Roads not taken in Winston-Salem’s quest for affordable housing

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by Jordan Green

Winston-Salem planners have been putting a lot of thought into public-policy tools that might address the challenge of economic mobility.

In spite of downtown’s impressive revitalization, poverty remains a dismaying fact of life in some parts of Winston-Salem, and local planners have grown increasingly concerned about the role geography plays in determining children’s life outcomes.

In a July 2015 memo to Mayor Allen Joines and members of Winston-Salem City Council, Planning & Development Services Director Paul Norby cited a recent Harvard University study finding that Forsyth County ranks among the worst in the country in helping poor children move up the income ladder.

“A child growing up in Forsyth County is expected to earn $6,200, or 24 percent, less per year as an adult than a child growing up poor in an average county,” Norby wrote. “A companion study found that children who moved at an early age to lower-poverty areas earned approximately 31 percent more than those who remained in high-poverty neighborhood. And, while adults moving to lower-poverty areas did not see the same income gains, they greatly improved their mental and physical health.

“In fact, where you live can even affect how long you live, as life expectancy is shown to vary by 16 years or more between ZIP codes in the same city. These studies do not conclude what makes living in high-poverty areas so detrimental, but it is likely a combination of lower performing schools, fewer job opportunities, less access to primary care doctors, lower availability of fresh foods, the presence of lead and other environmental toxins and the stress of living in high-crime areas.”

Norby’s memo, which relied on research by Project Planner Kelly Bennett, was prepared in response to a request by city council for a report on potential revisions to the city and county’s development ordinance with an eye towards finding ways to incentivize affordable housing in areas where residents have better access to jobs and services.

The planning staff’s examination of various options for incentivizing or mandating affordable housing highlights the limited range of public-policy options in influencing market conditions in a growing city. Faced with structural economic and legal barriers to other avenues of addressing the need for more dispersed affordable housing, city leaders have settled on a financial incentives program to encourage developers to include more affordable units in their projects.

Winston-Salem and Forsyth County have had a policy of bonus density for affordable housing, also known as voluntary inclusionary zoning, on the books since 1994. The policy allows developers to increase the density of their projects by 25 percent for multifamily units if 40 percent are rented to families earning less than 60 percent of average median income or if 20 percent are rented to families earning less than 50 percent of median income. Not a single unit of affordable housing has been produced as a result of a developer taking advantage of the provision, according to the Norby memo.

The city and county of Durham adopted a bonus density for affordable housing provision about 15 years ago, with Asheville and Charlotte following suit in 2010 and 2013, respectively. The other three cities also have nothing to show for their efforts.

Local planners determined that the main reason the policy hasn’t worked is that developers can already get the density they want through stick-built construction of buildings up to three stories high. For higher-density, mid-rise buildings of four stories or higher, the building-code requirement to use steel and concrete drives up the cost, canceling out any advantage the incentives would provide.

The potential loss of hundreds of units near Baptist Hospital and Thruway Shopping Center with the announcement of plans to demolish the Ardmore Terrace and Cloverdale apartments has prompted renewed discussion about what the city should do to preserve affordable housing.

City council adopted guidelines for financial incentives for developers who agree to include affordable units in their projects. Under the policy, known as affordable workforce housing, the city may provide low-interest financing for up to 20 percent of the cost of the project, provided that the developer commits to setting aside at least 5 percent of the units for households with incomes at 50 to 80 percent of area median income. The renovation of the Pepper Building in downtown — the first project to take advantage of the incentives — would include six affordable rental units. Councilman Dan Besse, who represents the Southwest Ward, has lamented that the number of units created under the policy pales in comparison to the 350 affordable units that could potentially be lost with the demolition of the Ardmore Terrace and Cloverdale apartments.

State law has discouraged city leaders in Winston-Salem from taking the more aggressive tack of mandating affordable housing, as Chapel Hill, Davidson and Manteo — all struggling with high housing costs — have done. The three towns require that a percentage of owner-occupied housing units be priced affordably.

“These provisions push the limits of the law as there is no enabling legislation for this type of provision in the NC General Statutes and rent controls are expressly prohibited,” Norby wrote. “Davidson’s provision is currently facing a legal challenge.”

One additional tool discussed in the memo as a potential lever for encouraging affordable housing is relaxing parking requirements.

“Right now, parking requirements for single-family homes are two spaces per unit,” Norby said. “For multifamily units, it’s one space per unit for efficiency to three spaces per unit for a four-bedroom apartment. We might have an opportunity to say that if a project with multifamily units is located within X feet of an employment center, grocery stores or other places of service, that could be reduced, given that people can walk to many of the places where they need to go.”

Expanding infrastructure for public transportation could also potentially make relaxed parking requirements more attractive for developers. The city has studied the feasibility of building a streetcar system, but council members opted to not include the project in a 2014 bond referendum.

“When the streetcar study was being done in the area within short walking distance of the streetcar line, one of the things we were talking about was waiving or seriously reducing the off-street parking requirement so the developer wasn’t required to provide as much parking,” Norby said. While developers would have the option of providing off-street parking as part of a package of amenities to tenants or homeowners, the area around the transit lines would be expected to develop in a more urbanized pattern similar to the central business district.

The city already has a large stock of affordable housing, but it’s not necessarily in the right places. And the large stock of affordable housing is, perhaps ironically, a barrier to incentivizing it in the places where it’s most needed.

“It really is a study of contrasts,” Norby said. “When you look at it nationwide, this is a low-cost area in terms of housing costs. On the one hand, you say, ‘What’s the problem?’ On the other hand, you see we’re one of the worst counties of allowing upward mobility of someone growing up in a poor neighborhood. It’s not an issue of averages; we’re looking pretty good if you take the average. The problem is the diversity of affordable housing options in all areas of the city, particularly in places close to services.

“There are a lot of people in East Winston who have to go to a lot of trouble or expense to get certain types of services,” he continued. “We’ve got to increase the services in places that don’t have them, and we’ve got to make it easier for people to live in the places where the services and jobs are.”