Leveraging anchor institutions: A new land bank model in Chapel Hill

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Northside_announce_140AAcross the country, local governments are increasingly embracing land banking as a key strategy to catalyze and control the revitalization of their vacant and abandoned properties. As described in this post on the CED blog, North Carolina local governments can cobble together the statutory authority to operate a land bank, a power that in some states is explicitly granted to municipalities. A new land bank launched in Chapel Hill in recent weeks as part of the Northside Neighborhood Initiative demonstrates an innovative partnership model that might be replicated elsewhere in the state, especially in communities that host large anchor institutions. 

Identifying the need and building the relationships

Chapel Hill’s new Northside land bank grew out of the work of the Marion Cheek Jackson Center for Saving and Making History (also known as the Jackson Center), a public history and community development center focused on Chapel Hill’s historically African-American Northside neighborhood. The Jackson Center itself is a unique neighborhood asset that leverages UNC-Chapel Hill; it was founded to institutionalize a 2005 collaboration between a UNC faculty member and Northside community leaders to collect oral histories in support of the neighborhood’s community development.

Through the Jackson Center’s engagement in the Northside community, staff learned about an urgent affordable housing problem in the neighborhood. When the neighborhood’s relatively smaller and older homes would come up for sale at prices below the Chapel Hill average, they were attractive targets for developers interested in converting them to student rentals. Because of pent-up demand in the student housing market and the neighborhood’s relative proximity to campus, renovated homes (or the large new homes developers replaced them with) would then rent at premium rates that were out of reach for many neighborhood residents. There was a perception in the neighborhood that the historically African-American community was at significant risk of displacement and that the neighborhood was turning into a “dormitory.” There was also a lack of trust in the Town of Chapel Hill – many residents believed that the new homes were in violation of zoning codes – and in UNC-Chapel Hill, which many residents saw as complicit with developers in driving their displacement.

The Jackson Center has responded to these community concerns by collaborating on a broad program of community development supports, including education, youth leadership development, workforce development, and a perishable food distribution center. Jackson Center executive director Della Pollock frames the new land bank as one piece of this puzzle, collectively referred to as the Northside Neighborhood Initiative (more background is on the Town of Chapel Hill’s website here).

The land bank partnerships

The role of the land bank within the larger Northside Neighborhood Initiatives is to leverage a pool of capital to protect key properties from converting to student rentals. Prior to the founding of the land bank, a challenge that the community and the Town of Chapel Hill’s affordable housing planners faced was that when key properties came up for sale, it was often impossible to assemble enough capital quickly enough to compete with private developers’ bids. The land bank makes it possible to buy and hold key properties until the town or other public sector actors have the funds to renovate or redevelop them as affordable housing units. The land bank is seen as not an end in itself, but as a community development tool that is preceded and complemented by significant community organization and action, including a resident-driven committee that has identified critical properties for acquisition. (A much more detailed overview of the land bank’s model can be found here.)

One key to making the land bank work was securing the investment and engagement of UNC-Chapel Hill, Chapel Hill’s major anchor institution. The capital that drives the land bank comes from a zero-interest, ten year, $3M loan to Self-Help, which will act as the fiscal intermediary for the land bank and de facto developer for homes that will be renovated rather than redeveloped. According to Pollock, UNC-Chapel Hill’s engagement was driven in large part by a recognition of the affordable housing challenges faced by the university’s 12,000 employees. (Pollock cited data that 60% of UNC’s employees live more than 10 miles away, and 30% live more than 30 miles away.) Another important piece of the puzzle was Self-Help’s experience implementing a similar project in Durham, although the much higher cost of at-risk homes in Chapel Hill ($150,000-$200,000 vs. $20,000-$40,000) called for a different model.

Can the Northside Neighborhood Initiative be replicated?

The Northside Neighborhood Initiative illustrates a case where, although the local government did not wish to operate a land bank directly, it played an important role in bringing key community stakeholders to the table to accomplish important public goals. Two related key ingredients that drove the success of this land bank – involvement from the anchor institution and community leadership. Because UNC’s growth was a partial driver of the affordability challenges in the neighborhood, and because UNC recognized its responsibility in maintaining local housing affordability to support its own workforce, the Northside Neighborhood Initiative had an opportunity to leverage institutional capital at zero interest. Access to capital – and an amount of capital beyond what the local government might have been able to achieve through taxes – is one critical driver of success in this model.

But the neighborhood’s long and sometimes difficult relationship with UNC meant that community engagement was also critical to driving the success of this model. The Jackson Center has spent years building trust with neighborhood residents and leaders, and only thanks to this investment (from both the Jackson Center and community members) have perceptions of UNC began to shift. It is this engaged and empowered community leadership that has allowed UNC’s financial investment in the neighborhood to be understood as one element of a project of community self-determination implemented with partners through the Northside Neighborhood Initiative.

Julianne Stern is a graduate student in both the Department of City and Regional Planning and the Kenan-Flagler Business School at UNC-Chapel Hill. She is also a Fellow with the Development Finance Initiative.

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