Wake County

Here’s what you need to know about affordable housing and the race for Raleigh mayor

Demolition is underway Tuesday, Oct. 24, 2017 at Washington Terrace in Raleigh. DHIC Inc., a nonprofit affordable housing developer, hosted a groundbreaking ceremony for the launch of a multi-phase redevelopment plan that will include two new affordable housing communities, a park and a child care center.
Demolition is underway Tuesday, Oct. 24, 2017 at Washington Terrace in Raleigh. DHIC Inc., a nonprofit affordable housing developer, hosted a groundbreaking ceremony for the launch of a multi-phase redevelopment plan that will include two new affordable housing communities, a park and a child care center. tlong@newsobserver.com

In his bid to become the next mayor, Charles Francis has criticized Raleigh leaders for not doing enough to help the city’s poorest residents.

Affordable housing has been a central part of his campaign, and a major sticking point ahead of Tuesday’s election.

Francis, a Raleigh attorney, is challenging three-term incumbent Mayor Nancy McFarlane. No candidate won a majority of the vote in the Oct. 10 election, so Francis called for a runoff.

McFarlane has said affordable housing is the city’s top priority, but Francis says Raleigh needs to do more.

How bad is Raleigh’s affordable-housing problem?

The average home price in Raleigh is now $224,000, up from $186,000 a decade ago, according to real estate website Zillow.

The median rental cost has dropped a bit when adjusted for inflation, from $988 in 2000 to $926 in 2015.

About 45 percent of renters in Raleigh are “cost-burdened,” meaning they spend more than 30 percent of their income on rent, according to an analysis by Apartmentlist.com.

More than 8,000 people are on the Raleigh Housing Authority’s waiting list for public housing and Section 8 vouchers.

What’s to blame?

There are several factors, including increasing land prices, redevelopment, and supply and demand.

Raleigh, one of the fastest-growing cities in the country, is attractive to developers who want to build upscale apartments, subdivisions and shopping centers. As older buildings are torn down and redeveloped, some longtime residents are being displaced.

Wintershaven and Sir Walter Apartments, two downtown complexes for low-income senior citizens, were recently sold to private developers who say they won’t renew the properties’ federal voucher programs.

As neighborhoods change, property-tax bills can become more expensive, which can burden homeowners on fixed incomes and force them to move further away from the city.

A low unemployment rate is also a factor, said Mai Thi Nguyen, an associate professor in UNC’s department of city and regional planning. In Wake County, the jobless rate was about 3.8 percent in July, below the North Carolina average of 4.1 percent. Many residents are able pay more for housing, which pushes up prices.

At the same time, cities are dealing with long-term cuts to federal money set aside to help fund new affordable-housing projects. Between 2000 and 2015, funding for the Community Development Block Grant program for affordable housing fell by about half, according to the think tank Center on Budget and Policy Priorities.

How does Raleigh compare to other cities when it comes to affordable housing?

Raleigh is among the least affordable cities in North Carolina but closer to the middle of the pack nationally, Nguyen said.

It’s on par with metro areas such as Pittsburgh, Salt Lake City and Columbus, Ohio, for the percentage of renters who spend more than 30 percent of their income on housing, according to Apartmentlist.com.

In Charlotte, 47.6 percent of renters are cost-burdened, and the number is 48.3 percent in Greensboro, slightly higher than Raleigh, according to Apartmentlist.com.

Larry Jarvis, director of Raleigh’s Housing and Neighborhoods Department, said: “I think Raleigh has dealt with it better than most other peer cities in the state and the country. It really is a national phenomenon.”

What can Raleigh’s mayor do to help?

Elected leaders can’t do much of anything when it comes to home loans and apartment prices.

But as a voting member of the City Council, Raleigh’s mayor can agree to approve development rules that could make affordable housing more attractive to private investors. They could also vote for additional funding to be set aside for affordable housing.

Cities with a dedicated source of revenue are better able make reliable, long-range plans about affordable housing, Nguyen said. Last year, the City Council agreed to increase the property-tax rate by 1 cent to generate $5.7 million a year for affordable housing.

What else is Raleigh doing now?

The city is spending $8.6 million toward the redevelopment of Washington Terrace, an apartment complex in Southeast Raleigh. Nonprofit housing group DHIC is leading the $45.1 million project.

Raleigh also plans to redevelop the East College Park neighborhood in Southeast Raleigh, designating some homes for lower-income families.

City leaders say they want to allow property owners to build and rent out accessory dwelling units, also known as “granny flats.” The units could provide more-affordable places to live and also serve as additional income for property owners.

Raleigh is also evaluating city-owned properties to determine whether any would be suitable for the construction of affordable housing. City staff and consultants have identified a site, near Moore Square and Raleigh Rescue Mission, but discussions are ongoing.

The city also has several programs that provide low- or no-interest loans for home rehabilitation and down-payment help for new homebuyers.

What’s the role of the federal government?

Raleigh receives about $5.5 million a year in federal money for affordable housing.

Cities also have access to a widely used federal program called the low-income housing tax credit, which encourages private investment of affordable housing projects. In exchange, investors can get a federal tax credit equal to a percentage of the investment’s value.

The reduced role of federal money in paying for affordable housing has forced cities across the country to adjust their approach in recent years, Nguyen said. President Donald Trump and his administration don’t appear likely to reverse that trend, she added, so cities must be more proactive than ever.

What does McFarlane want to do about affordable housing?

McFarlane said she wants to expand existing programs, which focus as much on preserving existing affordable housing as building new units.

She said last year’s tax increase to generate money for affordable housing was “more than any previous council has done to address the issue.”

She also said the city should continue to partner with groups like DHIC, which uses tax-credit financing.

What does Francis want to do about it?

Francis, who is the general counsel of the Raleigh Housing Authority, says Raleigh can produce and preserve more affordable housing without raising taxes, which he said are most burdensome for those on fixed incomes – people the city’s affordable housing policies are meant to protect.

He said he would focus on lending money to landlords who own affordable housing in exchange for helping keep it affordable.

As for building new affordable housing, Francis said the city should be more aggressive in pursuing tax-credit financing for developers.

“If the city would more actively solicit proposals for tax credit deals, we could create a lot more units more quickly,” he said. “I’m certain of that.”

What are other cities doing about affordable housing?

Some cities, including New York and Austin, Texas, have more freedom to pass rules as long as they don’t contradict state or federal laws. For example, they can require developers to set aside a certain percentage of their projects for affordable housing.

But under North Carolina law, cities and towns can’t force developers to set aside units for affordable housing. They also can’t manage rent prices, as New York does with some apartments.

Nguyen said North Carolina municipalities have been further limited since the state reallocated federal Community Development Block Grant funds away from housing and toward infrastructure under former Gov. Pat McCrory.

Gargan: 919-829-4807; @hgargan