Earlier this week, a Chapel Hill affordable housing project won a significant state grant: The Town of Chapel Hill’s redevelopment project on Trinity Court is one step closer to breaking ground thanks to a major tax credit award from the North Carolina Housing Finance Agency.
The Town was one of 28 projects in 23 North Carolina counties to receive a 2022 9% Low Income Housing Tax Credit (LIHTC) award. The award is worth more than $10 million and will support the construction of 54 affordable units to replace the 40 existing units that have been vacant since 2018. Most of the units will serve households earning less than 60% of the Area Median Income and about a quarter will serve households with extremely low incomes.
This is great news. Fifty four new units will be built without displacing anyone. These units are reserved for families that are typically priced out of Chapel Hill. This is an extreme need.
The subsidy program is wonderful.
The subsidy program is, at best, only a part of the answer for affordable housing.
The $10 million dollars is a one time infusion of funding. These subsidies are intended to fill the gap between what the residents can afford to pay and the cost of construction. Towns can not count on getting a grant of this size every year. Instead, it’s a “submit an application and cross your fingers.”
When it is approved, a project moves forward. When it is denied, a project gets delayed.
This $10 million dollar grant will support the construction of 54 units, for approximately $185,000 in public support per unit (an amount that does not include land costs since the town owns the land – affordable projects on private land would require far more subsidy).
These subsidies are intended to be gap fillers. We need housing strategies that seek to shrink the size of the gap between what families can afford and the cost of construction. We can do this by either finding massive and unlikely pots of public money (e.g., higher taxes) to subsidize massive amounts of new construction or we can encourage policies that lower the cost of housing in the town.
Increasing the amount of privately built, non-subsidized housing will lower rents and home sales prices, which means more families could afford to live in town without any extra assistance. Furthermore, streamlining the approval process for small multifamily projects while also reducing or eliminating parking requirements in neighborhoods well served by transit will make the construction of publicly supported housing less expensive per unit. That would enable the very welcomed tax credit awards and other grants to stretch further and support more units.
Housing policy needs a “Yes AND“ mindset. So let’s celebrate an important win for the town today while working to make future tax credit awards even more effective and efficient.