Raleigh needs affordable housing. Has it found a way to get it?

Developers can now use affordable housing to help get their projects approved by the city.

Raleigh leaders have removed a barrier that stopped developers from offering affordable housing during the rezoning process.

But some worry the change could make other housing more expensive or that the council could start denying projects that don’t offer affordable housing.

“If a council member threatens to turn down a project unless affordable units are ‘volunteered’ in the plan, the developer might have no choice but to cave to their demands,” said Andrew Blackburn, government affairs director for the Raleigh Regional Association of Realtors. “Should that become standard practice, it becomes extortion of private businesses from city government, which is obviously bad for everyone.”

Raleigh, like many cities, needs more affordable housing. The North Carolina Housing Coalition defines housing as affordable if families pay no more than 30% of their income on housing. Nearly one in four households in Wake County pay more than that. More than 55,000 of those households are renters.

The city wants to add 5,700 affordable housing units over 10 years and raised the property tax rate to help pay for those affordable homes and apartments. The city has added more than 500 affordable units so far this fiscal year with the plan to add 670 in the coming year.

“I think everybody needs to have skin in the game,” council member Russ Stephenson said before Tuesday’s night’s vote.

Rezoning requests

Property owners or developers who want to change how land is used often have to request a rezoning.

A conditional rezoning creates special rules just for that property, like limiting how it can be used, the hours of operation and building height.

Now affordable housing can become part of the deal.

“Conditional use zoning is a way for an applicant to take a generic zoning code and customize it to a unique context,” Stephenson said.

“Affordable housing is just another one of those items that in some contexts it will be really important,” he said. “In other contexts maybe not so much.”

Bob Geary, who’s on the city’s planning commission, hopes affordable housing conditions become “customary” in zoning cases. The affordable-housing shortage is getting worse and apartments keep popping up in and near downtown only for those “who can pay relatively high rents or very high rents.” he said.

“I think they ought to make room for people with lesser means,” he said.

But Suzanne Harris, the Home Builders Association of Raleigh and Wake County’s vice president of governmental affairs, opposed the change during Tuesday’s night public hearing about the code change.

“I want to make sure that the council understands that for a project to have below-market-rate housing within it, without any other cost reductions elsewhere, the other housing that is within that development subsidizes it and consequently you have more expensive housing and a greater disparity between the housing within that development,” she said.

She encouraged Raleigh to look at other tools — like expediting the review process for projects with affordable housing and offering developers more density than normally allowed — to help offset the cost of subsidizing the below-market-rate apartments.

“By doing so you may find more willing offers to do these voluntary conditions,” Harris said.

Offering more density in exchange for affordable housing has had mixed success in other cities. In Durham, the city has offered density bonuses since the mid-1980s with zero takers. And a 2012 report from the Urban Land Institute Triangle found that the bonuses would be “difficult to take advantage of” in Raleigh.

How it might work

If a developer does offer affordable housing as a rezoning condition, the council will now likely look at three things:

  • how many affordable housing units would be available
  • how long they would be available at an affordable rate
  • at what percentage of the city’s median income they would be targeted

That framework was considered during the council’s Growth and Natural Resources Committee meeting in mid-March. During that meeting, City Attorney Robin Currin stressed that there could not be mandatory inclusionary zoning. Inclusionary zoning is a tool some states and cities have used to require developers to include affordable housing in new projects.

Following her comments, council member David Cox asked if a developer wants to build 1,000 units and doesn’t offer affordable housing as a condition, must the council approve it.

The council can deny rezonings for land-use reasons, Currin said. So Raleigh leaders can’t deny a rezoning because it lacks affordable housing, she said, but it can say without affordable housing as a plus there are too many negatives, such as too much traffic or other reasons to deny the rezoning.

“The reason why you are turning it down would not be for the failure to provide affordable units,” Currin said. “It would be for other land-use reasons.”

It’s that exchange that concerns some, including Blackburn.

Her comments come across pretty clearly that council members could deny rezoning cases for false reasons that could be ‘remedied’ by the inclusion of affordable housing units they otherwise didn’t wish to construct,” he said. “I’d consider this to be threatening developers until they give you what you want, which runs contrary to good governance. “

“It also comes too close to circumventing state law which prohibits requiring affordable housing units in new developments,” he added.

Developers should be applauded for wanting to include affordable units “as they are able,” he said, adding it adds diversity and equity to projects when they work financially.

But Geary said if a major development doesn’t include affordable housing, it’s a good reason to not rezone a project because it’s “not in the public interest and not serving the public interest.” This type of condition will become routine once the first ones are approved, he said.

“The public interest is best served when these high-density apartment complexes have room for various price points, not just the rich,” he said. “The underlying fact is land is in short supply. So are you going to allocate and increase the allowable density only for rich people or are you going to try to try, through public policy, make room for others.”