The article says this development will have shelf parking inside the building. I can’t wait to see that become part of an affordable housing development.
Does Raleigh even have an example of this type of parking? I’ve seen this in NYC, and we have this in several places in Miami, but I haven’t seen this commercially in Raleigh yet other than in a SFH on Parade of Homes last year.
1 Like
I’ve seen that proposed in a handful of other projects across the Carolinas and all of those have would up cutting the self-parking. So we’ll see
The automated parking systems cost similar to a concrete structured parking (roughly $30,000/space), it’s the annual operating cost that weighs against the availability of land/height because the volume required for a 100 space parking garage vs 100 automated parking slots is substantial. They are usually found at hotels or buildings with 24/7 on-site management which few Raleigh buildings have.
Another challenge is they usually take 3-5 minutes to “retrieve” the vehicle which doesn’t practically work in buildings that experience high demand time windows to access the vehicle sleds.
3 Likes
They can, however, reduce the overall visual impact of a parking pedestal/garage in a large urban building.
1 Like
Could also be referring to not-automated parking stackers, which (especially in a concrete podium building) are way cheaper than building a two level garage. Heck, you can buy them from Home Depot for a few thou.
2 Likes
City will be doing a Listening Session on April 17 to get comments on the redevelopment of the Duplex Village on New Bern (next to the new Milner Commons senior apartments). If you can’t make it the link has a Survey you can give your opinions and such. Good opportunity to suggest ground floor retail, design, etc.
3 Likes
why does the city continue to concentrate low-income/affordable housing in ER?? This is a bit of a rhetorical question. I know its the cheapest land but when you concentrate low-income in the same are (like America has done for the last 75 years), what do they think we end up with? They literally just built ‘affordable’ senior apartments next door. Why not compliment them with market rate next to it. They can’t complain about not having grocery stores, food options when they only build lower income housing. Grocery stores will NEVER open where they can’t maximize their return & have to constantly worry about theft, etc. (I’m also aware the last comment will fire some people up…but the truth is not always pleasant)
6 Likes
You’ve raised an excellent point @UncleJesse and I believe many would share your perspective. Cities should focus on integrating housing with diverse price points across all downtown areas, ideally within individual buildings. Concentrating affordable housing exclusively in less desirable locations often proves to be unsustainable in the long term. This is one of the reasons behind the city’s implementation of the density bonus for new developments. It’s frustrating when development groups are allowed to pay into a affordable fund inlieu of including affordable units in the building:
5 Likes
Maybe you’ll know this, so I’ll ask. Is it possible that developers either have issues getting loans or good loan terms for projects that include an affordable housing component? If there are borrowing challenges, would those be the same regardless of the targeted % if AMI?
It seems to me that most affordable housing is in public projects, not a private ones. I am just wondering what role the banks play in that (if any).
2 Likes
The correct policy response is to use affordable housing dollars to integrate richer neighborhoods. But the political tendency is for cities to use (mostly federal) AH subsidies as a way to show lower-income neighborhoods that they’re “doing something” – and lower-income areas tend to welcome the investment, rather than shout it down.
High-rises are uniquely expensive to build and operate, and therefore create uniquely expensive “affordable” housing.
Especially in Raleigh, where there are much cheaper mid-rises right next door, the city is better off taking cash over units. That cash can be combined with other subsidies (which aren’t available for mixed-income buildings) to create many more affordable units at lower price points.
4 Likes
It’s a multifaceted issue:
Merchant builders, who construct and sell buildings after lease-up, often oppose including affordable housing components. This is because it can cap resale value and expose them to potential cost increases during construction or higher operating expense . As a result, many opt to pay fees or avoid affordable housing altogether to mitigate these risks.
On the borrowing side, banks and HUD lenders often provide favorable terms, such as reduced sizing requirements, if at least 10% of the building includes affordable units.
However, some equity investors and private debt funds steer clear of affordable housing because it limits the potential for maximum returns in simpler investment models.
There area many non-profit (private) development organizations focused on building affordable housing. However, as frequently reported in the media, the construction costs for affordable units tend to be around 25% higher than for market-rate housing. I would say this is largely due to the extensive bureaucracy and requirements involved, such as Davis-Bacon wage regulations.
There are several newly constructed apartment units in Raleigh that fall within the ~60% AMI rental rate range. Take Allora Southview - they have one bedrooms starting at $1,280 for one beds (when you account for the 8 weeks of free rent - you end up with about $1,100/month). If these units were designated as affordable housing, a single occupant’s maximum income would be capped at $51,420. This income level might not align with the “ideal” tenant profile sought by the property management group.
2 Likes
Yes high rises are expensive, but there is certainly an opportunity to sprinkle ~15 to 20 affordable units in the lower floors to meet the requirement. The reason Hoffman opted to pay $1.5M is a math equation for them to financially engineer the maximum return.
Say they were going to add 20 affordable units to their project, that means they have determined they can get more than $75,000 per unit in value from not having the affordable. Right now, yield on cost is around 6.5%, so they need to get $4,875 (75K x .065) more per year in rent to justify the in-lieu payment. So on a monthly basis they believe they can get ~$400 more per month on those units that would have been designed affordable in addition to not having to deal with an income cap and reporting for the affordable housing.
1 Like
If bureaucracy contributes to higher construction costs of affordable units, I wonder why the city/state wouldn’t choose another route like vouchers? If the city was providing vouchers, then couldn’t the recipient choose the best place for them to live based on their own circumstances, the rental rack rates, and the voucher? A voucher program could be reviewed annually based on the economic circumstances of the recipient and adjusted accordingly. For example, a single mother might get more assistance while she is pursuing an education, and then it could be adjusted as she transitions into the workforce with a job associated with her education. Is that too simplistic?
No disagreement from me. I don’t recall if the city already owned this property previously, or if they bought it with then intention of affordable housing. Either way, I hinted at some of what you said on the survey (since I can’t go to the meeting). There was a choice of income levels it should cover, and I chose the highest (80 percent of median). Then I made the comment that it should be Mixed-Income housing…looks like at least one other respondant did the same. This is why I posted it here—I think you and others need to get these ideas to them now while we can.
1 Like
Curious about your take on what I proposed on the other thread. Would it ever make sense for the city to contribute money toward the affordable component of RUSBUS to address the developer’s financing gap and keep affordable units in the project?
I’m still not convinced taking 1.5 million is the better option, or will go further than incorporating units into an existing project that is already being designed and developed.
I think we beat the “cost of high rise construction” debate to death in the other thread. Expensive for a comparison to other ground-up construction, absolutely. Uniquely expensive to add a few more units to a 20ish story market rate building? Debatable.
I’ll start by stating what I believe is the best solution for a resilient city.
Every new multifamily building should have some affordable component say 5% to 10% of the units (my project Loft3 for example has 2 out of 21 units at 60% AMI).
There was a well-written article highlighting how integrating multiple socioeconomic classes within a building can foster upward mobility for lower-income households. Strategies include offering lower-rent units with modest finishes and smaller sizes, while ensuring shared spaces like common areas, elevators, and entrances create an inclusive environment for all residents. Moreover, this concept should extend beyond individual buildings to neighborhoods and blocks, promoting diversity across income levels, lifestyles, and walks of life. When areas become distinctly desirable or undesirable, it often leads to economic segregation, perpetuating inequities and limiting opportunities for community growth and connection.
Policy plays a significant role in shaping real estate, with the US, housing historically centered around single-family, suburban developments. Creating an environment that encourages intermixed affordable housing is achievable but would come with financial implications. While challenging, the government could implement policy changes to promote mixed-income housing, making it more attractive for construction, lending, and investment. However, such shifts would likely disrupt industries and stakeholders that substantially benefit from the current system. This complex policy topic is probably best addressed by @paytonc
3 Likes
I would love to see city programs beside density bonus that reallocates the affordable housing dollars from payment in-lieu of construction to lower-construction cost midrise projects assuming they are in close proximity to the high rise building making the payment.
From a capital perspective, consider a scenario where $1.5M is allocated to a developer for a 200-unit multifamily project, including 20 affordable units nearby. With a development cost of $225,000 per unit, a yield on cost of 6.5%, and senior debt at 65% leverage with a 5.5% interest rate, treating the $1.5M as “special rate” mezzanine financing earning a 2% annual payment results in the equity achieving a 9.15% untrended return—a solid rate that justifies moving forward with the project.
1 Like
You’re right that vouchers help. Raleigh Housing Authority issues them on behalf of HUD. They have project-based vouchers which go with a site and portable vouchers. The City is proposing to add to the portable vouchers this upcoming year - it’s in the posted draft plan that’s going before City Council today. RHA and Wake County have a landlord engagement program to encourage more landlords to accept them, although RHA does have a very high utilization rate. “In addition to public housing units, RHA administers 4,225 Housing Choice (Section 8) Vouchers. As of December 2024, both the public housing and Section 8 programs have a waiting list. The average occupancy rate for public housing is 99% and the voucher program is 100% utilized.”
1 Like