CHARLOTTE, NC (Steve Harrison/The Charlotte Observer) - The city of Charlotte has a new strategy for low-income housing: Rather than focusing on building new apartment complexes, city officials want to invest in apartment complexes from the 1960s and '70s and use deed restrictions to keep rents affordable.
Speaking at the city's three-day retreat in Durham, Mayor Vi Lyles said she wants the city to move quickly, and said she would consider it a success if Charlotte helped "preserve" four or five complexes during her two-year term, especially those near good schools.
As the city's population and economy are surging, developers and investors are targeting older apartment complexes relatively close to uptown. In some cases, they demolish them and build luxury units in their place. Other developers are buying older units, renovating them and then raising rents.
The Charlotte Mecklenburg Housing Partnership said it recently tried to buy a late 1970s-era complex, Arcadian Village, near Independence Boulevard and Idlewild Road. The partnership wanted to renovate the units and keep them affordable.
But a New York private equity firm bought the complex instead, and will soon close on the complex.
"The rents were $600 to $800 a month," said Julie Porter, the partnership's president. "They will flip to $900 to $1,000."
Porter said she estimates the city has "lost" 900 affordable units in the last 90 days.
Housing advocates have said the city has a shortage of about 34,000 affordable units. They have also said the biggest need is for people who earn less than 30 percent of the area's median income, which would be $20,550 a year.
Preserving apartment complexes with $800 rents would help some low-income workers. But that might not help people earning minimum wage, who might need monthly rents at $500 or less.
The city's Housing Trust Fund is usually replenished with $15 million every two years. Last year, City Manager Marcus Jones added $6 million to that fund over five years.
That money usually goes to nonprofit developers like the Housing Partnership, which also seek state tax credits to make their projects financially viable. Trust fund dollars have normally funded new housing units.
But the city has found it's extremely difficult to bring affordable housing to prosperous parts of the city, where residents could have access to high-performing schools. One problem is the high cost of land. Another is opposition from neighbors, which has derailed some proposals in the past.
With those hurdles, the city's new plan is to keep what little affordable housing is left.
When the city subsidizes new construction, it often spends $25,000 per unit. An older complex could be renovated for about $8,000 per unit in city assistance. In exchange for the subsidy, the city could use a deed restriction to keep rents affordable for 30 years.
The city would not own the apartment complex. Investing $8,000 per unit in a 250-unit complex would cost $2 million. It's unclear whether the city would use existing Housing Trust Fund dollars or whether it would shift money from other parts of the budget.
For instance, the city could focus on areas like SouthPark and Providence Road, where older apartment complexes have already been bulldozed for new luxury units.
Developer Northwood Ravin is building a luxury apartment complex on Providence Road called Providence Row.
To make room for the new apartments, Northwood Ravin demolished 152 older apartments that were part of the Pinehurst apartment complex. The remaining units at Pinehurst have been renovated.
Porter said the city needs a strategy for preserving older complexes.
"If you purchase a complex in a disadvantaged part of the city – with no access to jobs and schools – then all you are doing is purchasing a bad property and asking the city for a subsidy."
She said the city should target complexes in fast-gentrifying areas like the west side and NoDa, as well as south Charlotte.
"We can invest, and people could visibly see that we are trying to do more," said Lyles, who was elected mayor in November.
Lyles said she wants investing in older complexes to be her top housing priority. She also wants the city to review its Housing Locational Policy, which makes recommendations on where subsidized housing should and shouldn't be built.
Five years ago, under then-Mayor Anthony Foxx, the city's focus was not allowing it to cluster in poor neighborhoods. The city wanted to avoid "concentrations of poverty," which was also a recommendation of the Opportunity Task Force two years ago.
But the city has shifted away from that goal.
Two years ago, the city approved a 198-unit subsidized apartment complex off Nations Ford Road and East Arrowood Road, even though there were already at least four other subsidized complexes within a half-mile of the site. But council members – including Lyles – approved a waiver for the Granite Pointe Apartments.
Even though neighbors pleaded with council not to approve the waiver, most council members said they thought the apartments would improve the neighborhood. They also said the city's housing needs were so acute they needed to build housing wherever they could.
Lyles said Thursday the city needs to review the locational policy. She said it might need to be more flexible.