A change proposed for an approved apartment redevelopment project near downtown sharply reduces its affordable housing, while adding more bedrooms and parking spaces.
The Town Council will hear plans for a modified Grove Park plan Monday. While the property owners asked recently for an expedited hearing, a council vote on the changes was not expected until September.
Townhouse Apartments covers nearly 13 acres between Martin Luther King Jr. Boulevard and Hillsborough Street, which the Town Council approved for a redevelopment project in 2009. The then-named Residences at Grove Park was expected to replace 111 apartments with 346 for-sale condominiums, plus 520 parking spaces.
That project failed to get off the ground before the construction deadline expired in January. The property owner and Phil Post, with engineering firm Philip Post and Associates, filed a new application with the town in December for a modified student apartment project.
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The newly named Grove Park has the same number of apartments but adds 204 beds, for a total of 850. Several 39- to 90-foot-tall buildings would replace those built in 1962, and it would meet Jordan Lake and town stormwater requirements created since 2009. The plan also reflects changes that reduce impervious surfaces, such as parking, and the impact on environmentally sensitive conservation district land.
The biggest change, however, is in the amount of affordable housing.
The council approved for-sale condos, requiring the owners to meet local inclusionary zoning rules with 26 affordable condos, plus a $1.1 million payment to the town’s affordable housing fund. The new plan, since inclusionary zoning does not apply to rentals, offers the town $175,000 toward its affordable housing fund.
The changes meet a demand for modern student rental housing near campus, owner A.P. Segar said in a letter to the town. It also could reduce student housing pressures in older neighborhoods near downtown, Segar said. The family has owned and managed the Townhouse Apartments since 1971.
The family has to work with the finance market, which is rental housing, Post said, and is not as familiar as its former partner Ram Development with for-sale housing. The Segars are “really smart business people” who have run well-kept apartments for four decades, he said.
“But when students want sprinkler systems, when they want amenities they can find next door, it’s time to upgrade,” Post said.
Making a dent
Grove Park, if approved, would be the sixth student-oriented rental complex since 1997, town reports show. It would push the total to 527 apartments, many with three and four individually rented bedrooms.
Roughly 900 new student apartments are possible if Carolina North and Amity Station on West Rosemary Street are built, and nearly 3,000 non-student rentals have been proposed or approved in the last 15 years, including Carolina Square and The Graduate, located downtown.
The university houses 8,114 undergraduate students, or roughly 45 percent, on campus, plus 496 graduate students. Greek houses and the privately run Granville Towers bring that number to nearly 11,000, UNC spokeswoman Sarah Derreberry said. About 500 rooms are vacant, which helps with new transfer students and other occupancy shifts, she said.
That leaves nearly 18,000 UNC undergraduate, graduate and professional students looking for off-campus space.
While the university increased its on-campus options in the last decade, Derreberry said, there are no plans at this time to add more beds and no land available for construction. UNC is exploring, however, the creation of a new master plan that could look at student life and housing, in addition to other needs, she said.
The town didn’t encourage or approve student apartments for a long time, Bassett said. Developers now see a council that is more open to options and aware of the unintended consequences of town decisions, he said. The timing also is right for construction loans, he said.
“Developers don’t propose projects unless they are relatively certain that there is market there to support it,” he said. “I got to believe that we really just missed the market for a very long time, and we’re playing catch up now.”
Multifamily developers nationwide are building more student housing, in part, because government-backed programs Fannie Mae and Freddie Mac expanded their flexible, low-rate student housing loans after the 2008 recession, when banks tightened their lending rules.
Fannie Mae officials reported in 2012 that both agencies saw their 2009 multifamily market share expand from less than 40 percent historically to more than 70 percent. By 2011, that share was roughly 50 percent, reflecting a renewed interest among other lenders, officials reported.
Town and Chamber of Commerce officials have said that more student apartments would reduce the number living in older, more affordable homes, allowing families to return. More competition also puts pressure on landlords to cut rents, Bassett said, as happened at The Warehouse, where prices dropped 30 percent when Shortbread Lofts opened.
Ensuring good management can allay neighbors’ concerns about noise, parking and other issues associated with large student complexes, he said.
There hasn’t been an avalanche of student housing, Post said, but a revitalization of older student and non-student housing, much of it built in the booming years of the 1960s and 1980s. Construction at Grove Park isn’t expected to start before 2019, he said.
“These projects, like Amity Station and Shortbread, will, just because of the length of time it takes ... space themselves out,” Post said. “They don’t all fall at once.”
The Town Council will hold a public hearing Monday, June 15, in the Town Hall Council Chamber, 405 Martin Luther King Jr. Blvd. The council meeting starts at 7 p.m.
▪ Name: Grove Park (formerly Residences at Grove Park)
▪ Location: 425 Hillsborough St., Chapel Hill
▪ Property owner: A.P. Segar, Townhouse Apartments LLC
▪ Acres: 12.75
▪ Residential: 346 apartments
▪ Affordable housing: $175,000 payment to town
▪ Vehicle Parking: 113 surface, 567 under buildings
▪ Bike Parking: 204 covered spaces
▪ Zoning: Residential-Special Standards-Conditional
▪ Recreation space: 29,800 square feet for pool, fitness room, clubhouse and bocce court
▪ Transportation amenities: Flashing lights and other traffic-calming measures, bus stop, Hillsborough Street improvements
▪ 2014 property tax value: $4.7 million
▪ 2014 property tax bill: $75,676 in county, town and school taxes