After delays Durham City Council to hear SCAD rezoning text
On Monday the Durham City Council is poised to open a Public Hearing and then vote on over 52 pages of proposed changes to local development regulations written and submitted by a team of developers.
Text amendments to the City’s Unified Development Ordinance (UDO) are typically mundane bureaucratic procedures that receive little public attention, but sweeping changes, spirited contentions and swirling controversies have added drama to the last few months of local politics in the Bull City. The community discussion comes to a head Monday night in the Council Chambers as a vote is expected on over 52 pages of proposed development regulation changes written by local developers.
At the core of the policy debate is the question as to whether deregulating development will increase housing supply and result in net benefits to the City and the public at-large or if deregulation will result in further displacement of and detriment to low-wealth communities for the profit of real estate investors and benefit of new, higher-wealth residents.
What is SCAD and where did it come from?
Clauses exist in the current development code that allow anyone to pay a one-time application fee of $3,838 to compose and propose their own rule changes to the development ordinances. Raleigh developer Jim Anthony exercised this option and submitted an application in May 2022. Local real estate professionals Aaron Lubeck and Bob Chapman began promoting his proposal. Named and marketed by the applicants, “Simplifying Codes for Affordable Development,” or SCAD for short, is a collection of extensive changes to the development regulations that would alter what types and sizes of buildings can be built where and with what heights, densities, lot sizes, setbacks from property lines, parking provisions, etc.
The proposal consists of 52 pages of UDO changes in addition to another 12 pages of other ordinance and rule adjustments—massively longer than typical text amendments submitted in the past through this amendment mechanism. Mr. Chapman told BCPI this week that there may yet be further edits submitted to the proposal before it officially goes before Council on Monday, although the City has already posted the agenda and supporting documents for the meeting. The sheer magnitude and breadth of the changes make it difficult to summarize in anything less than 52 pages, although narrow margins and condensed text helped the City/County Planning Department squeeze their review into 40 pages.
As Mr. Chapman has said many times at SCAD meetings, he believes the existing development code has become too long and prevents too much good development from happening, citing those conditions as leading reasons for the impetus of the SCAD proposal. The City/County Planning Department and City Council had reached a similar agreement about the UDO, and after years of anticipation, the City recently initiated a rewrite of the entire UDO by issuing a Request for Proposals on January 20, 2023 to solicit consulting assistance. Even if SCAD passes, it is unclear at this time if its principles would be included in the entire rewrite exercise.
Although SCAD does not shorten the UDO by any measure, it does propose some significant changes including eliminating parking requirements, expanding the abilities to build accessory dwelling units, reducing lot size requirements, allowing residential development in some industrial zones, allowing places of worship to construct accessory dwellings, and overall providing broad upzoning to allow increased density of development.
Debates of policy implications from SCAD
Underpinning the proponents’ promotion of SCAD is a belief that relaxing/deregulating/simplifying development code in ways specifically outlined in the proposal will have the effect of making housing development easier to achieve both in general and in higher densities, thereby reducing the per unit price of development and allowing new development to cost less per unit than traditional single-family homes on single lots.
Mr. Chapman summed up how to achieve affordable development in five steps: 1) low land cost, 2) long-term financing, 3) low-interest financing, 4) efficient construction, and 5) when possible, nonprofit sponsorship.
“Unfortunately, there are very, very few altruistic developers. I probably know, most of them in the United States… Unfortunately, most people who get into real estate, get into it for the money,” Mr. Chapman warned.
To save money “low land cost” often becomes synonymous with looking to low-wealth neighborhoods, and when Mr. Chapman was asked how SCAD in an open market could prevent displacement, he pointed out, “That’s going to happen anyway—it’s already happening.”
“People are buying houses in East Durham. There used to be a lot of bargains, four, five or eight years ago,” Mr. Chapman stated.
“There is a large change in the socio-economic status of neighborhoods.”
He is correct. And it appears that the precursor to SCAD may be partially to blame.
Nearly four years ago on September 3, 2019, City Council approved the Expanding Housing Choices (EHC) text amendment, which allowed for some added density and housing types (duplexes, accessory dwellings, etc.). That text amendment was technically initiated by the City even though at the Planning Commission SCAD hearing on December 13, 2022, Mr. Anthony, the official SCAD applicant, claimed the EHC as his own text amendment.
As for measurable impacts of the EHC, anecdotal experiences can be gained from a trip through East Durham today as empirical data is still beginning to be collected. One early data collection was a 2022 study by Ruby Brinkerhoff, a UNC Planning graduate student. It was found new EHC-inspired development that was located within Durham’s historical redlined districts, 77% of that development was found in areas once denoted as “Definitely Declining” (C) or “Hazardous” (D), suggesting that the majority of EHC development was happening in historically under-invested communities.
Demolition maps from the Open Durham GIS tool show that residential demolitions since the passage of the EHC have concentrations in Walltown and East Durham with noticeably fewer in Watts-Hillandale, Trinity Park and Duke Park.
One of the factors most likely impacting these trends is relative land values. Broad upzoning such as that orchestrated by the EHC and even more aggressively proposed in SCAD leads to rising land values.
“Density is the driving determinant of land value,” Mr. Chapman declared.
Dr. Andrew Whittemore, Associate Professor of Land Use and Environmental Planning at UNC-Chapel Hill, agreed: “An upzoning policy will result in increasing land prices.”
Increasing land values seem to threaten the first step in Mr. Chapman’s five-step plan for affordable housing, but he clarified that just because per acre prices might be increasing, it doesn’t mean development costs have to increase.
“If you've doubled the housing (density), you may double the cost of land, but you haven't made the cost of land per house any different. You’ve actually reduced the cost of land per house because you have much more efficient use of the infrastructure: you don't need more paved road, you don't need more paved sidewalk, you don't need more feet of sewer pipe or water pipe.”
This makes sense for new development, which with density has a way of canceling out the effect of rising land values. But infill development—the splotchy style of small-scale development that densifies an area one random parcel at a time—happens within a neighborhood and among existing structures and properties, many of which are anticipated to remain unchanged. What happens to existing homes as land values increase?
“Some structures become valued less than the land on which they are sited. After that, pressure for a replacement of structures predominates,” according to Dr. Whittemore.
Mr. Chapman says, “That happens all the time. It’s called a ‘scraper,’” referring to the demolition of an existing structure.
When asked directly if he thinks SCAD would cause more displacement or less displacement, Mr. Chapman evoked a pregnant 7-second pause before answering.
“That is a really good question. I don’t know the answer.”
Affordable vs More Affordable Housing
One of the more contentious proposals within SCAD is a new program that would replace the existing (and seldom used) affordable housing density bonus, which allows developers to add density to a project if there is a commitment to provide affordable units, with a new density bonus program that would redefine the mandatory periods of time that units are held as guaranteed affordable. Currently, affordability through the density bonus is required to be maintained for 30 years for both rentals and sales. Within SCAD, affordable rentals would only be required to stay affordable for 5 years while affordable for sale units immediately transition to market rate after the initial sale.
Mr. Chapman explains how, with the for sale units, this offers the first-time homebuyers the same wealth generation potential that market rate homebuyers enjoy.
But the consternation with this policy suggestion, especially regarding the rentals, has been widespread.
Dr. Whittemore openly declared, “I have never seen a 5-year term limit for affordable rentals; 30 years is the standard across the country. Five years is a joke.”
The Planning Department balked at the change in their review of SCAD, making this clause one of the few in the entire document that they offered clear opposition to.
Sherry Taylor, Executive Director of the Durham Community Land Trustees—an organization dedicated to holding properties in permanent affordability—expressed objections to the short period of affordability in the Environmental Affairs Board (EAB) meetings in January and April 2023.
Even Councilmember Javiera Caballero, who otherwise has given glowing reviews of SCAD in joint meetings with the City and County, questioned at the April EAB meeting if more length of time could be added to the rental period.
Outside of this redefined affordable housing bonus plan, there are not any other provisions within SCAD that have an affordable housing development component as defined by area median income (AMI) eligibility and some length of affordability covenant. There are numerous lot size changes that could enable more affordable housing to be constructed by any type of developer—for-profit or nonprofits. But those changes also could just as easily be used to build market rate homes as well.
Dr. Whittemore pointed out that there is a subtle but significant distinction between “affordable housing” and “more affordable housing.” Whereas affordable housing has the income restrictions and affordability guarantees over some time period, “more affordable” housing just means that it costs less than other options.
“You would likely not see more ‘affordable housing’ but rather more options and availability of housing within slightly lower price points. For instance, I would expect there to be cases of an $800,000 home in Watts-Hillandale, perhaps in less than adequate shape but on an otherwise good lot, to be sold, demolished and replaced with four homes priced at perhaps $600,000. So $600,000 is more affordable than $800,000 but it is still not ‘affordable housing.’”
String of Controversies and Turmoil
If nothing else, SCAD has been an unending source of controversy for the whole of 2023.
Habitat for Humanity was originally listed as a co-applicant but has since withdrawn, citing that they never authorized such participation and stating that an “unauthorized third party” exaggerated their involvement. The third party was later identified as Aaron Lubeck, one of the organizers of SCAD who maintained steady contact, as public records have shown, with the City Council. The INDY Week broke the story and wrote a follow-up and wrote another extensive follow-up.
The INDY Week is still the only print or television media in the Triangle to cover the SCAD proposal, despite how impactful the proposal could be.
Neighborhood list-serves have been buzzing with pro- and anti-SCAD proclamations. BCPI reached out to one vocal SCAD proponent, Thomas Hennessey, Manager and Co-Founder of West 4th LLC, a real estate investment firm started in 2012 and now with at least 88 properties in Durham and touting over $50 million in holdings. Following a cordial 15-minute phone call, Mr. Hennessey, based in New York City, declined to provide statements for this article despite engaging in pointed emails with other list-serve members.
BCPI also asked Mr. Lubeck if he would be able to share his intentions for a nearly 17-acre parcel of land that he purchased in 2021, just before beginning the SCAD endeavor. As of publishing Mr. Lubeck has declined to comment on his plans for the parcel.
The Inter-Neighborhood Council, Walltown Community Association, Hayti, Braggtown, and other neighborhood and community groups have been expressing their disapproval of SCAD.
Councilmembers Javiera Caballero, Jillian Johnson and Leo Williams voted on March 20, 2023 to proceed with the public hearing on that date despite there being no official review by staff of the full SCAD proposal. The hearing was postponed to May 1 but then postponed again, finally landing on this Monday August 21.
Council Chambers; 7pm Monday August 21: Live or via Zoom
It is safe to say that Durham has never seen anything like SCAD and potentially never will again—at least not in the form of a massive text amendment. In May at a public meeting about SCAD, BCPI asked Planning Director Sara Young if the value of City staff time dedicated to working on SCAD had exceeded the $3,838 application fee. Ms. Young immediately laughed and indicated that the City is looking into “fixing” this loophole since the intention of the text amendment function was to make minor edits that would impact a specific project.
As Mr. Chapman discussed the prospect of SCAD impacting displacement, he had shared one line that continues to reverberate in my mind:
“I know that the times that people have tried to engineer solutions, they’ve often been disappointed with the outcome.”
You can contact the Durham City Council at citycouncilonly@durhamnc.gov and let them know if you support or oppose SCAD. The Public Hearing for SCAD is on August 21; SCAD is the only item on the General Business Agenda. You can join the meeting in-person or via Zoom.
If you want to speak for or against SCAD from the Zoom version of the meeting, use https://us06web.zoom.us/webinar/register/WN_Hw3PrSxLQM2Y8VtYc7Fm-A to register to speak during the Zoom session of the City Council Meeting on the agenda item. Your registration should be submitted by 2:00 p.m. on the day of the City Council Meeting, and your access will be audio only.
DISCLOSURE: The author, Brian Callaway, has spoken publicly against the SCAD amendments but encourages readers to visit the cited hyperlinks to derive your own opinions.
Do you have a story lead or tip? Contact BCPI at BCPI.durham@gmail.com
