Spring 2023 CountyQuarterly — Feature Article

Creating Solutions for Community: County Successes in Affordable Housing

By Carl Wilkins | NCACC Strategic Communications Specialist

By Adam Pridemore | NCACC Legislative Counsel

Buncombe County, Homeward Bound WNC’s Permanent Supportive Housing Expansion Project

North Carolina continues to be an attractive place to work and live with more and more companies and workers choosing the state as their home. However, the influx of jobs, residents, and prosperity also brings challenges. One such challenge is the sufficient quantity and affordability of housing to meet increasing demands. 

The matter is complex, and there is no single reason North Carolina, along with many other states in the nation, are facing the issue. Some factors contributing to the current affordable housing crisis include:

• Urbanization over the last half-century and land price increases in urban settings.
• Building supply price increases and pandemic-related supply chain disruptions.
• Skilled labor shortages resulting in higher labor costs and increasing the time it takes to build a home.
• Interest rate increases.

This issue has reached a fever pitch at the North Carolina General Assembly this year with “affordable housing” and “workforce housing” being two of the buzziest buzz words making their way into most conversations this legislative session. As North Carolina continues to attract more businesses and residents, law makers are rightfully concerned with ensuring these new workers and residents have a high quality of life, which includes an affordable place to live.

The reasons for housing prices are varied and complex. Some people suggest that the housing market is over-regulated, and government regulation makes up nearly 25% of the cost of a home. To understand the housing issue and provide the local government voice, the NCACC partnered with the North Carolina League of Municipalities (NCLM) to produce a robust report, Local Governments Responding: The Housing Crisis in North Carolina. The report results from surveys and discussions with some of the fastest-growing jurisdictions in North Carolina to understand the scope of the problem and local policies and processes related to housing. 

The report has many important findings but indicates that delays often come down to two things: the submission of incomplete plans; and other entities besides local governments, such as private utilities and state and federal agencies, slowing down the process. Additionally, the report confirms that like the private sector, local governments are also facing labor shortages; particularly regarding building inspections.

“Counties are instrumental in community planning, land use, zoning and enacting policies and other regulations that affect housing. Regardless of specific county functions and responsibilities, all counties have the potential to establish and enhance partnerships with public, private and nonprofit sector stakeholders.”

– National Association of Counties (NACo) Housing Task Force

Local governments are limited in how they can address affordable housing issues in their communities. Despite this, local governments continue to look for solutions to address housing needs in their communities.

New Hanover County

New Hanover County is a prime example of a county using innovative solutions to address residents’ housing needs. New Hanover County is fast-growing, and the demand for affordable housing has continued to climb. Over the past 10 years, New Hanover County’s population and household growth rate have outpaced the state’s and is expected to continue growing through 2025. Growth is great, but, over the next 10 years, there is an estimated housing gap of over 10,700 rental units and over 13,000 for-sale housing units within the county.

Affordable housing is not just a county problem; it is a complex issue that requires partnerships and creative solutions. New Hanover County understood this need and partnered with the City of Wilmington to develop a joint Workforce Housing Advisory Committee (WHAC) to increase the supply and equitable access to affordable housing for their local workforce. According to the WHAC, workforce housing is defined as housing (to own or rent) that is affordable to households earning up to 120 percent of the Area Median Income (AMI). The task force’s goal is to support residents such as police officers, firefighters, teachers, health care workers, retail and restaurant staff, senior citizens, and people with other sources of income.

“Greater tax generation, creation of jobs, opportunities for economic development, increased job retention and productivity, and the ability to address inequality all are among the economic benefits of increased access to quality, affordable housing. Multiple reports show a harmful link between high housing costs and difficulties with employee recruitment, productivity, and retention, which hurts businesses and a community’s economy.”

– New Hanover County/City of Wilmington Workforce Housing Advisory Committee 

New Hanover County, Starway Villages

According to the U.S. Department of Housing and Urban Development (HUD) households should spend at most 30% of gross income on housing and utilities, with households that spend more than 30% being considered cost-burdened. Unfortunately, many in New Hanover County carry the weight of a growing housing market. In New Hanover County, most county renters and more than one-quarter of homeowners are cost-burdened. 

To address this issue and provide affordable options for residents, New Hanover County built upon its established partnership with the city of Wilmington to make a historic local commitment to affordable housing, developing Starway Villages, the first affordable development in the Cape Fear region’s history. The project utilized joint gap financing to make the project a reality. The City Council approved using $3.5 million of American Rescue Plan Act (ARPA) funding, along with New Hanover Board of County Commissioners approving $1.89 million in ARPA funds toward the project. This undertaking represented the largest gap funding commitment ever made by Wilmington’s City Council and New Hanover’s Board of Commissioners. 

“Addressing housing affordability is a key priority for the New Hanover County Board of Commissioners. With investments through American Rescue Plan funds, a five-year $15 million commitment through our workforce housing program, land donations and infrastructure funding, New Hanover County has taken meaningful steps in helping to address housing affordability. And we will continue to do more to increase the stock of safe and affordable housing options through a variety of creative solutions,” says Bill Rivenbark, Chairman of the New Hanover County Board of Commissioners.

According to the WHAC, the project received a $9 million grant from the North Carolina Office of Recovery and Resilience, leveraging a total of more than $16 million of public funding. Starway Villages will add 278 affordable units composed of one-to-three-bedroom apartments, including 20 fully accessible ADA units. The project is expected to break ground in late spring/early summer 2023.

Buncombe County

Like New Hanover, Buncombe County is implementing creative solutions to support cost-burdened renters and homeowners. According to a study by the National Alliance to End Homelessness, more than 17,000 renter households in Buncombe County are cost-burdened and since the start of the COVID-19 pandemic, rents in Asheville have risen 41.7 percent. By 2030, Buncombe County’s population is predicted to be 297,608 compared to the 2020 Census record of 269,452—a 10.4% increase in population. 

Affordable housing is a major priority for Buncombe County, and the board of commissioners and staff are working to ensure opportunities are available for affordable and safe neighborhoods. So far, they have allocated around $10 million of ARPA funds to affordable housing projects such as development projects, supportive projects like home repairs, and shelters for survivors of domestic violence and homelessness.

When households are cost burdened, they are more susceptible to homelessness. According to the National Alliance to End Homelessness, since 2020, there has been a 257% increase in unsheltered homelessness in the City of Asheville/Buncombe County’s homeless system. This issue requires serious solutions, and Buncombe County has risen to the challenge.

At the crux of Buncombe County’s affordable housing plan is community input, and it was the first step in deciding how their $50 million of ARPA funds would be spent. The Affordable Housing Committee, composed of Buncombe County Commissioners, was created to engage with community partners, solicit public input and make housing affordability policy and funding recommendations. Additionally, Buncombe County ensured the community had a voice through a request for proposal (RFP) process.

These channels for two-way communication ensured that community-based organizations had opportunities to expand their services and community members had opportunities to submit input. Once the RFPs were submitted and committees convened, the board of commissioners and staff reviewed applications and public input and decided which projects to fund based on the most dire needs in the community. 

Homeward Bound WNC’s Permanent Supportive Housing Expansion is an example of a great project funded through county administered RFPs, and a unique solution to homelessness. It provides permanent supportive housing through a remodeled motel that it acquired to renovate 85 affordable housing efficiency units to serve the chronically homeless. According to Homeward Bound WNC, to be considered chronically homeless, one must have experienced at least 12 consecutive months of homelessness or experienced four episodes of homelessness in the past three years and have at least one disabling condition. 

Homeward Bound WNC is unique due to its partner-ship with the housing authority and its implementation of vouchers, which is a sustainable funding model through the federal government’s program for assisting very low-income families, older people, and the disabled to afford decent, safe, and sanitary housing in the private market. Another unique aspect of Homeward Bound WNC is its longtime preservation of affordability window; meaning that the units will be affordable continuously. Typically, projects have a period of affordability just during the loan, usually a 20-30 year window. Homeward Bound WNC is a long-term solution to an immediate problem, and it was accomplished through effective partnerships and investments through the Buncombe County Board of Commissioners.  

“The housing crisis is not unique to Buncombe County, so we knew that ARPA funding was our chance to take swift and meaningful action. That’s why we were so intentional about making these awards to our community partners who help ensure people remain in their homes, improve their homes, create innovative solutions for affordable housing developments, and build bridges to housing for our most fragile populations. With our Affordable Housing Committee, we’re ensuring that intentional work continues to show up in future projects, regardless of the funding stream.”

– Amanda Edwards, Vice Chair of the Buncombe County Affordable Housing Committee and District 2 Commissioner

New Hanover and Buncombe County are just two examples of counties across the state that are passionate about solving the affordable housing crisis. It is a complex and comprehensive problem that affects each county differently. Unfortunately, there isn’t just one answer to the problem, and ARPA investments by itself cannot solve everything, but used in combination with other innovative and effective solutions, counties can make a substantial difference for residents.

Solutions

Some best practices to address affordable housing distilled from New Hanover County and Buncombe County:

• Partner with municipalities to address affordable housing.
• Counties can best assist in infrastructure develop-ment.
• Establish an Affordable Housing Committee.

As published in the Local Governments Responding:  The Housing Crisis in North Carolina report, the following are some best practices by local governments that can help make the approval process more efficient and lower the cost of housing:

• Approve concurrent review processes intended to speed overall building approvals and allow development to proceed more efficiently.
• Establish an ongoing process that allows developers, staff and citizens to meet to discuss development plans, land-use planning and building review processes, as well as development generally. 
• Establish interlocal agreements with neighboring jurisdictions to allow for resource and personnel sharing during times of high-volume building or staffing issues.

Potential state policy changes that can help local governments meet the housing needs of their communities include:  

• Expand a state Department of Insurance pilot program to train more building inspectors.
• Create and fund uniform software for small jurisdictions that could streamline and speed up permitting processes and create more certainty for builders. 
• Build a state-of-the art educational lab where building inspectors and other personnel can be trained in seeing real-world examples of trade construction and how to correct code issues. 
• Incentivize investment in housing development for various family income levels, whether through tax credits, land banking or public-private agreements, is time proven in addressing housing affordability.

Additionally, local governments can address housing needs through housing bonds. These bonds provide local governments with resources they may use to assist people to find housing solutions through direct construction of low-income housing, down payment assistance, and land banking. More commonly utilized by municipalities, some successful recent housing bond referendums in counties include:

• Buncombe County, 2022 – $40 million
• Orange County, 2016 – $5 million

“It has never been more difficult  to build affordable housing than it is today due to inflation and construction costs which are up 30-40 percent since the start of COVID. Larger and more impactful affordable housing developments are possible due to the subsidies and investments from the county, city, and state. Public financial support like gap funding is crucial to affordable housing developments.” 

– Ted Hielbron, Kelley Development Company 

Using tax dollars to address the affordable housing challenge is not the only way local governments are addressing the issue. Another, and increasingly common, way local governments are responding to the housing needs in their communities is through land-use reforms. These reforms include revising codes for more density by right, allowing density bonuses for housing construction, loosening parking requirements, and decreasing the land required for residential parking development. 

There is no one size fits all solution to the issue of affordable housing, and local officials must balance the competing needs in their communities of finding solutions to meet housing needs with the concerns of existing residents and homeowners on how those solutions may impact their home values and the character of the community they call home. However, counties continue to walk this fine line and come up with creative solutions that best meet the needs of their communities.