Chapel Hill News

Mark Zimmerman: Northside loan -- Game changing or game over?

“Game changing.”

That’s how Mayor Mark Kleinschmidt described UNC’s offer to provide $3 million interest free over 10 years to help preserve Chapel Hill’s Northside neighborhood.

That seems like a lot of money, but will it really change much? Is money really the answer to what’s happening to the area?

Northside is about a third of a square mile adjoining Rosemary Street encompassing about 800 homes. It used to have the largest population of African Americans in Chapel Hill. Over the past couple decades, however, that population has dropped dramatically while many of Northside’s houses have been converted into student rentals. By some counts fewer than 100 homes are still owner occupied.

UNC’s funding is the latest attempt to reverse that trend. Durham’s Self-Help, a community development financial firm, will work with the town, Northside’s Jackson Center and affordable housing groups. They will use the loan to help long-term residents stay in their homes and bring working families and seniors back into the neighborhood. Specifics of the plan aren’t clear, but will range from assistance with aging home repairs, to buying and reselling available properties to a more diverse clientele.

Two challenges confront this effort. First, the UNC money is a loan, so residents who get assistance would have to pay it back, albeit with low or no interest. But that may not help low- or fixed- income residents who cannot now afford to maintain their homes.

Second, most Northside properties today are no longer low priced, which will provide few opportunities to acquire affordable inventory. The shift to rental has resulted in property value appreciation far outpacing the rest of Chapel Hill.

Landlords in this area have been the opposite of slumlords; they have taken dilapidated homes and invested considerable money to renovate them. The result is a physically nicer neighborhood, benefitting all owners in the area, but raising the cost to buy. The UNC loan can’t permanently subsidize purchases. The consortium will hope to buy some of the few remaining neglected properties before market forces bid up the price.

Even this large war chest won’t dramatically alter the change in the neighborhood. A few more houses may be preserved, but the program has a fatal flaw. It doesn’t address the underlying problem driving out affordable housing across Chapel Hill: supply and demand.

Supply has been limited by the urban services boundary and development restrictions, so demand drives up prices. In this case, UNC student population grew but new housing options didn’t, so many opt to pay a premium for Northside’s proximity to campus.

This is a long term problem needing a long-term solution that addresses supply. We must continue building quality student housing like Shortbread Lofts and Lux to alleviate pressure on neighborhoods. A large project is being proposed for the Breadman’s lot next to Northside. We should look seriously at approving it if we want to be serious about the impact students have on traditional homes. That’s the way to actually change the game, rather than just being reactive to it.

Mark Zimmerman lives and owns a real estate business in Chapel Hill. He can be reached at