Why isn’t Charlotte building enough affordable housing?

Plus: The Waldhorn hangs on with no Oktoberfest; Readers respond to Ledger CMS article; Protestors battle it out at Marshall Park; Centene bypassed S.C. despite more lucrative incentive offer

Book Review: A Charlotte developer floats big, market-based ideas for solving the nation’s housing crunch

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Review of “Creating the Urban Dream: Tackling the Affordable Housing Crisis with Compassion,” by Clay Grubb

Forbes Books, $19.98; 184 pages

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By Ely Portillo

There aren’t many books about real estate development that open with a quote from Ayn Rand and a critique of “centuries of abuse by the white bourgeoisie” on the first page. 

But that’s how longtime Charlotte developer Clay Grubb, CEO of Grubb Properties, starts “Creating the Urban Dream.” The slim volume outlines Grubb’s history as a builder and owner of apartments and houses, as well as his prescriptions for fixing our ailing housing market.

The question Grubb’s book sets out to answer is at once beguilingly simple and fiendishly complex: Why aren’t we building enough housing to keep up with demand? It’s a topic that’s grown increasingly urgent in Charlotte and across the nation in recent years, as home prices and rents shoot up.  

A study in February by Freddie Mac estimated that the U.S. has a shortage of 3.3 million housing units. In June, the Canopy Realtor Association said the inventory of homes for sale in the Charlotte region hit an all-time low, plunging to just over one month’s supply. At the same time, home prices keep going up, with the average sales price rising another 3.5%, to almost $334,000. 

It’s the same story with apartments. RealData, which tracks Charlotte’s apartment market, estimates the average rent for an apartment in the region is $1,243 a month. That’s up from $842 in 2013. 

Adjusted for inflation, median rents in Mecklenburg County grew 18% from 2005 to 2017, while incomes grew just 4%. The UNC Charlotte Urban Institute, where I work, estimated last year that the county would need an additional 27,000 housing units affordable to low-income residents in order to meet the local need. 

“When people need something badly and have trouble getting it, the price goes up,” Grubb writes. “Only once the supply outstrips the demand will there be any relief in housing prices.”

Grubb has settled on a market-based set of ideas, with a focus on easing regulations to spur building, changing the financial system to allow people greater access to credit, and providing cushions like an emergency line of credit built into all mortgages greater than 80% of a house’s value (for “when life happens,” as Grubb puts it). 

Real estate development is a family business for Grubb. His father, Robert Grubb, started the company in 1963, about 60 miles up the road in Lexington. Grubb Properties’ roots go back to building houses and underwriting loans in a textile- and furniture mill-driven town.

Clay Grubb has been CEO of the company since 2002. Eventually, he made his way to Charlotte, where he now focuses on developing urban apartments, especially under the growing Link brand. 

Grubb Properties’ Link Apartments Montford complex near Park Road Shopping Center.

And he’s been in the news a lot this year: First as an early coronavirus victim and survivor, and more recently for promoting Charlotte’s first totally car- and parking-free apartment project. Planned for the west Charlotte neighborhood of Seversville, the development is an apt example of many of the principles Grubb lays out in his book put into action. 

The idea is pretty straightforward: Why require a parking deck for apartments barely a mile from uptown Charlotte, adjacent to a greenway, served by transit and near the future streetcar? By eliminating parking, Grubb told Charlotte City Council, he will be able to save the $30,000-per-parking-space construction cost. Each apartment will be $250 per month cheaper, without a public subsidy. At the same time, residents won’t be contributing to air pollution or the city’s traffic. 

And Grubb is serious about eliminating cars from the development, not just minimizing them.

“We will evict you if you buy a car,” he told the City Council recently during a hearing about the proposal. All it needs is the council’s rezoning approval. 

Eliminating parking to save on construction costs and passing those savings on to tenants is the kind of “no, duh,” solution that sounds simple in theory but gets more complicated in practice. Some neighbors object to the development’s no-parking premise, pointing out that there are no grocery stores, doctor’s offices or other services within walking distance. They’re also worried that apartment residents will just park on nearby streets and take their spaces instead. 

Those conflicts — between building and regulations, balancing change and innovation — are recurring themes throughout “Creating the Urban Dream.” 

Many of Grubb’s anecdotes are rooted in Charlotte and will be familiar to people who have been here a while. (Charlotte readers who follow development will also recognize references to local players like land use attorney Bailey Patrick and affordable housing builder Dionne Nelson sprinkled throughout the book.) 

Grubb details projects such as his purchase and renovation of an old office building on Park Road, Grubb Properties’ role in developing the “Montford Park” brand for that corridor and his involvement in the redevelopment of the former public housing complex Piedmont Courts, just outside I-277 toward Plaza-Midwood, into a mixed-income residential project. 

He also lays out how bureaucratic delays — like the yearlong wait to get a lien release from the Department of Housing and Urban Development that nearly sank for-sale townhouses Grubb was planning at Piedmont Courts, and (combined with the Great Recession), caused dozens not to be built at all — that Grubb says are contributing to our disastrous housing shortage.  

While everyone comes in for some criticism in Grubb’s book, by far the most heavily criticized entity is HUD. Grubb supports abolishing the federal agency because, in his opinion, its bureaucratic inertia has grown too great for reform. 

“Personally, I think it has gotten to the point where HUD’s inefficiencies are incapable of being corrected,” Grubb writes. “I am confident we could spend the department’s $53 billion budget more impactfully. In reality, federal policies are doing little to promote affordable housing at a time of crisis.”

Affordable housing advocates and developers will find much to agree with in Grubb’s book. For example, he points out that HUD regulations usually don’t allow combined parking for a residential and commercial project, leading to duplicative building and millions more in costs for developments that mix offices, shops and mixed-income apartments backed by federal subsidies. That extra cost ends up driving rents higher for tenants, as well as creating half-empty parking decks.

Grubb favors changing rules that restrict density and ban accessory dwelling units (commonly known as “granny flats”) in single-family-zoned areas — a position where housing advocates and developers have found common ground. Raleigh recently loosened its building regulations to allow “granny flats” in most residential parts of the city, and Charlotte planning director Taiwo Jaiyeoba has said the city should explore doing away with exclusive single-family zoning altogether. 

Other positions Grubb lays out might leave him at odds with affordable housing advocates. For example, Grubb says that thanks to the bureaucratic morass at HUD, his company doesn’t accept Section 8 housing vouchers. 

“We would love to be able to accept these vouchers in some of the five thousand apartments we operate,” writes Grubb. “HUD’s restrictive policies scare us off and tend to push most of the best landlords away.”

Housing advocates in many cities, including Charlotte, want to ban such practices as “source of income discrimination” and forbid landlords from considering whether tenants are using a voucher. 

Housing is a broad field, touching all aspects of our lives. As a consequence, Grubb sometimes wanders between subjects such as the problem of tenants who damage property to the dilemma of whether to clear-cut a tract next to a country club community in Lexington to harvest the timber once the land’s housing development potential seems exhausted. This is especially apparent when it comes to ideas for streamlining bureaucracies: The list of possibilities includes both eliminating HUD and legalizing euthanasia. 

“Housing policy need not be complicated,” Grubb writes. But no matter how common-sense the solutions Grubb advances might sound, the book also acknowledges another truth: There’s no silver bullet, no single fix for a problem whose tentacles stretch into every facet of how we build and grow our cities. 

When everything is implicated in skyrocketing housing costs — from parking requirements to land prices, preferences for urban living to national financial regulations, the cost of labor to whether people want to go into the plumbing trade — it’s difficult to see how any single intervention can make that much of a difference. 

Fundamental changes are needed around everything from how local governments regulate land use to how the federal government subsidizes low-income renters. Those changes, many of them contentious and expensive, will all need to be implemented in the midst of an intensely dynamic, constantly changing marketplace for housing. 

And in an era when we can’t even agree on whether to wear cloth face masks during a pandemic or produce enough cotton swabs for disease testing, that’s an especially daunting thought. 

Ely Portillo is assistant director at the UNC Charlotte Urban Institute. He previously spent a decade as a reporter at The Charlotte Observer.

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Today’s supporting sponsor is T.R. Lawing Realty:

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Beloved Business: With Oktoberfest cancelled and bratwurst troubles, the Waldhorn is ‘trying to survive’

Ordinarily around this time of year, the Waldhorn Restaurant would be busy planning its annual celebration of Oktoberfest, a tradition since it opened in 1999.

The German bar and restaurant hosts one of the biggest Oktoberfests in the region over the course of several weekends in September and October, centering on select craft beers and German culture, complete with giant tents and live polka bands. But because of the coronavirus pandemic, the Waldhorn’s owners are canceling festivities for the first time since they opened.

“That’s been our bread and butter for the restaurant,” said Gitta Maier, co-owner and founder alongside her husband, Thomas, “so we’re not quite sure how this will affect our whole business this year.” 

No live polka this year at the Waldhorn Restaurant in Pineville. It cancelled its annual Oktoberfest, which is the restaurant’s “bread and butter.”

The Waldhorn initially offered takeout when restaurants closed in March, but business wasn’t brisk enough, so the restaurant fully closed for about six weeks. A federal Paycheck Protection Program loan helped slightly with the hit to revenue, but Maier could still only describe the loss as “terrible.”

“We were just paying everything out of our pockets for six weeks,” she said.

Since reopening, Maier said the restaurant is getting only around 35% of the customers it did before the pandemic. The dining room ordinarily seats 112 people but is now capped at 56.

Another blow came when their sausage supplier closed, impacting the Waldhorn’s ability to make bratwurst — a restaurant staple and customer favorite.

The Waldhorn was able to retain employees making a full salary but had to let all their part-timers go when it closed, which accounted for most of the staff. They’ve rehired many since reopening, but Maier said the restaurant has struggled with some employees electing not to work in order to continue collecting unemployment checks.

Maier said she has heard other restaurants are suffering from a similar problem. Servers in North Carolina are paid $2.13 an hour, plus tips, with the restaurant having to make up the difference if their tips don’t help exceed a $7.25 hourly rate. The Waldhorn pays its servers $2.43 an hour, and Maier suspects they are making more from unemployment than they were making working there.

For those who do come to work, the Waldhorn is monitoring employees’ health by checking temperatures daily and sending home employees who may seem feverish or are coughing or sneezing.

“We’re just trying to survive here,” said Maier. “That’s basically all we can do.” — DG

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Readers respond to CMS inequality article

If you missed Cristina Bolling’s excellent and important article over the weekend on how school closures are likely to contribute to economic inequality in Charlotte, you might check it out. (Also available in Spanish though The Ledger’s partnership with La Noticia.)

Some reader responses:

• “You do a fantastic job of articulating the divide that was already there and is being exacerbated by the pandemic.”

• “Excellent Charlotte Ledger story by Cristina Bolling on the CMS shift to virtual learning due to Covid-19. The impact of this shift on social & economic mobility, perhaps the defining challenge of our age, could be devastating. Worse? There’s ‘no major plan’ to address it.”

• “Great article today. I wish I could figure out a way to help families who will be struggling with online school supervision. I know how blessed I am to have the ages of kids that I do and that I’m able to be home. My heart breaks for families trying to figure out how to make this all work.”

• “I am also worried about the long-term fallout for public education, with some of the most affluent families opting to home school or enroll in private schools and children with special needs or academic challenges who will not get the in-person intensive intervention they need. I fear it will be catastrophic.”

We also heard from school board member Sean Strain, who represents parts of south Charlotte and was the board’s lone “no” vote on closing CMS school buildings. In response to the article, he wrote on Facebook:

The choices being made to ignore the science and embrace the fear will prove to be the most inequitable action taken by school systems in decades.

I understand the concerns. We have them as parents. We have them as employees. We have them as managers and leaders.

Some facts worth considering that I believe to be indisputable and help provide some necessary context:

• Mecklenburg County Public Health reports the current confirmed active virus in the community is approximately 3 confirmed cases per 1,000 residents

• Mecklenburg County Public Health reports that 3 people (0.016% of confirmed cases) have died in the county below the age of 60 that did not have serious co-morbidities (18,401 confirmed cases, 187 deaths)

• Our most vulnerable, underserved, least-prepared and -supported youth lose the most by not being in our schools

• Elementary school-aged children, based on physiology and supported by data, are far less likely to contract and/or spread this disease, and are far less likely to have a serious illness as a result

• Both the Deputy Superintendents for Academics and Operations reported on July 14 that they were “on track” for the safe return to school under Plan B

• 3+ hours of expert witness testimony (educators, public health official, physicians from our largest regional healthcare providers) substantiated the safety of returning to the schools

All of these facts seem to be lost in the discussion regarding the fear of our essential workers (teachers and other in-school staff) returning to work.

If you have thoughts on the issue, drop us a line at editor@cltledger.com. We’ll include more responses in future issues on this important subject. —TM

Related school reopening news:

• From B+ to C?: Is momentum building toward canceling the three- or four-day in-person orientation at CMS schools? CMS board member Carol Sawyer, who represents east Charlotte and this month voted for the brief orientation followed by virtual learning (“Plan B+Remote”), said on Facebook over the weekend that she now favors eliminating all in-person instruction (“Plan C”). She cited a study from South Korea that showed that children ages 10 and up might transmit the virus at a similar rate to adults.

• In response, Dr. David Callaway, chief of Atrium Health’s division of operational and disaster medicine, wrote on Twitter: “OK, [Carol Sawyer and CMS], go virtual with middle school and high school- They can stay at home safely & do OK with virtual learning. Use HS space for elementary school kids- Parents can actually get back to work and we don’t stay a #50 on the social mobility list.”

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In brief:

• Tech workers to stay home: Red Ventures and LendingTree told their employees last week to expect to work from home through at least the end of the year. Many tech companies nationally have made similar announcements. Locally, most big companies are taking a wait-and-see approach, and the big banks aren’t planning a return to offices until at least Labor Day. (Agenda)

• Centene competition details: South Carolina and York County were prepared to offer Centene Corp. more than $900M in incentives to build its East Coast headquarters at the former Charlotte Knights stadium site in Fort Mill, according to newly released public records obtained by the Charlotte Business Journal. The company also considered Tampa, Fla., but ultimately decided to build in Charlotte’s University City, aided by about $450M in incentives from North Carolina and the city and county. The Fortune 500 healthcare company is expected to hire more than 3,200 workers locally. (Biz Journal, subscriber-only)

• Greatest hub on earth: After big cutbacks this spring, American Airlines is adding flights to its Charlotte and Dallas hubs. “Asked about Charlotte, [American’s chief revenue officer Vasu] Raja responded, ‘There is no higher performing hub on earth,’ referring to profit margin.” (Forbes)

• Wild protest showdown in Marshall Park: “After Defund the Police protesters arrived at a Blue Lives Matter rally in uptown Charlotte, tensions heated and the Charlotte-Mecklenburg Police Department deployed pepper spray.” (WCNC) Photos from Charlotte magazine show a pro-police protestor grabbing another protestor’s neck and a demonstrator from Charlotte Uprising spitting in the face of a woman wearing a Trump T-shirt. Queen City Nerve said on Twitter: “Police have separated Black Lives Matter protesters from Blue Lives Matter. The former are now at the courthouse getting into it with Jesus Saves guy.”

• Working … With Children: Occasional Ledger contributor Amy George offers tips on doing at-home work while supervising kids’ online classes: “Manage Your Business and Kids’ Distance Learning? Ugh. Here’s how one parent and entrepreneur plans to make it all work” (Inc.)

• Duke bars upperclassmen: In a change to reopening plans, Duke University is allowing only freshmen and sophomores to live on campus this fall, in a move designed to keep Covid from spreading. Juniors, seniors and graduate students will take classes online only. Upperclassmen were to have arrived on campus on Aug. 15. (Raleigh News & Observer)

• Newspaper fire sale: The Observer’s parent company, McClatchy Co., will be purchased for $312M by hedge fund Chatham Asset Management, according to documents filed Friday in McClatchy’s bankruptcy case. McClatchy’s CEO and board chairman will depart after the sale closes, which is expected by early September. A statement from the company said “all employees will be offered their current job with new McClatchy,” and the outgoing CEO said he was proud of transforming the chain of 30 newspapers into a “profoundly digital company” and “enhancing our reputation for essential journalism.” About 25 years ago, McClatchy bought a single newspaper, the Raleigh News & Observer, for $373M, WRAL reported. (McClatchy)

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Taking stock

Unless you are a day trader, checking your stocks daily is unhealthy. So how about weekly? How local stocks of note fared last week (through Friday’s close), and year to date:

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