 3-bedroom ranch houses—sold for under $200,000. I don’t know what the owners are paying in mortgage and related costs, but Zillow estimates the monthly mortgage payment as around $700, so I doubt they are paying more than that. Property taxes adds another $250/month, so perhaps their total monthly housing cost is $1,000.

    I think there are a lot of myths and misunderstandings about the Chapel Hill housing market. There is actually a fair amount of reasonably priced, older, housing that is of better build quality than the new, more expensive apartments and houses that are replacing them.

  6. DOM

     /  May 19, 2015

    David –
    As I was watching the Obey Creek discussion on TV last night, I heard one dyed-in-the-wool Chapel Hillian comment how the town was kind of like the “Beverly Hills of the Triangle” and we are in danger of losing that unique quality if too much development takes place here.

    I don’t know about you, but having our town compared to the epitome of elitist living isn’t exactly what I want to aspire to in creating a livable place. I agree there a lot of myths and misunderstandings about CH – and being affordable is one of them.

  7. Nancy

     /  May 19, 2015

    DOM — I gather you, too, are confounded then as to why Town Council keeps approving residential development targeted to relatively wealthy people and continually fails to take advantage of opportunities to press developers for affordable housing. If you haven’t already signed up for the CHALT newsletter, I invite you to do so. You would find it enlightening. Sign up at CHALT.org. Glad to learn you are a supporter, albeit an anonymous one.

  8. David

     /  May 19, 2015

    DOM,

    “Beverly Hills” may be a bit of hyperbole—sort of like calling Carrboro the “Paris of the Piedmont”—but there is no doubt that most of the residential development that has occurred in Chapel Hill since 1990 has been targeted toward the high end. Meadowmont and Southern Village are two notable examples. The town should have done a better job of ensuring a more balanced mix of housing opportunities for folks of all incomes (that, by the way, is a plank in the CHALT platform). For example, we should have been requiring at least 30% affordable units, or somehow required the distribution of new housing to match the distribution of income of people employed in the town.

    There is nothing Beverly Hills-ish about my neighborhood, or about many of the other older in-town neighborhoods such as Briarcliff, Coker Hills, or Elkin Hills, and we hope to keep it that way.

  9. DOM

     /  May 19, 2015

    David –
    “…most of the residential development that has occurred in Chapel Hill since 1990 has been targeted toward the high end. Meadowmont and Southern Village are two notable examples.”

    More neighborhoods you could add to your list are all the Goforth properties, large four-bedroom homes built on half-acre lots. Most of the land in town was eaten up by these pricey developments, leaving very little land to build on. That’s why high-density rental housing, be it lower end OR higher end, is the only viable alternative we have if we want to make CH an affordable place to live for those with less than a Beverly Hills budget.

    As I’ve said before, most young people I know today have no immediate desire to buy into that old fashioned American Dream of owning a house with a white picket fence and being weighed down with a hefty 30-year mortgage.

    It seems to me, from what I’ve read and heard from its representatives, CHALT is against the notion of putting up ANY high-density rental housing.

  10. David

     /  May 19, 2015

    DOM,

    You state “That’s why high-density rental housing, be it lower end OR higher end, is the only viable alternative we have if we want to make CH an affordable place to live for those with less than a Beverly Hills budget.”

    If by high-density you mean 3-4 stories, I’m all for it. When you start talking about 7 stories and higher, other factors come into play. For example, buildings up to four stories can be made carbon neutral using solar energy technology and sustainable building design techniques, whereas, given current technology, taller buildings cannot be carbon neutral.

    Also, buildings taller than five stores pose greater hazards for fire-fighters because their ladders only extend up to five stories; above that height they have to enter the buildings, which place them at greater risk.

    And then there are all sorts of urban design considerations which I won’t go into here but which you can read about at http://ourtownchapelhill.org/aboutus/newsletters/getting-the-height-right-the-importance-of-context/

    Also see the video here: https://www.youtube.com/watch?v=Hy4QjmKzF1c (the discussion of appropriate scale and building height begins about eight minutes into the video).

    It’s not clear to me how building higher end housing— whether it be rental or for sale, high density or low—helps in any way to make Chapel Hill affordable for households in the lower half of the income distribution.

    Here’s a concrete example: The Park Apts on Ephesus Rd. currently provides moderately priced rental housing for a few hundred folks. Two bedroom units rent for around $700/month. It’s nothing fancy, but it’s decent, affordable housing. The new owner, some out of state private equity operation, plans to demolish the existing apartments and build in its place several hundred considerably more expensive units, probably similar to what is under construction on Elliot Rd.

    If they had submitted their redevelopment proposal two years ago, the town could have negotiated inclusion of affordable housing in the redevelopment, as they do everywhere else in town. But because the town council declined to make any provision for affordable housing in the form-based code, despite the fact that the town citizens repeatedly asked for such a provision, the redevelopment of The Park Apts will not be required to include any affordable housing, and probably will not include any, just as the Village Plaza Apts will not include any.

    The current low-income residents of The Park, some of whom are my friends, will be forced to find housing elsewhere. And if they can find anything in town they can afford, it likely will not be as conveniently located to shopping and public transit as where they are now.

    Thus, the Ephesus-Fordham redevelopment will result in a net loss of affordable housing in Chapel Hill. Village Plaza Apts was a lost opportunity, but at least it did not displace low income town residents. The same cannot be said of the imminent redevelopment of The Park Apts.

    So, from the point of view of someone concerned about making Chapel Hill an affordable place to live for those with less than a Beverly Hills budget, what is there to like about the Ephesus-Fordham redevelopment plan? Or about the proposed Obey Creek development, which, as Nancy explained in this week’s blog post, is offering a disgracefully meager amount of affordable housing?

  11. David

     /  May 20, 2015

    Here’s a perfect example of what’s happening to affordable rental housing in Chapel Hill.

    “The McCorkle Place Condominiums are located on the north side of the historic “McCorkle Place” green at the center of the UNC Campus, in Chapel Hill, NC. The 1936 structure was originally designed to be an apartment facility for the elderly. For reasons unknown, it was always used for rental student housing and included 36 efficiency apartments tightly configured within a wood and brick shell.”

    “The adaptive re-use involved the demolition of the rental units in order to provide area for eight luxury condominiums. Each condominium is approximately 3,000 square feet.”

    When I was an undergrad at UNC, I had a girlfriend who lived in one of those inexpensive efficiency apartments that have now been replaced by eight luxury condos, some of whose owners don’t actually live there but just come to town for basketball games and other events. Could the town have denied approval for this condo conversion? Should it have done so?

    http://tisekiester.com/portfolio/history/mccorkle-place

  12. Bruce Springsteen

     /  May 20, 2015

    I don’t know what kind of buildings should be build but I’m going to balk at the “don’t build them tall because that’s not carbon neutral” stuff. That kind of thinking has led to cars chugging long distances to and from work at UNC each day because they people can’t live in CH/C.

    If CH/C consisted solely of 100 people that grew their own food on their land and biked everywhere they went, etc., would things be better or worse in terms of carbon output? Answer: Much, much worse. Saying otherwise is like hoarding a bunch of money for yourself and then saying you’ve eliminated poverty.

  13. many

     /  May 20, 2015

    David,

    If they had left McCorkle Place as is Chapel Hill wouldn’t have Lewis Black & John Grissom as residents 🙂

    In the economics of renovating and preserving older buildings, sometimes only luxury prices can make financial sense for the structure.

    That again illustrates one of the biggest issues doesn’t it? As incomes rise, people choose more space and privacy. Less well off families are squeezed out of a market with limited space and development opportunities move to the high end over time.

    Supply and demand is not an evenly applied market force, it is stratified across income levels and the more uneven those incomes become the more supply and demand is distorted.

  14. David

     /  May 20, 2015

    Bruce,

    You make a good point, however, I didn’t write “don’t build them tall because it’s not carbon neutral.” I wrote that when we talk about building above four stories other factors come into play, and we end up having to trade off different values, such as a desire to limit commuting with our desires to help mitigate global warming and to minimize risk to our fire fighters.

    We might decide that limiting commuting trumps these other values, but let’s at least recognize the trade-offs and make an informed decision rather than acting, as we seem to be doing, as if increased density is some kind of “free lunch,” i.e., that it confers benefits and no costs.

    And more to the point, how many of the people currently chugging long distances to and from work to Chapel Hill each day will want to or be able to afford to live in the apartments that are currently being built on Elliot Rd or that will be built at Obey Creek or elsewhere in Ephesus-Fordham? Not many, I suspect. There is a kind of bait-and-switch at work here. The shortage of workforce housing is being used to justify construction of high-rise apartments for affluent retirees and college students. And then we wonder why Chapel Hill gets less and less affordable.

    I am not convinced that abandoning our efforts to manage growth responsibly and maintain the qualities that make Chapel Hill a pleasant place to live would solve the problem of local workers having to commute long distances. Raleigh, for example, has had a much more “bring it on” approach to growth over the past few decades and has been building high-rise apartments all over the place. Yet just as many folks drive just as far to and from work in Raleigh each day (relative to population size, not just in absolute numbers) as they do to Chapel Hill.

    I feel that the town’s major employers ought to take greater responsibility than they have thus far for providing housing for the people they employ. For example, when UNC gets a $200 million federal grant to build a new cancer hospital, some portion of that money could be used to build moderately priced housing for the scores of nurses, technicians, custodians, and so forth who will work in the new facility. The way we do things now, the costs of accommodating the growth associated with construction of the new hospital (or of any new enterprise that employs large numbers of people who do not already live in town) fall on the rest of us.

  15. DOM

     /  May 20, 2015

    “The Park Apts on Ephesus Rd. currently provides moderately priced rental housing for a few hundred folks. Two bedroom units rent for around $700/month. It’s nothing fancy, but it’s decent, affordable housing.”

    A most disingenuous observation, David. The only reason these units are relatively “affordable” is because they are 35-40 years old and the investors have concluded they can make more profit by keeping them as-is than by providing needed repairs and updates. Believe me, when these units were built, the developers were dead set on making as much money as they could – as well they should have.

    To think these rents are now lower for some altruistic or socially-minded purpose of the current owners is naive, at best.

  16. Terri

     /  May 20, 2015

    David,

    UNC tried to build workforce housing in Carrboro about 8 years ago and the town threw multiple barriers in their way. The only way they could have kept the costs down and stay within budget was to build several large lot, large sized luxury units. So now they are moving forward at University Square. If Carolina North ever happens, there will be workforce and graduate student housing there too.

  17. Nancy

     /  May 20, 2015

    DOM, what makes you think the Park Apts owner is altruistic? It’s simply good business sense to keep your rents low, have 0% vacancy rate and be able to choose your tenants. The new owner realized he could make even more profit by tearing down the existing units and tripling the rent on new units, even if half the apts are vacant. Greed causes tunnel vision for some people.

  18. David

     /  May 20, 2015

    Terri,

    That’s good to know. How many grad student and workforce housing units are on the drawing board for Carolina North?

    DOM,

    What on earth are you talking about? Where did I state or imply that the owners of The Park are charging low rent for altruistic reasons? Of course they are charging what the market will bear.

    Your statement, “the investors have concluded they can make more profit by keeping them as-is than by providing needed repairs and updates,” is incorrect. They are not making repairs and updates because they plan to soon demolish the units.

    The owners of The Park submitted a concept plan for replacing the existing units with several new 7-story apartment buildings back in 2012, but withdrew it when they realized that the town was planning to rezone the property and give them the new height and density entitlements for free. The town is currently negotiating with them to obtain a right of way to build an extension of Elliot Rd across their property. As soon as that negotiation is complete, the redevelopment of The Park—and displacement of existing tenants—will proceed.

    You never answered my question: From the point of view of someone concerned about making Chapel Hill an affordable place to live for those with less than a Beverly Hills budget, what is there to like about the Ephesus-Fordham redevelopment plan?

  19. Mark Marcoplos

     /  May 21, 2015

    A substantial number of grad student apartments were demolished several years ago (10-15 maybe??) to be replaced by campus development. I checked them out when they were on the chopping block and they were fine buildings.

  20. DOM

     /  May 21, 2015

    In ten to fifteen years, the 200+ apartments going in at E/F will most likely be “affordable” if we use the history of CH rental development and typical depreciation metrics. They’ll be pretty much what The Park (once considered high-end) is now.

  21. David

     /  May 21, 2015

    DOM,

    And where do you suggest the inhabitants of the soon-to-be-demolished Park Apartments live for the next 10-15 years? The contrast with the redevelopment of Glen Lennox is instructive. All current tenants who have lived there for at least five years are guaranteed housing in the redeveloped Glen Lennox at their current rental rates with annual increases capped at 3%, or something like that. That’s the right way to ensure that redevelopment does not happen at the expense of low- and moderate-income residents. I suspect your confident assurance that in 10-15 years we’ll once again have affordable housing in EF will be cold comfort to those facing displacement.

  22. Nancy

     /  May 21, 2015

    DOM, Timber Hollow, Timberlyne Apts. and Foxcroft are older units that could have served as affordable housing had Eller Properties not bought them, dubbed them “underperforming assets,” added granite countertops and doubled the rent. Going out on a limb here, I predict that the current crop of newly approved apts will suffer the same fate years down the line. .

  23. bonnie hauser

     /  May 21, 2015

    David – thanks for reminding us that sometimes we get it right. Its reassuring to know that good developers can take the high ground and still make money.

  24. DOM

     /  May 22, 2015

    Nancy –
    “I predict that the current crop of newly approved apts will suffer the same fate years down the line.”

    I think that’s one reason we should be welcoming more rental housing, despite the rates; it’s a cycle: today’s high-end is tomorrow’s affordable. Not that it’s the total solution, but it certainly helps.

  25. David

     /  May 22, 2015

    Another part of the solution—and perhaps it should be the the most important part of the solution—is preservation of existing affordable housing. New construction gets most of the attention, but preservation is at least as important. Here’s a excerpt from a HUD website:

    ____
    Preserving existing affordable rental housing offers many advantages over new construction. The cost of constructing new subsidized and privately owned affordable rental housing from the ground up, says Enterprise Community Partners’ Lydia Tom, would be staggering. By contrast, preservation typically costs about one-half to two-thirds as much as new construction. Preservation also enables people to stay in their homes and neighborhoods, where they can enjoy the social capital they have built within their communities. In addition, rehabilitation that focuses on energy-efficient upgrades can save tenants, government agencies, and owners money. As Michael Bodaken of the National Housing Trust puts it, “It’s less expensive, and smarter,” to preserve the affordable housing stock that the nation has already paid to construct.

    In addition to meeting demand for affordable rentals and upgrading housing stock that has already been built, preservation can offer economic benefits. According to a 2013 study by the Center for Housing Policy on affordable multifamily rental housing, these savings are realized even when accounting for the full life cycle of a property. Although costs such as maintenance expenses may be higher over the life of a rehabilitated property, rehabilitation is still more cost effective than new construction. Including such long-term considerations and controlling for “location, project size, average unit size, building type, [and] year of development,” the study finds that new construction costs between $40,000 and $71,000 more than acquiring and rehabilitating existing developments.
    _________

    http://www.huduser.org/portal/periodicals/em/summer13/highlight1.html

  26. Terri

     /  May 22, 2015

    Here are some affordable housing statistics by the National Low Income Housing Coalition. They only go down to the county level which I suspect grossly underestimates the challenges in Chapel Hill/Carrboro.
    http://nlihc.org/oor/north-carolina

    I appreciate David posting the information on preserving existing affordable housing–it’s a point I’ve been harping on for the past couple of years and felt like it was falling into the abyss. However, we shouldn’t just be talking about preserving affordable rentals. Neighborhoods, like mine, where there are many seniors who own their homes outright, need to be preserved without gentrification or the lack of affordable housing will continue to snowball. If people can’t stay in their homes due to increasing taxes and other costs of living, they become part of the problem. If we concentrate attention on helping them stay in their homes, we have some degree of control of the problem.

  27. David

     /  May 22, 2015

    Terri,

    When Dave Shreve was here, he suggested that one way to prevent lower income folks from being forced out of their homes due to rising property taxes—which can rise steeply due to home appreciation even if rates remain constant—is for municipalities and counties to raise revenue through income tax rather than property tax.

    He made a compelling argument that property taxes are regressive, and that the things we due to try to make them less so, such as providing exemptions for low income elderly and other groups, are band-aids that try to make property tax function more like an income tax. It would be simpler, and fairer, he said, to just go ahead and switch to an income tax.

  28. Terri

     /  May 22, 2015

    Income taxes are also regressive depending on the tax code (current NC law being a perfect example).

    What I want is to stop focusing regulations and policy decisions on low-income families/individuals exclusively. A healthy economy needs incomes/wealth along the continuum. If we keep focusing on low income, developers will continue building luxury residences in order to protect their profits, leaving us with a bifurcated economy and housing inventory. We need housing that is affordable for a broad spectrum of income levels, not just the rich and the poor.

  29. DOM

     /  May 22, 2015

    Terri –
    “If we keep focusing on low income, developers will continue building luxury residences in order to protect their profits, leaving us with a bifurcated economy and housing inventory. We need housing that is affordable for a broad spectrum of income levels, not just the rich and the poor.”

    I couldn’t agree with you more. This is so evident in CH. The arcane and lengthy development process, coupled with the reluctance of nearby neighbors to accept rental complexes in their neighborhoods has meant that the only way a developer can profit is to build for the top-dollar tenant.

    The idea of what I’ll call “spectrum housing” could well provide a substantial solution to our problem if the town were to make it easier to get approval for these ‘spectrum sites’ and if the neighbors would be more accepting of it.

  30. David

     /  May 22, 2015

    So, would you therefore like to see the town adopt and implement policies that promote housing, work, and shopping for residents of all income levels?

    More specifically, should the town 1) create effective development incentives and requirements to maintain and increase the town’s stock of housing for those who work in Chapel Hill and for those with moderate incomes; and 2) change those current policies and zoning that are contributing to the rapid elimination of housing for moderate income families?

  31. Terri

     /  May 22, 2015

    Speaking for myself, David, the answer is yes. But I’m not sure the town has the authority from the state to put those kinds of controls in place as part of the development process. They can however think very carefully about whether new development in locations that are nearby to existing affordable neighborhoods is the best choice instead of just saying yes to whatever a developer wants to do.

    I want to be clear here that I do not blame the developers for what is happening here. For all that I dislike East 54 and Obey Creek, I believe Roger Perry is trying to design his developments to achieve what council has said they want. Council on the other hand is on a right hand swing away from the previously left hand swing of years past. We can only hope that the next election brings some moderation to their views.

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