Chattin’ with developers (a quick note on affordability in Chapel Hill)

I recently was at an event and recognized a developer who had come before the planning commission in the past (I will not name the developer as I did not request permission to do so). We spoke briefly and the conversation turned to challenges associated with developing in Chapel Hill. The developed talked about the difficultly of getting a project cleared by town staff and the years (years!) that can add to a project’s timeline – and that all of that work to get staff clearance comes before a project must run the gauntlet of the town’s advisory boards.

Unprompted, the developer said it costs $1 million to plan to build a project in Chapel Hill. Not to actually build it, just to get it to the point where it is ready to go before the advisory boards and town council (where it will inevitably face changes that increase project costs).

I asked how that would compare to the cost of developing the exact same project in other communities like Durham or Raleigh. “Less that $100,000,” they quickly replied.

My reaction:It’s one anecdote but consistent with my hunch that Chapel Hill, in addition to having some of the most expensive land in North Carolina, has one of the slowest and costliest development review processes in the state. Yet we wonder why developers aren’t cranking out the affordable units we claim to want. Who is going to eat the $900,000 the town arbitrarily adds to project development costs? (hint: it won’t be the developer)

A few month ago, I was at a party in Raleigh and chatted with another local developer and I told him I lived in Chapel Hill and was on the planning commission. After he stopped laughing at me, he basically described Chapel Hill as a joke among the developer community – that it is not simply worth the effort to try to build here.

A good sign your local government may be doing something wrong is when local developers don’t want to build in a wealthy and attractive community located in one of the country’s hottest housing markets. Thought that presupposes that our lengthy and costly development review process is a bug – not a feature.