Aerial view of 15-501 looking north, Chapel Hill
“Trickle-down housing” refers to the idea that if we build enough new housing, of whatever type, housing prices in general will fall. But this supply-side idea doesn’t apply to housing markets, which are fundamentally different markets from the stylized ones taught in economics 101. Because housing markets are fundamentally different, building more doesn’t necessarily reduce costs. Although Chapel Hill has seen these dynamics play out over and over again in recent years, too many elected officials believe that building more luxury high-rise apartments will bring down the cost of local rents.
“It ain’t so”, as John Quinterno explains in a 2015 article in the News and Observer. Some town leaders believe erroneously that simple laws of supply and demand could be applied to complex housing market dynamics such that expanding the housing supply would cause the price of housing to fall. Armed with this faith, Town leaders mistakenly steered Chapel Hill from a path of deliberate development onto one of rapid growth – a shift embodied in the mushrooming across town of high-rise, high-rent apartment towers.
What has been the result? Fast-track project approvals that award building permits to developers without any opportunity for public input and new construction that enriches out-of-town investors while imposing fiscal, environmental, and congestion costs on the local population. But housing has not become more affordable as a result. In fact, there has been a net loss of housing for low – and moderate-income households in the 7 years since “wild west” zoning was adopted for the Ephesus-Fordham (“Blue Hill”) district.
The lowering of town standards and doing away with public review did work, because there was a rush of new owners from out of town to the district. The result? As a result of the economic stimulus that was applied, the district now contains 1804 new apartments (built or under construction) — AND prices have not come down.
When the Town Council forms a new zoning district, such as “Blue Hill”, or when it grants zoning changes anywhere in Town, it often causes the displacement of lower cost housing. A good example is the owner’s intention to redevelop their trailer parks like the one located across the street from Timberlyne Shopping Plaza. In essence, private parties want the public to create wealth for them by rezoning the property but at the same time that action would displace many lower income residents. The only reason why the property was potentially worth as much as the developer was willing to pay was because the rezoning would allow them to build more dense housing.
The gentrification encouraged by the loosening of the Town’s development standards is best exemplified by the destruction of the moderately-priced Park Apartments in order to build in its place several hundred new high-priced units. Around 200 families were displaced, most of whom had to move out of Chapel Hill in order to find housing they could afford. Town Housing apartments on Hillsborough Road is yet another example of older housing now replaced with more modern but more expensive rental housing.
If the Town Council continues to approve all rezoning requests, gentrification will continue to make housing more expensive. However, if Chapel Hill voters elect a Mayor and town council members willing to stop subsidizing the destruction of the Town’s affordable housing stock and learn from the mistakes of the past, then the trend can be reversed and Town resources can be put toward the kind of housing we need.
Note: There is a common consensus that the Form Base Code has failed in its objectives to achieve affordable housing and community benefits. The frustration felt by citizens who were part of the Town Code deliberations in no way is directed toward the residents of the apartments who now live here. This article updates a previous newsletter article.