Charleston City Council on Tuesday changed the workforce housing zoning rules to encourage more apartment developers to buy their way out of the required below-market rents in a portion of their units.
Under the new rules, apartment developers who opt into the workforce housing zone have two options: they can offer below market-rate rents in 20 percent of their units for a period of 25 years, or they can pay the city $5.10 per square foot to opt out of that requirement. In exchange, the city will allow them to build more units than the base zoning allows.
The fee-in-lieu would help fund the city’s efforts to build its own affordable housing projects, which Mayor John Tecklenburg and most members of council agreed increases the long-term supply of affordable housing.
The original workforce housing zone created several years ago required developers to offer 15 percent affordable units for 10 years, without a fee-in-lieu option.
After hearing from developers, housing experts, residents and preservationists, council voted 10-2 to override the Planning Commission’s suggestion to require fewer affordable units — 15 percent — for a period of 15 years.
Then, they voted 9-3 to keep the fee-in-lieu rate as it was suggested by the Committee on Community Development.
Councilmen Bill Moody and Mike Seekings voted against both measures, and Councilman Peter Shahid voted against the fee-in-lieu rate.
Seekings said the workforce housing requirement has never worked to resolve the shortage of affordable housing because the rents aren’t low enough and they expire after a certain period. He thought the fee-in-lieu should be lower to encourage more developers to opt out of the program.
“We have to come up with a plan on this peninsula to build truly affordable housing,” he said.
Moody said he wanted to keep the Planning Commission’s proposal and lower the rate by about two dollars.
However, most members of council said the group needed to go ahead and set new rules since they’ve been debated for more than six months.
“Let’s go with the number we have now, and if nobody takes us up on the offer, we can bring it down,” Tecklenburg said, adding the $5.10 fee calculated by the committee was considered a discounted rate.
Luther Cochrane, the founder of the large commercial construction company formerly known as BE&K, said most commercial developers’ calculations supported a rate of about $2.75. He said that would account for construction costs, the difference between the market and affordable rental rates, and a number of other cost considerations.
“We don’t want to have a fee in lieu that’s so high that it chills development,” he said.
Of the roughly 2,000 units planned in the Mixed-Use/Workforce Housing zone now, about 300 — or 15 percent — will be workforce units.
Developments already in the pipeline can pay a lower fee-in-lieu of $3.40 per square foot to opt out of their workforce housing requirements under the previous rules. The developer of the SkyGarden apartments on Woolfe Street has already been given approval to pay that fee, which amounted to $520,587.
Reach Abigail Darlington at 843-937-5906 and follow her on Twitter @A_Big_Gail.