A piece of housing legislation in Raleigh – North Carolina’s first major statewide housing proposals in years – has garnered much attention. Initially known as House Bill 765, the measure is still early in negotiation after getting pulled into a Senate bill. But the effort has drawn both praise and criticism for provisions meant to increase the rate of approval for housing projects, but at the expense of some local government control.
One of the driving reasons for the bill is a report commissioned by the state Chamber of Commerce in 2024, which projects North Carolina to face a housing inventory gap of more than 764,000 units based on demand for new units and need for repairs of old ones. More than half of that gap (422,000 units) is specifically for-sale houses and the largest housing gap for area median income levels is residents making 121% to 150% of AMI — reflecting how the cost of housing has become a challenge alongside creating more.
To address this, a bipartisan group of lawmakers developed provisions of HB 765 – now SB 205 – meant to more quickly spur development. Some of the strategies include allow more density in areas and encouraging more infill housing in places zoned for single-family homes, while limiting what zoning authority local governments can make that traditionally have stalled development. Additionally, the measure would shorten the windows local governments have to review and critique applications from builders – speeding up how long it may take for approval or denial.
Advocates for the bill include lawmakers from both political parties, as well as groups like the North Carolina Chamber of Commerce, the state Association of Realtors and the statewide Home Builders Association. The Home Builders Association of Durham, Orange and Chatham Counties is also generally supportive of the effort, according to its government liaison Ian Scott. He acknowledges how the town governments of Chapel Hill and Carrboro are already working to adopt some of the zoning updates to allow more infill housing in their ongoing land use ordinance rewrites. But he says with the rest of North Carolina catching up to the local housing needs, a shift in governmental approach is necessary to correct for the under-building trends.
“In order for us to get there,” Scott says, “we need meaningful policy change, regulatory change, and we need the approvals process to be predictable and fast. The housing industry is ready to build, knows there’s a need, and knows there’s a need for housing at all different income levels. I’m [grateful] that both local and state leaders are prioritizing housing policy this year, and I’d encourage everybody to move forward, faster. We’ve got to get change.”
But there are several state lawmakers – and local governments – that are pushing back on the bill, citing concerns that the state would remove their ability to manage what development gets done locally and effectively eliminate local zoning options.
District 50 Rep. Renée Price is among those. The longtime Orange County commissioner says while she supports developers’ efforts to build more housing and expediting regulatory processes, the changes could hamper municipalities’ ability to best plan for growth specific to their communities. She also points to the infrastructure challenges many areas face for accommodating more housing, which go unaddressed in the bill, and the burden a faster development process could put on government staff that are stretched thin.
“It’s kind of a chicken-and-egg type of thing,” Price says, referring to the ‘what comes first’ scenario. “You want to be able to move development so that your community can grow, but you’ve got to have the staff to do it. And without the staff to do [the regulatory work], the development doesn’t happen.
“But having spent 10 years as a county commissioner, and because of the amount of time I spent on the board of directors of the North Carolina Association of County Commissioners,” she adds, “I’m very sensitive to any legislation that will decrease or eliminate power from our local governments.”
Sen. Graig Meyer, who represents Orange County in District 23, says he is disappointed the state government has not made any significant housing legislation in his 12 years of serving in Raleigh. But he does not see the bill in its current form as the most productive method of reform.
“The problem with this proposal that’s being put forward now is that it’s all sticks and no carrots,” says Meyer. “It doesn’t incentivize any good approaches to housing; it just punishes municipalities who are trying to put limits on certain types of housing. You need a combination of the two – and then you also need better policy around things like transportation so that housing and transportation build connected, dense communities.
“If you put all of that together, we could have an amazing package,” he says. “But this bill is a long way off from that.”
The state senator says, moving forward, he would prefer a bigger bill instead of trimming out sections of the current proposal. An example he cites is HB 951 from the 2021 session, where a bipartisan group of lawmakers took a specific ask from Duke Energy and spun it forward into a broader measure that set up carbon neutrality goals and asked electric utilities to create a plan to reduce their emissions. A comparable housing bill would be more visionary on how to incentivize communities necessary to both address the short-term needs and prepare to meet long-term ones for a growing state, Meyer argues. That would likely include transit and other elements beyond housing regulations and zoning enforcement, which is what the industry associations are focused on.
“I think they’re just being too myopic,” he concludes. “I think if they were really willing to think about this at a bigger level, there’s no reason why any of those organizations would oppose some additional policy work for connected transportation – it would actually help them. So, they should think bigger, and they should have a more inclusive process.”
The Chapel Hill Town Council and the government’s staff are undergoing a rewrite of its Land Use Management Ordinance, or LUMO, to help address some of the zoning constraints around housing in the town. The document was last updated in 2003 and the changes aim to allow Chapel Hill to plan for sustainable and conscious growth. (Photo via the Town of Chapel Hill.)
Like Meyer, Chapel Hill Town Councilor Theodore Nollert sees potential in the housing goals and clear drawbacks to SB 205. As a major housing advocate, he says there are several components of the proposal he supports to allow for a diverse range of housing types and encourage more affordable units from developers.
From a town government perspective, Nollert says he understands why municipalities and counties would be skeptical of losing zoning authority to a state legislature at a time when the Republican Party aims to expand its political control over offices that have, historically, not acted in a partisan fashion. But the housing issues long pre-date those efforts and fall on the town and county governments not approving or legalizing a variety of housing types, he says.
“Local communities contribute to some of these challenges when they don’t build tall buildings and when they don’t build in a way that provides services efficiently,” says Nollert. “But they are also faced with a lack of resources from the state and faced with a state legislature that loves to take power away and move it around – and housing should not be a partisan issue.”
The first-term council member says he believes the overall bill misses the mark in involving the state government’s own ability. He points to the loan fund like the Town of Chapel Hill recently developed and launched alongside UNC Health to spur affordable housing development. The $20 million local fund is providing below-market loans to developers interested in creating affordable housing or buying and preserving existing affordable communities. By shifting the something they would be unlikely to do based on current market loan rates and would lead to higher home prices.
If the state scaled this model up, Nollert says, it could help unlock supply that the market cannot currently support because of building costs and rate of returns on loans. And with its regulatory power, it would not only make the development less risky for builders but be a cutting-edge housing approach to make North Carolina an example to the rest of the country.
“We could create a commercial sector by providing loans ourselves and by legalizing certain types of buildings for people participating in those loan funds around the state [and] in our cities,” he says. “And then we would be meeting a desperate need, we would be improving people’s quality of life. The root of all of these policies is the simple belief that people deserve access to a safe and affordable home, that they should be part of a healthy and secure community.”
For now, SB 205 remains awaiting a review by the Rules Committee by the North Carolina House. It was briefly put onto the agenda for Wednesday’s session before being removed minutes before lawmakers called their business to order.
Featured photo via McAdams.
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