Land in Downtown Raleigh can go north of $10m per acre. Heritage Park’s 12+ contiguous acres smack in the middle of Dix, Fayetteville Street, and Union Station is really, really valuable. Taking a property that could be worth $100m, and building such an unambitious complex on it just doesn’t make sense.
Allowing that PH might tend towards higher bedroom counts than private residential development (which might result in lower unit count for a given square footage - which is fine), a development that puts less residential square footage here than a private developer would, is basically a failure to realize the full value of this property.
At least four of the council members yesterday in their Work Session endorsed the idea of increasing the density of the proposed redevelopment. A couple of the main concerns from RHA were:
the need to create structured parking, which as @paytonc said above might be an issue due to federal funding. However, with the newly passed 0 parking minimum downtown, could the city council approve a dense redevelopment of Heritage Park without parking? (Someone please correct me if there is a rule about federally funded housing projects requiring parking). Mayor Baldwin also recommended they look into shared parking with another private user.
the expense of going over 7 stories due to the switch from lumber to steel or concrete and how it might not be financially feasible to do such for an affordable housing project.
I also second @orulz in their thinking that it could be totally possible to redevelop a small portion of this without any/much displacement that could fit all 122 current families if they develop the first section dense enough.
If the city ends up putting up another Walnut Terrace type suburban development on such a valuable piece of urban land, I am just going to scream.
If that happens, I’ll have to conclude that the decision is nothing more than virtue signalling, and not an actual action/policy to provide affordable housing to as many in need as possible.
For me, it’s simple. If it’s affordable suburban style housing that’s wanted, then build it in a more suburban location. That doesn’t mean that one has to toss it to the far edges of the county, but putting it within the city’s tiny downtown core is just insane. While I lean toward those who say that housing is a right, I don’t agree that it means suburban style housing in the city center is a right.
While I agree 100% that density here is important and should be increased to the maximum extent possible, Payton is correct that the way tax credits are allocated by the state punishes projects with higher per-unit costs. They will have to get pretty creative and/or the Council will have to allocate potentially millions more to bridge that gap. At that point it comes back to a situation similar to the bus system, do you go for more total units across the city or do you ensure that the ones you build are the densest possible (or coverage vs frequency in transit)? Can’t always get both. Or we can lobby the NC Housing Finance Agency and their overlords to update their QAP (Qualified Allocation Plan) to stop punishing urban locations in their scoring methodology.
Heritage Park is an awesome spot for homes, period. That also means it’s a great spot for affordable/public housing. But limiting it to 300-some units is only conferring those benefits on 300-some extremely lucky families on a PH wait list that doubtless has thousands of families on it.
Virtue signaling is exactly the word for it.
Bundling in private, market-rate development could easily offset the added cost per-unit of going for higher density and probably result in extra money left over to build more affordable housing, whether here or elsewhere.
If the idea is that including a for-profit partner somehow makes it “icky” and no longer in the public interest, I would argue in favor of the liberal approach of looking at outcomes:
First, what approach yields the most affordable housing?
Second, what approach yields the most housing overall?
Maximizing the residential density may be best outcome.
You may be able to bundle (most projects are) but I’d have to look again at the QAP because I believe part of the problem is your project scores high enough to get millions in tax credits or it doesn’t. If your per-unit cost is high then you may not get the tax credits at all (especially the highly competitive 9% ones), rendering a project infeasible no matter your financing package (unless the City wants to pony up 10s of millions to go it on our own). I’m not sure if you can have the city build a parking deck next door and then have the developer submit a project for tax credits at a lower per-unit cost. I work in affordable housing but from a slightly different angle so I’ll look into it. I don’t think there’s been an issue so far with including a for-profit developer. Most of the City’s projects are with for-profit developers/builders as there are only a handful of large scale non-profit AH developers in the area (DHIC).
The topic at hand seems to be that it’s complicated financially to build dense affordable housing where the property is a premium and building materials are expensive.
Yet private builders are expected to incorporate this into their projects pro bono.
I realize that’s a very simpleton perspective and affordable housing is a very complex issue and a very important one. But the same folks that complain private developers aren’t donating margin from their projects are the same people that complain the city is spending too much to accommodate a project like this. I guess NIMBY be NIMBY regardless of consistency of agenda.
I guess I come down on supporting spending more on a project like this, but also support having private developers contributing to AH. Developers do benefit tremendously from public investment (we haven’t been spending a lot of public dollars downtown to encourage small-time stuff that can go anywhere), and their profit margins are usually higher than AH developers so there’s likely room to accommodate these requests while leaving the private developer enough profit to make it worth the while. If it isn’t then maybe their project wasn’t strong enough to begin with.
People in other parts of the city in particular look at the amount of public funding that we put into downtown on top of the basic infrastructure/parks/etc. and think developers that are making a lot of money off of it should share a slice towards an issue they directly impact. It also builds a stronger community to have mixed-income developments.
I just wish the State would allow us to use inclusionary zoning so we could make the requirements more predictable for developers, citizens and policy makers.
City owned public housing seems to be better than housing owned by private developers. Private developers/owners tend to have a short timeline of when the units will actually be affordable.
I believe this is why Larry Jarvis (Housing & Neighborhoods Director)said in the meeting yesterday that the city will be using long-term land leases with some of their partners instead of selling it to them outright. It will allow the developer to collect rent and subsidy for the life of the project, and then when it’s outlived its usefulness and torn down, the city can pivot to a new project that is still affordable.
Obviously there’s a flaw in the model. Certainly I see the value in keeping costs per unit under control, but that model obviously doesn’t take into account the value of the land. If the city had to purchase that land, the only way that they’d be able to make their model work would be to build the tallest building in the city.
It would seem to me that the city could give the land (or sell cheaply) to a developer in exchange for them providing a certain number of affordable units back to the city at no additional cost based on the value of the land itself. In other words, let’s say that the value of the land is 5 million dollars. For that, the city gets 250 affordable units valued @$200K each (construction costs excluding land) returned to them. This would mean that the city would own and manage those units ad infinitum. In addition, the city could also demand that the parcel also provide other community resources like retail and more market rate housing that would make the whole community better. The developer could, in turn negotiate for increased density on the parcel to make the project work for them financially. For the value of the land alone as a negotiating tool, the city could provide affordable housing at nearly no additional cost. Is that something that could be done?
Since I started this topic, I want to clarify that I didn’t mean to ask if RHA should work with private developers to make major changes to the characters of a public housing development; I didn’t realize this was already the case, like the examples Owen brought up. I meant to ask whether they can work with them in the first place, or if some weird bureaucratic or market-related reasons would get in the way of that like what Payton described.
Judging from how this conversation’s going so far, it sounds like you can do this, though the way to pay for it could quickly get complimented and hard to predict.
Could the renovation be funded so that the affordable housing bond specifically funds amenities like the parking deck as a separate project? I’d imagine that, that way, you wouldn’t have to worry about issues in rising per-unit costs that would impact federal funding eligibility.
Are municipal ordinances on inclusionary zoning prohibited in North Carolina? Over here in Chapel Hill, we have an inclusionary housing program, and the site doesn’t mention anything like the General Assembly (especially in McCrory’s era) bending over backwards to allow this.
I think that’s an interesting idea that could be pulled off, but I wonder what if that could turn into a shortsighted solution. If the city leases the land (or air rights or whatever) like what @JetsJessiesuggested, you may get a smaller revenue stream but it could give more money to the city for affordable housing expansion and maintenance over time. What that would look like in the context of Heritage Park?
This is an article from several years ago that wanders a bit but does have this quote below about inclusionary zoning powers and I don’t believe state laws have changed since then. Short answer is that Chapel Hill has been sued over it and has been operating in a ‘legal gray area’.
“In North Carolina, local governments only have the powers granted to them by the state constitution and statutes, and inclusionary zoning isn’t one of them. The state could explicitly grant local governments the authority to enact inclusionary zoning, but it hasn’t done so. A 2001 bill that would have done that died in committee, and bills granting the power to specific municipalities, including Durham in 2017, Carrboro in 2003, and Cary in 2001, met the same fate.”
It also says that Chapel Hill’s attempt at inclusionary zoning ‘failed’, primarily because state rent control statutes may prohibit it being applied to rental projects, so Chapel Hill developers were nudged, along with the effects of the great recession, to build rental instead of for sale (sidestepping the AH requirements). Sounds like the state would have to make a few changes to make it viable and successful like it has been in other parts of the country.
That’s interesting; thanks for the link! With the state of the General Assembly, though, I have a feeling that that policy hole won’t be filled in time for affordable housing projects that’re already rolling now
Even if we don’t have inclusionary zoning, I think mixed-use, mixed-market apartments can still make sense, and phased buildouts can still work in a way that displaces as few residents as possible. I tried to redesign Heritage Park on Google Maps with similar-ish footprints as the city’s preliminary concept but using taller and contain more housing units.
Even with some apartment buildings being just 4-7 stories tall so that they transition into the rest of the neighborhood (which is still not considered downtown in the future land use map), I think there’s ways to squeeze out at least 1200 units; take a look at the map below, and use the menu to the left to toggle the different phases of development. What do y’all think of this? And if you like it, would it be best to email this design to the Housing Authority (or is there a better way to get this to the eyes of the powers that be)?
It is a model similar to the one you proposed that made the College Park/Idlewild and Martin/Haywood affordable house construction possible under private development. The citiy entices private development by “donating” the land. The end result is near full margin (no citation for this) for developer and rental income for the city, or at the very least, a more substantial tax base.
I have heard many complaints about the size of the CoR land portfolio - it happens to be a huge bargaining chip IMO. I think that is a big argument in favor of density on these parcels. In a sense, they only have one shot, especially on a land assemblage this large.
Seems that they could create a win-win situation here by redeveloping the property with good urban form along Saunders and South, mixed use, 7 story or less to keep per unit cost down, with temporary (like red hat amphitheater temporary) surface parking between the buildings slated for future development once more funding comes along.
Inclusionary zoning doesn’t work because the market rate units are subsidizing the below market rate units which in turn raises the comps for all properties in the neighborhood, making housing less affordable.
It’s a simple fix to a complex issue. An agency looks at it and slaps a solution on it that doesn’t disturb their operating budget. But the money has to come from somewhere, and the net effect is reduced residential buying power in that locale.
