Opinion

#MoreHousingFaster: Here’s how we can do it – Aaron Nelson

Aaron Nelson is the president of the Chapel Hill-Carrboro Chamber of Commerce and executive director of the Partnership for a Sustainable Community.
Aaron Nelson is the president of the Chapel Hill-Carrboro Chamber of Commerce and executive director of the Partnership for a Sustainable Community. File Photo

A popular business adage states that the best solutions are fast, cheap, and good – but the most you can hope for is two out of those three. What if we could have all three – fast, affordable, and good? With new approaches to affordable housing, we can.

The Chapel Hill-Carrboro Chamber of Commerce and I are calling on our community to modify our approach, adopt new strategies, improve collaboration, and move faster to increase the availability of affordable workforce housing proximate to our employment centers. When it comes to affordable housing, we need to be more optimistic and less patient.

Two quick definitions: by “affordable housing” we mean the accepted definition of spending no more than 30 percent of your pretax income on housing and by “proximate to employment” we mean a 20-minute commute radius.

To address affordable housing goals, our community has been applying tools that – while innovative when created and successful by many measures – have delivered too little housing, too slowly, for too big a price tag.

Other than municipal public housing, our community has applied much of its affordable housing efforts to a home ownership model. While this approach has created hundreds of permanently affordable homes over the last two decades, we are only able to produce a few dozen units per year, each home requiring as much as $120,000 in public and private subsidy. This process has been too slow, too expensive, and too reliant on private sector development.

It’s time to add new tools and partnerships and to harness the power of our existing supply of market rate rental housing and the thousands of new market rate units in the pipeline.

I write to propose and support the concept of “Master Leasing” to quickly get people into affordable and safe housing at a much lower price.

Rather than buy or build units, we would lease them. A new or existing organization would master lease rental units throughout the community at existing market rates and then sublease the units to qualified, pre-screened tenants. To keep the rents affordable, the master leaseholder would subsidize the rent so that tenants pay a maximum of 30 percent of their income for housing.

▪ For Pat, a single parent working 40 hours a week at minimum wage of $7.75/hour ($16,120 a year), an affordable rent is $403/month, 30 percent of Pat’s monthly pre-tax income of $1,343.

▪ The master leaseholder would lease a currently available two-bedroom unit at $795/month, for example, and then re-lease it to Pat for $400/month, subsidizing the unit with $395/month. In this scenario, the housing organization would spend $4,740/year to help Pat and family secure local housing.

▪ For Sam, a first-year teacher earning $40,000/year, a unit regularly priced at $1,200/month unit could be subsidized down to $1000/month and cost $2,400/year in subsidy.

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.

While Master Leasing does not offer the permanence of homeownership, it is flexible, requires dramatically less upfront cost, and advances our objective of #morehousingfaster.

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.

We applaud the many partners working on the issue of affordable housing, but we’re not addressing the problem fully or quickly enough. We must find additional ways to put more people in housing faster. In addition to subsidizing affordable homeownership, let’s invest resources in a Master Leasing Program where, with $120,000 in annual subsidy, we could locally house 25 to 40 Pats, Sams, and their families.

The chamber and the business community we represent support increasing the availability of affordable workforce housing because we care about successful employees and successful communities. When employees commute, it increases the cost of employee recruitment and retention, decreases the success of the same, reduces productivity, and negatively impacts employees’ quality of life and civic participation. By using the power of the existing housing market, we can have more flexible housing, more quickly, more efficiently, and more affordably.

In partnership with Justice United and in cooperation with local housing advocates and providers, we are working to create a Master Leasing Program. We already have the first rental units pledged, have earned the support of the Orange County Affordable Housing Advisory Board, are seeking the support of others, and are working to identify sources of funding.

We are impatient optimists. Affordable home ownership will remain a key tool in solving this problem and will continue to enjoy our support, but we must now invest in smart new strategies like master leasing to make faster gains on this issue.

Community organizations like the chamber have been working on this issue for a long time. Let’s apply new tools to deliver the trifecta of faster, better, and more affordable housing.

Aaron Nelson is the president of the Chapel Hill-Carrboro Chamber of Commerce and executive director of the Partnership for a Sustainable Community.

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