Labor Housing Option
CITY OF HILTON HEAD PURSUES PUBLIC-PRIVATE PARTNERSHIP
BY TONY KUKULICH
Faced with a shortage of affordable housing and failed attempts to encourage private development to meet this need, the City of Hilton Head Island is pursuing a public-private partnership strategy to develop housing for the workforce on 13 acres of city-owned North Island property.
“We have a lot of frontline workers, hospitality and retail staff and others who want to live where they work,” Mayor John McCann said in a news release. “They invested in our community, and we need to invest in them by creating affordable housing opportunities for the workforce.”
In February, City Manager Marc Orlando received permission from city council to explore the public-private development option. The site selected for the project was identified as the North End Post Office Tract due to its proximity to the post office on William Hilton Parkway. Shortly thereafter, survey work and site clearance began on the section between Gumtree and Wild Horse Roads.
A sheet produced by the City illustrates the challenge faced by potential buyers and tenants on the island.
The median home price on Hilton Head Island is $420,000. Assuming a buyer has the required $84,000 for a 20% down payment, a 30-year mortgage payment would cost around $1,700 per month. The median monthly rent on the island is $1,500. The salary of a first grade teacher is around $35,500. By providing a 30% allowance for housing, this teacher could afford $888 per month for housing, well below what is needed to pay both the mortgage and the rent.
For low-income workers, the delta between what is affordable and the real costs becomes even greater.
The annual income needed to pay the average rent in Hilton Head is about $60,000 a year, nearly three times the average salary of a food service worker and more than double the amount of a retail worker. retail wins in a year. It’s also more than the starting salary of a registered nurse and firefighter/paramedic at Hilton Head Island Fire and Rescue.
According to council member Glenn Stanford, the city began looking for opportunities to alleviate the housing shortage several years ago when a consultant was hired to study the issue. One solution suggested by this study was to provide additional density, which allows developers to build more housing units than a parcel of land is zoned if those units provide housing for the workforce.
“We passed those recommendations as city ordinances, and nothing happened,” Stanford said. “Since then, I’ve heard from people with expertise in the field that bounty density just doesn’t work. The problem here is that dirt is too expensive to meet the economic formula that a real estate developer needs.
With no private developer stepping in to fill the housing gap, the city, which is the island’s largest landowner, searched its inventory of properties for a plot suitable for development. This process revealed that development on most city-owned land was prohibited, largely by the terms of the bond referendums that were used to purchase the properties. These restrictions were put in place to preserve trees and green space on the island, an idea Stanford called “very worthy.”
Despite the challenge of locating unrestricted land, a parcel adjacent to the post office on the northern end of the island was identified as city-owned and free of development restriction. With a suitable location identified, the city began its search for a development partner in early April when it produced a Request for Qualifications (RFQ). Interested developers have until May 20 to respond to the RFQ.
“This first phase really qualifies what we believe to be good partners who have experience building fixed-income, sustainable, value-added communities,” said Deputy City Manager Shawn Colin.
The city will evaluate RFQ submissions to determine the pool of applicants who will be invited to submit a development proposal, and these proposals will be reviewed by city staff and city council before a final selection is made.
The timing of the process will depend on the number of RFQ responses received, as each response requires time to be properly assessed. Colin said there has been great interest among developers in the project and provided a rough estimate of 60 to 90 days after the RFQ process closes before proposals are due.
The city has $1 million in funding from its $5.5 million U.S. cast to contribute to the project in some form, though exactly how that money will be used has yet to be announced. been determined.
“It could be inland routes,” Colin said. “It could be a public park feature. Roads, water, sewer, storm water and broadband are priority areas.
Labor housing is a broad term that can apply equally to low income development projects and those earning up to 150% of the county area median income. Until project proposals are submitted, it remains to be seen which part of this continuum will be targeted.
Sandy Gillis, executive director of the Deep Well Project – an organization with a 50-year history of assisting and promoting self-sufficiency to people in need on Hilton Head Island – expressed support for the initiative but remains concerned that those at the lowest rung of the economic ladder will be excluded.
“I feel like we have some momentum now that we’re at least talking about the need for workforce housing,” Gillis said. “You’re not going to hear them talk about the guys who work the golf courses or the ladies who clean the condos. They’re going to talk about teachers, and they’re going to talk about cops, and they’re going to talk about those kinds of people, which is another step in the right direction. But there is still a whole other level of housing that is currently in the shadows.
Colin responded to this concern by affirming the town’s commitment to meeting the needs of the entire community.
“We want to provide housing that meets all of the labor needs that we have here,” he said. “We want to make sure we are looking for mixed income opportunities to meet labor needs across a broader spectrum.”