Waynesville considers more incentives for affordable housing development
The Balsam Edge development on Howell Mill Road (center, in yellow) is just behind the Russ Avenue Ingles Market (lower left). Haywood GIS photo
Two years after a nonprofit affordable housing developer was granted incentives by the Town of Waynesville, the project is finally moving again but the developer has now returned to the table, asking for more incentives amidst rising construction costs.
“We have a workforce in Waynesville that needs safe, adequate housing that is affordable to them,” said Adeline Wolfe, a real estate developer with Mountain Housing Opportunities. “I think a big misconception is that this is poverty housing, and it’s not. This is housing for the workforce of Waynesville and is much needed if Waynesville is going to continue to be affordable for all of its residents.”
In April 2021, a private, nonprofit community development corporation called Mountain Housing Opportunities requested $306,750 in affordable housing incentives for a proposed 5.3-acre, 84-unit affordable housing development on Howell Mill Road, called Balsam Edge.
Waynesville aldermen granted MHO a little over $167,000 — the estimated cost after in-kind town labor was factored into the equation.
Over the past 35 years, MHO has accumulated 1,134 affordable rental units in the region through acquisition, development, new construction and renovation. The group also offers assistance to prospective homeowners who meet income limits in Buncombe, Haywood, Henderson and Madison counties.
Of the 84 units at Balsam Edge, 22 will be one-bedroom, 42 will be two-bedroom and 20 will be three-bedroom. All will be constructed in accordance with EnergyStar guidelines, to keep utility costs low, and 12 will be ADA compliant.
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The parcel, however, does not currently have access to town sewer services, which are costly to install.
The incentives approved by aldermen in 2021, which are in line with the town’s affordable housing policy, were to help reimburse the town’s sewer fund and cover the cost of system development fees, physical infrastructure and installation.
When the plan was first presented to aldermen nearly two years ago, the project timeline had estimated that units would start being leased by summer of 2023.
But construction on Balsam Edge hasn’t yet begun because Low Income Housing Tax Credits (LIHTC) from the North Carolina Housing Finance Agency didn’t materialize for MHO as anticipated. The LIHTC application process is extremely competitive and also resulted in yearslong delays for the redevelopment of the old Haywood Hospital into affordable housing units.
Last October, MHO finally got the news it had been waiting for — an award notice on $9 million in credits, and a $1.5 million federal loan. The Balsam Edge project was one of only 28 projects awarded in 23 North Carolina counties for the 2022 application cycle.
That cumulative effort by the NCHFA will result in just 1,716 affordable housing units across the entire state – not nearly enough, but better than nothing.
“The award to Balsam Edge could not come at a better time as currently more than 1,400 renter households in Haywood County are paying over half of their income for rent alone,” reads an MHO press release issued upon notification of the award.
Now, MHO says that construction is expected to begin this fall, with completion estimated in spring, 2025.
A lot has changed since MHO’s original request was considered by aldermen. Inflation and skyrocketing construction costs have caused problems across the country, and Haywood County has not been spared.
Site work, including grading and paving, was estimated by MHO in December 2020 to total $30,400. A February 2023 estimate provided by MHO says that’s gone up almost 20% to $36,200.
Erosion control measures once estimated at $6,000 have nearly doubled, to $11,800.
The sewer line extension itself, estimated at $209,000, will now cost 18% more, coming in at $246,500.
All told, MHO’s original $306,750 estimate for the sewer component of the Balsam Edge project has grown 20% to $368,125. Adding in system development fees of $100,000 brings the total to nearly $470,000.
While MHO will own the development, tenant relations will be conducted by a company called Partnership Property Management. Rents will be determined by what percent of area median income (AMI) tenants earn.
When MHO initially proposed the project, it was intended to serve only those earning between 40-80% of AMI.
Each of the three apartment sizes were allocated at the 40%, 50%, 60% and 80% levels, with more than 25% of all units reserved for those making a maximum of 40% AMI.
That means a one-bedroom for 40% AMI tenants would have gone for $388, a two-bedroom for $469 and a three-bedroom for $539. At the maximum 80% AMI, those rents would have been $721, $849 and $963, respectively.
Now, due to some confusing changes by the IRS, MHO will eliminate the 80% units and serve only those earning 40 to 60% of AMI.
New rents will run between $534 and $801 for one-bedrooms, $642 and $963 for two-bedrooms and $741 and $1,112 for three-bedrooms. All those rents are gross and include a utility allowance of $79 for one-bedrooms, $92 for two-bedrooms and $109 for three-bedrooms.
On Feb. 16, aldermen approved annexation of the parcel into the town’s corporate limits. Previously in the town’s extra-territorial jurisdiction, the parcel had an estimated annual property tax bill of $2,377. After development, MHO estimates that bill will jump to nearly $19,000, generating more revenue for the town.
On March 28, aldermen will hold a public hearing and consider amending the previous incentive agreement per MHO’s request.
Alderman Chuck Dickson, who’s taken an active role in affordable housing initiatives, said he’s supportive of the request and expects some increase from the original amount of $167,000 even with the town’s in-kind labor.
Wolfe said that if the proposed amendment to the original incentives doesn’t come in at the requested level, the project will still move forward.
“It’s not going to kill the project,” she said. “It’s definitely going to be not ideal, since costs are increasing across the board, but we’re used to doing a lot of fundraising. This is a really great source that we’re excited about, but projects like these have multiple [funding] sources.”
Be heard
The Town of Waynesville Board of Aldermen will hold a public hearing to consider increasing affordable housing incentives already granted to Mountain Housing Opportunities for an 84-unit development on Howell Mill Road.
• Time: 6 p.m.
• Date: Tuesday, March 28
• Location: Town Hall, 9 South Main Street, Waynesville
