Charlotte TOD Density Bonus Program Analysis

City of Charlotte, NC

The City of Charlotte engaged BAE to evaluate the economics of office and rental residential projects under current zoning, a proposed TOD ordinance, and a potential Voluntary Bonus Program to determine whether developers would participate in the Bonus Program and help adjust incentives to promote participation.

The City of Charlotte recently undertook the process of creating four new TOD zones that allow for development within transit areas that meet the City’s goals for walkable communities.  As part of this process, the City developed a voluntary bonus program that would allow additional height in exchange for community benefits, including affordable housing, open space, and other benefits.  In order to determine how best to structure the voluntary bonus program to realize new affordable units or open space, the City engaged BAE to evaluate the economics of office and rental residential projects before and after the TOD ordinance took effect, and utilized sensitivity testing to evaluate the desirability of the Voluntary Bonus Program.

As part of this assignment, BAE performed static development pro forma analyses on mid-rise residential and high-rise office uses likely to develop in the TOD zones.  BAE collected market data and construction cost data to determine the economics of new development to determine whether the additional height proposed would provide sufficient incentives to attract developers.  BAE also held a developer roundtable with local developers to understand their concerns and general interest in the program, as well as identify other benefits that the City could provide developers to incentivize the Development Bonus Program.  Some of these included providing affordable housing unit technical assistance and education, relaxing requirements around building lengths, and streamlining the entitlement process.  In April 2019, the Charlotte City Council unanimously approved the TOD Ordinance with Development Bonus Program.