North Carolina does not currently have a statewide housing lottery program. However, some individual cities and counties within the state do operate their own local housing lottery programs as a way to provide more affordable housing options. These localized lottery programs allow residents to enter a random drawing for a chance to purchase or rent below-market-rate homes or apartments. While North Carolina has taken some steps to address issues of affordable housing availability, the lack of a statewide lottery system puts it behind many other states that have implemented such programs to assist lower-income residents.
Background on Housing Lotteries
Housing lotteries, also sometimes called affordable housing lotteries, are programs designed to promote equitable access to affordable housing units. They work by collecting applications from interested households, then randomly selecting winners who are given the chance to purchase or rent the housing units at below-market prices.
Key features of housing lottery programs:
– Lotteries are open to all eligible applicants who meet certain income requirements. This introduces an element of chance and fairness into the housing selection process.
– Winners are chosen randomly through a lottery drawing. This prevents units from simply going to the first applicants or those with inside connections.
– Lottery winners can purchase or rent units at discounted rates, making them affordable even to lower-income households. Developers agree to set aside units at below-market prices in exchange for development incentives.
– Lotteries help ensure affordable units are distributed widely and not just concentrated in a few areas. Geographic diversity requirements can prevent concentrations.
– Lotteries make the process of finding affordable housing easier by centralizing information and applications. Interested households only need to apply to the lottery rather than searching unit-by-unit.
Overall, housing lotteries aim to open up affordable housing access, provide fair chances for all eligible applicants, and promote economic diversity within communities. Many consider them one of the most effective tools for making affordable housing available on a wide scale.
Housing Lottery Programs in Other States
While North Carolina currently lacks a statewide housing lottery, these programs have been implemented successfully in a number of other states across the country:
– Massachusetts – One of the longest running lotteries, the Massachusetts Affordable Housing Alliance (MAHA) lottery provides access to both rental and homebuyer units in hundreds of participating communities. Over 60,000 households have benefitted since its inception in the 1990s.
– New York – New York City’s affordable housing lottery has been operational since the 1980s and lets residents apply for over 50,000 affordable units across the city’s five boroughs. The lottery is administered by the NYC Department of Housing Preservation and Development.
– Illinois – The Illinois Housing Development Authority runs an affordable housing lottery offering both rental and purchase opportunities in Chicago and the broader state. Availability includes single family homes, condos, townhomes and apartments.
– California – Many California cities and counties operate local housing lotteries, including lotteries in Los Angeles, San Francisco, San Jose and San Diego. These localized programs help promote affordability in California’s expensive real estate market.
– Washington DC – D.C.’s Inclusionary Zoning Affordable Housing Program has an online lottery system for assigning newly constructed affordable units to qualifying households across the District’s neighborhoods.
Looking at other states demonstrates the key role housing lotteries can play in distributing affordable housing opportunities more equitably across communities.
Pros and Cons of Housing Lotteries
Implementing a housing lottery system can have many benefits but also comes with some potential drawbacks to consider:
Potential Pros:
– Increase access and affordability – Lotteries help lower-income households access housing units and neighborhoods that might otherwise be out of reach.
– Fair chance for all applicants – Random selection gives all eligible applicants an equal shot without biases, connections or first-come-first-served limitations.
– Streamlined application process – Lotteries centralize information and applications so interested parties don’t have to search unit-by-unit.
– Promote economic diversity – Affordable units are spread across a jurisdiction, preventing concentrations in just a few areas.
– Support public-private partnerships – Lotteries provide incentives like density bonuses that bring private developers to the table to construct new affordable units.
Potential Cons:
– Doesn’t serve immediate needs – Applicants may have to wait months or years before their name is chosen in a lottery drawing.
– Creates false hope – The odds of actually winning a lottery can be very low depending on demand. Many applicants come away disappointed.
– Can be complex to administer – Overseeing the lottery takes capable leadership and resources to ensure an equitable process.
– Geographic distribution not guaranteed – Affordable units may not ultimately end up being evenly distributed, especially if participation varies by neighborhood.
– Potential for abuse – Strict controls required to prevent manipulating the system by entering multiple times or selling a won lottery spot.
Overall the benefits seem to outweigh the downsides, but jurisdictions need to be thoughtful in how they structure and administer housing lotteries to maximize their effectiveness. Combining lotteries with other policies like inclusionary zoning and community land trusts can further expand access to affordable housing.
Current Affordable Housing Lotteries in North Carolina
While North Carolina does not have a statewide affordable housing lottery at this time, some individual localities within the state have already implemented their own housing lottery programs. Here are some key examples:
Durham
Durham County and the City of Durham operate a joint Inclusionary Housing Program overseen by the Durham County Affordable Housing Program Office. The program includes an affordable housing lottery that helps provide affordable rental and homeownership opportunities to city and county residents. Some key facts on Durham’s housing lottery:
– Created in 2016 through an Inclusionary Housing Ordinance.
– Provides affordable units in projects with 10 or more homes set aside for households earning up to 80% of area median income.
– Utilizes a lottery process to select renters or buyers for half of the affordable units in a development.
– Has made over 150 affordable housing units available through lotteries, with hundreds more in the pipeline as housing construction continues in Durham.
Chapel Hill
Chapel Hill also runs its own local housing lottery as part of the town’s Inclusionary Zoning Ordinance adopted in 2019. The lottery features:
– 15% of units in new residential developments must be affordable workforce housing rentals or condos.
– Affordable units set aside for those earning up to 80% of area median income.
– Lottery conducted when new developments have affordable units available.
– Purchase prices for affordable ownership units typically range from $150,000 to $275,000.
– Rental rates for affordable units range from $375 to $1,100 per month depending on income level.
Chapel Hill’s housing lottery aims to promote economic diversity in a community with high housing costs and limited affordable housing availability.
Raleigh
Raleigh does not currently have its own dedicated housing lottery program. However, the city runs occasional lotteries as affordable units become available through its Inclusionary Housing Ordinance. For example:
– A 2021 lottery offered 19 affordable townhomes and condos to purchase, priced between $130,000 and $235,000. Over 800 people applied.
– An upcoming 2023 lottery will include 16 affordable rental apartments in two new mixed-income developments downtown, with rents ranging from $277 to $1,100 per month.
While not as extensive as Durham and Chapel Hill, Raleigh does periodically leverage lotteries on a limited basis as affordable opportunities arise through new developments. Expanding Raleigh’s program could increase access for more residents.
Statewide Housing Lottery Possibilities for North Carolina
While housing lottery availability currently depends on where you live in North Carolina, the state could consider following the lead of other states by launching a statewide affordable housing lottery program. Here is how it could work:
– Lottery open to all North Carolina residents who meet income eligibility such as earning up to 80% of area median income.
– Operated through a central state agency like the North Carolina Housing Finance Agency.
– Database of available affordable units across the state supplied by individual counties and cities.
– Units include those developed through local inclusionary zoning ordinances, as well as existing affordable housing projects.
– Applicants enter the lottery and if selected can be matched to available units in the community and property of their choosing.
– Annual application process with multiple lottery drawings held for rental units and on a project basis for properties for purchase.
– Geographic distribution could be promoted by reserving shares of units for different regions.
A statewide lottery would streamline and simplify affordable housing access across North Carolina. However, participation from local governments would need to be incentivized to provide a sizable inventory of affordable units. State housing agencies would also require expanded capacity and resources to develop and operate the lottery.
Other Affordable Housing Policies in North Carolina
While a statewide housing lottery could expand access to affordable housing in North Carolina, additional policies and programs also need to be part of a comprehensive strategy to promote affordability, including:
– Inclusionary zoning – More cities and counties can adopt ordinances requiring developers to make a percentage of units in new projects affordable, providing a pipeline of units. Durham, Chapel Hill and Charlotte already have such policies.
– Housing Trust Fund – North Carolina’s existing $10 million per year fund could be expanded to finance construction of more affordable units for low-income residents across the state.
– Homebuyer assistance – State and local down payment assistance grants and low-interest mortgages help make homeownership affordable for more moderate-income buyers.
– Affordable rental housing preservation – Older affordable projects nearing the end of rent restrictions need resources to maintain affordability.
– Tenant protections – Policies requiring lease terms, limiting security deposits, preventing discrimination, and stabilizing rent increases help protect renters.
– Homelessness programs – Continuing to fund emergency shelters, rapid rehousing, and permanent supportive housing will reduce homelessness.
A housing lottery should be part of the solution, but not the entire solution. Maintaining a coordinated, multifaceted approach promotes housing access and affordability across all communities and income levels within the state.
Key Takeaways
– North Carolina currently does not have a statewide affordable housing lottery, putting it behind many other states with active lottery programs.
– Some cities and counties in NC have created local housing lotteries, including Durham, Chapel Hill and occasionally Raleigh. But availability depends on where you live.
– Lotteries can streamline and simplify the affordable housing application process. They promote fair access and economic diversity when structured appropriately.
– Implementing a North Carolina housing lottery would require participation from local governments to supply units, as well as capacity to run the lottery through a state agency.
– A housing lottery should be part of a broader strategy, along with policies like inclusionary zoning, housing trust funds and homebuyer assistance.
– Overall, a statewide lottery would improve access to affordable housing, but needs to be carefully designed and administered to maximize effectiveness.
Conclusion
Access to stable, affordable housing provides far-reaching benefits not just for individual households, but for entire communities. North Carolina’s lack of a statewide affordable housing lottery puts it behind many peer states who use lotteries to promote equitable access to below-market homes and apartments. While some cities and counties operate local lottery programs, availability depends heavily on where you live. Implementing a properly structured statewide lottery through the North Carolina Housing Finance Agency or another state department would streamline access for lower-income households across the state. However, local government participation is critical to provide a steady inventory of affordable units. A housing lottery should also be paired with additional policies that finance new affordable housing development, assist homebuyers, preserve existing affordable projects, protect tenants and combat homelessness. With a balanced approach, North Carolina can make meaningful progress on expanding affordable housing access and reducing cost burdens through programs like a statewide housing lottery.
