Woolfe Street developers reach agreement with city on workforce housing fee

Affordable housing amendments get a test run

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FLICKR USER JAMES WILLIAMS
  • flickr user James Williams
Although city officials have yet to approve new requirements for workforce housing, at least one Charleston developer will be given the chance to move ahead under a proposed zoning exception on the peninsula.

The pending completion of Skygarden student apartments on Woolfe Street has run concurrent with a proposed plan being considered by city officials that would rewrite some of the rules on workforce housing in Charleston. Under the current Mixed-Use Workforce Housing zoning, developers opting in are required to set aside 15 percent of available units for at least 10 years. In exchange for renting these units below market rate, developers are allowed to build to maximum density in the project and receive a break on the required amount of parking.

For the Skygarden development, the density bonus would allow for a maximum of six times the number of apartment units that would otherwise be allowed on the site. Under current plans, approximately 94 residential units are expected to be built. If passed, the amendments to the workforce housing zoning would increase the required number of affordable units from 15 percent to 20 percent and extend that requirement to 25 years. But with changes to workforce requirements under consideration as developers search for tenants, those overseeing the Woolfe Street project have struck an agreement with the city to avoid any financial limbo in which they may have found themselves by taking advantage of a key feature of the proposed changes — the fee-in-lieu option.

If the new amendments are passed by City Council, developers taking advantage of the benefits of the workforce zoning will have the option to pay a fee instead of providing the otherwise required amount of affordable units. Under the proposed ordinance, this money would go to a newly established Workforce-Affordable Housing Fund maintained by the city to pay for the creation of new affordable housing projects and improve current workforce housing.

Gaining approval from the city’s Community Development Committee earlier this week, an agreement will allow Skygarden developers to hand over $520,587 instead of providing 14 units below the market rate. The fee, which has been a topic of debate between city officials and representatives from the development community, is based on the gross square footage of the space that would otherwise be used for workforce housing. For projects already in the pipeline, the proposed fee in lieu is $3.40 per square foot, but that rate would increase to $5.10 for any development presented at a later date.

As a part of their agreement with the city, Skygarden can move ahead with pursuing tenants and in the case that the proposed fee is lowered or never passed by City Council, their money will be returned. After hearing from a host of speakers for and against the changes, members of Charleston’s Planning Commission deferred any final recommendations on the workforce housing amendments last month.

Addressing the commission, representatives from the development community argued that the extended workforce requirements would scare away those hoping to build in Charleston’s urban core and the proposed fee option was too costly. Whereas the Skygarden deal works out to just over $520,000 in exchange for not providing workforce housing, both the Elan Midtown and Courier Square developments on Meeting Street would be expected to pay more than $1 million to avoid setting aside 65 workforce units.

It should be noted that the proposed fee as well as the workforce housing requirements are purely optional for developers. Under state law, city officials cannot force developers to include affordable housing, instead relying on density bonuses and parking breaks to encourage the inclusion of workforce units.

Although the Community Development Committee was told this week that no other developers have requested to get a head start on the fee-in-lieu option, Mayor John Tecklenburg told the committee that the agreement with Skygarden can stand as confirmation that the fee is fair.

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