Q&A: Executive Director of the Community Home Trust

In our semi-regular Question & Answer series, we have featured Meg McGurk, Executive Director of the Chapel Hill Downtown Partnership and Brian Litchfield, Director of Chapel Hill Transit. The latest installment is with Robert Dowling, Executive Director of the Community Home Trust. As affordable housing discussions have been gaining prominence lately, we thought it was appropriate to learn more about the Community Home Trust.

What is the Community Home Trust?

Community Home Trust (the Home Trust) is a nonprofit organization that was created to provide affordable housing in Orange County.  We sell homes, mostly to low-income people and we implement inclusionary housing policies in Chapel Hill and Carrboro.  I should mention that we convey ownership of our homes using a 99-year ground lease.  The ground lease allows us to keep our homes affordable for future generations.       

What is the history of the Community Home Trust?

The Home Trust was originally incorporated in 1990. The organization was originally called Orange Community Housing Corporation (OCHC) and it was formed at the behest of the local governments.  OCHC built affordable homes in Chapel Hill, Carrboro and Hillsborough before we revised our model in 2000.  In those days, affordable homes for ownership typically became unaffordable after the first buyers sold the home.  In some cases those first buyers made a substantial financial gain, which was great for them, but not so great for the community because the home was no longer affordable. 

In response to this phenomenon, the local governments asked us to create the community land trust (CLT) which could better keep homes affordable over time.  The CLT model is unique because the Home Trust forever maintains an interest in the property.  We are essentially partners with each of our homeowners, which is a benefit to them and to the larger community.  We view our homes as community assets that exist to serve many generations of lower income households.      

We incorporated the CLT in 1999 and merged it with OCHC in 2001.  The name of the merged organization was Orange Community Housing and Land Trust. The first CLT home was sold in June 2000 in Carrboro. 

Our destiny changed significantly in 2001 when the Chapel Hill Town Council began asking developers to provide affordable homes in most new developments.  As a result, our inventory of homes grew quickly in such developments as Meadowmont, Vineyard Square and Larkspur.  By 2005 there were 100 homes in our inventory of affordable homes.  Today there are 230 homes in our inventory, most of which are townhomes and condominiums.      

How many units does the Community Home Trust manage (1-bedroom, 2-bedroom, locations...)?

As of October 31, 2014, there were 230 homes in the Home Trust inventory.  105 of those are townhomes, which are all two and three-bedrooms, 87 are condominiums, which are one or two bedrooms and 38 are single family homes, all of which are three or four bedrooms.  In recent years, our inventory of condominiums has increased significantly due to inclusionary units in Greenbridge, East 54 and 140 West Franklin.

What are the occupancy statistics for the Community Home Trust? Is there a waiting list? Who are the folks that you see the greatest demand from?

Of the 230 homes in our inventory (which includes two rentals), about nine are being resold as of this writing in late November.  Several of those nine are already under contract and will close before the end of the year.  We are also selling newly developed townhomes in Carrboro in the Ballentine development.   Four of the Ballentine townhomes are still unsold but two of those are under contract.    

We see more demand for single family homes than for townhomes.  Unfortunately, our inventory does not match the demand, particularly from families of four or five persons.  However, our inventory enables us to serve a wide variety of homeowners, from retired, single persons, to single-parent families to traditional families to young single people and couples.

How would you summarize the current affordable housing situation in Chapel Hill? In Orange County? In the Triangle?

Housing, both ownership and rental, is more expensive in Chapel Hill than in most of North Carolina.  This has been the case for many years in large part because Chapel Hill (and Carrboro) are desirable places to live.  Rental housing is expensive because UNC has about 18,000 students, including graduate and professional students, who must find housing off campus. That places upward pressure on rental rates.  Ownership housing is expensive because demand is high and supply is restricted.  So, we have relied upon ‘market interventions’, such as inclusionary housing to provide affordable housing.  Inclusionary housing in Chapel Hill has resulted in the creation of almost two hundred affordable ownership homes, in such places as Meadowmont, Larkspur, East 54, Greenbridge and Vineyard Square.  The Town Council deserves great credit for policies that created all those homes.  However, all of those developments were approved prior to the 2008 financial crisis.  I believe the Council needs to revise its inclusionary housing ordinance to reflect the new realities in the housing market. 

I think the same is true in Carrboro, where inclusionary housing is voluntary.  No developers have made use of the voluntary density bonus in Carrboro in many years.  That’s not surprising because voluntary inclusionary housing policies are notoriously ineffective in most places.  Developers need sufficient incentives if we want them to build housing that will most likely cause them to lose money.  The good news is that both the Board of Aldermen and the Town Council recognize this reality and are taking steps to address it.   

As for Orange County, housing is more affordable in Hillsborough, Efland and Mebane.  However, jobs, though growing, are not as plentiful in those places.  So, we find that many people live in Mebane or Efland but commute to Chapel Hill to work.  With gasoline at $2.80 a gallon, that’s not too onerous, but what will the price of gasoline be in ten years?  We really should be making decisions based upon what the world will be like in 20 or 30 years.  I expect housing will continue to become more expensive in cities and towns that are desirable places to live, such as Chapelboro.

What sorts of policies would the Community Home Trust like to see to improve affordable housing in Chapel Hill?

I believe that well thought out municipal policies and ordinances can have an impact on the creation of affordable housing.  I really believe that we can incent private sector developers to create affordable housing if we are willing to listen to their ideas.  Of course, listening doesn’t mean developers should have carte blanche to develop as they please.  But it may mean compromising on other things that we desire, such as open space, parks and recreation, public art, etc.  We have the right and the obligation to establish priorities.  If our priorities are for low density development and lots of open space, it will be difficult to obtain affordable housing from the private sector.  To be most effective, our policies must become very intentional and more sophisticated than we may be used to. 

Of course, I expect the nonprofit sector will remain a viable provider of affordable housing.  However, with land being so expensive, those opportunities will be limited.  But serving people below 60% of median income will always be the realm of the nonprofits – and the lower the incomes we target, the more funding that will be required.  Speaking of funding, that too will be a challenge throughout the County.  If federal subsidies continue to shrink, we will become more reliant upon local sources of funding.  Simply put, without subsidies, it is very difficult to create affordable housing.    

Our toughest challenge is with really low income households, for example people who are at risk of becoming homeless.  There simply aren’t sufficient housing options for these individuals and families.  But, we are fortunate to have compassionate and dedicated individuals and organizations focused on this challenge.

How does the affordable housing situation in Chapel Hill compare with other towns and cities across the nation? Are we on-par, doing better, doing worse?

Cleary, our local elected leaders throughout the County have been focused on affordable housing for many years.  I know they care about this issue and have exhibited the political will to address our need for affordable housing.  So, we are very fortunate here in Orange County.

Looking at the bigger picture, affordable housing tends to be in short supply in all vibrant cities and towns – desirable places where prices are high.  In fact I just read an article that talked about a shortage of affordable housing in many left-leaning cities – such as San Francisco, New York City, Austin, etc.  I think our Towns are clearly progressive, but there are barriers that we have created, such as the rural buffer, that make housing more expensive.  I am not advocating that we abandon the rural buffer, but we should recognize its impact on land and housing prices.   Although I have not done any sort of formal analysis on how we compare to other places, I do know that Chapel Hill’s inclusionary housing policies have been a model for many towns throughout the southeast.  I think it’s fair to say that Chapel Hill is known for its leadership in this area.  

Are we seeing any policy innovation in affordable housing locally or nationally?  What might the future of affordable housing look like, and what might it look like in Chapel Hill?

As I mentioned earlier, Chapel Hill has been a model for many other communities.  The Council’s inclusionary housing policies were very successful in creating affordable home ownership opportunities for individuals and families earning 80% of median income.  By the way, 80% of median income is just $36,800 for a single person.  That figure goes higher as the family size increases.  Inclusionary housing has become more popular in recent years as more and more cities and towns struggle with the challenge of having sufficient housing for regular working folks.  Perhaps most notably, the new mayor of New York City, Bill DiBlasio, has committed to providing two hundred thousand new units of affordable housing in the next ten years. 

I’m very pleased that our local elected officials continue to work on this challenge.  Chapel Hill recently established a Housing Advisory Board that will provide advice to the Town Council on affordable housing issues.  In Carrboro, the Aldermen have established an affordable housing task force that has already reviewed staff policy recommendations.  I think there is recognition that our affordable housing policies and ordinances require updating to be more effective.  Hopefully, in both towns we will see renewed policy initiatives that will more effectively address the needs for both ownership and rental housing.    

Some properties that come into the Home Trust's possession have been difficult to sell.  Why has that been the case and what can we do to make sure that the properties that the Home Trust receives are acceptable to their clientele? 

With inclusionary housing, we get a percentage of what developers build. Although this is generally a very positive means of obtaining affordable homes, it may not provide us with the precise types of housing that we would prefer.  As I mentioned earlier, most families want single family homes, but inclusionary housing has produced mostly townhomes and condominiums.  Recognizing this, we should be more circumspect about the types and numbers of homes we obtain through inclusionary means.  But having said that, I truly believe that all of these condos and townhomes will be more acceptable to families twenty years from now than they are today.  Why?  Because many of us will need to live in smaller spaces closer to our places of employment.  If I’m right about that, then todays 10 year old may well relish the opportunity to live in a small condo that allows her to bike to work when she is 30 years old.  I believe proximity and public transportation will become more important over time. 

To better answer your question, I believe that low-income people, just like all of us, want to live in certain parts of town, but not necessarily in every part of town.  Besides proximity and transportation, safety is a huge factor.  No one wants to live in a neighborhood they perceive to be unsafe.                     

What else should the community know about affordable housing or Community Home Trust?

The last few years have been challenging ones due to a variety of factors that are beyond our control.  For example, despite our track record of zero foreclosures, many banks are unwilling to make mortgage loans to Home Trust buyers.  The reasons are too complex for this questionnaire (actually they’re too complex for me) but it obviously becomes more difficult to sell homes if lenders are unwilling to make loans.  But we’re working on that challenge and hopefully we’ll make some progress in the next few months.

Another challenge has been the decline in median incomes over the past twelve years.  Back in 2002, we never imagined that median incomes would be lower in 2014 than they were in 2002.  The CLT model was created to keep homes affordable over time, to successive generations of buyers.  However, when incomes decline and costs increase (costs such as property taxes, HOA dues and the price of the homes), it is impossible to keep homes affordable without using additional subsidies.  We are hoping that incomes will begin increasing in the next couple of years, but until then, we are improvising to keep our model viable.

Orange County residents interested in affordable housing can be comforted by the fact that our elected officials are committed to maintaining diversity in our communities.  Furthermore, they are willing to expend tax dollars to create and preserve affordable housing options for those who cannot afford market rate homes.  The CLT model and inclusionary housing are just two mechanisms for creating and preserving affordable homes.  Neither is a panacea, and neither tends to serve our lowest income brethren, but we are fortunate to have elected leaders with the vision and compassion to establish these policies.