I attended two events over the weekend that showed the complicated issue of boosting the amount 
of affordable housing, from the perspective of the investor and the end-user. Each left me somewhat disheartened.
Community Empowerment Fund’s “Affordable Housing: The Musical” poked fun at council members, developers and others in the community while sharing the experiences of people who became homeless. The production explicated the varied interests of town residents layered onto decisions about affordable housing that can paralyze council from acting.
Good for CEF for holding council accountable to our campaign promises of supporting affordable housing.
One flaw in the musical’s premise, though, was that if we clearcut all greenspace and replace all parks with public housing projects, we’ll fill the need for affordable housing. That plan will only deprive people of modest means a free amenity. We’ll never fill the need for affordable housing, but we can make progress by redeveloping what we have.
A public housing complex has sat empty for nearly three years, and we haven’t decided what to do with it. Earlier this year, we received permission for RAD funding to redevelop and increase the density of other public housing sites, but we haven’t started the discussion yet. When we press developers to provide units in exchange for a rezoning, we ask for a low AMI threshold that results in a pitifully small number of units. Or we accept only a tiny amount of payment-in-lieu.
(The musical’s message was undercut somewhat by a cast member who had teamed up with a council member to quash a project that would have provided more than 30 apartments affordable in perpetuity to those making no more than 60% of the Area Median Income, plus given an additional $1 million for affordable housing off site.)
The show started and ended with a plaintive song from low-income characters who belted out the chorus: “What about us?”
That’s where the conference I went to Friday comes in. The Kenan Institute of Private Enterprise, part of UNC Kenan-Flagler Business School, hosted “Investing in Affordable Housing,” inviting investors, developers, affordable housing providers and a few elected officials to hear from experts in the field and get us all talking with one another.
One breakout session focused on emerging affordable housing models, of which there are precious few, and another laid out a proforma for a typical multifamily housing development and explained what factors affect the profit margin. Discouragingly thin margins and few levers that can be shifted to increase profits.
I had wanted the conference to inspire all those men with money to invest in housing for middle-class and working-class folks. Although the presenters did a fine job of demystifying who might hold what jobs at different annual income levels — underscoring that a balanced town needs to have housing options for people in a wide range of incomes — the thin profit margins revealed in the proforma session may have caused investors to dismiss the opportunity to invest in affordable housing.
I can only hope that the proforma session showed where the pinch points were, and the investors focused on the strong market demand for an affordable “product” and set their minds to finding ways to overcome the obstacles.
— Nancy Oates
