THE PROBLEM WITH CHAPEL HILL is often it doesn't seem to know that it is the problem with Chapel Hill.
(By Chapel Hill I don't mean the all the town’s citizenry. By Chapel Hill I mean the town's political establishment and the governing bureaucracy. Don't get me wrong, many of these people are well-meaning. But don't get me wrong on this either. Well-meaning is a pejorative. Well-meaning is synonymous with blithely wrongheaded.)
Chapel Hill doesn't seem to understand that while taxes and regulation are necessary -- if we are to have any government at all -- they are a necessary evil. They don't seem to understand that the private property in Chapel Hill does not belong to the town; it belongs to the property owners.
Briefly, in the aftermath of Hurricane Fran in 1996, Chapel Hill police restricted access to the town at the town limits. I thought it was an appropriate move for Chapel Hill, making Chapel Hill the state's only gated municipality. But, it was unnecessary anyway. The town has built a barrier much tougher to breach: a massive wall made of land-use taxes, fees, rules and regulations that take a special ladder constructed of dollar bills to get over.
Periodically, local governments study the cost of housing in Chapel Hill. These taskforces, study groups and advisory boards work hard to figure out why housing costs so much here. A small mirror would be a lot simpler.
Currently, Chapel Hill assesses a $6,092 impact fee on every new single-family home. This is a horribly regressive tax (0.6 percent on a million dollar house but 6.0 percent on a $100,000 house -- if such a thing could be built in Chapel Hill).
Eleven years ago, the Chapel Hill Fire Department had 56 members, only one of whom owned a home in Chapel Hill. Chapel Hill's solution? “To keep more firefighters, and other workers, in town,” the town "would require developers to build a certain percentage of affordable homes in each subdivision," reported WRAL.com. This rule, as implemented, requires 15 percent of the homes be “affordable” whenever a developer needs a special-use permit.
This, of course, has worked wonders for keeping housing costs down in Chapel Hill. There is nothing like additional costs and extra regulations to reduce development costs. While such a zoning ordinance can extort a handful of affordable units from the few developers willing to deal with its strictures, put together with a time-consuming and complicated approval process, it raises, quite obviously, the cost of the other units in the same development. Further, these additional costs and restrictions keep some developers from even entering the market. Reduced competition and a reduced supply of housing lead directly to higher prices.
How much higher? A 2006 study in 50 metro areas of growth-management land-use policies, such as those in Chapel Hill, showed "smart-growth" policies added more than $100,000 per home. Not so smart, it seems to me.
So, what does Chapel Hill now propose? An ordinance which would make the affordable housing set-aside rule apply to all housing developments. Given such an "affordable housing" set-aside, developers will, and have, targeted higher-end homes. The evidence? According to City-Data.com, the average price in 2008 for all housing units in Chapel Hill was $411,506. Is that affordable enough for you?
As the economist Walter Williams has noted, "Politicians love visible beneficiaries and invisible victims." While a few dozen, easily countable, modest-income homeowners will get their "set-aside houses," we have no way of directly counting the far more numerous modest-income homeowners, who would “rather be in Chapel Hill,” who had to buy houses in Mebane, Butner or Saxapahaw and now make long daily commutes to their Chapel Hill jobs.
Chapel Hill says Chapel Hill is the Southern Part of Heaven. It says so right on the town's website. It certainly might be so, because, you know, Chapel Hill does have many neighborhoods where the driveways could be paved in gold.
Gary D. Gaddy served on the Orange County Commissioners Affordable Housing Advisory Board from 2005 to 2010. During his tenure the price of local housing did not go down.
A version of this column was published in the Chapel Hill Herald on Friday March 12, 2010.
Copyright 2010 Gary D. Gaddy