City wants subsidized housing in transit corridors, but developers haven’t responded

More than 5,000 apartments have risen within a half mile of the four main transit stations along the Lynx Blue Line light rail system in South End.

Developers haven't put up much subsidized housing near transit stations in South End. Photo by Payton Guion

For city officials, that’s good, they like housing close to public transportation. But the city isn’t content with any old apartment development close to the light rail line.

That’s because in 2001, the city made a policy suggesting that of all apartment units within a half mile – walking distance – of public transit stations, 20 percent should be subsidized and available to those making no more than 60 percent of the area median income.

But in the years since the light rail began stopping at the four main stations in South End – Bland Street, Carson Street, East/West and New Bern – developers haven’t lived up to the city’s hope.

Alan Goodwin, planning coordinator with the city, said of the 5,045 apartments within a half mile of those four stations, less than 10 percent were considered subsidized housing.

At the Bland Street station, 1,486 units are within a half mile and only eight were subsidized. Of the 1,361 units close to the Carson Street station, none were subsidized. At the East/West station, 1,133 units are within the threshold, but only eight are subsidized.

Only New Bern station has a significant number of subsidized units. Of the 1,065 units within a half mile of that station, 391 are subsidized. Goodwin, however, said that number should be taken with a grain of salt because all those units came in one or two projects.

South End isn’t the only place that has seen an underwhelming return of low-income housing options in transit corridors. Goodwin said the city did a study of units within a half mile of all transit corridors and found that of 33,382 units, only 2,152 were subsidized, a measly 6.4 percent.

Though he said the city has been disappointed with the low percentage of subsidized multifamily housing options that have popped up along transit lines, the city’s policy doesn’t require developers to add those units to their projects. That being so, no punishment mechanism is in place and the city is doing little to encourage developers to put up that type of apartment.

When asked about city efforts to increase subsidized housing along transit lines, Goodwin said, under this policy, the city can’t do much other than deny public funding of apartment projects that don’t meet the low-income housing threshold.

Still, Goodwin said the city maintains the belief that low-income housing in transit corridors is a good idea for future development.

“The city feels that transit station areas are good locations for lower-income residents because they may have transportation issues,” he said. “We’ve seen the benefit of public transit for everyone, but for those with lower incomes, it may be even more important.”

And as Charlotte’s public transportation infrastructure grows, with the extension of the Blue Line and the Red Line to the north, as well as other transit initiatives, the city will keep the policy. It just likely won’t be in the same form.

Since August of last year, the city planning staff has been meeting with a citizen advisory group to help draft changes to the policy that has been a bit of a failure.

Joe Padilla, the executive public policy director for the Charlotte-based Real Estate and Building Industry Coalition, said he and other members of the advisory group, which includes developers and neighborhood leaders, had a few concerns with the original policy.

“There’s an issue with the current language and we felt it needed a change,” Padilla said. “We communicated to them the flaw is that you have to integrate the housing within a single building.”

Padilla said his biggest issue with the subsidized-housing policy is that it encourages the subsidized units to be integrated with the market-rate apartments. The advisory group has recommended changing the policy to allow subsidized buildings and market-rate buildings in the same project, but remove the mixed buildings.

The Charlotte City Council considered these changes at last week’s business meeting, but council members were hesitant about separating subsidized and market-rate housing, saying they fear it would create an “us-versus-them mentality.”

But Padilla said developers found that having both types of housing in the same building causes a problem on the operational side.

“There are two different business models that run these,” he said. “A market rate unit has a very different business model than subsidized living communities. (Subsidized units) have to have support systems that help the residents with issues of financing that a market rate operator isn’t prepared to do.”

Among the other proposed changes to the current policy coming from the advisory group:

• A drop in the recommended percentage of subsidized housing within a half mile of a transit station from 20 percent to 15 percent;
• A reduction in the maximum percentage of subsidized housing in a single development from 25 percent to 20 percent;
• Eliminating the suggestion that 30 percent of the subsidized units be set aside for those making no more than 30 percent of the area mean income. All of the subsidized housing would be aimed at those making no more than 60 percent of the AMI ($39,100 for a family of four), according to city documents.

After City Council deferred approving the policy last week, city staff will again work with the advisory group before the changes come back before council in July.