How much is that rent, really?

Trying to find an apartment in Chapel Hill affordable to your typical Chapel Hill Nancy Oatesworker takes diligence and a roommate. An apartment complex may advertise rent at one price, but by the time the management adds up all the additional mandatory fees — valet garbage pick-up, package delivery acceptance, weight room access, and Internet and cable service — the real cost to live there has ballooned by more than $150 a month. And that doesn’t include utilities.

The practice is deceptive. And regarding Internet and cable, it’s illegal.

In 2007, the Federal Communications Commission banned apartments and homeowner associations from imposing exclusive cable deals, reasoning that competition lowers prices more than do apartment owners, who get a cheaper bulk price but rarely pass the savings along to tenants. The ruling held up to a challenge in federal court in 2009.

Eller Capital Partners CEO Daniel Eller said tenants in his properties didn’t have to use the cable, but they couldn’t reduce the $125-a-month fee. GSC, Alexan and Shortbread, who do allow tenants to opt out of cable, apparently received different legal advice.

Although Eller’s Timber Hollow advertises that it has an unrenovated one-bedroom for $775 a month, the mandatory fee raises the rent to $900. Never mind that all of the unrenovated apartments are leased, and as soon as the tenant moves out, the granite and brushed nickel move in, pushing the base rent to $850, and the real rent to $975.

The deception isn’t limited to price. Alexan advertises free parking, but when pressed, the sales rep admitted it was available only first-come-first-served. The luxury building in Village Plaza plans to reserve the top four floors in its parking deck for tenants in its 266 one- and two-bedroom apartments. Because it describes its two-bedroom units as “one-bedroom plus den,” Alexan needs to provide only 1.25 spaces per unit. Its permit caps parking at 463 spaces, 70 of which are dedicated to Whole Foods.

Chapel Hill-Carrboro Chamber of Commerce executive director Aaron Nelson patiently explained to me that Alexan’s $1,500-a-month one-bedroom (plus the mandatory amenities fee) was affordable if two people shared it, a microaggression against single people. Doing the math, Alexan’s tenants will fill up the parking deck and spill over into surface parking that neighboring businesses have paid for in their rent. Those businesses effectively subsidize Alexan.

Community member Ken Larsen anticipated this problem and petitioned Town Council in February to rework the parking formula. The petition was routed to the town’s Planning and Sustainability Department, and he has heard nothing more.

Where is the affordability that building more luxury rentals was supposed to free up? It does not exist. We learned in the Reagan era: Trickle-down doesn’t work. In real life, building more luxury apartments raises the floor of rents throughout town. All of a sudden, Eller’s $975-a-month unit looks affordable because it is considerably less than Alexan’s $1,500-plus. And Alexan’s rent rose 30% from the time it was approved because other luxury apartments came online that made $1,500-plus seem affordable by comparison.

I wish I had a quick fix for this problem. A first step is to educate all council members on the unintended consequences of approving the development of so many luxury apartments.
— Nancy Oates

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  1. As far as added excessive fees, when I joined the OWASA Board I was able to get a review of local sub-metering practices which resulted in the identification of some excessive charges throughout our service area.

    Specifically, a sub-metered property can only charge a maximum of $3.75/month above an beyond the cost of water/sewer which is typically sold to an apartment/condo complex at bulk rates.

    Anyone who believes their sub-metered water bill is excessive should read this

    and contact OWASA for further assistance.

  2. Plurimus

     /  September 12, 2016


    Wouldn’t sharing a one-bedroom plus den, violate heath codes that are meant to govern the capacity of water and sewer infrastructure? How do the taxes work, by bedroom or by square footage?

    Advertising rent at a lower price then tacking on mandatory additional fees is a form of coerced trade and should be illegal. Sadly we know it’s not. Social media word spreads fast, however and the true cost usually gets out.

  3. Plurimus, that’s a very good question. Seems like the Certificate of Occupancy should be based on actual expected occupation patterns instead of the sales brochure fig leaf.

    Along those lines, I’m going to ask the OC tax folks at next weeks public hearing ( ) how they planned to modify the current income capitalization formulation for apartments like Alexan to more closely align with the steeper rent curves that these kind of units have.

    I’ve been looking at a range of apartments within Chapel Hill and it seems – based on spot checking – that rents increase more slowly for units that are really 1 bedroom versus units like the 1+den configuration at Alexan.

    If this is true, it appears that a one size fits all approach to capitalizing income for tax valuation purposes is biased to under-taxing something like an Alexan.

    With the rapid increase in properties that will use capitalized income formulations for tax purposes, it’s really critical that OC gets this right. As it stands now – again based on preliminary work – it really looks like the tax basis for these type properties are quite favorable leaving local residents to pick up the slack.

  4. Plurimus

     /  September 12, 2016


    I posit the same goes for impact fees.

    Gotta love those one bedroom two bath apartments (with a den of course).

  5. Kind of like all those one room additions to Northside “caterpillar” homes – each addition coming with an exterior door, individual bathroom and, sometimes, illegal front-yard parking spots 🙂