An affordable housing enclave in the heart of pricey Davidson will be sold

An affordable housing enclave in the heart of pricey Davidson will be sold
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A housing community for some of the poorest residents in Davidson, a well-off town north of Charlotte, will be put up for sale, leaving residents in flux.

What’s happening: The Bungalows houses residents earning around 30% to 50% of the area median income for the region, which is about $28,250 to $47,100 for a family of four.

  • The Davidson Housing Coalition (DHC), an affordable housing nonprofit, partnered with Mosaic Development Group to develop it more than two decades ago. They own a small sliver.
  • But an unnamed investor from California owns 99% of the property, and they’ve decided to sell it, says Margaret Martens, chairperson of the board of directors at DHC.

Why it matters: The sale of the property could leave longtime residents, some of whom are on fixed incomes, uncertain about whether they’ll pay more under a new owner — or if they’ll be forced to move. What’s more, finding a place that’s affordable is increasingly challenging in Davidson, one of the richest towns in North Carolina.

By the numbers: The median household income in Davidson is over $100,000. The town has a shortage of about 881 affordable units, according to Mayor Rusty Knox. It’s part of a unit shortfall that numbers in the tens of thousands for the Charlotte region.

  • “We fight every day for affordable living in this town,” Knox tells Axios. He says The Bungalows houses Davidson’s most financially challenged residents.

The big picture: The situation at The Bungalows is also a setback for a town that has pushed the envelope in its affordable housing efforts.

  • It is one of the few places in the state to have an inclusionary housing program, which requires developers to set aside 12.5% of homes in new projects as affordable housing, or pay a fee-in-lieu. The program’s legality is unclear, however.

Flashback: The town of Davidson granted the property on Jetton Street, just a few blocks from the heart of Main Street, to DHC in 1999, land records show.

  • DHC immediately transferred the ownership to Davidson Limited Partnership I, which is still listed as the owner. It’s registered to Mosaic’s address on Park Road.
  • Martens declined to name the majority investor, also known as the limited partner. But she said in exchange for funding the development, the investor received federal tax benefits that have now expired.

The plan was for the limited partner and Mosaic to back out of the partnership, leaving the DHC in control, she says. But there was never any clause in the original agreement that laid that out.

  • DHC offered to buy out the limited partner, but they did not accept it and plan to sell the site.

Shelli Roberts couldn’t afford to pay rent in Charlotte after her husband died.

She was looking to find a place that was more affordable and safe to raise her daughter in — and The Bungalows fit the bill. Plus, it was the cheapest rent she could find in the area, at $571 when she moved in in 2012.

  • She’s called the community home for more than 10 years.

Driving the news: In the fall, residents received notices that not only was the complex to be sold, but they’d also would face a $150 rent hike beginning in January.

  • Roberts was outraged, as were her neighbors, many of whom are seniors on a fixed income. She said her rent had never been raised by more than $25 per year.

Yes, but: The North Carolina Housing Finance Agency has to approve rent increases at the community, and the agency approved a $50 increase for existing tenants, denying the full $150, except for with new residents.

  • Martens said the $150 rent increase originally sought was necessary to cover maintenance costs, and that the property will be almost $90,000 short between operating expenses and income.

Of note: The housing must be affordable until 2030, per a legal agreement, with the ability for a three-year extension. A deed restriction also requires the land to be used for affordable housing in perpetuity.

  • Knox said Davidson would not agree to remove those requirements.
  • Because of those agreements, Martens said the maximum income level a new owner could target rents to is 50% of the area median income. Still, a number of current residents earn below that.

What’s next: The Davidson Housing Coalition is working out plans to try to take over at least some ownership when it goes up for sale, which Martens anticipates will be in the first quarter.

  • “We understand that feeling of uncertainty, we are very sorry that (residents) are in that situation,” she says. “We did everything we could over the last two years to try to try to keep The Bungalows from going to market.”

In the meantime, Roberts says she’s been talking to her daughter, who is now 25, about where they might go if they have to leave. She doesn’t know where she’ll be able to find anything comparable to the $745 she’s paying for their two-bedroom.

“I have some really really good neighbors here, and these people are like family,” she says. “It feels like someone is trying to break up our family.”

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