From the North Carolina League of Municipalities, this is Municipal Equation, a podcast about cities and towns.

2002 with the amount of people that were moving into the the region, into the area, and the availability of land, especially in the city of Wilmington, small geographic area about 52 square miles. New Hanover County is the second smallest geographic county in the state of North Carolina. And we started seeing, you know, a change in the amount of units that were available. We had we were starting to see a lot more demand for units than we were seeing supply being built on the ground. And a former mayor pro tem, Earl Sheridan, asked about the possibility of us earmarking a a piece of our our tax rate, to be used for affordable housing. So that's how we kinda got really into it big time, what I would consider big time. And then we started started thinking about different ways that we could enhance more affordability in our housing stock in the Wilmington area. Looked through our zoning, classifications, started giving density bonuses to developers in the private sector that were willing to put affordable units on the ground, started working more intently with, nonprofit organizations, CHODOs, and Habitat for Humanity and and and a lot of different organizations that are on the ground here, to to start looking at different ways to put affordable units in place. It wasn't just gonna be one thing that we were gonna do. It was gonna be a a litany of different things that we would have to take a look at and study and evaluate. And from that, I think the city of Wilmington has come up with a a pretty good program. Obviously, we continue to see significant growth in this part of the state like we're seeing throughout the entire state of North Carolina. And, it's starting to pay dividends for us, but, you know, we still have a significant amount of population migration coming into this part of the the state, and we're gonna continue to have challenges in putting affordable units on the market because just of land availability in our particular area and starting to really think now in regards to density, you know, especially in the Wilmington area and the possibility of going more vertical in construction as as as opposed to what we have seen in the past. So, you know, there's a lot of different things that we're gonna be working, on. Definitely, the nonprofit sector plays a very important part here with, with a group that was established here several years ago called the Cape Fear Collective. We were able to preserve 89 units of affordable housing that would have been sold to the private sector, refurbished, and sold. That group came to the city of Wilmington, said we're gonna spend a significant amount of money to buy a lot of these homes from investors that we're using for rental property that we had a lot of people in. We'd like the city to make a commitment to help us with some of the rehab of some of those homes and to keep them affordable. And and we made that commitment, and and we've done well with that. We've also had collaboration with the County Of New Hanover for one of the largest projects in in our state's history, the largest public private partnership, which is Starway Village with about 270 units, of affordable housing. The city put in $4,000,000. I believe the county put in 2. The state as well as the federal government also put in a significant amount of money, And that has translated into a significant development and the largest public private partnership in in, the state's history. So we're very proud of that. And then just looking at our overall zoning codes and what we can do, not only for affordability from the government side, but also what the private sector can do with accessory structures, garage apartments, some mother-in-law flats as we call them. What can we do to enhance the private sector and the private homeowner to put more affordable units in place. So there's a lot of different things, happening, and, we continue to look for ways to to enhance the the stock in our community. We continue to look for ways to to evaluate what's happening around the country, also not only the country, but the state of North Carolina to see what other communities are doing to to bring more housing stock into their communities.

in your area that you've seen? Well, obviously, land availability has become a big issue for us because, geographically, we're a very small area. We're bordered by the Cape Fear River and the Atlantic Ocean, so we can't grow West and we can't grow East. We have what we have here. We're an island, very similar to what you may see for those that have visited the the the borough of Manhattan. We're we're what we have is what we have. We're gonna do whatever we can here, but it's not only the city of Wilmington that's gonna be impacted by this. This is gonna be the counties of Brunswick, Pender, and the unincorporated areas of New Hanover County. All of these areas in Southeast North Carolina are growing at, you know, at I'm I'm I'm chair of the metro mayors, and one of the things that we have seen through with with demographers that are sharing information with us is right now, we're the third fastest growing state in the country. Texas is one, Florida is two, and we're three. We're averaging about a 160 some residents that are migrating into the state of North Carolina every single year. We're gonna go from a population of 11,000,000 up to 12,500,000. So we know that more and more people are gonna be moving into the state, but primarily most of those people are gonna be primarily moving into urban areas. Urban core is where the job jobs are. We've been seeing this this, transformation from the rural communities, rural areas into the urban centers, not only here in North Carolina, but throughout the state, throughout the country. And so this is an issue that a lot of municipalities around our state and around our country are dealing with, and so we have to find different ways to address the issue. Some of it is gonna involve government. Some of it is gonna involve the private sector. There's gonna be limitations to to what each and every entity can and will do. Land availability is one. Obviously, the infrastructure infrastructure cost have gone through the roof, cement, steel, asphalt, stormwater. All of these issues continue to raise the cost in addition to the preservation of, natural assets like trees, neighborhood concerns about density in their backyard, what we call the NIMBY factor, and being able to overcome some of that. So there's there's a there's a litany of things that drive up the cost of housing. And then when you look back in history at what happened in 2008 with the great financial crisis that was caused by the housing boom and bust, regulations changed dramatically in regards to how developments were gonna be done, how they were gonna be financed, how big banks were gonna finance these developments. A lot of what what we call mid sized developers were kinda pushed out of the marketplace. They no longer exist. And so you have larger conglomerates, larger entities like hedge funds that are getting into this business pretty pretty, quickly. What I would call a real estate investment trust that are beginning to own large swaths of real estate, apartments, condominiums, that are that are doing this through Wall Street. So there's a whole other issue that's happening at a much higher level, that is gonna have to be addressed at some point in time by congress in regards to how we are going to work with these larger real estate investment trusts that are coming in and buying large swaths of land and controlling more of the marketplace and also controlling more of the cost structure in all of our communities. It's it's, as I as I've talked to a lot of, local builders here in the community, we probably have a need in Southeast North Carolina of about 10,000 units. If we could find a place to put 10,000 units, we will put it. I guarantee you, the private sector would go to it and build it and and hopefully make a profit with it. But, it's hard to find the land. And then the funding and financing of those projects has also become extremely difficult. And unless you have a significant amount of money from a development team, it's gonna be very hard for some of these folks, to build be able to build affordable housing. That's where government plays a major role in incentivizing, development and incentivizing cost structures to get you to a place where it becomes more affordable.

Well, for what I take the Starway Village, for example, the gap funding in that particular project because of the cost structure, because the cost continue to have risen, created an atmosphere where the the tax credit developer came back to the city, came back to the county, came back to the state and asked for additional funding to help offset those costs. We as a government, local governments as well as state governments and federal governments have got to make a firm commitment to say we're there. We're there once you get these projects started to to fulfill that obligation and get that affordable unit in place. Without that, you're gonna lose a lot of the tax credit developers that would come in there to do these projects because they're looking around the state. They're looking around the country as to what municipality, what county, what government structure is willing to subsidize, which what what what are they willing to put into the to the game to make it affordable. I wanna I wanna be very clear about this because when sometimes people will share with me what what are we doing incentivizing these things and getting into this game and doing this this kind of work. Since I I I do have a real estate background, 90% of the homes in this country would not be sold if it wasn't for Freddie Mac and Fannie Mae, FHA, and VA. The federal government has been in the housing subsidy business for years, decades. So this is not unusual. What we're looking at here is 30 AMI, 60% AMI, and 80% AMI. A a lot of civil servants that are in this, in in this a a lot of folks that are blue collar workers, you know, these are the folks that, you know, run our communities, are in our restaurants and working, that are in our factories, that are in our job, that that are at the hospital, that in our nursing homes. These are the people that we need to be able to to to afford to have some sort of housing nearby because the other the other part of this is as land becomes more and more valuable and the cost of land continues to go up and the infrastructure cost continue to go, people would just go further and further out from the central city, from the urban core of your community, and build further and further out. The problem with that is then it creates another issue for all of us, which is traffic. And I'm sure you've seen it in the in the triangle. You you you see it in Mecklenburg County. You see the issues that we're dealing with traffic because the affordability has moved further and further out because of cost structure. So whatever we can do as a community to build more housing within the confines of the incorporated city limits, we we we should we we need to do. The the other thing is we've created a, you know, a housing services department here in the city to evaluate all options that we have. It's not only the 2.5 $2,300,000 that we're investing from our property tax rate into this. It's also working with the federal government when we get CDBG funding. It's also rental rehab. It's also, you know, trying to get people to stay in their homes, especially more of the the elderly, that may not have the means to repair their homes, trying to find ways to keep them into those homes and repair those homes if necessary. It's it's it's looking to to work with the nonprofit sector, Habitat for Humanity. For example, back in two thousand eight, nine when we had the great recession and you could not get a loan to build housing, they were our largest real estate developer in the in the Wilmington area for about four years there. They built probably more units than anybody. So, you know, it's it's not one thing that's gonna help resolve this. It's gonna be a multitude of things, including, you know, looking for for land trust where where maybe cities or counties or governments can buy large tracts of land, put them into some sort of an affordable housing component. And then as those people, you know, what maybe buy a house or buy a bigger house or move from the particular area, they would they would sell it for a particular price, and that house would stay into an affordable housing range. So we are working and we've also, I think, in in since two thousand and twenty three, twenty two, we have invested over $23,000,000 in affordable housing, projects and and and working with the private sector in in looking for ways to to bring more affordable housing units, which is translated to almost a thousand units of affordable housing that we've put here in the Wilmington, marketplace, the city's market, per se. But also, I think it's also critically important that counties play a role in this. I mean, this is just not the city of Wilmington. It's also the county of New Hanover. And since we're a small geographic county, we're gonna have to work with with them. We created a coalition, a housing coalition between the two entities, and that has paid some dividends. But, of course, they've backed off currently, but I feel very confident that at some point in time in the future, they'll come back to the table. But it's critically important that they play a role in this. I think all of your local governments in some way, shape, or form are gonna have to play a role in this. What what was communication like from the city in terms of messaging this and trying to, you know, really kinda show that the other side of what you were trying to accomplish? I think one of the I think one of the big things that we're we've we've been talking about for the last couple of years, and it's just not housing, it's a lot of different thing, is affordability. Affordability is is the buzzword now of of of of of right now that I'm hearing. Not only affordability of health care, affordability of, food, affordability of housing. Affordability is the big issue that everybody is talking about right now. And we've been in this housing, I would say, crisis since really 2008 when the whole thing changed. We had a pretty we had pretty good equilibrium where we were building enough housing units to take care of the population that was moving into the area. But at some point in time, that changed. And as the state grew, we just couldn't keep up with the population migration that was coming in. So the we we have people obviously from all parts of the country that are moving here. And in some parts of the country where housing prices are higher, they would sell their houses, come down here, and we're willing to pay for higher prices for housing, which of course drove up the cost. The demand was continuing to come. The supply was continuing to dwindle, and it just it it it just put us into this, spiral of not enough housing. And it's not just the city of Wilmington. It's I guarantee you, you know, we we heard it in Chapel Hill the other day. We were hearing it in Chapel Hill. We're hearing it in Raleigh. We're hearing it in Charlotte. We're hearing it in Nashville. We're hearing it all over the state. We've got a great thing here in North Carolina. And one of the concerns that I do have also as a mayor is depending on the state structure in regards to the state income tax, if state income tax ever goes to zero, which is something that the state, legislature has been talking about on and off over years, and I think right this coming year will go down to 3.9. This becomes even a much more attractive place for people to move to and migrate to as opposed to going all the way to Florida, where they do have a state income tax of zero, and Tennessee of zero and Texas is zero. You can see some of these states that have zero state income tax, and you can see the growth rates in this particular state. That could add an additional burden to us that we haven't even anticipated. So it we've got a lot of challenges to have. We're just not building enough housing to take care of the demand that is migrating into the state of North Carolina. And and we saw, I guess, with the demographers, that we just had our our winter meeting there in Chapel Hill. 38,000 people moved up from Florida into the state of North Carolina, 32,000 people moved in from the state of New York, and 30,000 people moved in from the state of South Carolina. So we've got a great thing happening here in the state. We've we've we're the number one state for for business. We've been recognized in so many different publications around the country as the great places to move to and raise a family. So this this trend of migration that's moving here is gonna continue. We're just trying to try to do the best we can to stay in front of it. So we're gonna have to play a major role. Government, local government, state governments, and federal government is gonna have to play a major role in helping, to to to provide additional housing. In addition, Ben, I do wanna say that we're also working with our housing authority, our federal housing authority, which is now here in Wilmington. It's called the Wilmington Housing Authority, on the redevelopment of existing housing stock that has been in place since the nineteen forties. We have some of the oldest housing stock in in the state, maybe even in the country. We're about to, redevelop a a a development called Hillcrest, which has currently 240 units, about 24 acres of property. We're about to take that from 240 units to almost 600 units of affordable housing. We're also doing a project in Jervais where the housing authority has purchased some additional property, redeveloping that, putting additional units there, as well as Houston Mall, which is also a very old housing development that will be on the heels of the Hillcrest redevelopment. So this is a there's some opportunities with our also our federal housing partners to also enhance the amount of of units that that are out there in the marketplace, that we think, will also have some market rate rents included in there, as well as some wrap around services that don't exist currently. So there's some opportunities for some some significant redevelopment. One of the things that I've seen here locally is if a city or community makes a commitment, a financial commitment, that is an ongoing financial commitment for affordable housing, you will see the tax credit developers coming into an area because there's tax credit developers that reside all over this country that are looking for opportunities. But they're gonna look for opportunities where the government and the community is gonna back it and support it. And, so far, we have seen a significant amount of interest from tax credit developers that are coming to the Wilmington area, coming to the county in New Hanover because we have made a commitment as a community for affordability. And we've and that is translated into, obviously, Canopy Point, which is another, development of 72 units for senior housing, as well as going back to the, one at Starway Village. It translated into 279 units, and there's some additional ones out there. I could just can't get them right off the top of my head, but, has has really paid a lot of difference for us.

It's one of the great days I've ever had is being in public service is to to cut the ribbon on 279 units of affordable housing. Took an old flea market off of Carolina Beach Road, converted into this great affordable housing development. And to see those people that were moving into it and what it meant to them and what it meant to us that have been in in this fight for a long time to see that to come to fruition, understanding all the pitfalls that went through that development and rallying all the time to make it happen, I think was a testament to everybody that was part of that process. Yeah. Here again, I have to give a lot of credit to the city, to the county, to the state, and to the federal government for really being there. And that's what it's gonna take moving forward. You're gonna have to have all four government entities in some way shape or form step up and be part of this. We're gonna do a part of it. We're not gonna do all of it. But then the other part of it is that, you know, we have also, in our land development code, incentivize private development that will at least put 10% of their development into affordable housing. That is translated into a significant amount of units that is being built by the private sector as long as they keep them affordable for at least minimum of fifteen years. That's also translated into a into a great, story for for us. We're seeing developers now that understand that the city has a commitment to affordable housing if they're gonna get anything rezoned in this community. Although we can't force you to put affordable housing into your development plans. If you come in with an affordable housing program within your development, we're gonna incentivize you, and we will support it. The the city council has been very supportive of that, and I have to commend all of the council members, the elected leaders, past and present, that have made a commitment to affordable housing. That's the other part of this is every group that has come in here and probably in the last twenty years has made a significant commitment to affordable housing. And that's what's got to translate out into the into the world that we are here for to for business. If you're willing to bring that business to our community, if you're willing to make an investment here, we're willing to participate and be partners with you. But the government is gonna play a role in this no matter what. Is there a message you have to fellow mayors, who might wanna address this issue? What as long as the mayors and the city councils and the elected leaders are willing to make that commitment financially, also through their zoning, processes, also working with the private sector and understanding their their concerns about how you bring more affordability and what we can do to maybe offset some of the costs that may be a barrier to affordable housing. You've got to have those conversations. Those are first and foremost, those conversations have need to be ongoing all the time. So we understand what they're dealing with on the ground because sometimes there's a disconnect. You know, people think that maybe well, the developer can afford to do this, the developer can afford to they're just like anybody else. Once they're in this business, they're looking to make a profit. Banks are looking to invest with people that are gonna make some sort of a profit and be able to repay the loan. So the financial side of that is also critically important. Making certain that our elected leaders understand that, understand what they're dealing with, making certain that our our city staffs understand what's happening. So when we're asking them questions, they can they can share with us the concerns and the things that they're seeing out there that are having some effects on the affordability side of it and what we can do. Because I'm gonna be look looking to them and leaning on them, to to address some of these concerns that when they pop up, because sometimes, just invariably, people that don't know the industry, don't know the business, are not in the day to day, just don't understand it. And then understanding what cost structures are what's happening in our cost structures. I mean, with the tariffs and what it's doing to overall cost in general, it's driving up the cost significantly. And so you have to kinda keep up with that if you possibly can. And then also dealing with neighborhoods. You know, this is another big issue that a lot of people, you know, sometimes don't talk about is but we talk a lot about affordability. But when we start to put it onto the ground and we start talking about rezoning property for additional density, there's also significant amount of of pressure that comes back from the from the neighborhoods that have significant concerns. You know, being able to talk with them about those things and work through those issues is also critically important. So there's a lot of moving parts of this. It's not one one thing fix it all fixes it all. It's just a a litany of different things. But I also am gonna say that at some point in time, congress, and I'm talking about the federal level, is gonna really have to look at at the at the tax structures on a lot of these real estate investment trusts that now own a significant portion of real estate throughout this country in regards to how they can sell those properties, maybe get a reduction in their in in their tax structure when they sell it, that would open up a significant amount of affordability by them selling those units, by making a profit on it without having the taxation part of it so high, that would free up a lot of units for affordability, that could be converted into condos, townhouses, whatnot. There's a whole issue in regards to tax structures in regards to how properties are are bought and sold. That also plays a significant role. And these real estate investment trusts, just like any other investment vehicle, is out to make a profit. So if they make a profit, get a reduction in in in their taxes to sell that property, They sell that property. The communities win because there's more affordability that's put out into the marketplace. There's a whole issue there that we're we're not even talking about that we could get help from from congress. But that's just some of the ideas. I'm sure there's more ideas that are out there that exist, but, you know, that's that's that's another big one that would that would help free up some housing. And then the other thing, I mean, we're we're seeing all kinds of different housing types too. You know, a lot of communities and you know this are are talking about being able to put duplexes, townhouses in residential areas that are that have been predominantly single family in nature, but a mixture of type of housing. We see that in larger developments when there's a mix of uses within that development. But existing developments, older developments, where it's just single family residential, then you get a backbite there. But a lot of communities are talking about putting different types of housing stock within those existing neighborhoods. That would that would also increase the amount of housing affordability out there. But here again, it it it takes it it takes education. It takes sitting down with the community, and it's also, you know, having, the courage to make the decisions when necessary.

I mean, so, you know, the concept of housing and I just wanna make this is very important. People that live in single family home, they say I wanna protect that single family home, whatever it takes. I don't I don't wanna hurt anything to hurt the value. But people live in so many different ways. Some people live in mobile homes. Some people live in condos. Some people live in townhouses, flats, apart, garage, apartments. Tiny houses. High rise con there's just a litany of different ways people live. And and you can't just say you can't pigeonhole somebody and just say, well, this is the only way people are gonna live. When we're talking about small houses, you name it, you know, people have are are gonna live somewhere. And in addition to that, I also wanna also point out that we're also have also been involved with, some of our nonprofits here in regards to our unhoused, which is also a critical, issue that we're all dealing with throughout, the state of North Carolina in in in throughout our cities is is that we have made a commitment as a city to support housing, with wrap around services. That's critically important. 48 units at at, Lakeside Reserve, we're about to do 32 units at the Sparrow, which was an old fire station that the city had that we donated to a nonprofit, Good Shepherd Ministry that's putting in 32 units of, housing, supportive housing with supportive services. Phenomenal thing. Obviously, we don't have enough of it, but it it it works, and we've never had a problem in any of those areas. The place is always taken care of. The neighborhood was concerned about it to begin with. We said just trust us. Let's let's go through this process. We did a a Lakeside Reserve with 48 units and it's turned out to be a magnificent project for our community. And, that's another part of this that, you know, that we're gonna be talking about in the future as that population continues to grow throughout our throughout our state.