Last week, Mecklenburg County Community Support Services released the 2020 Charlotte-Mecklenburg State of Housing Instability & Homelessness (SoHIH) report. The report provides a single, dedicated compilation of all the latest local, regional, and national data on housing instability and homelessness pertaining to Charlotte-Mecklenburg.

The report is intended to be the “go-to” resource for all stakeholders working to address housing instability and homelessness in Charlotte-Mecklenburg. Anchored by the three main components of the housing continuum: housing instability; homelessness; and permanent, affordable (or stable) housing, the report is designed to make information easily accessible. To help connect the data with stakeholders, there are also helpful complementary materials available. These include the Key Findings Handouts, Report Toolkit and Housing Data Factsheet.

Last week’s blog shared five key themes from the 2020 SoHIH report. This blog post will take a deeper dive into the first three themes, which are all related to the need for both increased access to and availability of permanent, affordable housing. The post will also share examples of solutions from other communities and what this means for Charlotte-Mecklenburg.

“PERMANENT, AFFORDABLE HOUSING,” UNPACKED

The single biggest takeaway from the 2020 SoHIH report is the urgent need for more permanent, affordable housing in Charlotte-Mecklenburg. But, what does “permanent, affordable housing” mean? Is all “permanent, affordable housing” the same? Why does the definition matter?

Housing is generally considered “affordable” if a household does not have to spend more than 30% of their pre-tax, gross annual income on housing-related expenses. Those that pay more than 30% of their gross income on housing-related expenses are identified as “housing cost-burdened.” “Housing-related expenses” includes not only the cost of the rent (or mortgage), but utilities and other expenses directly related to sustaining their housing. Using this definition, it should be apparent that everyone desires to live in housing that is “affordable” to them. However, the way the term “affordable” is widely applied only serves to artificially divide the housing market, rather than recognizing the universality of the need and desire for any household to be unburdened by their costs of housing. The reality is, everyone wants housing that is “affordable.”

More importantly, everyone deserves to live in housing that is affordable to them. Unfortunately, Charlotte-Mecklenburg does not have sufficient housing stock to ensure equitable access. On page 35, the 2020 SoHIH report provides the latest data on the number of households with higher income who rent lower (than their AMI level) cost units. This results in what the report calls a “rental mismatch.” Households with higher incomes can (and could, given the desire everyone has for affordable housing) “rent down.” This action, while benefitting the household that is “renting down,” has repercussions on the housing ecosystem. “Renting down” can displace units; and could be a cause for households with lower incomes to “rent up.” Further, there are negative consequences for those “renting up,” like housing cost-burden which can lead to housing instability and for some, homelessness.

Affordable housing is universally desired, but the term “affordable housing” is generally applied to households ranging in income from 0% to 120% of Area Median Income (AMI). Using FY2020 data for a family of four, this annual income range spans from $0 all the way to $100,200. The Fair Market Rent for a 2-bedroom apartment in Mecklenburg County is $1,063. A four-person household at 30% of AMI can afford (at most) $655 per month in rent and utilities without being cost-burdened. In contrast, the same size household at 80% of AMI can afford $1,670 per month in rent and utilities. Therefore, when new “affordable housing” is developed or existing “affordable housing” is preserved, it is important to understand (and ask) for all of the details, such as how many units will be made available and at what AMI levels.

The 2020 SoHIH report illustrates that the need is not consistent across all income levels. In fact, the report shares that the largest gap in permanent, affordable housing is for households with incomes at or below 30% of AMI. For a family of four, this means an annual income that is at or under $26,200. For a single individual, the number is $17,550. In Mecklenburg County, there is a current need for more than 23,000 permanent, affordable units just to serve households at this income level. Many at the 30% AMI level are households with frontline workers such as nurses, janitors, and food industry employees. Worse, this current need is only growing while new inventory is unable to keep pace and existing units are being lost.

THE NEED FOR MORE PERMANENT, AFFORDABLE HOUSING, UNPACKED

Permanent, affordable housing more typically is used to refer to the physical units, themselves.

Permanent, affordable housing can also mean the financial assistance used to gap the difference between what housing costs and what households can afford. Examples of financial assistance include short-term rental subsidies, such as rapid re-housing, as well as long-term subsidies and/or vouchers like permanent supportive housing and Housing Choice Vouchers. Financial assistance is funded by public and private entities at the local, state, and federal levels. New financial assistance has also been made available through the federal CARES Act.

There are three primary considerations related to permanent, affordable housing: preserving existing units and resources; adding new units and resources; and removing barriers to available units and resources. Preserving existing housing stock includes the retention of NOAH and other lower-cost rental inventories as well as the rental subsidies needed to gap the difference in cost and affordability.

A subsidy may not be necessary if the rental unit is already affordable; this is typical of Naturally Occurring Affordable Housing (NOAH) units. In other instances, a short-term rental subsidy, combined with access to a rental unit at or near market rate, may be necessary until a household stabilizes and can afford the unit independently. It is important to consider both the need for financial assistance and the physical units to meet the need when contemplating solutions. If there are not enough physical units to support an increase in available subsidies, then the needle is not moved.

• The 2020 SoHIH report indicates that the share of units renting below $800 per month has dropped from 51% of all inventory in 2010, to just 25% in 2018. In addition, the number of units able to be supported with rapid re-housing and permanent supportive housing has decreased over the past 2 years. Adding new units and expanding resources includes development of new units; rehabilitation of existing housing stock; and allocating more money for subsidies and/or vouchers.
• Also per the 2020 SoHIH report, the local Housing Trust Fund has supported the development, preservation, or rehabilitation of 10,369 total units between FY2002 and FY2020. After deducting the total number of units that were emergency shelter beds for people experiencing homelessness (694); and the total number of units that are pending and/or under construction (3,599); this equates to a total of 6,076 total new units over eighteen years, or 338 new units on average per year. These 6,076 units also rent in a range from 0% to 80% AMI, and even includes some market rate units.
• Finally, removing barriers to access available units means addressing what has become the new redlining: source of income discrimination (or SOID). The 2020 SoHIH report indicates that 44% percent of rental applications placed by Housing Choice Voucher holders between April and December 2019 were denied. Barriers like SOID only further limits the community’s supply of permanent, affordable housing.

SO, WHAT

Last week’s blog post used the metaphor of a leaking ship, overloaded with cargo, to illustrate the current state of housing instability and homelessness in Charlotte-Mecklenburg. Prior to the COVID-19 pandemic, there was a growing deficit of permanent, affordable housing.  This deficit was already especially large for households with income at or below 30% of AMI. Now, in the pandemic era, the need for permanent, affordable housing continues to grow, creating a new tidal wave that threatens to overwhelm the system. According to a new report from the National Council of State Housing Agencies (NCHSA), renters in the United States will owe up to $34 billion in past-due rent by January 2021. This is significant, as the current national eviction moratorium ends in December 2020. In North Carolina, this means an estimated rent shortfall between $632 and $824 million, and potentially 240,000 eviction filings. In addition, the report highlights other negative impacts like reduced apartment payroll expenses for property managers and maintenance staff; hits to local property tax revenues, which support services; and deferred maintenance and delayed repairs.

In response to the need for more permanent, affordable housing in the COVID-19 pandemic era, communities have fostered new, innovative solutions for a pre-existing condition. These include:

• Purchase vacant or underutilized buildings (like hotels) and renovate as housing. “Project Homekey” is a statewide initiative in California in which $600M will be invested to purchase and rehabilitate housing, including hotels; motels; and vacant apartment complexes, and convert them into permanent housing for people who are at risk of or currently experiencing homelessness. The average reported cost is $130,000 per unit; and a total of 1,810 units were recently funded. $550M of the total funding is from California’s direct allocation of the federal CARES Act Coronavirus Aid Relief Funds (CRF).

• Protect households from displacement while preserving and/or producing more housing. Many communities have adopted anti-displacement policies, with the goal of prioritizing and protecting some of the existing permanent, affordable housing inventory for households who would otherwise be displaced due to factors like poor living conditions; rising housing costs; evictions; and now, COVID-19. Recently, San Jose approved an anti-displacement plan that requires property owners to notify the city when their property goes up for sale. This allows nonprofit affordable housing developers and tenants advance notice and first pick of the property. The plan also provides tenants who live near new low-income housing a preference for occupancy, so that they can stay in their neighborhoods.

• Expedite the move from homelessness to housing by linking and aligning all systems. In response to COVID-19, the Chicago Continuum of Care (CoC) developed the “Expedited Housing Initiative” (EHI) to move 1,250 households experiencing homelessness into housing over a 12-month period. The EHI model relaxes barriers to streamline processes and reduce the length of time it takes to secure housing; enlists multiple public and private partners to provide health and human services; and leverages CARES Act and other COVID-19 related funding. To help recruit landlords, Mayor Lori Lightfoot issued a letter of support. And, to help speed up the process, EHI created one-day “Accelerated Moving Events” whereby groups of individuals can complete all steps of the housing process, from identifying the unit to completing a rental application, with onsite assistance. Finally, EHI has developed an evaluation plan to measure the effort’s impact.

These examples highlight just a few opportunities for communities like Charlotte-Mecklenburg to consider in order to address the need for more, permanent, affordable housing in and beyond the COVID-19 era.

Strategies previously deemed impossible might actually be not only plausible, but smart and strategic. This could be the community’s opportunity to begin the process of righting the ship for the benefit of all.

Stay tuned for next week’s blog, which will take a deeper dive into the final two themes from the 2020 SoHIH report.