Crime and Affordable Housing in North Carolina

Post image for Crime and Affordable Housing in North Carolina

by admin on May 6, 2011

Most underwriters evaluate proposed affordable housing development projects for factors such as visibility, access, topography, environmental characteristics, and proximity to local amenities. Yet many underwriters overlook crime when evaluating development proposals. Certainly, an underwriter would be remiss to overlook the existence of a scrap yard, an active rail line, or an environmental hazard near the subject property. But why overlook crime? The existence of sexual predators, child molesters, rapists, and murderers in proximity to a proposed $10 million project housing families with small children is certainly as important of a consideration as the distance to the nearest grocery store, bank or pharmacy.

Because of this, the evaluation of crime is identified as a best practice for National Council for Affordable Housing Market Analysts (NCAHMA) members. Indeed, it is a required element for all NCAHMA members issuing reports for tax credit allocation purposes. NCAHMA is a membership organization that sets industry standards for real estate market research. The Council has created and refined guidelines to ensure that market studies are sufficiently thorough to assure a comprehensive evaluation as required by Section 42 of the IRS Code. Many state agencies have adopted NCAHMA guidelines as part of their market study requirements.

North Carolina

Although the state of North Carolina commissions market analysts to look at each application, the State has not adopted NCAHMA guidelines. Instead, site evaluations are conducted by the housing finance agency itself. Each applicant is awarded a site score with a maximum of 100 points. Over the past three years, no application with a score below 58 has received a tax credit allocation.

According to Scott Farmer (NCHFA Director of Rental Investment), site scores are awarded on the basis of the following criteria(taken from the 2011 QAP, p10-11):

(i) NEIGHBORHOOD CHARACTERISTICS (MAXIMUM 40 POINTS)

• Trend and direction of real estate development and area economic health.
• Physical condition of buildings and improvements in the immediate vicinity.
• Concentration of affordable housing, including HUD, Rural Development, and tax credit projects as well as unsubsidized, below-market housing.

(ii) SURROUNDING LAND USES (MAXIMUM 20 POINTS, POSSIBLE 10 POINT DEDUCTION)

• Land use pattern is residential in character (single and multifamily housing).
• Effect of industrial, large-scale institutional or other incompatible uses, including but not limited to: wastewater treatment facilities, high traffic corridors, junkyards, prisons, landfills, large swamps, distribution facilities, frequently used railroad tracks, power transmission lines and towers, factories or similar operations, sources of excessive noise, and sites with environmental concerns (such as odors or pollution).
• Extent that the location is isolated.

(iii) AMENITIES (MAXIMUM 40 POINTS) Availability, quality and proximity of the following: grocery store(s); basic shopping / general merchandise; pharmacy; community/senior center; public park or library; access to public transportation; other beneficial services or amenities.

(iv) SITE SUIT ABILITY AND BUILDING LOCA TION (POSSIBLE 10 POINT DEDUCTION)

• Adequate traffic safety controls (i.e. stop lights, speed limits, turn lanes, lane width).
• Degree of negative features, design challenges or physical barriers that will impede project construction or adversely affect future tenants; for example: power transmission lines and towers, flood hazards, steep slopes, large boulders, ravines, year-round streams, wetlands, and other similar features (for adaptive reuse projects- suitability for residential use and difficulties posed by the building(s), such as limited parking, environmental problems or the need for excessive demolition).
• The project would not be visible to potential tenants using normal travel patterns.

The site score is the first of several threshold tests that each application must meet in order to be considered for an award of tax credits. You will note, that the criteria for awarding site scores contains no mention of crime. In addition, the NCHFA Market Study guidelines contain no mention of crime.

Our Investigation

Given the fact that NCHFA does not look at crime when scoring potential development sites, we conducted our own investigation to account for crime in the vicinity of the proposed properties in the 2011 LIHTC application cycle. Specifically, we looked to see whether there were any registered sex offenders living within 1000 feet of any proposed development with a site score of 58 or more.

The Four Properties

Our investigation identified four applications that met these criteria:

Property Name: Winslow Pointe
Address:
 901 Hooker Road, 
Greenville, NC 27834
Sex Offender Distance: 276 ft
Offenses Committed: Indecent Liberty Minor
Site Score: 72
Total Units: 84
Project Type: Family
Tax Credits Requested: $1,077,000
Total Development Cost: $10,774,429

Property Name: Sunset Place Apartments
Address:
 726 Sunset Avenue, Asheboro, NC 27203
Sex Offender Distance (2 offenders): 402 ft, 688 ft
Offenses Committed: Sex Exploit Minor 3RD Degree (X3), Attempted Rape or Attempted Sex Offense (1ST,2ND DEGREE) (X2)
Site Score: 72
Total Units: 84
Project Type: Family
Tax Credits Requested: $648,261
Total Development Cost: $5,893,698

Property Name: Orchard Ridge
Address:
 2177 Russ Avenue, Waynesville, NC 28786
Sex Offender Distance: 590 ft
Offenses Committed: Sexual Offense with Certain Victims (X5)
Site Score: 60
Total Units: 40
Project Type: Family
Tax Credits Requested: $ 588,162
Total Development Cost: $5,289,441

Property Name: Freeman Place Apartments
Address:
 100 and 200 Manchester Street SE ,Wilson, NC 27893
Sex Offender Distance (2 offenders): 393 ft, 722 ft
Offenses Committed: Indecent Liberty Minor, Rape 2nd Degree (X2)
Site Score: 58
Total Units: 60
Project Type: Family
Tax Credits Requested: $647,360
Total Development Cost: $6,996,328

The existence of sexual predators, child molesters or rapists, in proximity to a proposed $5-10 million affordable housing project with small children is a problem.  In our opinion, NCHFA is negligent in not accounting for this in their site scoring. We recommend that they begin to look at crime – especially sex crimes – on or near proposed developments in the 2012 application cycle. We also recommend that they adopt NCAHMA guidelines as part of their market study requirements. In doing so, the State can be assured that they have a clear picture of potential crime risk on proposed developments.

Article Image courtesy of Flickr user alancleaver_2000


 

Leave a Comment

Previous post:

Next post: