The Community and Economic Development program at the School of Government provides public officials with training, research, and assistance that support local efforts to create jobs and wealth, expand the tax base, and maintain vibrant communities. We deploy the resources of the University to support the development goals of communities in North Carolina.

The Community Reinvestment Act & LIHTC: How changes in the banking sector could affect affordable housing

Over the past few decades, the Low-Income Housing Tax Credit (LIHTC) has become the nation’s most important policy to incentivize the creation of affordable housing. LIHTC, administered in North Carolina through the North Carolina Housing Finance Agency, allocates credits to private developers who then produce affordable units. Since its inception, LIHTC has helped create an estimated 2.3 million homes.

The policy is unique because few developers actually use these credits themselves, instead opting to sell them to investors to help finance construction. As a result, changes in demand for these credits can sometimes affect the financial viability of affordable housing projects.

Who invests in LIHTC? Because affordable developments don’t generate substantial revenue, investors instead use the credits to reduce their tax liability. Since the 1990’s, large, publicly traded financial corporations have become the largest investors in housing credits. According to one report, approximately 85% of all housing credits are purchased by banks.

Housing credits are appealing to banks for a number of reasons. Because bank profits are relatively stable year to year, they have a consistent need to reduce their tax burden. Housing credits are also safe assets for banks that are barred from making unnecessarily risky investments. Nationally, LIHTC units have higher occupancy rates and lower foreclosure rates than traditional multi-family housing. Read More…

What @sog_ced is reading online: September 2019

The following are articles and reports on the web that the Community and Economic Development Program at the UNC School of Government shared through social media over the past month. Follow us on twitter or facebook to receive regular updates.

Items of interest related to CED in North Carolina:

City of Marion, NC took ownership of Drexel plant, used grants to demolish and clean up site, and then will place site on the market. Excellent example of smart and legal approach to reuse of industrial site. bit.ly/2PY0ycZ

Nonprofit Quarterly piece takes critical look at business location incentives, offers advice, mentions decision by Buncombe County NC to move some incentive funds to small business loans. http://bit.ly/2Nmeg7v

City of Albemarle adopts housing code capable of addressing vacant buildings with “green-yellow-red” approach devised by UNC SOG faculty member and DFI Director Tyler Mulligan: http://bit.ly/2nQOxsj 

Other CED items:                                   

NY Times article suggests that Opportunity Zone investments are not helping the designated communities, nyti.ms/2LfKuPA, a concern we at SOG CED shared with local governments last year here: unc.live/2DucfzB.

Zillow analysis: “Starting Salaries for Teachers Don’t Pay the Rent.” Teachers in Raleigh require 41% of their salary to afford median rent. Charlotte teachers use 37%. HUD defines cost-burdened families as those “who pay more than 30% of their income for housing” and “may have difficulty affording necessities such as food, clothing, transportation, and medical care.” http://bit.ly/2MTsufU

Harvard Joint Center for Housing Studies paper describes steep decline in past 5 years of number of rental units that are affordable to those earning $24k or less (rent of $600 or less). http://bit.ly/2LG1a2I

DFI in the News:

AIM Magazine describes the transformational work being done by DFI in Kinston and other cities around NC. We’re grateful for strong partners like LGFCU and the City of Kinston Planning Department who make this important work possible. bit.ly/2kCw0hW

Read More…

What @sog_ced is reading online: August 2019

The following are articles and reports on the web that the Community and Economic Development Program at the UNC School of Government shared through social media over the past month. Follow us on twitter or facebook to receive regular updates.

Items of interest related to CED in North Carolina:

Great interview with one of North Carolina’s giants in economic development, Dr. Pat Mitchell, who discusses NC economic development, rural and urban, and the role of economic developers. bit.ly/2OTeC7h

NC Department of Commerce reports record visitor spending in all 100 NC counties in 2018, $25.3 billion statewide, with Mecklenburg and Wake leading the way. bit.ly/2YXfgVT

City of Gastonia approves agreement with developer for $15 million private redevelopment of 115-year old Trenton Mill, a SOG Development Finance Initiative (DFI) project, in City’s FUSE district. http://bit.ly/2NAVbxv

High Point NC nonprofit installing “tiny houses” as affordable housing solution. http://bit.ly/2MIWbjx  Read More…

Household Overcrowding in North Carolina: A Look at the Data

For community developers and housing advocates, household overcrowding has long been a key concern. Across the country, housing needs assessments often list overcrowding as an economic outcome, an indication that affordable housing supply is unavailable. That is, individuals are forced to cohabitate because they have no other available options, and should affordable housing supply appear, individuals would relocate.

When broadly applied, this assumption does not necessarily align with available data. In North Carolina, as discussed below, household overcrowding is more closely correlated with ethnic and demographic characteristics than household economics. Before positioning household overcrowding as an indicator of unmet housing demand, developers and advocates should examine the specific demographic nuances of their communities. Read More…

Strategies for Creating Mixed-Income Neighborhoods

Durham County hired the Development Finance Initiative (DFI) in 2017 to help redevelop two county-owned parcels in downtown. Though currently serving as surface parking for county employees, the two sites are located adjacent to recent high-end residential development, government and institutional services, and subsidized public housing. County and community leaders recognized the strong potential of these sites to transform the area’s character and hired DFI to help develop a plan for a mixed-income residential development. After 18 months of intensive analysis and community engagement, the County—with the help of DFI—selected a development partner in early July 2019.

Throughout the process, the topic of mixed-income development was reoccurring. What exactly does mixed-income mean? And how can it be administered and achieved? For Durham, given current state-level regulations, mixed-income ultimately came to mean a diversity of income across the broader neighborhood context. While incomes will be mixed within the larger development site, the buildings themselves will house either market-rate or income-restricted affordable housing. Read More…

What @sog_ced is reading online: July 2019

The following are articles and reports on the web that the Community and Economic Development Program at the UNC School of Government shared through social media over the past month. Follow us on twitter or facebook to receive regular updates.

Items of interest related to CED in North Carolina:

Read this fascinating examination by the Charlotte Journalism Collaborative of affordable housing in Charlotte—this piece focuses on history and current efforts in the affluent Ballantyne area. bit.ly/2XgOgzG

North Carolina ranks #3 among CNBC’s 2019 Top States for Business cnb.cx/2JqSUCI

The New Yorker reports on African-American agricultural land loss, with focus on North Carolina. Read the article here: https://t.co/tr5AcQWdtQ Read More…

DFI: Of the Public, For the Public

The mission of the School of Government is to improve the lives of North Carolinians through training, advising, and scholarship for public officials. However, when it became clear that a phone call or email exchange would not be adequate help for a local government trying to navigate the complex world of private development, faculty member Tyler Mulligan created the Development Finance Initiative (DFI). A common criticism of academic institutions is that the knowledge produced rarely yields real-world impact for the surrounding communities, but the 134 projects DFI has worked on over the last eight years tell a different story.

DFI’s service to the state is a story of hope for North Carolina’s future. Housed at UNC, DFI has partnered with geographically and economically diverse communities, from urban metropolitans to rural towns, and spanning 38 Senate (76%) and 66 House districts (55%) in North Carolina. DFI is investing time and expertise in the areas of North Carolina that need it most – those with limited resources. Read More…

Kannapolis, NC: Strategic Vision, Financial Planning, Development

This blog post features a project undertaken by the UNC School of Government’s Development Finance Initiative. The Development Finance Initiative (DFI) was established in 2011 to assist North Carolina communities with achieving their community economic development goals. DFI partners with communities in North Carolina to attract private investment for transformative projects by providing specialized finance and real estate development expertise.

A community wanting to transform its downtown could focus on singular projects, but DFI analysis often reveals that a greater scale of redevelopment can enhance feasibility and achieve more impact. If an entire city block is vacant, the redevelopment of one building will not make a huge difference. Large-scale efforts will sometimes help mitigate the costs of development and allow for a shared vision and coordinated investment among public and private sectors—all factors that can enhance the likelihood of a successful and sustainable revitalization effort. Read More…