For the past nine months, town staff have worked with HR&A Advisors – a housing and land use consultant that in my experience does excellent work – and local stakeholders to develop a comprehensive affordable housing plan. While the town has long focused on affordable housing, this represents the first comprehensive affordable housing plan in its history. The benefit of a comprehensive approach is it enables the town to be more strategic, align its housing policies, and be more proactive to address housing challenges. 

Read the draft plan here.

We’re eager to see how Council votes on the plan, especially considering that the town’s efforts to promote diverse housing types and affordable units is a top election issue. We will report on how Jess Anderson, Amy Ryan, and Adam Searing vote – Anderson and Searing are running for mayor and Ryan is running for reelection to Council.  

Why do we need an affordable housing plan?

As many of us are aware, Chapel Hill and many other parts of the country are facing a housing crisis. The U.S. as a whole has underbuilt housing in recent years. Different estimates peg the number of homes needed to accommodate population growth – but not built – at 4-7 million homes. Fast-growing metro areas like we live in, with high-quality jobs and other amenities, have not kept up with demand for homes. This has led to increasing rents, the inability of young families to purchase homes, and homelessness. 

The affordable housing plan acknowledges these challenges at the local level: “A constrained housing supply, increasing wealth and income disparities, and racial inequities have led to rising housing challenges. Fewer households in Chapel Hill can access homeownership and rents are increasing far faster than incomes for most households. Furthermore, historically marginalized communities in Chapel Hill continue to face displacement pressures as housing costs increase.” 

How did the town develop the affordable housing plan? 

The plan did not start from scratch but rather built on preexisting efforts of the town’s Department of Affordable Housing and Community Connections (HR&A praises the town’s work, noting that it “leverages a robust set of housing programs, policies, and funding sources for a community of its size”). HR&A’s role was to shape that existing work into an affordable housing plan, add new policy and implementation recommendations as needed, and engage the community to receive feedback on the plan. The engagement included interviews with local affordable housing developers and providers and presentations to Town Council, the Housing Advisory Board, and the Orange County Affordable Housing Coalition. The Housing Advisory Board unanimously approved the Affordable Housing Plan with the condition that the investment strategy include a $50 million affordable housing bond

Tonight, September 13, 2023, the plan returns to Town Council for approval or denial. 

Should Council pass the plan?

Absolutely. As discussed below, affordable housing is an ongoing challenge. Passage of the plan, which includes a funding strategy, is critical because the town has exhausted recent funding sources for housing (a total of more than $21 million was invested over the past five years, which included the 2018 $10 million housing bond). 

Those previous investments helped develop 130 new affordable homes, preserve over 920 homes, and create a pipeline of hundreds of additional units that will be coming out of the ground in the next few years . By contrast, the funding that Council has allocated in this year’s budget can only support approximately 10 affordable homes. Without additional funding, we cannot make a dent in our housing crisis.  

What are the primary housing challenges noted in the plan? 

There are four:

  1. Low density zoning, a lack of housing diversity, and public opposition to new development are noted as limiting the supply of housing, which in turn has driven up housing costs. According to the plan, “Compared to neighboring municipalities in the region, Chapel Hill has the lowest rate of new housing production and household growth over the past decade.” 
  1. As we’ve noted many times on TBB, there are no starter homes for young families anymore. Chapel Hill households in all income categories but one ($150,000 or more) were less likely to own their home in 2021 than in 2010. Households earning less than $150,000 experienced a 29 percent drop in homeownership in that timespan, while households earning more than $150,000 saw a 57 percent increase. We are quickly becoming a town where you have to earn a very high income or come from money to buy a home. 
  1. Renters are similarly being priced out of Chapel Hill. From 2014 to 2021, we lost 550 renter households earning less than $35,000. Almost 70 percent of renters here are cost burdened, meaning they spend 30 percent or more of their income on housing. Among renters earning less than $50,000, 88 percent are cost burdened. According to the plan, there is a gap between the number of rental units needed and supplied at all income levels (including those earning $100,000), but especially for lower-income renters: “Low-income renters in Chapel Hill are competing for a limited supply of rental housing that is affordable to them. Lower income renters unable to access affordable rental homes either need to seek more expensive housing options, which can exacerbate housing cost burdens, or find affordable rental housing options outside of Chapel Hill.”
  1. As you would expect in a town that does not produce enough housing to meet demand, people are being forced out of Chapel Hill. From 2010 to 2021, we lost over 2,100 households earning less than $35,000. It is also not surprising that Black households are the most harmed by our lack of affordable housing.  According to the plan, “Chapel Hill saw a net loss of 6% of Black renter households and 32% of Black homeowner households” from 2010 to 2021. In 2021, the Black homeownership rate fell to 18 percent, compared to 35 percent for Hispanic/Latino households, 55 percent for White households, and 60 percent for Asian households. 

What does the plan recommend?

The plan proposes 14 strategies across four areas: 

Reduce barriers to building homes

  • Continue to pursue zoning and regulatory changes to streamline entitlements processes and evaluate the impact of development requirements on affordability.
  • Launch a formal education and outreach campaign in order to bolster community support for the Town’s affordable housing priorities, including housing development.
  • Refine the Town’s inclusionary housing policy to better incentivize the development of affordable rental homes.

Expand and preserve affordable homeownership 

  • Modify the Town’s Employee Housing Program to provide down payment assistance for moderate-income homebuyers.
  • Expand the Town’s Transitional Housing Program and explore additional asset-building programs to serve more households interested in working towards homeownership.
  • Dedicate consistent funding to provide low-income households with property tax assistance.

Expand and preserve affordable rental housing 

  • Expand the Master Leasing program.
  • Create relocation assistance packages for renters at risk of displacement or eviction.
  • Continue to provide gap financing to preserve and create homes for low-income renters.

Increase staff and funding capacity 

  • Dedicate new, consistent sources of funding.
  • Realign the Town’s governance and funding processes for its local funding sources.
  • Establish a revolving loan fund.
  • Enhance partnerships with regional collaborators.
  • Align staffing capacity with existing and projected programming.

How would we pay for the plan?

As noted above, the $10 million affordable housing bond passed in 2018 has been spent or allocated. Without additional funding, Chapel Hill will find it increasingly difficult to preserve and build affordable housing on its own terms. Instead, we will have to rely on competitive federal and state programs, and affordable housing built through the town’s inclusionary zoning policies. Without local dedicated resources, our affordable housing plan will be more like unrealistic wish list. 

This is why the priority for the affordable housing plan is increased funding. The plan suggests that we spend $50 million over five years, which is roughly equivalent to what Charlottesville, Virginia, another college town with high housing costs, spends. Where will we get this money? The plan recommends three primary sources:

  •     A dedicated “two-cents” for housing. Out of our property taxes (currently 57.2 cents per $100 of property value), two cents would be dedicated for housing. This will generate $2 million per year. 
  •     A substantial ($30-$40 million) bond, which will be placed on the ballot in the near future.
  •     Commitments of up to $2 million a year from the town’s general fund.

Everyone in Chapel Hill claims to want affordable housing. This plan would give the town greater flexibility and resources to build and preserve affordable units. It will not be enough – we’ve dug too deep a hole for this plan alone to get us out of – but it’s a critical piece of the puzzle. We’ll learn a lot tonight and in the upcoming election about just how serious we are about making Chapel Hill a more affordable place to live.


Martin Johnson contributed to this post.

In the last municipal election cycle, we helped increase turnout by over 20 percent. We're all volunteers who care deeply about Chapel Hill and Carrboro, and we're working to make Chapel Hill and Carrboro more vibrant, accessible, fun, and sustainable.  Please consider a small donation to help us keep our digital lights on, host events, and hire students to do data deep-dives.

Stephen Whitlow lives in Chapel Hill. Trained as an urban planner at DCRP, he works for a research, evaluation, and technical assistance firm and focuses on the areas of housing affordability, fair housing,...