The Price of Liberty is Eternal Vigilance
City Council March 22
Some affordable housing issuesMarc Knapp who covers City Council
Usual issues on zoning…..
It was essentially a "meat and potatoes' night. There were no major issues, though of course this was not the case for some of the individuals disputing re-zonings. Council was sympathetic to the neighborhood who was opposing a re-zoning from Residential to Residential Office. The property was located at 16 Oakdale Place but one of its sides lay along Saint Andrews Boulevard. This was not enough to allow for the re-zoning as far as Council was concerned. And there was the change in conditions for a previously approved Planned Unit Development (PUD) that fell under the Bees Landing Master Plan and located between Bees Ferry Road and Ashley Gardens Boulevard. The applicant was reducing the density of residential units but adding business units. This was approved though there was some concern about the increase in traffic that would ensue. The mayor promised a traffic light at the intersection of the main road and the entrance to the development
………and traffic congestion
Yours truly rose to speak on the traffic issue. Traffic lights are well and good, but they also stop the flow of traffic. I predict that the result of this proposed traffic light will be more congestion along Bees Ferry Road. The main outlet for Grand Oaks is not and will not be aligned with the propose traffic circle. A caterpillar effect on traffic is likely with the proposed new traffic light and new traffic circle. The City needs to undertake a thorough traffic study for the whole City. We have a proliferation of traffic lights, and many roads over which traffic no longer flows. Council needs to address this. A resolution may well be a slowing in the rate of subdivision approvals. Councilmember George spoke in similar terms about the City's traffic problems latter in the session
RPC denied funds
So having dispensed with these things let me turn to "affordable housing". Most notable was Council member Lewis's lament about the tardiness of meetings of the Capital Projects committee. Council member Lewis serves on the Redevelopment and Preservation Committee (RPC) a City body that allocates funds to assist in the repair and restoration of properties particularly on the East and West sides. The Council member pointed out that there are a lot of needy people from these areas that need assistance but they were being ignored because there had been no allocation of funds from Capital Projects. He said that when Ms. Pat Crawford was Head of Housing and the department was independent of Capital Projects, the RPC was able to run smoothly. Now it was another matter. There was no doubt that Council member felt strongly about the injustice. The Mayor did reply in soothing tones but he did not seem to offer something substantive.
We confess to not understanding why the RPC is not receiving funds, It is the major beneficiary of CBDG funds that the City receives from HUD and typically is allocated about $850,000 a year. One has to ask why it is not receiving that which it is entitled.
Affordable housing units for Daniel Island, and more likely in longer term
And then there was the issue on Daniel Island. The Humanities Foundation, the biggest builder of "affordable housing" in Charleston is planning to build 72 units on a corner of Seven Farms Road and Principal Streets, within the Town Center. Apparently the neighborhood was shocked, and expressed concern. But as Council member Fishburne stated, it was the surprise and speed of the plan that shocked. More notice and more information and residents would not have been alarmed. We suppose that residents had a vision of public housing rather than "affordable" units which generally look no different from other housing.
The issue before the council was not citizens' concerns but the apparent anomaly in the Zoning Ordinance. Some language was omitted in part of the ordinance that referred to buildings on the site. One part of the ordinance referred to at least 2 stories, another part had no reference to height. It has now been amended where necessary to at least 2 stories. But the planned change caused Council member Fishburne and the Mayor to speak of the other issues.
The Humanities Foundation bought the 3 acre site from the Roman Catholic Diocese, Interestingly, the Mayor told Council that the City has the right to acquire up to 20 acres at cost from the owners of the Daniel Island development to use for "affordable housing". We suppose that there are now 17 acres that remain that can be used for "affordable housing" And considering the rising cost of land elsewhere on the Peninsula, it seems safe to assume that we will see more "affordable housing" on Daniel Island. The Mayor also noted that the developer of Daniel Island had agreed to have 5% of the units built there as "affordable housing".
Agreement highlights high subsidies and vulnerability to interest rate hikes
And then there was the 2 development agreements between the City and Pastors for "affordable housing" at 53 and 57 Nunan Street. Pastors intends to construct a single family house on each site. Included in the packet submitted to Council was an estimate by the City's Housing department of the cost of development. These estimates indicate the subsidies for each house and the vulnerability of "affordable housing" to interest rate hikes. And indeed, we wonder whether the City may have low balled its cost estimate.
The "cost" of the two houses was estimated at $172,516 and $188,134 respectively. The projects cost were predicated on building costs of $77 and $82 a sq foot respectively, costs which we think are low in the present environment of rising timber, materials and labor prices. The costs also include commissions and a profit for Pastors. Overall, the City estimated the subsidy that it and others was passing on to the buyer was $34,149 and $$47,804 respectively, taking the cost of the house to a buyer to about $140,00 for each. In reality, the subsidies are much more. The City paid $73,000 for each property in 2000. It is selling the properties to Pastors for less than half cost. In aggregate, the subsidies on these properties approximates $180,000, an average of $90,000 a house.
The other side of the picture was the ability of the buyer to purchase such a house. Assuming that the interest on the mortgage was 5% a year (presently available through Special bank loans or through the Charleston Banking Consortium, the City calculated that the buyer at a minimum would have to be earning respectively 85% and 86% at least of the median income to qualify for that sort of loan. In this calculation, the City has assumed that the buyer is a member of a 4 member family. The ratio of median income changes for different sized families. Our point here is that interest rates are expected to rise over the next year or so. They have been rising in recent months though mortgage rates only modestly. Taking a pessimistic though realistic view, 30 year mortgage rates on special loans could rise to 6% over the next year or so. This higher rate would push the qualifying income to above the median family income, we estimate. In other words, "affordable housing" would become less affordable for those who really need it, unless the City ups the subsidy. And there are restraints beyond financial as to how much subsidy can be paid.