Playing it safe

It was a dark and stormy night for affordable housing last Monday. At the Oct. 10 TownNancy Oates Council meeting, we had two opportunities to take meaningful steps to increase the supply of affordable housing, and a majority on council squandered them both.

Early on in the meeting, a council member put forth a resolution urging voters to vote in favor of two county bonds on the Nov. 8 ballot: $120 million for school repairs and $5 million for affordable housing. As I wrote last week, the county has no plan on how to use its affordable housing money, leaving it vulnerable to being dribbled away on stopgap measures. I asked that the resolution be amended to add urging county commissioners to come up with a plan. I got no takers.

To add to that discouraging response, Orange County commissioner Penny Rich emailed council members a copy of the county’s policy paper on affordable housing the next day, claiming that was the county’s plan. Nowhere among the report’s 239 pages was a plan to spend the bond money. To know that one of the people involved in deciding what to do with so much money doesn’t understand the difference between a policy paper and a spending plan was all the more disheartening.

Politicians drag the big-eyed puppy of affordable housing into photos to make themselves look good. And admittedly, with reporters and tweeters in the audience, it would be politically risky to appear at all critical of the bond. But if we had pushed for a plan, it could have been affordable housing’s Colin Kaepernick moment, focusing a spotlight on long-ignored problems by refusing to go along with tradition, and maybe being an impetus for change.

Instead, council played it safe, 7-1 in favor of no plan.

We ended the night with Carraway Village developer Northwood Ravin bringing us a tepid proposal for affordable housing, and we made it worse. Northwood Ravin offered to build 50 units of affordable housing amidst its luxury apartment and commercial destination complex, providing it could get tax credits or other outside funding within four years. If it hadn’t built the housing by the end of 10 years, the town could buy an acre of land for $1 and build it ourselves.

But by negotiating from the dais — we lose every time we do — we gave the developer nine years to find funding and obtain a building permit. If those conditions are met, the town has no contractual leverage to buy the land at year 10, even if no units have been built. And we set no time limit for when the apartments had to be ready for tenants.

Meanwhile, luxury apartments spring up around town like so many wild onions. And council members shrug, shifting the affordable housing crisis to someone else.
— Nancy Oates

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29 Comments

  1. Terri

     /  October 17, 2016

    The council would do more for affordable housing by NOT approving these luxury developments. There was a commentary in CHN this week saying we need more housing. But we don’t have a housing shortage; we have the wrong kind of housing. Developers are building what’s beneficial to their greed and no one is standing up for what’s good for our community. We don’t need any more stinking luxury apartments.

  2. Good point Terri. The county has a different problem – the zoning and permitting doesn’t allow affordable housing.

    That’s why Nancy’s point is so important – throwing money at problems doesn’t solve them.

  3. Nancy

     /  October 17, 2016

    Thank you, Terri. My point exactly. A council election is coming up in 2017. Please keep making your point so candidates will understand: We’ve tried trickle-down theory, and it hasn’t brought us any affordability.

  4. Nancy, thank you for standing firm on both questioning how the bond will be spent and opposing the Carraway Village giveaway – another in a long line of bad, bad deals for our community.

    I do support the $5M but have been looking for the same kind of answers you have on how the money will effectively be spent. Of concern is this is an OC bond so all of OC residents should benefit from its expenditures. I worry that, once again, the northern part of the county along with the booming west and east edges are being overlooked.

    As far Carraway Ridge – what a godawful mess. The Council has forgotten the first rule of any negotiation – that no deal is sometimes better than any deal, best to be prepared to walkaway.

    I hope Council considers that first rule this evening when they hear what appears to be the largest “smoke and mirrors” economic presentation since the 140 West boondoggle.

    There are dozens of open questions on the Wegmans $4 million deal that should have already been answered at this point. For instance, how was a net $1.7M tax gain calculated without considering Wegmans predictable impact on its competitors.

  5. Geoff Green

     /  October 18, 2016

    Colin. Not Jason.

  6. Plurimus

     /  October 18, 2016

    Great comment Geoff! Right to the point!

  7. Terri

     /  October 18, 2016

    “A survey conducted by the National Association of Home Builders (NAHB) found that 59 percent of respondents said they could and would spend no more than $249,000 on a new home, but only 35 percent of new homes started in 2015 were at or below that limit. The online real estate service Trulia recently reported that the number of starter and trade-up homes available in the 100 largest U.S. metropolitan areas has plunged by more than 40 percent since 2012.”
    http://urbanland.uli.org/development-business/housing-shortage-u-s/

  8. Looks like the Indy agrees with you Nancy: “Yes” to the school bond with reservations; “no” to affordable housing bond.
    http://www.indyweek.com/indyweek/the-indys-endorsements-for-orange-county-schools-and-affordable-housing-bonds/Content?oid=5077231

  9. Nancy

     /  October 19, 2016

    Thank you, Geoff. I corrected my error.

  10. Julie McClintock

     /  October 20, 2016

    Nancy. I am supporting both bonds. I, like you, would have liked to see a call for a plan added to the Council resolution. When people vote on bonds they want to know how the money will be spent.

    I’d like our county commissioners to acknowledge that they don’t have a plan for how to spend the money. They could also state that the Affordable Housing coalition intends to expeditiously produce one as soon as the bond passes.

  11. Julie – how about a call for a sustainable funding process for schools? That plan only covers $120 of a $330 million need. In CHCCS, it only funds Ch Hill High and the Lincoln center.

    People out in the county are quite concerned – especially seniors. They know the schools need help but after recent tax increases and higher fees for recycling and vehicles, they “dont have any more room in their budget for the county”.

    Where is the light?

  12. Plurimus

     /  October 21, 2016

    I agree that the school bond is at least as flawed as the affordable housing bond. I see no understanding of how schools get in such a sorry state. Where has the money for maintenance gone? How is this maintenance issue being dealt with in the school budget going forward?

    The county has no plans to spend the affordable housing money, thay have no cost estimates or locations identified. Chapel Hill has affordable housing money earmarked that remains unspent. The affordable housing stock continues to decline because of past administrative decisions and pressure form university students, while dorms remain unoccupied.

    We are in for a revaluation in 2017 which is a precursor to a tax increase. We hear rumors of other borrowing being needed (transit, solid waste, jail). Town Hall has been mortgaged, county and town governments are giving away millions in incentives to Wegmans for what appears to be a limited benefit.

    Things seem a bit out of control to me. I for one would like to see accountability and have a view of all of the coming increase needs before I vote for another bond.

  13. Plurimus – the county does not budget for large ticket school maintenance like HVAC and roof replacement. Orange County Schools gets $3 million a year for all their maintenance (buses, painting, repairs). I don’t know what CHCCS gets – but I’m sure its similar. That’s about the cost of a single HVAC replacement.

    Its all part of the 48% of county taxes that goes to schools.

  14. Plurimus

     /  October 22, 2016

    Bonnie, are you saying that what the county and schools are doing is OK and “large ticket school maintenance” should not be planned and budgeted for? If so, I disagree.

    I an sure the bond will pass anyway. However; I think 48% of the county budget is enough to have put aside money especially when enrollment has been flat to declining. If it’s not, I have to ask “how so?”. Without accounting we are left to guess and ask rhetorical questions and repeat the same behavior.

    The stated goal of the bond is “fund the repair and renovation of safety and security features, as well as infrastructure in schools” No mention of capacity.

    Why is greater capacity necessary when enrollment has been flat to declining over the past 7 years? If capacity is needed then why doesn’t the county say that’s what the bond is for and provide the stats to back it up?

    How does renovation of the administration campus “improve safety and security, and renovate and repair area schools”? Perhaps the renovation is moving students out of temporary class rooms, but you would think that would be highlighted if it were so.

    The county spend seems a bit more oriented toward maintenance, I believe Cedar Ridge needs a new roof, but again; how is an additional 500 student capacity at Cedar Ridge “maintenance”? Where are an additional 500 high school students coming from in a county wide school population that is 7500?

    I want better accounting for what caused this and a more complete rational behind what is likely the tip of the iceberg.

  15. Plurimus- my point was that the county does NOT budget for large ticket maintenance for schools. With 32 aging schools, major repairs have been piling up (as deferred maintenance) and ignored until the commissioners decided to put the bond on the ballot. That’s why there’s $330 million backlog. Whether the bond passes or not, the process is not sustainable and needs to be fixed.

    The schools really need the money. IMO – the root cause is the 48%

    There’s no way to tell if 48% enough – cause its arbitrary and blurs essential economics of both school districts. If 48% was enough when the state was favorable to schools, then its not enough now. Last year, Wake committed about 53% to schools, but their tax rate and per pupil spending amounts are much lower.

    I’d feel a lot better about all of this if the county and school leaders were committed to work together on a meaningful approach to fund schools that, as you suggest, would provide more transparency and accountability, and allow all our leaders to effectively anticipate and plan for school needs

  16. Here’s the DRAFT OC Affordable Housing Strategic Plan

    http://www.orangecountync.gov/DRAFT_2016-2020%20Affordable%20Housing%20Strategic%20Plan%20for%20Orange%20County_NC.pdf

    Here’s the OC Bond 5-yr “plan”

    https://orangehousing.files.wordpress.com/2016/10/ocahc_5-year-plan1.pdf

    This reads more as a fund-raising plan than a housing plan.

    I’m still stumping for the $5M bond but share similar concerns with the Indy.

    Look, I know how bad the Indy can be in endorsing anything and anyone, but in this case the Indy has a solid point.

    Rather than take the Indy’s advice – to give more specific examples of expenditures, explain how $5M gets you to 1065 homes, etc. – people (lots of electeds) would rather grandstand the heck out of their disappointment than flesh out a little more detail.

  17. Plurimus

     /  October 23, 2016

    “Last year, Wake committed about 53% to schools….”.

    Not a relevant comparison.

    Wake County school population is growing leaps and bounds. Wake is planning and building 13 new schools by 2017. Orange county is not.

    On the plus side, Wake has been shuffling kids to new schools every year. Orange county has not.

    We don’t agree funding is necessarily the problem. There are school districts the same size and growth rate that spend less with better results. Nationally, a case can be made for an inverse relationship between spending and performance, which shows education is not always improved by throwing money at it.

    Not sure what a “meaningful approach” means. I tend to think 48% is too much until there is a clear budget case otherwise. What is most disturbing in my mind is that there are gaps in how the budget is constructed and glaring inconsistencies in basic budget line items between CCHSS and OCS. I do not get the feeling the county or the school administration has clarity on basic infrastructure, wants vs. needs, or what is improving learning vs what “would be nice”.

    What else has not been “anticipated”?

  18. When Carrboro HS was being built for $386/sf, Wake was building theirs at $70/sf.

    I’m not sure how much Northside Elementary was but heard it was fairly steep.

    I’m glad our students have fantastic facilities but we have to face the fact our community made a choice to spend more on architecture than on other critical needs.

    Now we’re having to deal with that discontinuity.

    Looking at the new OC study on school impact fees I was surprised by the proposed rates. It’s clear that those fees are really regressive for various categories of housing and don’t represent a sustainable source of revenue for school upgrades and repairs.

    It’s disappointing that so much of the new development in CH avoids sharing the financial load for schools and that SAFPO wasn’t used effectively to control the burden.

  19. Plurimus

     /  October 23, 2016

    Will, exactly. Its not the money, it’s the lack of clarity on how it is spent that I object to. Bamboo floors and rooftop gardens are nice, but.really expensive over the long haul.

    Looking at the increase in spending on schools adjusted for inflation over the past 30 years or so, have we seen a commensurate improvement in scores?

    Has there been focus on proven methods of improvement such as reducing teacher-student ratio?

    Has there been any improvement in scores and especially the disparity in minority student scores?

    Voters approve this unbridled and unfocused spending at their own risk.

    As with wealthy but absentee parents experience tells me there is a much higher correlation between parent and community involvement in schools to student performance than there is on per pupil spending.

    Further I believe there is a relationship between local spending and better outcomes, I think because the community is more involved and invested in decisions. Isn’t it therefore important for teachers to be able to live here and be a part of the community? I would argue that impact fees are a double edged sword because that can reduce the ability for the people who work in the community to live there.

    Admittedly I do not have the answers, but I know without much more clarity and planning the school bond does not resemble a solution.

  20. Terri

     /  October 23, 2016

    Orange Co adopted the Schools for Adequate Facilities Ordinance (SAPFO) more than a decade ago. The intent was that new development approval depended on having adequate school facilities (which included trailers) to meet the needs of incoming students. Since that time, CIP funds have been redirected to the construction of new schools instead of maintenance. The reason? The school boards feel like SAPFO pushed development decisions off on them and they won’t invoke it.

    Instead we get new schools that take funds away from maintenance of old schools and require new revenue sources in the form of exceeding the 48% cap and bonds. Bonds, used correctly, help impose funding requirements on new residents, so I am not opposed to bonds–they are relatively democratic.

    But I am opposed to the continued growth in the community at the cost of affordability for long term residents. That is not democratic. In other communities, new growth can have positive effects on affordability. But for reasons beyond my understanding, growth here has a negative effect on affordability.

    The irony of a bond for affordable housing is that the “affordable units” are priced at what is considered a moderate price for other communities. So when we raise debt/taxes to support affordability initiatives, we impose new costs on those residents who are already economically marginal.

    The question someone needs to address is what impact these bonds, if passed, will have on our moderate and low income residents. Will the adoption of these bond initiatives help more than they will hurt?

  21. Plurimus- we’ve had this discussion before. An arbitrary percentage of any amount is an irresponsible way to fund schools. And as we know, the 48% has been ignoring maintenance of aging campuses.

    To me, a meaningful school budgeting process – standard for both schools – that includes:
    1. separation of operating, new consruction and maintenance expenses
    2. specific budget line items for teacher pay (by far the biggest line item), teaching assistans, program espenses (including how many kinds are served, and other line items that can be prioritized
    3. trends in enrollment, academic performance, and other important measures

    Yes Wake is different – but I believe benchmarks and best practices are an important part of the analysis – including data like cost per sq foot for construction.

  22. BTW – Wake’s 53% is not a guideline – its the number that resulted from a strategic budgeting process that included the $1bn bond to add new schools and have the highest paid teachers in the state.

    Last year, when the school board asked for more, the commissioners said “no” – with conviction. They knew the priorities were funded.

  23. Plurimus

     /  October 23, 2016

    Terri,
    That is interesting thank you. Can you tell me where I can find more information on that decision? The rational escapes me and I would like to understand what happened there, who made the decision and why. As late as 2016 SAPFO seems to point only to new housing as a driver for new capacity/construction and I see no mention of maintenance. In fact, the 2016 report makes the statement that enrollment at Cedar Ridge is declining and “the need for additional capacity at Cedar Ridge High School is not anticipated in the 10 year projection”.
    http://www.orangecountyfirst.com/sites/default/files/Board%20Files/meeting_agenda/2-8-2016/16-schools-adequate.pdf

    Again, I do not oppose spending on the students or the notion of a bond, it’s the political nonsense that is covered up by budget contortions and the chickens that always come home to roost.

    Bonnie,
    A ceiling on spending is the only rational way to manage priorities and plan. That is what a budget is. Otherwise you are describing the Pentagon. The ceiling should not be arbitrary but there should be traceability from spending to expected outcomes.

    WCPSS is a train wreck and not to be emulated. For decades Wake has been juggling students from school to school every year while playing politics and squabbling over things that have nothing to do with the kids or education .

    Wake is a false comparison, period.

  24. Plurimus- lets agree to disagree on both points.

    I agree that spending controls are essential but the arbitrary percentage does not function as a spending “ceiling”, and its obviously not working.

    It may be time to update your view on Wake. I hear great things from Wake families and they have many top ranked schools. Under the new leadership, they have impressive new initiatives, especially around equity, and they are watching the numbers closely and openly to see what’s working and what’s not. They lead the state in teacher pay (IMO – essential to education)

    At $9300 per pupil vs $12,000 for CHCCS, isn’t it worthwhile understanding the differences – including how they use vendors for facilities management? Maybe Orange County can learn something.

  25. Terri wrote: “I am opposed to the continued growth in the community at the cost of affordability for long term residents . . . . what impact these bonds, if passed, will have on our moderate and low income residents?”

    I share this concern. If the bonds will be financed by raising the property tax rate, then one way to buffer lower and moderate income residents from these tax hikes is to make the property tax more progressive. There are a number of ways to do this, but one of the simplest would be to exempt the first, say, $100,000 of home value from taxation. The person who lives in a $200,000 house and the person who lives in a $1 million house would each receive the same tax reduction (i.e., $1600 at current rates); however, the person in the $200,000 house would see their taxes reduced by half, while the person in the $1 million household would see their taxes reduced by only 10%. That’s what makes it progressive.

    The local jurisdictions could decide either to make do with less revenue or increase the tax rate to keep revenue constant.

    There are other, more complex ways to achieve property tax progressivity, such as having different marginal tax rates for different tranches of home value (e.g., one tax rate for the first $100,000 of home value, a slightly higher rate for the next $100,000 of value, etc.)

    Or we could do what economist Dave Shreve suggested and replace the property tax with an income tax.

    Any of these reforms would require approval from the state legislature, which won’t happen any time soon, but it’s not too early to begin exploring the pros and cons of these sorts of changes to way we fund local government.

  26. Bonnie,

    I don’t doubt that Wake is doing good things, but the rapid growth and continuous redistricting does take a toll. I’ve met several families that moved to Chapel Hill from Wake specifically because they wearied of changing schools every year.

  27. Plurimus

     /  October 24, 2016

    David,

    Same here. The constant shell game was taking a toll on their families, and they did not see it ending with all of the new schools coming on line.

    The impact on affordability is a sticky issue. I would have to think hard and learn a lot more about the options. Right now I would just be happy to know why we did not have this major expense covered in the budget and why there is a push to expand capacity when the schools enrollment is flat. As well, Wills point is a good one; $386/sf is ridiculous and is traceable directly back to affordability in the community at large.

  28. Terri

     /  October 25, 2016

    Love the idea David.

    Regarding the construction costs of schools, there are two issues to keep in mind. One, schools have to be built to state code (just like UNC). Those safety codes increase the cost of construction. Two, CHCSS builds for sustainability so the cost of construction is higher but the cost to operate is lower. I believe there is a net gain in those new buildings.

    Wake Co schools started attracting attention last year when they raised teacher salaries. The CHCCS promised their teachers a raise in order to keep up with Wake. Since that time Wake has encountered several financial challenges, losing teacher aid and other support positions. I don’t think they are a good model to compare against.

  29. It’s amazing how we like to cherry-pick the leader.

    Wake is doing some really impressive things that are worth looking at. Their Elementary School Model is fantastic, They are running dual calendars, and they are working with the private sector to maintain schools (jobs, tax credits, and big savings). Oh and they have a full time lobbyist working with the state.

    My favorite part is they don’t brag – they manage in a continuous improvement process. And while I’m strongly committed to Orange County’s Schools, we have our own warts. I’m sure you saw the CHN
    http://www.newsobserver.com/news/local/community/chapel-hill-news/article109696707.html

    Terri – I don’t know of financial difficulties at Wake – except that the the teachers are the highest paid in the state and the commissioners did not grant the schools full funding request. All the schools, including ours, have high turnover. At least with the pay raise, the schools started the school year with a full roster of teachers.

    Public education is under siege – which IMO requires strong leadership focused on education — not keeping buildings in decent repair.

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