Affordable Housing in the Triangle: A Primer

Ken Bowers, AICP

What is Affordable Housing?

• Housing is affordable if the total cost of occupancy does not consume more than 30 percent of household income – Rental housing: rent + utilities – Ownership housing: mortgage + taxes +

insurance + maintenance

• Affordability is benchmarked against percentages of Area Median Income

Income Limits

Source: U.S. Department of Urban Development. Values in blue bars are HUD calculations; others are calculated by Community Development staff.

Estimated Allowable Rents

Source: HUD, City of Raleigh

60 and 80 percent of AMI

Subsidy Required to Fill Gap

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Unit cost

ProfitHard CostsSoft costsLand

Market Rate

80% AMI

60% AMI

Value at Stabilized NOI

Who Pays?

Public Sector • Low Income Housing Tax

Credit (LIHTC) • HUD (CDBG, HOME,

Section 8, Section 202) • Local housing bonds • General fund revenues • Tax Increment Financing

Private Sector • Inclusionary zoning • Community Benefit

Agreements • Exactions

Payees may include land owners, developers, and owners/renters of market rate units

3 Flavors of Inclusionary Zoning

• Mandatory – Fixed-percentage required of new

development • Incentive-based

– Density bonuses, fee waivers, or other incentives offered for inclusionary units

• Rezoning-based – Approval of rezoning tied to inclusionary

requirement

Fees-in-Lieu

• Arguments in favor: – Fees may produce more units elsewhere when

in the hands of the public or non-profits – Buyout from a mid- or high-rise may produce

more family-friendly units – Acceptance from development community

• Arguments against: – Works against the goal of mixed-income

communities

Affordable Housing Decisions

• What size/age/type of households? • What income levels? • Ownership or rental? • Mixed-income or 100% affordable? • Where?

– Cheap land = concentration – Expensive land = mixed-income but fewer

units

What is the Need?

Renter Owner Total

Households < $50K 50,855 23,133 73,988

Cost burdened 33,730 15,245 48,975

Percent 66% 66% 66%

Nearly 50,000 households with incomes under $50,000 are cost burdened within the City of Raleigh.

Source: American Community Survey, City of Raleigh

What is the Supply?

City funds 4,513 35%

LIHTC only 1,974 15%

HUD 6,342 50%

Total 12,829 100%

What is the Supply?

Total project units approved since 1995 4,056 Affordable dwelling units 368 9.1% Units sold 235 64% Payments in Lieu $3.6 M Received to date $1.1 M 31%

Inclusionary Housing in Chapel Hill Town Council Approvals

What is the Supply? Type Units Aff Housing 58 CASA 35 CASA/Section 8 21 DCLT Rental 102 DHA 50 HFDA 65 HOME 12 HOME/Section 8 44 Housing for New Hope 54 LIHTC 548 LIHTC/Affordable Housing 102 LIHTC/Section 8 1,756 PRAC/202 77 PRAC/811 74 Project based Section 8 301 Public Housing 1,716 Section 202 48 Section 8 584 Total 5,647

City of Durham Affordable Housing Inventory 5,647 total units

The Panel

• Loryn Clark, Executive Director of Housing & Community, Town of Chapel Hill

• Gregg Warren, President, DHIC Inc. • Patrick Young, Assistant Director for

Development, Durham City/County Planning Department

www.durhamnc.gov

• Projects of 15 units or greater • Base bonus of 15% • At least 15% of affordable units for households at

or below 60% of AMI • Bonus of 20% if affordable units for households at

or below 50% of AMI • Bonus doubled if project has at least 500 feet of

frontage on a major thoroughfare • Rental units must keep affordability standards for

15 years

Current Affordable Housing Density Bonus (AHDB)

Standards

www.durhamnc.gov

Evaluation of successful incentives

• Density bonus of at least 2:1 • Height increase • Parking reductions • Administrative review, no legislative process

www.durhamnc.gov

Station Area Demographic Summary

• Median household income in station areas is significantly lower than Durham County’s.

• Station areas exhibit high rates of renter-occupied housing and vacancy.

• Vast majority of residential structures are in normal or fair condition, with variation among station areas.

• Transportation is a significant cost for Durham County residents and should be a factor in future housing policy.

www.durhamnc.gov

Sample Rental Options

Community

Monthly Rent

Monthly Utilities*

Monthly Housing Expenses

Alden Place $990 $93 $1,083 Pinnacle Ridge $955 $93 $1,048

New Haven $925 $93 $1,018 Independence Park $850 $93 $943

Spring Ridge $845 $93 $938 Yorktown Club $780 $93 $863

Northpoint Crossing $729 $93 $822

*Based on DHA allowance rates and an all-electric unit

Market-rate units can be difficult to afford for those at 50% AMI

$762

$915

Units are available for those earning 60% AMI, but not necessarily near transit

By HUD 2013 Income Limits, a family of three at 80% AMI can afford $1,218 in living expenses.

www.durhamnc.gov

Lowest Income Residents are Most Cost Burdened