Will island's failed affordable housing programs bring owners, developers a windfall?

Homeowners and developers who took part in Hilton Head Island's failed affordable housing programs could end up with a windfall once the program is finally taken off the books.

Owners who bought their units at a discounted rate over the past decade will be able to resell their units at market rate. Developers may also be allowed to sell the units at the market rate.

The town says creating this potential for a financial boon is not the ideal situation. But town officials say they are stuck without another legal option if they want to get rid of the programs and remove deed restrictions some owners say trapped them in property they couldn't sell or even build equity on.

The Planning Commission on Tuesday voted unanimously to recommend Town Council repeal all deed restrictions associated with the programs. The programs operated by offering developers incentive to build units that would remain at an affordable rate for a period and only sold to people at certain income levels. In return, developers got to build more units than zoning would normally allow.

For the town, it basically amounts to a mea culpa that the program was a good premise that failed in practice. It's unfair to punish people or keep them tied to a program that doesn't work, officials said.

"There's no sticks here, there's just carrots I guess," town comprehensive planner Randy Nicholson said.

Owners say it amounts to emancipation from the chains of their properties, some of which have sat on the market for years because the deed restrictions made it hard to qualify buyers or get mortgages.

Nineteen units in the Summerfield development were built under the programs and sold to property owners at average discounts of $7,000 for one-bedroom and $14,000 for two-bedrooms, according to the town. But another 42 were approved or are under construction in other developments at Fuller Pointe and Allenwood.

Affordable housing has become a particularly prickly issue for the town as more and more of its middle-income workers such as teachers and firefighters are priced off the island. With property values increasing, it's unclear how the town will tackle the problem. But grants administrator Marcy Benson said the town isn't giving up. In upcoming revisions to the town's comprehensive plan, officials hope to go back to the drawing board and come up with a new way to address it, she said.

The idea that developers would get to reap a benefit through the changes didn't sit well with some commissioners.

"I am bothered by the thought that the real beneficiary of this whole action we have tonight is the developer," commission member Loretta Warden said.

Warden suggested the town manager meet with developers and ask for a voluntary contribution to a future housing trust the town may establish to help low income residents.

The issue will now go to the Planning and Development Standards Committee today at 4 p.m. before moving on to the full Town Council for final approval.