Town Sees Surplus of Nearly $8 Million; Talks Land Use

GOVERNMENT

By James Kiefer

In its first working session of 2022, the Chapel Hill Town Council discussed projected housing needs and excess funds from the 2021 fiscal year. 

Mayor pro tem Karen Stegman led the session in Mayor Pam Hemminger’s absence; it was also the first working group for new council members Camille Berry, Paris Miller-Foushee and Adam Searing.

Unappropriated funds 

The Town ended the 2021 fiscal year with an excess of $7.9 million in unappropriated funds, according to business management director Amy Oland. She attributed the bump to the council’s conservative budgeting efforts in 2020, an uptick in revenue from sales tax and other savings created by instituting a hiring freeze. 

Oland explained that unassigned funds is money that has yet to be allocated, and that local governments should maintain their level of unassigned funds at around 22% of total monies. She noted that the Town’s current unassigned funds compose around 35% of total funds. 

Oland further stated that part of the leftover war chest is due to spending cuts implemented in Fiscal Year 2021 for general maintenance, fleet vehicles and post-employment benefits. To return to the 22% target level, staff recommended the Town appropriate $4.5 million for various purposes. These include adding funds back to meet Chapel Hill’s five-year budget strategy, along with community and organizational needs and assisting in pandemic recovery measures.

Staff advised that portions of the $4.5 million would be used to address issues such as climate action, affordable housing, maintenance, fleet vehicles and as a possible placeholder for a splash pad. 

Stegman asked Town manager Maurice Jones whether there is a timeline for appropriating any of the funds. He responded there is not a firm timeline, but noted prior discussions about allocating the funds before Chapel Hill decides how to spend cash it receives from the American Rescue Plan Act. 

“My first interest is using this money for what we had to cut [in 2021],” council member Amy Ryan stated. “There’s lots of good projects on here. I’d really like to see most of this go back to that, I don’t think it’s found money.” 

Ryan added she was also concerned about using money she saw as a one-time windfall to fund ongoing expenses. 

Miller-Foushee asked staff to determine whether the money could be used to address maintenance and repairs for public housing that had been stalled due to the COVID-19 pandemic. She also asked Jones for an assessment of deferred maintenance needs. 

Councilmember Berry said that the splash pad did not seem a priority use for the unappropriated funds unless there is no alternative funding source and asked whether ARPA money could be used to fund a splash pad.

Jones said that would depend on the decision council makes about how ARPA funds can be used. 

Growing sensibly

In a follow-up to the Housing Needs Study the council received in September, consultant Rod Stevens of Business Street returned to talk about Chapel Hill’s housing affordability challenges. His last presentation showed that 90% of jobs within the Town are held by commuters, pointing to the fact that most Chapel Hill employees aren’t able to afford to live in the same city they work. 

On Wednesday, Stevens estimated the level of housing growth Chapel Hill needs to achieve in order to avoid displacement of lower-income residents. 

“You need to produce 35% more housing over the next 20 years than you have the last 10 years,” he said. 

Stevens explained there are three options the Town can pursue: become a no-growth community (which, he said, would result in the levels of gentrification seen in many West Coast communities), maintain the status quo of poorly planned, incoherent housing growth or develop comprehensively planned neighborhoods that grow sustainably and compactly. He explained the first two options lead to hikes in housing prices, whereas the third option allows the Town to link housing, jobs, and local services together and create a more inclusive environment. 

“In order to grow sensibly, environmentally and in a way that’s in [Chapel Hill’s] character, you’re really going to have to change where and how you grow,” he said. 

Part of that process is initiating public outreach that identifies leaders and people not being heard. He said Chapel Hill’s current process for public feedback seems to be dominated by people who oppose growth and support that status quo, which may not be representative of the entire Town. 

Stevens added that besides better engaging the public, Chapel Hill will also need to pursue a technical analysis of how the Town can grow and hire a consultant to help guide the process. 

Ryan asked what metrics Stevens would base a technical analysis on. He said the specific data needed to assess Chapel Hill’s capacity for growth has yet to be calculated. 

Council member Anderson added these are conversations the council has avoided. 

“I have been very open and transparent about my very adamant support for this,” she said. “And [about] how important it is that we not predetermine the outcome, but that we do this process and we do authentic engagement so that we set ourselves up for success for what is going to be a hugely time-intensive and expensive undertaking in the LUMO (Land Use Management Ordinance) rewrite.”

Stevens also stated that Chapel Hill will have to address issues such as inclusivity, house prices and traffic congestion. 

“The big gorilla or elephant in the room is how do you plan housing in neighborhoods in the abstract?” he asked rhetorically. “And the answer is, you don’t. You have to plan them comprehensively.”

Council member Miller-Foushee said it is important that the citizens facilitating these discussions understand the needs and history of the community, including why some areas have experienced growth while others have not. 

“It really is an equity issue for me,’ she said. “That’s going to be really really important as we’re doing this work, making sure that folks who are driving these community conversations understand and are willing to have the hard conversations moving forward to get to where we want to be.”

After discussing some aspects of the Town’s land-use management ordinance, the council ended in a closed session.