NHC says Rescue Act funding could increase affordable housing, but details aren't worked out yet
Update April 7: The Cape Fear Public Utility Authority clarified that the fees in question are 'Capacity Fees,' not 'System Development Fees.' One key difference is that capacity fees are actually recouped over time by developers. Developers pay upfront for a major water and sewer extension to allow building in new areas, and then are paid back by those who come along afterward and tap on to the expanded system. Typically, this involves an agreement with CFPUA, which charges a small administrative fee to collect future payments and return them to the initial developer who paid the capacity fee.
The American Rescue Act signed into law by President Biden last month is sending roughly $45 million to New Hanover County. Officials say $4 million of that is earmarked for infrastructure improvements they say will help create affordable housing -- although it's not exactly clear how that will be worked out yet, or how much additional housing the county will be able to leverage.
Most of the $1.9 trillion in federal covid relief funding is required to be related to pandemic recovery, but the act also permits local water and sewer projects. That allows the county to use $4 million to extend water and sewer lines along Sidbury Road in northern New Hanover County.
So -- how will this generate affordable housing?
“What it does allow is for future developers to forego their incremental share of what the cost of water and sewer extension are.”
That’s County manager Chris Coudriet.
He’s talking about ‘system development fees’ -- which helps fund ongoing infrastructure growth and development. Developers pay these fees when they connect new units to a utility.
Legally, utilities like CFPUA can’t waive these fees for individual developers -- even if they’re a non-profit like Habitat for Humanity. But local governments can kick in, either for specific projects or -- as in this case -- in general.
But once fees are lowered, what prevents a developer from simply folding the savings into its bottom line, and still building luxury apartments?
Coudriet says that could be negotiated during rezonings.
“So we can get there through the rezonings that have to happen for development, that we know the community wants that we know the building community wants to provide, there's going to be rezoning. And so I think that's the mechanism by which we accomplish that.”
And, while the county could already negotiate affordable housing units as part of a rezoning request -- even without federal money or utility improvements -- lowered utility fees do give staff some additional leverage, Coudriet says.
So how much affordable housing will the county ask for, from new projects facilitated by the Sidbury Road extension?
“So those are, candidly policy decisions that haven't been worked out yet.”
County Commissioners will vote on a non-binding outline of spending priorities for the Rescue Act funding on Monday -- but the formal approval of where the money officially be spent will come as a budget ordinance, likely in mid-May. Coudriet says when that happens, there could be more specific guidelines, which could more firmly tie affordable housing requirements to lowering costs for developers.
Below, the proposed guidelines for spending $45.4 million in federal funding from the American Recovery Act. Note, this is funding for the county only, the City of Wilmington and the beach towns will each receive their own seperate funding from the Act.
American Rescue Plan
New Hanover County will receive an estimated $45.4 million from the American Rescue Plan, which was signed into law by President Biden on March 11. The funds must be spent by Dec. 31, 2024, and New Hanover County has developed a draft framework to utilize these funds over the next three years to strengthen our community. Additional details for the administration and timing for each program or project will be determined after this plan is approved by the Board of Commissioners at its April 5 board meeting.
Broadband Connectivity - $5,760,000
The Congressional language permits using the funds for broadband purposes, so the county proposes the following:
Broadband Access: A program to connect around 8,000 homes to broadband, focusing on households with children who qualify for Medicaid or Food and Nutrition benefits, for two years in order to increase access and affordability to reliable high-speed internet for students and families. ($5,760,000)
Business and Employment Assistance - $3,850,000
The legislation allows for assistance to businesses and nonprofits. New Hanover County’s leisure and hospitality sectors were particularly hard hit during the pandemic and the county proposes using funds for the following:
Business Assistance: Business grants, scaled in size based on a business’ number of employees, focused on the retail, service, leisure and hospitality sectors and child care facilities. ($2,500,000)
Nonprofit Assistance: Grants to nonprofits that have been negatively impacted and were not able to continue operations at some point during the pandemic. ($700,000)
Job Training: Two jobs programs, to be administered in partnership with Step Up Wilmington, to include a six-week paid job training and placement program for 100 people, and a six-month paid internship and job placement for an additional 10 to 20 people to develop long-term skills and employment. ($650,000)
Housing - $3,000,000
The legislation allows assistance to households who have been impacted by the COVID-19 pandemic, so the county proposes to use funds for the following:
Mortgage Assistance: Provide assistance to homeowners who are in arrears on mortgages because of impacts from COVID-19. This would be in addition to the $7 million Emergency Rental Assistance Program that is currently underway through the county. ($3,000,000)
Overview for Board of Commissioners, April 5
Physical and Mental Health - $4,136,936
The well-being and mental health of students and seniors suffered during the pandemic and the legislation allows local governments to use funds to mitigate the public health impact of the pandemic. The county proposes to use funds as outlined below to help address these issues and provide long-term positive impacts. For each of these, the intention is to fold the services into the county’s continuation budget beginning in Fiscal Year 2023-24.
Mental Health in Schools: Ensure access at each public school to mental health counselors through the county’s Health and Human Services Department. ($3,156,039)
Mental Health for Seniors: Establish mental health counselors and a mobile health outreach team based at the Senior Resource Center to serve our county’s older adults. ($332,215)
School Nurses: Reclassify two school nurses into school nurse leads and provide one school nurse supervisor through the county’s Health and Human Services Department, in addition to the school nurses that the county already provides at each school. ($212,000)
Senior Resource Center: A congregate site in southern New Hanover County for the Senior Resource Center for meal distribution and social interaction. It also provides for enhanced meal distribution at the SRC’s existing sites. ($436,790)
Infrastructure and Emergency Management - $12,327,521
Congressional language explicitly allows the American Rescue Plan allocations for water and sewer projects. Given Emergency Management’s role in the pandemic, it appears eligible for funding as well. The county proposes to use funds in the following ways:
Stormwater Services: Cover and pay for stormwater utility costs in the unincorporated county for all users for fiscal year 2021-22, to ease the burden of a new fee on residents but still provide this needed service. ($4,158,521)
Water & Sewer:
• Water and sewer extensions for Sidbury Road to ensure access to these vital services, aid in responsible growth and support the creation of affordable housing in northern New Hanover County. The intention is to lower development costs to provide affordable housing. ($4,035,000)
• Blue Clay Business Park water and sewer infrastructure to increase economic development opportunities in this area. ($3,600,000)
Homeless Sheltering: Reimburse nonprofits that provided non-congregate sheltering during the pandemic and were denied reimbursements from FEMA. ($370,000)
Emergency Operations Plan: Revise the county’s EOP to reflect the updated structure and ensure the plan addresses pandemic issues. ($100,000)
Personal Protective Equipment: Replenish the county’s PPE stock to ensure adequate supplies for any future needs. ($64,000)
Overview for Board of Commissioners, April 5
Revenue Replacement - $3,200,000
Congressional language permits replacing lost estimated revenue during the pandemic. The county proposes to use funds for the following:
Sales Tax Revenue: Reimburse sales tax revenue that didn’t meet projections to ensure the county remains on solid financial footing. ($3,200,000)
Essential County Employees - $6,195,177
The American Rescue Plan allows for “premium pay” for public employees who provided essential government services, so the county is proposing to use funds in the following ways:
• Provide employee bonuses in fixed dollar amounts based on an employee’s length of service during the pandemic and full- or part-time status. This is in recognition of county staff who have remained on the frontlines, continued important public services, and ensured residents received the help they needed at a time when it was critical. ($5,745,177)
• Provide bonuses for employees working directly in the vaccine response to compensate them for their dedication, long hours and constant work in vaccinating our community and saving lives. ($450,000)
Reserve and Administration - $6,930,366
The legislation appears to allow the county to set aside funds as a reserve for potential future allowable expenses as well as funds to administer and provide reports as needed on the use of the funds. The county proposes the following reserve funds for this purpose:
• A reserve fund representing 10 percent of the total amount received. ($4,660,366) • A reserve fund for administration and reporting, established at 5 percent of the total amount received. ($2,270,000)
Total Amount of Funding Outlined in the County’s Plan: $45,400,000