Another Perspective on Colony Apartments

The Town Council's initial reaction to the proposed redevelopment of Colony Apartments (see "Council balks" in the CH News, 7/3/12) is classic Chapel Hill: act high-minded when, in fact, our head is buried deep in the sand. I am an affordable housing advocate and a Chapel Hill resident, but I take a different view of this development proposal.

Am I concerned by the potential loss of one of the community's few apartment complexes that serves a working class population? Of course. Yet the reason such apartment complexes are scarce is that as a community we persistently fail to understand the ongoing impact of our many protectionist, restrictive policies that curb the supply of housing. (With all the PhDs in this town, you'd think we could understand basic supply and demand by now.)

Worse yet, our affordable housing policies are focused almost solely on homeownership with little attention to rental housing. For instance, communities across the Triangle utilize the federal Low Income Housing Tax Credit and other programs that create new, affordable rental units that are as high quality and attractive as apartments anywhere. Why not Chapel Hill?  Perhaps the thought of housing some of the thousands of low wage workers who help UNC run, care for us at the hospital, and fill service sector jobs across Chapel Hill makes us a little uncomfortable.

If we are sincere about wanting a diverse housing market then we should encourage dense, well-planned development. More to the point, we should actively seek partners to work with the Town to develop new affordable apartments. Finally, we should revisit the Town's 2011 decision to exempt rental developments from affordable housing requirements.

 Let's get our head out of the sand and break some new ground.

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14 Comments

We Need to Talk More About the Housing Market

The poster is absolutely correct that we need to build more housing in order to address the increasingly acute affordable housing problem in southeastern Orange County.More units allow for slower rent/price growth in comparison to demand, while limiting the number of units will only accelerate the exclusion of the middle class from Chapel Hill by price.I think the Charterwood debacle indicates that not enough people focus on the benefits of general housing supply expansion for affordability.  I think this is because the development process focuses on the question of affordable units or payment-in-lieu, but never measures the impact of the project on local absorption of units, which might show to what degree a new development could take the heat off the market.

A tale of two islands

Manhattan is an island surrounded by water.  Chapel Hill is an island surrounded by the rural buffer.  Both are considered attractive places to live.  For the last thirty years there has been significant residential construction in Manhattan as well as gentrification of formerly lower priced neighborhoods.  Despite that prices have risen astronomically despite extensive rent control and rent stabililzation programs.In Chapel Hill three major condominium complexes have been (or are being) built in the last several years.  They all have the highest residential prices per square foot in Chapel Hill.Where is the evidence that building more condomium units (or rental apartments) has -- or will -- reduce prices of residential real estate in Chapel Hill where median prices are already about 50% more expensive than surrounding communities.Of course, New York City is not just Manhattan.  It has four other boroughs.  Housing is much more affordable in many areas in the other boroughs but with a few exceptions it's not considered as "attractive" as Manhattan.The dominant supply factor in both cases is the scarcity of land.  This can not change in Manhattan and is unlikely to change for Chapel Hill.  It would be great to see quantitative evidence to the contrary but I am not aware of any that has been presented in the community discussion so far. It will be interesting to see what data will be presented in the Planning Models and Future Townscape Special Topics session next Wednesday (at noon). The community may conclude that  it wants to build significant amounts of multi family housing for other reasons but the argument that it will result in more affordable housing (other than for the Home Trust) has not been substantiated.  Indeed, based on recent projects, just the contrary.     

George C's picture

It Might Depend On The Nature of The Construction

Matt,You said "For the last thirty years there has been significant residential
construction in Manhattan as well as gentrification of formerly lower
priced neighborhoods."  Indeed, the total number of occupied housing units in New York in 1970 was 2,836,872 (this obviously includes all five buroughs).  In 2010 the number was 3,109,784 - an increase of 9.6%.In 1970 the population of the New York was 7,894,862.  In 2010
the population of New York was 8,175,133 - an increase of only 3.6%.These numbers include all the buroughs but one could argue that since the growth in housing units outpaced the growth in population that the prices should have fallen (which we know they didn't).  Unfortunately, such comparisons are meaningless without information about demographics since we also know that there is generally an increasing demand for housing units by smaller households. This may (probably is) also be the case in Chapel Hill. It's obviously important to look at not only the number of units built but the market they are built to address.

numbers look even worse for cost relative to smaller households

Great data George.  Glad to see it appears to support my observation.  As for an increasing demand for housing units by smaller households -- I believe that makes the numbers look even worse.  Units in the current three major developments in Chapel Hill are more expensive per capita as well as being more expensive per square foot.What is the data source for your assertion  that there is "generally an increasing demand for housing units by smaller households"  

George C's picture

Perhaps I Should Have Phrased It.....

Matt,I didn't mean that smaller households per se demand more housing.  There are a number of studies that show that average household size is decreasing across the nation.  If that is correct (and I think it is), then for the same number of people you have more households.  Assuming folks have to live someplace (whether buying or renting) then an increased number of households will result in increased demand and therefore, presumably, higher prices.Going back to your original post though, you suggest that Chapel Hill, an island surrounded by the rural buffer, is constrained much the same way Manhattan is constrained by its surrounding water.  I would suggest that it (Chapel Hill) is only constrained if it limits its growth in that remaining direction - up!.  And that is the choice that Chapel Hill citizens face: if developers are allowed to build up as much as they choose then perhaps demand could be saturated (as Patrick suggests) and housing prices would level off (or even come down). And this is indeed the conundrum we face: (a) allow builders to build up and perhaps meet or exceed the current and/or expected housing demand and thus allow prices to stabilize or even drop or (b) restrict housing height (and ergo density since, we agree, we've already restricted the area) and thus put a premium price on available housing and restrict affordability.Quite a conumdrum indeed!  

That's a big perhaps!

Affordability is already restricted.  Housing prices in Chapel Hill are more than 50% highher than surrounding areas. According to Katelyn Ferral at the Chapel Hill News the average price of a condominium at East 54 is $361 per square foot.  How much would that have to come down to in order to create affordable housing. I believe the average price per square foot for a single family residence in Chapel Hill runs around $200 per square foot.  Certainy not $360. Also would love to see just one source showing that average household size is decreasing across the nation (and by how much) for my own edification.   

George C's picture

Will This Do?

Average US Household Size Declines to 2.6

October 8, 2009

 

The number of people living alone in America rose from 17% in
1970 to 27% in 2007, and the average household size declined from 3.1
people in 1970 to 2.6, according the latest 2007 figures recently
released by the US Census Bureau. But to be fair, they have leveled off or are heading back up:From The Economist: Cramped quarters: As children postpone their departure, households get larger

Image credit: The Economist
[A]fter shrinking for decades, households have started
to grow. Last year the average household had 2.59 people, up from 2.56
two years earlier, marking the first increase since 1993. 

Geoff Green's picture

New York

Interesting that you bring up New York City. The amount of residential construction in NYC may be substantial particularly for people living in Chapel Hill, but it's still far short of demand. You'd probably need to double the pace of residential construction to make any sort of a dent in pricing. (Read Ed Glaser for more.)

The construction process in NYC is complicated, thanks to a patchwork of laws and different city agencies with overlapping jurisdiction, and projects frequently have to contend with NIMBYs who are concerned that any proposed buildings that are taller than what they replace will destroy the community. Sounds familiar, actually.

As far as household size, can't help you there. But there's growing evidence that the younger generation is much more interested in walkable neighborhoods and less eager to own cars. Even General Motors recognizes this.

New Units Affect Existing Units, Particularly the Oldest Ones

The primary opportunity that new development presents for affordable housing is not new OCHLT units in the development, it is the impact the new development makes on the existing housing stock and its price. Any new units obtained for OCHLT are a nice bonus.The larger benefit than the handful of units obtained for OCHLT by the approval of 140 West is the filtering opportunity the new units added to the market allow for households at different price points. Let's take 140 West Franklin as an example. Here's a unit that costs $390,000 listed on realtor.com.  It's likely that there are households in Chapel Hill that are selling their close-to-downtown-but-not-in-downtown homes to move into the building.  Maybe it's an retired couple looking to downsize from a house like this one, listed for about $275,000.  Well, someone's got to buy the retired couple's house to make the move to 140 West work out. Maybe a family with young children in Village West looking for more space. So they put their unit on the market for $172,000. Which gets purchased by someone from another smaller townhouse, looking for more space, who lists their old place for $131,000.I could go on, but I think the point is evident.Where we end up is a place like Bolinwood condos, where there are multiple units available all in the$65,000 - $80,000 range. It's not a coincidence that these condos, which look to be the cheapest in all of Chapel Hill, were built 40 years ago.  In Carrboro, Abbey Court (built in 1971) was just sold for a rough average of $25,000 - $30,000/unit. The key point is this: in any housing market, there are always numerous people looking to trade up to a slightly better housing opportunity, or a significantly better one.  In a high-demand location like Chapel Hill, this is even more true. 140 West has 140 units in the building. Eighteen will belong to OCHLT. But even if 2/3 of the new occupants in the 122 market-rate units are bought by out-of-towners, the remaining units still allow 40 filtering opportunities in Chapel Hill, and that helps open up lower-cost housing stock as the filtering process continues.  

Mark Chilton's picture

some points of clarification

I agree with a large part of your overall point, fwdprogress.  And I absolutely agree we need to focus on affordable rental housing (both new developments and the overall market).  But attacking the Town Council is probably not the solution - especially given that some of your statements above are not correct (viz.):"For instance, communities across the Triangle utilize the federal Low Income Housing Tax Credit and other programs that create new, affordable rental units that are as high quality and attractive as apartments anywhere. Why not Chapel Hill?"First, I can think of five LIHTC developments in the immediate area (and I am not sure that I know of them all).  Second, the Town of Chapel Hill is probably the third or fourth largest residential landlord in town (through the Chapel Hill Public Housing Department) with literally hundreds of dwelling units.  As well, both towns have quite a few Section 202 (for people with disabilities) and Section 811 (for senior citizens) apartment complexes. "Perhaps the thought of housing some of the thousands of low wage workers who help UNC run, care for us at the hospital, and fill service sector jobs across Chapel Hill makes us a little uncomfortable."I can't think of any occasion where a legit affordable housing development got canned by the Chapel Hill Town Council.  Not to my knowledge.  Not in the last 20 years.  On the other hand, I can think of several occasions when the CHTC stood up to NIMBY activists and funded/approved (on 9-0 or 8-1 votes) controversial non-profit affordable housing developments - the Janus Tree House, Dobbins Hill, and Sunrise Road all come immediately to mind as examples and there are others.And in fact Dobbins Hill is an example of the Chapel Hill Town Council approving a Low Income Housing Tax Credit development over the objections of NIMBY's."Finally, we should revisit the Town's 2011 decision to exempt rental developments from affordable housing requirements."I agree the subject should be revisited, but your characterization is unfair.  The Town's affordable housing ordinance exempts rental developments because the State government explicitly prohibits local governments from regulating rents.  I think calling that "Chapel Hill's decision" is unfair.Nevertheless the issue deserves a second look, particularly because apartment financing is just about the only form of commercial credit that is currently available for land developers.  That is why everyone is bringing in big new rental projects right now; it's the only thing the banks will readily finance.But the question is not whether to exempt rental housing from an Inclusionary Zoning Ordinance in NC.  The question is whether an Inclusionary Zoning Ordinance is the best tool, given that it CANNOT compel the inclusion  of affordable rental housing:North Carolina General Statutes § 42-14.1"No county or city as defined by G.S. 160A‑1 may enact, maintain, or enforce any ordinance or resolution which regulates the amount of rent to be charged for privately owned, single‑family or multiple unit residential or commercial rental property. "