DRAFT Morrisville Affordable Housing Plan, September 23, 2019 version

DRAFT SEPTEMBER 23, 2019

Master Leases A master lease program would involve the Town of

Example A

Example B

A 96-unit apartment complex is proposed near Morrisville Town Center. To increase the supply of units affordable to service-sector workers in that area, the Town makes a deal with the owner to have a 10-year master lease on 12 of the 96 units. The Town gets an 8% discount from the market rate for saving the owner from advertising and vacancy costs and has contracted with a local non-profit to handle sub-leasing and tenant screening. Rents on the units are set to be affordable for households making 50% to 70% of AMI.

Over the course of a year, the Town works with the owner of a 24-unit complex built in 1996 to secure a 10-year master lease on a block of 12 units. The Town contracts with a local non- profit to handle sub-leasing and tenant screening, and the Town’s lease stipulates standards for maintenance and reinvestment by the owner. Rents on the units, which are already below the Town median, are set to be affordable for households making 50% to 70% of AMI.

Morrisville entering into long- term apartment leases with landlords, allowing the Town to preserve access to affordable units for income-qualified renters. Such an arrangement can ensure stability and cash flow for landlords and stability for potentially vulnerable tenants.

24 unit complex

96 units

Town gets 8% discount on 12 units

Rents are affordable for households at 50-70% of AMI

Town secures 10-yr master lease on 12 units

Rents are affordable for households at 50-70% of AMI

Costs incurred by the Town would be a reflection of the number of units controlled, the gap between the cost of the lease and the revenue from the sub lease, and overhead. Cost Scenarios

If a master lease on a unit costs $1,100 , the Town sub-leases it for $800 , and annual overhead is 10% of the lease … One unit = $4,920 per year Ten units = $49,200 per year

If a master lease on a unit costs $1,600 , the Town sub-leases it for $950 , and annual overhead is 10% of the lease ... One unit = $9,720 per year Ten units = $97,200 per year

Affordable Housing Plan for Morrisville, NC | 2019

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