The cranes picketing Greenville’s downtown skyline are evidence that the city’s housing market is booming. New apartments and condominiums are under construction in and around the central business district and along the Reedy River on the west side, and houses in neighborhoods near downtown are being renovated or torn down and replaced with much larger homes. The average home sale price in the Greenville area rose nearly 20% between 2011 and 2015. It’s a seller’s market for sure.
But that is tough for a buyer with limited resources and even harder for a renter looking to live – or to remain – in the City of Greenville.
To consider the challenges of affordable housing in Greenville and what many are calling a crisis, the City assembled a Steering Committee of local stakeholders to assess affordable housing and make recommendations to City Council. Greenville Partnership for Philanthropy member organizations Hollingsworth Funds, Inc. – represented by Gage Weekes – and the United Way of Greenville County – represented by John Concklin – serve on the Steering Committee. The committee and the City of Greenville hired Charles Buki and czb, a consulting firm specializing in neighborhood planning, to conduct a study on affordable housing in Greenville and provide recommendations. Buki presented his findings and recommendations at a special GPP meeting on October 26, 2016
As a reminder from the September 2015 GPP meeting, housing is considered to be affordable if monthly rent or mortgage payments to a bank costs no more than 30% of a household’s gross monthly income. So there is no one dollar amount that equals “affordable.”
However, looking at the housing market and availability of units for rent or purchase, it’s clear that housing is difficult for those with lower incomes to obtain. The czb study found that there is an acute crisis for workers earning less than $20,000 annually, which is about $9.80 per hour (minimum wage in South Carolina is $7.25). But even those with middle-incomes face challenges finding housing. Households need an income of $65,000 per year to buy an entry level home in the City or at least $30,000 a year to access a decent entry level rental unit. As a point of reference, starting salaries for teachers and police officers in Greenville are around $40,000. Firefighters start at $32,000 and Certified Nursing Assistants start at $23,500.
The czb study had four key findings. First, gentrification pressures in the City of Greenville are real. Historically low-income neighborhoods (which are also historically African American neighborhoods) are losing rental units and are seeing their rental and purchase prices increase as properties are renovated and flipped for profit. Second, there is a large deficit – approximately 2,500 units – of minimum quality rentals for less than $500 per month (which would be affordable to those making $9.80 per hour or less). Third, low costs units and poor households are highly concentrated in the City of Greenville. Fourth, up ladder demands on supply create down ladder pressure.
This last finding means that Greenville has a shortage of not just less expensive housing but also insufficient housing stock for those with higher incomes. For instance, in 2014, there were just over 4,000 renter households in the City of Greenville with incomes of $50,000 or more. But for those 4,000 households, there were only 1,230 rental units that rented for 30% of their incomes – in other words, that would be “affordable” to them. So, although they could spend more, because nothing was available in the city for these households, they rented units that were less than 30% of their gross monthly income, thus “raiding” the housing pool of units that would be affordable to someone with a lower income. This deficit continues on down the income ladder until those with the lowest incomes have nothing left for rent; these units have been taken by those who can easily afford them.
The study and the Affordable Housing Steering Committee offer two objectives to addressing this affordable housing crisis.
First, they recommend addressing both preservation and production. It is paramount to keep and upgrade the affordable housing stock already available in Greenville to prevent the deficit from widening. This can occur with the help of a flexible, locally-funded rental subsidy that is used to trigger owner upgrades. As this preservation is underway, we must also produce new housing that is affordable, but only as a part of mixed-income deals and projects to better distribute housing for lower- to middle-income households outside of traditionally poor neighborhoods. A Community Land Trust, which transfers parcels in the City’s inventory for housing use and that acquires additional vacant acres in the city, can be used for development of new units.
Second, the study recommends that Greenville changes the underlying governing variables to the way we approach affordable housing. It’s important to use our own money rather than rely on federal programs, because our funding is flexible and responsive to market conditions in a durable way and keeps us in the driver’s seat. In addition, affordable housing needs to be seen as economic development rather than something that is the victim of or an obstacle to economic development. Practically speaking, the City and private entities can invest in a city housing trust and then distribute these resources as subsidies, a land hedge, and developer incentives for mixed-income housing citywide.
These recommendations are meant as a starting point for moving the work forward and will require a collective approach with input from and participation by multiple stakeholders. Both will require political and community will as well as local investment from public, private, and philanthropic sources.
A subset of the Steering Committee is in the process of developing a transition plan to move from strategic recommendations to implementation. This will include the creation of a nonprofit land trust and a leadership team to guide the work. There will be opportunities for funders to participate in different phases including planning, operations, and capital investments.
In the short term, there is an opportunity to jump-start investment in the land trust with $2 million from the City’s $5 million budget surplus. City Council is currently scheduled to review this opportunity at a Work Session on Monday, November 28th at 4 p.m. and to vote on a resolution at a Formal Meeting on Monday, December 12th at 5:30 p.m. We invite GPP members to attend both meetings to show your interest and support.
Stay tuned for more information. For those of you with additional questions, please feel free to reach out to Gage Weekes.