Good insights. The Low-Income Tax Credit is by far the best leverage for multi-family units that can have a mix of incomes, but don’t necessarily have to.
The City then layers local dollars on top of the tax credits to fill any gaps (gap financing)
I 100% agree, and I’ve posted this article several times over the past few weeks. I think Portland and Baltimore have fantastic models on how to do this without suppressing homebuilding or adding significant costs to developers.
…but also, I was hoping for your thoughts on this one specific scenario I’m posing for RUSBUS, since I don’t really understand all the implications on funding.
I thought of it almost as a logical extension of publicly funded inclusionary zoning discussed by the article, in that the city could use funds from the affordable housing coffers to address the developer’s financing gap. So: the developer would be responsible for incorporating the units into their project and funding as much of the affordable component as their financing allows per their original pledge; Raleigh makes up the difference.
The RUSBUS site presents unique challenges, as is often the case with public-private partnerships. Hoffman’s private funding tends to be more sensitive to economic conditions, while the public funds are rigid and fixed. I’m not sure of the exact agreement remains, but it might have been more effective for Raleigh to take the lead on the tower development, with Hoffman & Associates serving in a development Co-GP advisory role. This approach would allow the city to leverage its financial strength and long-term commitment to completing the project on schedule, rather than being constrained by current market conditions. The economic value generated by a fully operational building over a 50-year horizon would far outweigh the $2-5 million in profit the sponsor may be aiming to maximize by timing and changing what they build.
Simply put, private developers aim to maximize profits strategically, while the City of Raleigh/Government prioritizes completed projects and increasing housing availability. If the cost per unit rises from $340,000 to $375,000 resulting in a $10M increase on a $100M project, it’s not an insignificant amount. However, the potential for increased tax revenue from what this site could generate completed should provide enough justification to proceed with the development.
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where else in raleigh can ‘larger’ amounts of low-income housing go? my old house in longview now is zillowed at over half a million dollars…36k in 1976. wont there always be cheaper areas of a city? it doenst necessarily have to mean nasty.
How about spreading the lower income housing throughout the city. Let’s strategically provide housing near where employment opportunities are. Concentrating housing in one spot that’s not necessarily near employment is NOT going to help them out of low income housing.
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Dude yes, I’m traveling and don’t have time to respond how I’d like but this is spot on and the comments about this being wrong are toxic. Everyone read @paytonc’s post again. And again.
@UncleJesse We’re getting the grocery store still, stop trying to will that into not happening, we need to rebuild the crumbling subsidized housing in ER, and MOST IMPORTANTLY BUT BEING IGNORED is that existing residents DESERVE AND NEED TO STAY IN ER. And this is taking a stab at doing that. The naturally occurring infill is the offeset. And if you went to the DMV session or go to this upcoming one, you will learn that they are soliciting ideas including how to incorporate market rate. City owns a number of properties. All part of a puzzle. The backlash over “concentrated affordable housing in ER” from the city doing what it should demonstrates a severe lack of understanding about what’s important here. I tried to flag it and it wouldn’t let me.
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+1 to the Baltimore model. If you think this stuff is destined to fail, you’re stuck in a different time/decade. Plenty of examples out there of what works in 2025 and Raleigh is emulating, as it should, while navigating the tough financial climate. Again, this is why taking the cash and doing something with it that keeps residents in ER while developers like @raleighdeveloper infill with market rate makes total sense. If you go to ER and walk/bike/drive around, it would be impossible not to see this happening and be optimistic (new affordable units, new market rate units, naturally occurring affordable units, & modestly renovated missing middle units, all mixed).
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The City’s Affordable Housing Location Policy aims to do this by awarding more points to proposed projects in ‘opportunity areas’ which do not include east of downtown and areas that have high concentrations of poverty with some exceptions. See page 3 for the map:
"Geographic Applicability and Exceptions
As a means of implementing this policy, newly constructed subsidized multi-family housing developments will not be allowed in census tracts having a concentration of minority or low-income persons or subsidized rental housing unless the proposed project qualifies for one or more of the following exceptions:
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Developments located within a one-half mile radius of a proposed rail or bus rapid transit station;
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Development located within one-half mile of a transit stop served at intervals of 15 minutes or better in each direction throughout the day;
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Developments located within the boundaries of the Downtown Element in the Comprehensive Plan; or
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Developments which are implementing elements of a mixed-income neighborhood revitalization plan approved and funded by City Council"
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Five blocks south of RUSBUS?
Just pulling numbers out of a hat of course, but for every unit of AH that “could” get added at RUSBUS, I bet they could increase the scope of the Heritage Park redevelopment by 2 AH units for the same amount of money.
They still have some low rise, surface parked, even townhome type stuff planned at HP, even in the more recent ~1000 unit master plan options. Get it all up into at least the structured-parking, 5 over 1 range that every private development downtown starts with.
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I think this is a great point overall, but I’m not following with the “number out of a hat” bit. Are you (even hypothetically) saying that $1.5 million could build 78 units at Heritage Park?
If the city were paying for those 39 units currently, I’d agree – they could get more for their money elsewhere. But the equation is different because the developer was footing the bill and is proposing to buy their way out of it with a sum of money that doesn’t approach the value of the units we’re losing. If we could get the value of what we’re losing, I’m on board – take it and use it elsewhere.
I seriously bet that you understand better about this than I do. But my understanding is that the value of AH is “complicated”, especially when we’re talking about inclusionary units.
-How much is the rent subsidized? (how much would the rent received differ compared with an equivalent market rate unit)
-How long is it to remain affordable?
-What is to be the disposition of this unit after that?
Of course $1.5 million wouldn’t build 39 new construction units anywhere, not this side of 1996 anyway. But remember, people living in AH aren’t paying nothing, their rent is subsidized. It reduces the income from (and therefore value of) the unit, but does not completely negate the income/value.
Also recall that a given subsidy can either make more units moderately affordable, or fewer units deeply affordable. So trying to measure AH by counting units is a gross oversimplification.
But all in all, my main point was that cheaper construction yields more affordable housing per dollar of subsidy. Sending the $1.5 million south to Heritage Park makes more housing more affordable to more people than it does if the units are at RUSBUS.
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