× Expand The Sir Walter Raleigh Apartments

In June, Raleigh's city council raised property taxes to, among other things, generate $5.7 million a year for affordable housing. The goal was to expand the number of affordable units built in the city by more than 60 percent, from 200 per year to 325. Advocates hailed the move as a crucial firstthough not laststep in combatting skyrocketing downtown rents.

A few blocks from City Hall, however, the city has another looming affordable housing problem: the Sir Walter Raleigh Apartments building on Fayetteville Street, a senior housing complex with 140 affordable units, is up for sale for $16.8 million. Those units are financed by the Federal Housing Authority and the U.S. Department of Housing and Urban Development under a contract that runs through 2020.

The new owner, according to city leaders and HUD, would have a choice not to renew that contract. If that happens, those HUD dollars will go somewhere elseand it's not clear where.

Even so, some residents see this as an opportunity both to reaffirm the city's commitment to affordability and to increase downtown's diversity.

Will Marks, who lives in the PNC building, moved to Raleigh three years ago from Boston. Forty years ago, he lived near a "fleabag" building in Beacon Hill, now one of Boston's most desirable neighborhoods; the building was renovated in 1983 to create affordable housing for seniors. Today, that building contains eighty-five rent-subsidized and thirty-three rent-moderate apartments.

"This is a really first-class building," Marks says. "It breaks all the rules. It's really expensive real estate, but someone found a way to make money on it, even though there are some really down-and-out people who are out there."

Marks thinks something similar could work for the Sir Raleigh, even if that means the city buys the property or takes it over temporarily, to ensure that the new owners keep those affordable units.

Bill King, the Downtown Raleigh Alliance's senior director of economic development and planning, says city intervention is "a possibility, but the price is a little too high for what they could do."

The city isn't currently thinking about buying the Sir Walter because "the asking price would be substantially more than our funding for affordable housing," says housing and neighborhoods director Larry Jarvis.

And if the city doesn't buy the building, it will have no leverage over what the future owner does with those affordable units.

"It's privately owned, it would be sold to another private entity, and there's no way for the city to be involved in those transactions," Jarvis says.

Indeed, when it comes to forcing developers to include affordable units, North Carolina municipalities' hands are tied. North Carolina law doesn't allow local governments to pass inclusionary zoning ordinances, which require developers to include affordable units in new buildings.

"It's concerning, because it seems that in North Carolina, municipalities are very limited in what they can and can't do," says council member David Cox. The $5.7 million the city's tax increase will raise, Cox says, "sounds like a lot of money, but it translates into a small number of units. So then we're reliant on the market and what private developers can bring. I find it very frustrating."

For now, it's all up in the air, at least until the Sir Walter is sold and the new owners indicate whether or not they'll maintain the HUD contract.

But for Marks, finding a solution for affordable housing downtown is essential.

"We have a vision for the downtown core, and we say that we want it to be diverse and for everybody," Marks says. "So wouldn't we want to do whatever we could do to preserve that?"

This article appeared in print with the headline "Hands Tied"