by Leo Suarez

Stone’s Warehouse and Affordable Housing

Stone's Warehouse

Stone’s Warehouse, photo taken December 2014

Just outside of downtown Raleigh is a site that’s getting a lot of attention lately. The block containing what is called Stone’s Warehouse at 500 East Davie Street could see a major renovation and new development in the near future.

This city-owned property could be sold soon and transformed into a destination for a mix of uses. I wanted to introduce this project as well as dive into the current topic of affordable housing, a criteria the city has listed for potential developers of the site to comply with.

Stone’s Warehouse
An old bus repair shop, the warehouse has been around since about the mid-1920s. The Carolina Coach Garage and Shop outgrew the space and moved out in 1939. After a variety of uses, it was eventually acquired by the city in 2001 and has been empty since.

View on Google Maps

In addition to the empty warehouse, the site also includes the currently open Rex Senior Health Center. The parking lot and some open land rounds out the rest of the site.

The city has slowly acquired the majority of the block, not including a few houses on the southern end. They intend to use it for community development and have put the site up for sale to developers. A long list of criteria has been put together and today we have three developers in the running for the sale of the site based on their proposals.

According to an article in the N&O, here are some of the details of each plan:

  • Transfer Company LLC plans for a grocery store, cafe, and a community hall with space for small food producers. They would build a 13,000 square foot building for additional food/drink space and a row of 16 market-rate townhomes. The proposal states that it would assist with the moving of the Rex Senior Health Center.
  • AACRE plans for a five-story, 200-unit apartment building with 300-space parking deck. The renovated warehouse would have a grocery store in it and the health center would remain although in a smaller space. 10-20 apartments would qualify as affordable housing.
  • Empire Properties plans for an “Entrepreneurs’ Village.” This would consist of the Exploris Charter School (currently looking for a home for their elementary school), a medical office, a museum, and an “intimate acoustic music hall” called The Garage. 49 apartments would be added with 15 qualifying for affordable housing.

As of this writing, Raleigh city staff and the Budget and Economic Development (BED) Committee recommend that the proposal by Transfer Company LLC be selected for the site.

For more reading see these articles:

Affordable Housing and the Scattered Site Policy
The most controversial and discussed topic with Stone’s Warehouse, and sometimes with downtown Raleigh in general, seems to be the affordable housing topic. Take note that the BED committee recommended a plan that does not include affordable housing.

I think we first have to recognize that the term “affordable housing” means different things to various people. The first place I looked for a definition is our city’s adopted 2030 Comprehensive Plan which explains it nicely.

The terms “affordable housing” and “workforce housing” mean different things to different people, and a variety of definitions have been advanced by various groups. For the purposes of this plan, housing is “affordable” if the cost of occupying it does not consume more than 30 percent of household income—the definition promulgated by the U.S. Department of Housing and Urban Development (HUD). HUD defines housing costs as contract rent plus utilities for renters, and monthly payment (mortgage plus taxes and insurance) for owners. Affordable housing refers to housing affordable to households with incomes at or below 80 percent of the HUD-estimated Area Median Income (AMI) for owners, and 60 percent for renters. Workforce housing is generally thought of as housing affordable to essential public- and service-sector employees such as teachers, fire fighters and nurses. It is defined here as housing affordable to households with incomes up to 120 percent of AMI. As of February 2012, the HUD-determined AMI for a family of four in Raleigh is $79,900.

I hear a lot of commenters on this blog, people around town, in the media, all over say that affordable housing is important. But which one do they actually mean? We have:

  • Affordable Housing – Typically using government subsidies to reduce the price of the home below market rates so that individuals/familes earning 80% less of the AMI can own, 60% less can rent.
  • Housing that is affordable – Market rate homes that do “not consume more than 30 percent of household income” according to the 2030 comprehensive plan.

Both may or may not be related. The housing section of the 2030 Comprehensive Plan has a lot more on this and should be your next stop for more information.

Now that we’ve defined affordable housing, what about policies that help guide where affordable housing should be placed in the city? The City of Raleigh’s Scattered Site Policy was created to help guide this. It identifies high and low priority areas where affordable housing is needed. It is a guide in order to avoid clustering too much affordable housing in one area.

As recently as early 2014, the policy was under review. The Raleigh Public Record has a write up, including a map, about the conversations that took place.

Areas of the city are broken up into four priorities: Priority One being areas are those that lack affordable housing; Priority Four areas have heavy concentrations of low-income and minority residents.

*Council Wants More Data for Affordable Housing Policy

*NOTE: As of this writing, the page on the city’s website for the policy has been taken down and I can’t find the policy listed.

The Scattered Site Policy is mentioned several times in the 2030 Comprehensive Plan. Updates to it should certainly be looked at but following it is a strong recommendation of the plan.

How is Raleigh Doing?
We have some figures here in order to make some generalizations. Using the 2012 data point of $79,900 AMI for a Raleigh family of four, we have:

  • 120% AMI = $95,880
  • AMI = $79,900
  • 80% AMI = $63,920
  • 60% AMI = $47,940

I see this as kind of a range here in order to give us some context with the definition of what is and isn’t affordable. At the same time though, more detail is probably needed to account for taxes and of course everyone’s situation is different. 30% of the $79,900 figure is $23,970, or $1997.50 a month. Is the message that a $1900 a month mortgage payment is affordable to a family of four pulling in $79,900? More details are definitely needed. (for a follow up post perhaps)

When it comes to the locations of affordable housing in Raleigh, there is some data available showing the mapped locations. I’ve had a list of sites in Raleigh which include Raleigh Housing Authority developments, HUD subsidized projects, and NC Housing Finance Agency projects. I went ahead and mapped them which you can see below.

NOTE: Data is dated December 2013. City-owned rentals are not included in this map. Some projects may also be paid off and are no longer considered affordable.

Another map to show is this one below, showing subsidized affordable rentals on top of the scattered site policy. This map is dated December 2013 and shows the entire city. For finer viewing, I recommend downloading the pdf.

2013 Raleigh Scattered Site Policy map

Click for larger. Download the pdf for even larger.

So with all this presented, here is the controversy. The adopted Scattered Site Policy is not being followed. The maps show a higher concentration of affordable housing projects in the low priority areas and very few units in high priority areas.

For Raleigh to be a diverse city with as much equal access across a variety of socioeconomic lines, a quality of a true 21st-century city by the way, communities of mixed-income must exist.

Adding market rate housing to an area of low-income is not something that should be avoided especially when it isn’t displacing anyone. Adding affordable housing to an area where there is little or none (priority 1) should be the bigger priority and real controversy.

How can Raleigh find the discipline to push against the trend as the city council approves again and again more affordable housing in priority 3 and 4 areas of Raleigh?

Back to Stone’s Warehouse

Let’s swing back to Stone’s Warehouse.

There’s a strong argument for the need for more housing that is affordable in our city. The comprehensive plan proves the demand and how the amount of residents burdened by housing costs has been rising over the last few decades.

However, demanding that affordable housing be included with all projects at the expense of nearby incomes is short-sighted. To create truly mixed-use, mixed-income communities Raleigh should place higher priority on delivering services, amenities that don’t exist.

Stone's Warehouse on Davie Street

That’s not a blanket statement, sure, but let me paraphrase a woman I heard at a South Central CAC meeting that stood up and kindly commented about the Stone’s Warehouse presentation.

More housing? I feel like we’ve got plenty of housing. We need retail and economic development in our neighborhood.

Stone’s Warehouse is in the middle of a sea of affordable housing projects. It’s also in the middle of a food desert. With a potential grocery store at the site, it’s possible nearby residents would benefit from access to healthy food, a close location, and possibly a nearby job.

With the warehouse being saved, the project should draw huge respect from the neighborhood for the efforts to save the history. Economic development could bring an even more impactful benefit compared to affordable housing at Stone’s Warehouse. Let’s not let a hot, politically-charged topic sway the real need in this location.

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18 Comments

  1. Interesting! The recommended proposal sounds like a real asset to the community. I dropped by a similar development in DC a couple months ago called Union Market (whose cafe serves locally made Counter Culture coffee btw :) and the aesthetic of the renovated warehouse was wonderful. These kinds of projects seem to strike the hard-to-achieve balance of being both chic and very warm and inviting. Looking forward to the ribbon cutting! Great topics and coverage as always Leo! Thanks

  2. The affordable housing issue is an intriguing one too. As urbanization continues across the country, many cities are having these conversations as they try to stay competitive in the market for citizenry – both corporate and corporeal (sorry, I know that was terribly cheesy). With increased demand, some gentrification is inevitable, but it there are certainly mechanisms that can be used to manage it.

  4. Devil’s advocate comment/question: Am I wrong to have some general doubt about “affordability” as an inherent virtue, particularly in terms of housing in Raleigh’s downtown area? I’m no Milton Friedman, but I understand and believe in the free market enough to think that to a certain extent, if something is in high demand and limited supply, it’s appropriate for it to be fairly expensive. And that (currently) tends to be the case for real estate in the downtown areas of many cities, especially in cities like Raleigh that are relatively dynamic, prosperous, growing, and (hopefully) “cool.”

    So, in the current environment, downtown isn’t going to be as affordable as some outlying areas, and to me that’s okay. I kinda like my city’s downtown to be sort of aspirational, and I’m okay with it being too expensive to live there. Realistically, I recognize that I already can’t afford to live in Downtown Raleigh, but it seems to me that that’s not Raleigh’s fault. If I want to live Downtown, I should have gotten a better job, or learned how to do better at budgeting and managing my finances, or otherwise found a way to come up with more housing dollars per month than I currently have.

    And I think it’s okay for me and other people to be priced-out of some parts of the city, including Downtown. I’m also priced-out of living in San Francisco or Manhattan or lots of other vibrant, in-demand urban centers, but so what? I kinda wish I could afford to live in those places, but then again I also wish I could afford a brand new Mercedes. But I don’t blame Daimler-AG for the fact that I can’t.

    Personally, I do value living in a community with socioeconomic diversity, so I’m happy living in Raleigh’s working-class fringes. But I’m well aware that at some point in the future, even my neighborhood could become too expensive for people like me to remain. If and when that happens, it will make me a little sad and nostalgic, but I won’t blame the higher-end people moving in for my plight. And I will also firmly believe that it’s a good sign for the city overall, since it would indicate that it’s a place where people can and want to invest money in real estate. After all, there are plenty of other places out there to choose from where nobody’s in danger of being priced-out; anybody wanna go live in Rocky Mount? Me neither.

    So, while I can see some of the arguments for promoting “affordable housing” options at the Stone’s Warehouse site, and I certainly won’t complain if that’s what’s ultimately done there, personally I tend to favor the more ambitious, market-rate proposals. Let’s make Raleigh awesome but expensive, rather than cheap but crummy.

  6. I agree Tom. This keeps getting brought up in Raleigh discussions. I don’t hate the poor or something, but I’m middle class and if I can’t live in a new high-rise downtown, I don’t see why poor people should instead. The whole point of supply and demand is that things in demand cost more, and if that thing is important to you, either strive harder to earn more, or make that a disproportionately large part of your budget. I love to buy one of those Teslas, but I’d basically have to live in it, so I drive a Nissan. Bottom line, if you can’t afford to live downtown and maintain a decent lifestyle, live a bit outside (like I do).

  7. @ Jeff, as a middle class guy who lives out with the other lowly paid state employees on six forks road see what you’re saying. But the bigger issue is pushing poor folks OUT of their homes downtown and replacing those homes with shiny, new housing. Gentrification has to answer to someone. It should not be done with the sole intent of forcing folks out of places they’ve lived, some their whole lives. Just because downtown is all of a sudden trendy does not make it right to force folks out.

  9. Wow! Interesting article Randall – thanks for posting it. Seems a pretty inflammatory decision by the architects to create a rich entrance and a separate poor entrance. I wonder how a renter in that situation would feel about living there.

    In regard to Tom’s comment: I think historically there has been a strong economic incentive for cities to ensure some housing for low income families near city center so they could commute to and fill min. wage service and city jobs (i.e. bell boys and bus drivers). Even as it grows though, our DT is so small and concentrated I wonder if that would ever come into play here.

  10. As a lower-middle income resident who loves downtown, but recently had to move a couple miles out of it because I could find *NOTHING* I could afford to live in, in downtown. This issue frustrates me to no end. I love downtown…I’ve lived in it since the late 90s. And to find myself removed from the city core I love so much because housing costs have soared faster than my income, I admit I’m getting kinda bitter on this.

    This is city-owned land. They should have picked the proposal that had the most number of affordable units, IMO.

    I agree we need to change the definition of “affordable”. I am not “poor” enough to qualify for the units that are labeled affordable. But we need more housing like Capital Park which has units (with long waiting list, I might add) that are inexpensive but are aimed for middle & lower-middle incomes.
    THAT is the type of housing the city needs a LOT more of, in and around downtown. And it’s a crying shame they’re not using this site for that type of development.

    One should not have to have a six-figure income to live in the city core. The largest employer in downtown is still state government—not Red Hat or Citrix. And hardly any of those employees can afford to live downtown. Can you imagine the improvement in the parking & traffic in the city core on weekdays if all those commuters were on foot??

  12. I agree that the scattered housing policy needs to be more strictly followed. But opportunities to improve affordability in high demand areas should not be wasted. Raleigh isn’t the only city that faces the affordability dilemma and there is no easy way to implement affordable housing when trying to counter a market that clusters low income housing in one place.

    I think that market rate units in this development would be better for the neighborhood as it would support amenities that aren’t as viable now.

  13. We as human beings must chip in to provide care for those who cannot provide for themselves. It is also fair to say that someone who receives government subsidized assistance should not have a house/lifestyle greater than the working people who chip in for them.

  15. So this has been approved. With the Transfer Company option. I’m glad. I am already seeing people complain “What, no affordable housing?!” without even realizing the situation. The development plan seems pretty unique and awesome for Raleigh, and even more so in this neglected area. Could be a gamechanger for both grocery options and a whole chunk of downtown.

  16. My issue isn’t necessarily the affordable housing units, it’s the loss of Rex Senior Center. That’s a real loss for the community, and the lack of its mention in this article I think shows the (unintentional) bias towards those services and amenities that are mainly geared towards a certain subset of society (wealthier and younger). Fine if you don’t want more affordable housing in this part of the city, but what are we losing by giving up an invaluable service for our elderly citizens in exchange for the shiny fancy craft coffee shop?

  17. I’ve lived in lots of cities that have been gentrified – including San Francisco and Portland, OR – and as far as providing housing for the poor, I can tell you that the topic is always raised just as developers start razing huge areas where the poor live. Call it “lip service” if you will. Also, just take a look at the Hammond Street infrastructure development at 1-40, which leads directly into the city. I predict that the poor living in the area just outside of downtown, leading up to Hammond, will get pushed out so the area just immediately south of the urban core can be developed. Hammond Street will act as another way to access I-40 efficiently from the city center and relieve future traffic as the (monied) population explodes. They might reserve a few apartments for low income residents, but the majority will be forced out. I’ve seen it happen so many times before under the exact same premise.

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