Council Approves Micro-Housing Subsidy - TribPapers

Council Approves Micro-Housing Subsidy

The former site of the Hot Spot is about to be converted into micro-housing. Staff Photo.

Asheville – Asheville has an affordable housing crisis, which has been going on for about 20 years, which is about as long as Asheville City Council members have been committing themselves to mitigation. To help with the problem, David Moritz, d.b.a. Hilliard Flats, LLC, set out to create about 80 units of relatively inexpensive housing.

The development would be constructed on 0.187 acres at the location of the former Hot Spot. The housing would be naturally affordable in that the units would cost less by virtue of the design rather than the masterful cobbling together of government grants. Each would have a sleeping area, a bathroom, and a sink with space for small appliances. Each floor of the five-story structure would have a full kitchen and lounge for community use. 

The idea was big in the 1990s, if only among visionaries with a bent for living cooperatively and sharing resources that remained idle most of the time. It was called co-housing then, but now it is being referred to as micro-housing, or, as city council candidate Nina Tovish called it, “glorified dorm rooms.” 

While the developers were building small-is-beautiful units for single-occupancy, they were also building on prime real estate downtown, and so they opted to apply for a Land Use Incentive Grant from the city. To qualify, developers score points by building city council priorities into their designs. This project, for example, scored points by locating near a bus stop and furnishing green-certified appliances. Successful projects also require the approval of the city council.

Hilliard Flats offered to rent-control 20% of the project’s units so they would be affordable to people earning no more than 80% of Area Median (AMI) for 20 years. In addition, half of the rent-controlled properties would accept Housing Choice Vouchers. Moritz said rents for his unsubsidized apartments would run around $1,000 a month, including utilities, whereas the nearest studio apartments, at the Patton, rent for $1,800. Moritz said his partner had built about ten micro-housing developments throughout the country, and they were all fully-occupied. 

This project scored 105 points, which qualified it for an estimated $592,790 in tax abatement over 21 years, or $37,049 per unit. “Please note,” states the staff report, “the city will still receive property taxes of approximately $787 per year” for the duration of the rent control.

Vice Mayor Sheneika Smith said she had voted against the project in the council’s Housing and Community Development Committee (HCD) meeting. Her reasoning was that this newfangled development would raise property values for people of color who were already struggling under disproportionate increases in property valuations and were ineligible for existing tax-relief programs. 

Councilwoman Antanette Mosley concurred. Both did not think the new apartments would be affordable to people who currently live in the area, and Smith did not believe the development would meet a community need. 

Smith added that the project was great; it was just in the wrong place. The city, she said, had a lot of good tracts the developer could use. She suggested the city wasn’t doing a good enough job of marketing land it owns to developers and negotiating with them to build affordable housing on it.

Mayor Esther Manheimer said the county was researching how they might go about carving out special revaluation rates for homeowners in historically underprivileged neighborhoods. City Manager Debra Campbell added that the city and county both offer tax relief programs for disadvantaged homeowners.

Councilwoman Kim Roney said she was on a mission to require all housing developments to incorporate some form of alternative energy feature, such as solar panels. Moritz stated that his team was investigating the use of solar power.

Tovish not only thought the subsidies were meager, she was concerned the market-rate units would be used as Airbnb’s.

Manheimer replied that the current ordinance does not allow Airbnbs by-right, and City Attorney Brad Branham said the responsible party would face consequences for violating a zoning ordinance if they tried to rent Airbnbs in this project.

Citizen Chris Peterson would, during the next public hearing, remind the council of the self-defeatism innate in trying to build low-income housing on prime real estate. But for now, Manheimer lamented how difficult it had been to build affordable housing, even on city-owned lands. She said that, due to the cost of land and construction, the city was not going to be able to resolve the affordable housing crisis with new housing. “The numbers don’t work.”

Councilwoman Gwen Wisler reminded her peers that the purpose of the public hearing was to determine whether or not the developer would receive a LUIG grant. Manheimer clarified that if the council did not approve awarding the grant, the project would proceed with no affordable housing.

Mosley asked the developer if he would be willing to re-crunch the numbers to see how many units he could offer at 60% of AMI before the council had to take a vote, and Moritz said, “No.” His team had been planning the project for over a year. The budget was already “tight,” and he wanted to start building before construction costs became prohibitive.

Moritz said this was their “genuine best attempt” to build affordable housing downtown. His team was among the very few that were actually trying to build affordable housing instead of just talking about it. They met the requirements for a LUIG grant, so it would only be fair for the city to honor that. He added that the authority for controlling tax rates was not in the hands of developers but the government.

Manheimer recalled that the city had updated the LUIG program about six times because, with each iteration, developers have told them the numbers are highly unworkable. Councilwoman Sage Turner added that the HCD was going to explore how to integrate micro-housing into the LUIG at a future meeting.

Roney said the city would have to update the LUIG program again to better provide “what we need.” In the future, she wanted only to approve “projects that reflect our values.” She lent her support to this project, however, because of the sixteen units that did meet her standards and the project’s superior locational efficiency. Smith and Mosley were the only two on the council to vote against it.