This report is one in an occasional series on Asheville’s shortage of affordable housing.
ASHEVILLE – Gordon Smith admits to having seen eyes roll when he talks about cross-sector collaboration yielding concrete solutions to the region’s affordable-housing crisis.
Put another way, that’s getting builders, businesses and bureaucrats working together.
“People in Asheville who have been building affordable housing for years are doubtful that the private sector is going to step up,” said Smith, a city councilman and chairman of the city’s Housing Community Development Committee and the Asheville Regional Housing Consortium.
But a meeting of the area’s captains of industry last week could give the cause a boost, he said.
About 60 people attended the Aug. 27 meeting at Asheville Area Habitat for Humanity’s office, including members of Asheville Area Chamber of Commerce boards, the Economic Development Coalition of Asheville-Buncombe County, the Tourism Development Authority, people involved with the chamber’s five-year plan for job creation and local developers, said chamber board chairwoman Suzanne DeFerie. She also is president and CEO of Asheville Savings Bank.
Chamber President and CEO Kit Cramer organized the meeting to ensure affordable housing would be examined within the context of the region’s many industries. Some Asheville city and Buncombe County government officials also attended the meeting.
The next meeting will occur this fall, but a date has not yet been set, DeFerie said.
“The ultimate goal really is to bring together the public sector, the nonprofits and the private sector – not just the development community, but also hoteliers, manufacturers and restaurateurs,” said Jack Cecil, president of Biltmore Farms.
Ideas discussed at the meeting – which some called a first for the region – included encouraging large employers to help employees with housing costs and making grants available for homebuyers.
“I cannot remember a time when the private sector, through the chamber’s leadership, has been as involved with the housing affordability discussion,” said Cynthia Barcklow, a Buncombe County planner who also attended the gathering.
That fact is important if Western North Carolina is to see progress in tackling the region’s affordable-housing predicament, experts say.
How the region became mired in a shortage of affordable housing for everyday workers is complicated. But it could start with Asheville’s ever-more-visible national profile, which has increased the numbers of visitors and residents. The city’s popularity combined with the post-recession reluctance of developers to build has left the region short in the supply of places to live — while demand keeps rising.
That dynamic has pushed up home prices and rents.
The Problem
A report released in December found a less than 1 percent apartment vacancy rate in Buncombe, Henderson, Madison and Transylvania counties.
That study, conducted by Ohio-based Bowen National Research, a real estate market consulting firm, found median rents for market-rate apartments ranged from $832 to $3,300 and $583 to $1,187 for tax-credit units.
And while more jobs exist than in years, many are in low-wage industries such as retail and tourism.
July marked the 10th consecutive month with the highest level of nonfarm payroll employment ever for that month in the Asheville metro area, which comprises Buncombe, Haywood, Henderson and Madison Counties, according to U.S. Bureau of Labor Statistics.
About 19,000 retail jobs and 17,000 tourism jobs existed in Buncombe County alone during 2014, according to a study released in August by the Pennsylvania-based consulting firm, Tourism Economics. Only the healthcare sector employed more people, with 25,000 employed, that research showed.
Possible remedies
The cost of housing “has now become an issue that our economic development prospects are asking about when they talk with us,” DeFerie said during her opening remarks at last month’s meeting.
One way to confront that concern is for the private, public and nonprofit sectors to band together and seek federal dollars designated for affordable housing, Cecil said.
Priorities for those dollars would be building, repairing and renovating housing for the area’s workforce, he said.
Options someday could include local companies providing their employees with housing, Cecil said.
“That’s a good question to ask in the future,” he said.
Another option is a year-and-a-half-old program run by the Federal Home Loan Bank of Atlanta.
Arthur Fleming, a bank senior vice president and director of community investment services, told the meeting attendees that obtaining equity would be key to solving the affordable-housing conundrum.
The bank would provide $1 million to the Asheville and Buncombe County community through its 13 member banks that exist in the area, Fleming said.
But that $1 million would be contingent on the community raising $2 million over a fixed time period of nine months or a year, he said.
In one scenario, that money could be available as grants for homebuyers through the local member banks.
If the buyer, for example, qualified for a mortgage that was less than the house cost, the grant money could help make up the difference.
“It reduces the money that people need to buy the home,” Fleming said. “It’s not about buying a cheaper house. That’s not a solution.”
Fleming and his Atlanta colleagues have used that model for projects in Atlanta; Palm Beach County, Florida; and Savannah, Georgia.
The bank also helps renters by providing funding to developers of multi-family apartment complexes.
Mountain Housing Opportunities Inc., an Asheville nonprofit community-development corporation that builds and improves homes, received $500,000 to build the Villas at Fallen Spruce, a 55-unit senior-housing complex in Leicester.
And the bank offers credit enhancement that developers could use when borrowing money to build a housing project. Financing would be provided to the developers, for example, with a bond that has a lower interest rate than conventional financing. The savings then could be passed on to the renter or homebuyer, Fleming said.
Private-sector participation
That tool could be particularly useful in today’s economic environment, which Jonathan Miller described as one with persistent tight credit.
The high credit standards that have existed since the Great Recession also is a reason local governments in places like Asheville, New York and “anywhere else in the country are connecting with the private sector,” said Miller, the New York-based co-founder of Miller Samuel, a residential real estate appraisal company, and the commercial valuation firm Miller Cicero.
“There’s no money in the coffers,” Miller said. “The public sector can’t build affordable-housing units or supplement rent. It doesn’t have the money for it.”
Compounding the tight-credit situation is wage stagnation while rents and home prices keep rising.
“That dramatically exacerbates the problem,” Miller said.
And in places like Asheville, where the economy is improving, “there is no housing for the jobs being created. That’s the challenge.”
Which is also why the private sector must be part of the solution, Miller said.
“It benefits the business community for its employees to have access to housing, so business can grow in your town,” he said.
Private-sector organizations throughout the country assisting their employees with housing include Johns Hopkins Hospital and Johns Hopkins University in Baltimore and Nationwide Children’s Hospital in Columbus, Ohio, said Maya Brennan, housing vice president at the Urban Land Institute Terwilliger Center for Housing in Washington, D.C.
“More local employers see this is as a challenge that’s affecting retention and recruitment,” Brennan said. “It makes financial sense to make obtaining housing more feasible.”
Biltmore Estate and Mission Health in Asheville also have programs that help employees become homeowners. Both companies provide up to $2,500 in matching funds per employee for a down payment on a first home.
Lew Kraus, Asheville Area Habitat for Humanity’s executive director, agreed that wages were integral to solving the affordable-housing equation.
“I always say that the main thing that prevents us from helping more people is the lack of capital,” Kraus said. “That doesn’t mean just writing checks to Habitat. Capital also comes in the form of paying wages that allows employees to afford housing in the area.”
Kraus said he is encouraged that members of the local private sector are talking about helping alleviate the affordable-housing strain.
“It’s to everyone’s advantage to come together and find a workable solution,” Kraus said.
Throughout the years, conversations among many representing different sectors of the Asheville-Buncombe community have occurred with affordable housing at their center, Kraus said.
“I trust that all of us will continue to get together and come up with some tangible concrete steps,” he said.
One thing gives him hope about the current process: Business people say they are also considering collectively applying for grants from large organizations such as the John D. and Catherine T. MacArthur Foundation in Chicago.
“That’d be wonderful, I’d love to see that happen,” Kraus said. “I’ve never seen that done here.”
But the challenge remains immense, Scott Dedman, Mountain Housing Opportunities executive director, reminded the meeting audience during his remarks.
He suggested a goal of building 200 new units of affordable housing a year – an endeavor that would cost “upwards of $5 million annually in new commitments,” Dedman said.
Councilman Smith emphasized that it’s already common knowledge that the public and nonprofit sectors can’t solve the affordable-housing problem on their own.
Even if city officials maximized the tools available to them to address shortage, Asheville leaders would be able to meet only half the area’s current need within seven years, Smith said in April.
In the most generous forecast, a total of 2,800 rental units could be created by 2022 – half of the 5,600 that a report released in January concluded the region lacked.
Smith found an idea put forth by Biltmore Farms’ Cecil to create a joint city-county affordable-housing commission that would include private-sector members particularly intriguing.
“That’s building a table for everyone to sit at,” Smith said. “The private sector is owning the problem.”
Dedman concurred.
“Any significant portion that the private sector could provide would be helpful.”
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