NC law makes mandating affordable housing hard — did Asheville find a solution?

When Asheville put a temporary pause on construction of hotels three years ago, officials seized the moment to address a burgeoning affordability problem in their city.

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When Asheville put a temporary pause on construction of hotels three years ago, officials seized the moment to address a burgeoning affordability problem in their city. 

In doing so, Asheville may have also left a breadcrumb trail that other North Carolina localities can follow to get around a state restriction many routinely cite as the reason city officials can’t adopt more rules to support affordable housing.

Some states, like California, require residential developers to provide a certain percentage of mixed income or lower cost housing in subdivisions. Other locales, like some municipalities in New York and states like Maryland and Connecticut encourage it through certain programs, oftentimes with tax incentives. 

In North Carolina, local governments only have the powers granted to them by the state constitution and statutes. It’s known as “Dillon’s Rule.”

How has that affected affordable housing? In Charlotte, for example, City Council members can’t legislate or mandate that all developers or property owners build income-restricted housing or affordable units. 

The city (and other taxing bodies) can and does offer incentives, grants and more. 

But inclusionary zoning is off limits. 

Inclusionary zoning effectively allows local governments to deny permissions to build or use land for residential purposes without a certain mix of affordable units being added. 

In Asheville, officials stopped hotel construction after a years-long boom of developer interest. And while the city didn’t call what happened next “inclusionary zoning,” the game plan did achieve something similar. 

When Asheville lifted its hotel moratorium, officials did so with more rules in place and established a new hotel overlay district. The overlay district — a zoning authority North Carolina municipalities may exercise — effectively replaced Asheville’s moratorium. 

But in order to build hotels in it, developers would have to take steps to earn enough points in a system designed to aid affordable housing. 

Points are earned by:

  • Pitching a hotel project that revamps and reuses a historic building
  • Donating to the city’s affordable housing or reparations fund
  • Agreeing to pay workers a higher, liveable wage
  • Contracting with women or minority-owned businesses

To guide the work, the city placed an emphasis on affordable housing points and required that at least half of the developer’s points come from contributing to that bucket. 

“For example, a 100-room hotel in downtown Asheville would need to either contribute $400,000 to either the Housing Trust Fund or a Reparations Fund, or build 10 affordable for sale housing units, plus choose from a menu of other benefits such as supporting a Business Inclusion Program or providing living wages in order to get approval at the staff level,” explained a city spokesperson in a news release last year. 

Could something similar work in Charlotte? 

A Community Benefits Association (CBA) working in conjunction with the Charlotte City Council or the Mecklenburg County Commission could, in theory, create a similar scenario. 

“For over a year and a half the city worked very hard at putting together a Community Benefits Association,” explains Jordan Brooks-Adams, the Executive Director of West Boulevard NC, one of the founding members of Charlotte’s Community Benefits Coalition (CBC) that includes more than 30 organizational members from Charlotte’s low-income and minority neighborhoods on the city’s east and west sides.

“I believe in the concept of community benefits programs,” she explains. “They work. We’ve seen them work all over the country.”  

The city of Charlotte does have some authority, although it has limits. City Council recently passed source of income protections for renters in government-supported housing, followed by similar protections in Mecklenburg County. They are the first such protections in the state. 

The new policies apply only to affordable housing developments receiving local government funds or financial incentives, including vouchers and the conveyance of real estate for affordable housing production. Owners that fail to comply will face thousands of dollars in fines. 

Councilwoman Victoria Watlington, who spearheaded the city’s policy, said before voting she understands that there’s going to be more work to do in terms of expanding these protections. Like inclusionary zoning, any broader measure would require movement at the state level and that seems doubtful with the current political makeup of the legislature.  

Asheville’s workaround has shown signs of success in meeting community needs. According to the Asheville Citizen-Times, the new hotel policy has resulted in more than $1 million toward the city’s reparations and affordable housing funds, while addressing concerns over infrastructure and design. 

More than half of the projects approved have a mixed-use component, adding a total of 164 residential units. 

Where state law prohibits requiring community benefits, city incentives became a way of encouraging private companies to be involved. 

The CBC believes it’s a roadmap for Charlotte’s affordable housing. The group proposed the creation of overlay districts as part of the Unified Development Ordinance (UDO) to areas of medium to high housing precarity in addition to projects within a mile radius of a light rail station. 

Any development built within this area would trigger a community benefits table and developers would be required to choose whether or not to meet the point system or go through a standard rezoning process. 

“We believe that community benefits us, and we believe the realization of these policies within the UDO should allow for communities to benefit from economic development rather than be bulldozed by it,” stated the group in its proposal. 

The Charlotte City Council voted 6-4 to pass the UDO in August, without a community benefits plan — at least for now.

Cover illustration by Mariano Santillan

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