When I read the editorial by Chapel Hill-Carrboro Chamber of Commerce head Aaron Nelson proposing
what he called “master leasing” as a solution for high housing prices, I had to double-check the byline. Was this the same Aaron Nelson who stood before Town Council in 2014 swearing that Berkshire Apartments (then called Alexan) would be affordable housing? And, after the behemoth in the middle of the Village Plaza parking lot opened, and I pointed out to him that $1,800 a month for a one-bedroom wasn’t affordable, he declared, “It is if you have two people.”
The same Aaron Nelson who believes that the more luxury apartments council approves, the faster rents will plummet all over town?
Now, several months after Berkshire has opened and is struggling to find tenants, Nelson is exhorting taxpayers to guarantee developers, including those in the Ephesus-Fordham form-based code district (now known as Blue Hill) who avoided making any contribution to affordable housing, market-rate rents for their vacant units. Nelson proposes that middle- and low-income households rent the units at a discount, and taxpayers will fork over the difference so that developers will still get full profit on their overpriced units.
Nelson claims that creating home ownership opportunities for middle- and low-wage earners is “too slow.” What he doesn’t mention is that home ownership is the most reliable path to building wealth. Buying a home is a forced savings account. The home owner builds equity with each mortgage payment. And when the home owner sells, he or she gets the equity back in a lump sum that can be used to lower the cost of the next home he or she purchases.
In all the years I rented apartments in New York, never once did a landlord say to me at the end of the lease, “And here’s a pile of money you can use toward your next home.”
Renting has its benefits for individuals who need flexibility because they don’t know how long they’ll stay in an area, or who don’t have the down payment or reliable income needed to buy. But renting does nothing to build wealth.
Nelson’s plan of taxpayer money to protect the profits of developers who refuse to lower their rents in an over-built market advances the rich-get-richer philosophy of Donald Trump, not only by picking the pockets of taxpayers but by reducing the opportunities for modestly paid wage earners to build wealth.
Master leasing? No. More like master fleecing of taxpayers, who will go to the polls in November to decide on a tax increase to enable the town to borrow $10 million for genuine affordable housing.
In the next couple of years, hundreds of luxury apartment units will flood the Chapel Hill market. Let’s give the supply-and-demand theory that Nelson has long advocated a chance to prove itself, rather than paying developers now to keep housing prices artificially high.
— Nancy Oates
plurimus
/ April 2, 2018Exactly who is the “we” Mr. Nelson refers to?
From the opinion piece: “With Master Leasing, a landlord has little risk. The Landlord is guaranteed the rent by the Master Leaseholder and secures quality, screened tenants The subsidy can come from local government, grants or be paid by the employer as an employee recruitment/retention strategy.”
Uh-huh. No mention of the landlord (developer) kicking in. OK, I get it; we have entered the political silly season,
I have an idea. Since the developers now want to socialize their losses after the fact they should start a “GoFundMe” page and ask for donations for at least three years before coming to the taxpayers.
Matt “Supply and Demand” Bailey and Mark “Luxury is Temporary” Zimmerman must be the first willing to contribute $50,000 each..
On the other hand, developers could build family sized moderately priced units, then I suspect we would not be having this conversation.
Seriously though, before a dime of taxpayer Affordable Housing funds go to subsidizing developer leases the amount of subsidy the development interests are contribution should be well understood beforehand and this question should be put to a taxpayer vote
As I read it this proposal by Mr. Nelson is not affordable housing this is developer subsidy pure and simple.
http://www.heraldsun.com/opinion/article207420934.html
CitizenWill
/ April 2, 2018Nancy, you nailed it.
One of the reasons for the great inequality we see in our country, in our county and in our local community is the difficulty folks have building wealth – especially “generational” wealth.
“Colonel” Nelson’s plan, besides feathering the nests of all the out-of-town developers he so dearly loves to support, guarantees that this divide will continue.
The name itself – “Massa” leasing – is about as tone deaf a one as you can find in today’s America (that’s saying a lot living in “Trump world”).
It is quite disheartening to see that it appears Justice United is willing to shill for the Chamber’s President conservative “trickle down – keep them down” approach.
CitizenWill
/ April 2, 2018Chapel Hill did a survey of folks interested in affordable housing several years ago and their overwhelming preference was for detached housing and a way to build equity (“wealth”) as part of the affordable housing process.
It is absolutely no coincidence that “Massa” leaser Nelson is calling for this on the heels of Council’s willingness to put an affordable housing bond on November’s ballot.
Imagine how far $10-15 million in taxpayer funds will go to improving the bottom lines of the developers who have saturated Chapel Hill’s housing market with “upscale” rentals.
Nancy
/ April 2, 2018I like the idea of a GoFundMe page. It would be a good measure of the popularity of the idea of subsidizing for-profit developers and shifting financial risk to taxpayers.
David
/ April 2, 2018Will’s comment suggests that the AH bond referendum needs to specify that the funds cannot be used to subsidize market-rate rent in units owned by private for-profit companies.
CitizenWill
/ April 2, 2018David, absolutely!
1. Bond money should be used for actual square footage.
2. Square footage should be oriented towards what folks who want affordable desire – not what is cheapest.
3. Bond money subsidized affordable housing programs should be designed so that owners have a “chip” in the game and can build equity.
If the Council buys into this “flim-flam” and wants to channel money to the out-of-town landlords t “Colonel” Nelson’s “Massa” plan is helping out there should be the following HARD RULE:
Any developer who rejected affordable housing in their project, who was “stingy” ($25K for a $44M project) or provided less that 15% AH is COMPLETELY DISQUALIFIED from receiving funds.
Or, more in line with the “Golden Rule” – if a developer/landlord was unwilling to serve the community’s affordable housing needs, then the community has every right (and moral obligation) to not reward that behavior.
plurimus
/ April 2, 2018Interesting how AH scarcity still seems to have a lot to do with university policies:
http://www.dailytarheel.com/article/2018/02/edit-1-022818
Del Snow
/ April 2, 2018“With Master Leasing, a landlord has little risk. The Landlord is guaranteed the rent by the Master Leaseholder and secures quality, screened tenants The subsidy can come from local government, grants or be paid by the employer as an employee recruitment/retention strategy.”
Well, let’s start with UNC!
I passionately agree with every comment made by Will, David, and plurimus. Unfortunately, I am concerned that this Machiavellian plan could be considered because to be against it leaves will be spun as being against AH at a critical time.
So, IF David’s language (the AH bond referendum needs to specify that the funds cannot be used to subsidize market-rate rent in units owned by private for-profit companies) is NOT used, there should be a distinct cap on the top rent, therefore forcing the profiteers to absorb some of their loss. The cap could be determined by a percentage off of the top rent tied into the AMI target tenant.
Again, I am NOT at all in favor of this bail-out – just trying to think ahead.
Joan Guilkey
/ April 2, 2018As she usually does, Nancy Oates gets to the root of the issue. I hope the rest of Council will carefully read her article and do a lot of soul searching before any consideration of this form of leasing. As a taxpayer, I will vote against the $10 mil bond in November if I have any indication that Council is buying Aaron Nelson’s snake oil product. And I will be looking for various ‘bait and switch” processes along the way to November 6.
plurimus
/ April 2, 2018Del,
I agree about UNC as an employer. That was my first thought when I read that passage in Aarons opinion piece. Wonder if there is some byzantine SL that prevents it?
You point about fact based arguments that counter emotional perception is well put.
As far as the percentage goes, perhaps more family oriented ties to square footage or number of bedrooms should be considered as well?
Del Snow
/ April 2, 2018Actually, that’s part of the problem. These “luxury” units that were supposed to attract all these well-paid young professionals with no kids (Note: People say if a town doesn’t grow it dies…I say if a town plans to grow by aiming for kid free zones that’s real death) so the apartments are mainly studios, and one or two bedrooms.
Having grown up in an apartment myself, a two b/r worked because I was an only child. And although I endorse zero population growth, it won’t happen because of the number of b/rs in an apartment!
CitizenWill
/ April 2, 2018The argument that “if you build it” and build it and build it and build it, economic pressures will force prices down has just been defeated.
This obscene “trickle down” housing pitch has been used to justify “wild west” hands-free zones, free-floating “unconditional” zones and disagreeable development agreements – all of which have only served to enrich developers to little or no benefit to the wider community.
Next time the “you know who’s” pitch their brand of “trickle down” housing snake oil, Council needs to consider that their approach has only led to less affordable housing and this scheme to subsidize developers’ bottom lines.