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Davidson refines affordable-housing strategy

The town of Davidson, one of only three N.C. municipalities obligating residential builders to either construct affordable housing in their projects or pay a fee, wants to fine-tune its program to better meet residents’ needs.

These townhomes in the Davidson Bay subdivision are part of Davidson's affordable-housing program. The community includes an 8-unit apartment building, where rent on a one-bedroom garden apartment costs $665. Photo courtesy town of Davidson

These townhomes in the Davidson Bay subdivision are part of Davidson’s affordable-housing program. The community includes an 8-unit apartment building, where rent on a one-bedroom garden apartment costs $665. Photo courtesy town of Davidson

The town plans to hire a consultant to assess current and future needs and to find a developer to build affordable residences on town-owned land. Other short-term goals include prioritizing the use of payment-in-lieu funds.

Affordable Housing Manager Cindy Reid said that the recession and complaints from developers that they bore the sole burden of providing affordable housing prompted the town to look for new strategies to increase affordable housing in Davidson.

With that in end in mind, Reid was tasked with forming an affordable-housing steering committee last year to make recommendations to the town board.

She updated commissioners last week on its progress, saying that three firms have been asked to submit proposals for the housing-needs assessment, which will probably take about four months to conduct. She said she hoped to present the report’s findings to the town board by early fall.

In an interview, Reid said that it is important for the town to take into consideration current market conditions when forming a strategy. The last housing-needs assessment was done in 1999, and Reid expects the updated study will show a need for “more affordable rental, especially for seniors and households earning less than 50 percent of the area median income.”

Reid told commissioners that the steering committee was also looking at ways to expand funding mechanisms. That might entail grant proposals, the establishment of a housing-trust fund, and partnering with financial institutions. The town currently funds its inclusionary-housing program with grants from federal programs such as HOME Investment Partnerships and Community Development Block Grants.

Reid also suggested using payment-in-lieu funds to provide down-payment assistance of up to $6,000 per qualified homebuyer. That money could also go to support nonprofits such as the Davidson Housing Coalition and Habitat for Humanity.

Other options, she said, might entail town support of a low-income housing tax credit program or the purchase of property for affordable housing.

On that note, the town plans to post in early April an online request for proposals for affordable-housing development on 2.2 acres it owns in the Bailey Springs subdivision.

In an interview, Commissioner Jim Fuller said Reid’s presentation to the board last week updated commissioners on how to use “every possible tool” to achieve a successful affordable-housing program.

Fuller, who is serving his third term, said burgeoning property values have made Davidson too expensive for a broad range of people.

“It’s really important that police officers, school teachers, and office workers have an affordable place to live,” he said.

Commissioner Beth Cashion, who is serving her second term, agreed. She said it was important that the town continually study all avenues to ensure that the town’s inclusionary ordinance is applicable and statutorily effective in meeting the town’s expanding demographics.

The town’s population increased nearly 10 percent between 2010 and 2014, according to the U.S. Census Bureau. The bureau’s most recent estimate put the number of residents at 12,000.

Davidson adopted an affordable-housing program in 2001. It requires that 12.5 percent of the total number of residential units in a new development be devoted to affordable housing.

Developers have also built affordable housing in the Summers Walk community off of N.C. Highway 73. Photo courtesy town of Davidson

Developers have also built affordable housing in the Summers Walk community off of N.C. Highway 73. Photo courtesy town of Davidson

So far, 64 units have been built. Currently, one residence is on the market, and no rental units are available, Reid said. Below-market rate townhomes, condos, single-family residences, and apartments have been built in several subdivisions.

Finding affordable housing can be difficult in Mecklenburg County, where nearly half of the households that rent are considered cost-burdened. According to the UNC Charlotte Urban Institute, 46 percent of renters are considered “cost burdened,” spending more than 30 percent of their gross income on housing costs. That is due in large part to rising rents and falling wages. Between 2008 and 2013, inflation-adjusted median gross rents increased 2 percent, while the median household income dropped 12 percent.

While Chapel Hill and Carboro also have affordable-housing requirements on residential development, Charlotte does not. The city has instead taken the approach of offering a “density bonus” that allows developers to build more homes or apartments if some affordable units are included in the project. Few have taken up the offer.

Reid said Davidson has long been proactive in its development standards.

She said Davidson was one of the first municipalities in North Carolina to adopt a form-based code on land development. Such a policy focuses on the relationship between public and private space, the look and form of buildings, the scale of surrounding streets, and how these factors link into a community’s overall vision.

“We’re on the forefront with a lot of things,” Reid said. “We take pride in marching forward and being on the cutting edge.”

Town Manager Jamie Justice points to the town’s core values, which state: “Davidson’s historic mix of people in all income levels and ages is fundamental to our community, so town government will encourage opportunities, services, and infrastructure that allow people of all means to live and work here.”

“We’re proud to have had the will to create such a progressive affordable-housing program and inclusionary zoning ordinance,” Justice said.

However, the town’s broad-minded approach has not been without problems.

Last year, Davidson settled a lawsuit filed by two developers claiming the town didn’t have the authority to require homebuilders to construct affordable housing or collect fees for public services. The town repealed its public-facilities ordinance in 2013, but the builders had made payments before then.

Following the lawsuit, commissioners eased their requirements. Last summer the town adopted a policy offering developers a fee-in-lieu option on all required affordable units. Previously, that option could be used on just 30 percent of the affordable units the town required.

Commissioners also dropped the current fee-in-lieu to $26,550 per unit, down from $53,100 before the policy change. Such payments are put in a trust fund to further affordable housing development.

Fuller and Reid agreed that the changes were made to be fairer to developers. Reid said commissioners lowered the payment-in-lieu as “an acknowledgement that affordable housing cannot be successful based solely on developer contributions.”

Fuller declined to comment further on the lawsuit, saying only that it served as a reminder that the town could face legal restraints concerning its policy.

“We’re trying to do it the right way,” and still have a successful program, he said.

Reid said that while the inclusionary policy is generally viewed favorably, concerns remain among some homeowners that affordable housing in their neighborhoods will drag down their property values.

“A lot of folks want it, but not in their neighborhoods,” she said.

Reid added that such fears are unfounded because Realtors know not to include affordable housing when calculating the sales price of comparable homes.

And although Davidson repealed its public-facilities ordinance requiring developers to pay for police protection and parks, courts have still not addressed the question of whether a municipality can require affordable housing. Towns and cities are left interpreting legislation passed by the state.

“The General Assembly hasn’t given us an inclusionary zoning program,” said Reid, who also is staff attorney for the town.

That gives Davidson “the implied authority to further provide for the health and welfare of our community,” she said. “An economically diverse community is a healthy community.”

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