February 11, 2013; Source:  Daily Tar Heel

One strategy of affordable housing production is to buy or rent apartments, such as condominiums or cooperatives, for lower income occupants in otherwise higher income complexes. It makes sense. It is hard to find and acquire land in many communities to build new housing, but some existing apartment complexes may have units that can be purchased or rented. Doing so achieves two purposes: securing affordable housing and creating some income integration in market rate communities.

It makes sense, but it’s not always easy. In Carrboro, N.C., a nonprofit called EmPOWERment owns one unit and is in the process of buying two more in the Collins Crossing Apartments for occupancy by homeless and disabled households. That may not happen now that the Old Wells Owners Association announced plans to charge each unit a fee of $5,406. Add that fee to the cost of buying a unit and paying a mortgage, and using these units as affordable housing becomes financially difficult. According to a lawsuit filed by Wendy Dale, a Collins Crossing unit owner, the homeowners association’s board was entirely replaced by the Alcurt Realty Group, which is the majority investor in the complex.

The fee is supposed to address needed renovations in the complex, but the homeowners association and the Alcurt investors have to know that a fee that large means that apartment owners will pass it down to renters of their units, making the units much less affordable. In the case of EmPOWERment, the fee makes dedicated affordable units basically unaffordable without access to significant subsidies.

Nonprofits like EmPOWERment generally have to be creative problem solvers to navigate difficult environments. Situations like the surprise fees at Collins Crossing require them to be that much more entrepreneurial, often dealing with situations that might have impacts and motivations deeper than what appears on the surface. What do you think might be the motivation for the new $5,406 fee—a fee that might make the inclusion of homeless residents among otherwise higher income apartment occupants less financially feasible? – Rick Cohen