Charlotte spent $2 million for housing project. After 11 years, it hasn’t been built.

Charlotte spent $2 million for housing project. After 11 years, it hasn’t been built.
Eleven years ago, the city of Charlotte reached a deal with Scaleybark Partners to build 80 low-income apartments near the Scaleybark light-rail station. They still haven’t been built. (Credit: John D. Simmons | The Charlotte Observer)

CHARLOTTE, NC (Steve Harrison/The Charlotte Observer) - In the summer of 2007, the city of Charlotte struck a deal with a prominent developer to build affordable housing adjacent to the Scaleybark light-rail station.

But after waiting nearly 11 years and spending $2 million from the city's Housing Trust Fund, the apartments haven't been built.

The city could get its money back, but City Council is considering whether to give developer Peter A. Pappas, chief executive of Pappas Properties, a break. On Monday, council members will consider a 60-day extension with Scaleybark Partners, the Pappas-led development group behind the Scaleybark plan.

The vote comes as the city is struggling to build affordable housing as rents increase citywide. Building affordable housing was a key promise council members made in their "Letter to the Community" in fall 2016, after the Keith Lamont Scott protests. But the city's Housing Trust Fund, which subsidizes many new affordable projects, is nearly depleted.

Republican City Council member Tariq Bokhari, elected in November, said it's frustrating that the project hasn't moved forward.

"The land is just sitting there," he said. Bokhari said the city should consider getting its money back immediately, if there are not "aggressive" signs that the apartments are coming quickly.

In a statement, Pappas said that the company hasn't been able to obtain federal tax credits that it needs to build the affordable housing.

"Unfortunately, the state has turned down three separate applications (2010, 2011 and 2014) for these tax credits based on the site criteria, which penalize sites that do not have a grocery store within a one-mile radius," said Pappas. The Harris Teeter and Publix on South Boulevard are more than a mile away. Pappas said the company has been discussing options for the site with city staff for three years.

"We also have offered to pay the penalty outlined in the agreement, but have been encouraged by city staff to continue to explore other development and financing options," Pappas said. He said the company submitted two options to the city in February and is waiting to hear back.

"We are looking forward to a response from the city on our most recent proposals," said Pappas. City staff plans return to council by the end of May with a new development agreement.

Long history

The city and the Charlotte Area Transit System bought nearly 16 acres for $9.2 million. The city helped pay for that with $2 million from the Housing Trust Fund.

In 2007, the city sold the land to Scaleybark Partners at a loss for about $5.2 million. The goal was to get affordable housing and the type of transit-oriented development leaders wanted. (The city had also cut $1.8 million from the price because of "challenging" soil conditions.)

Real estate records show Pappas' development company recently sold about 4 acres of the site at South Boulevard and Clanton Road to Pulte Homes for $6.6 million. Prices start at almost $400,000 for the 58 townhouses under construction, with more planned in future phases.

There is still enough land remaining to build the 80 apartments called for in the city deal. Development has surged north and south of the Scaleybark Station since the Blue Line opened, including thousands of new apartments to the north and a cluster of breweries, cideries and distilleries to the south.

The city's agenda for Monday does not give a history of the sales prices for the site, and it does not mention that the city spent $2 million from the Housing Trust Fund on the deal.

Other options?

Having affordable housing near a light-rail station is considered important, because it's easier for residents to get around without a car.

But if the Scaleybark deal falls through, the city could consider buying other vacant parcels near Scaleybark.

Another option is to use city-owned land near light-rail stations such as Archdale and Woodlawn. The city has surface parking lots near those stations, but it could build a parking deck surrounded by apartments. That's similar to what Scaleybark Partners had envisioned for the 16-acre site at Scaleybark.

The agreement with the city called for Scaleybark Partners to do several things.

The first was to create a temporary park-and-ride parking lot for CATS. That has been completed. The developer was also required to plant trees and build a new sidewalk. That has also happened.

But the main part of the deal has been elusive.

The developer was supposed to build a permanent park-and-ride facility for the Blue Line, as well as 80 apartments reserved for people earning less than 60 percent of the area's median income. That's about $42,000, under federal guidelines.

In 2011, Pappas attributed the lack of movement to the economic downturn. But the economy has now been strong for several years.

Pappas has built several high-profile projects elsewhere in the city, including the Metropolitan, a mixed-use development in midtown, earlier this decade.

He is also redeveloping another midtown site near Pearl Street Park. Two years ago, the City Council agreed to give Pappas a $4 million tax increment grant in exchange for him building some roads and other infrastructure on the site.

But the city didn't require Pappas to include affordable housing in the project in exchange for the $4 million. At the time, Mayor Vi Lyles – then a City Council member – said the city had made a mistake. She said future projects seeking city money would need to include affordable housing.