The terms “essential and workforce housing” refer to housing that is affordable for households with low to moderate income—typically households whose earnings are between 50 percent and 120 percent of area median income (AMI). As of July 2020, the AMI for a four-person household in Dare County was $69,400, according to the Development Finance Initiative at the University of North Carolina’s School of Government (DFI).  

Examples of some of the professions that fall into the essential and workforce housing category include—but are not limited to—firefighters, police officers, paramedics/emergency medical technicians, nurses and other healthcare workers, teachers, utility personnel, chefs, servers and other restaurant workers, cashiers and retail store staff members. 

According to DFI, households should spend no more than 30 percent of their income on housing costs. For renters, this figure consists of the cost of rent and utilities, whereas for property owners this number consists of the cost of their mortgage plus private mortgage insurance (PMI). DFI also states that more than 60 percent of all low-income renter households spend more than 30 percent of their income on housing costs.

A constitutional provision and various case laws do not allow government agencies—such as Dare County—to develop and operate/manage an apartment complex or housing units.

Dare County comprises six municipalities—Duck, Southern Shores, Kitty Hawk, Kill Devil Hills, Nags Head and Manteo—in addition to the unincorporated areas of the county, which include Hatteras Island, Roanoke Island, Colington and the Dare County mainland. 

Although they are geographically located within the confines of Dare County, these six municipalities themselves are tasked with planning and implementing the zoning, building and development that takes place within their town limits. Dare County only has jurisdiction over planning and development within the unincorporated areas of the county mentioned previously and does not have jurisdiction over these municipalities.

Therefore, it is necessary for everyone—the six municipalities and Dare County—to work together to move forward with finding solutions to the essential and workforce housing challenges that are currently being faced.

Despite what appears to be a considerable amount of undeveloped land within Dare County, approximately 85 percent of the land in Dare County cannot be developed because it is designated as public land, which means that it is either state-owned or federally owned.

This public land includes National Parks, National Historic Sites, National Wildlife Refuges, National Monuments and National Marine Sanctuaries, among others. Public lands—which can consist of both land and water—are collectively owned by U.S. citizens and managed by a variety of different government agencies, such as the National Park Service and the U.S. Fish and Wildlife Service. 

In Dare County, some examples of public land include the Cape Hatteras National Seashore, the Alligator River National Wildlife Refuge, the Pea Island National Wildlife Refuge, Fort Raleigh National Historic Site and the Wright Brothers National Memorial.    

Areas that have been designated as public land are required to be preserved, therefore commercial and residential development—such as apartment complexes or similar housing developments—in these protected spots is prohibited.

The federal Low-Income Housing Tax Credit program (LIHTC) was created in 1986 and is currently the largest source of affordable new housing development, contributing to more than 3.2 million units nationwide thus far. Administered by the Internal Revenue Service, LIHTC provides tax credits for the acquisition, rehabilitation or new construction of affordable rental housing specifically for low-income households.   

LIHTC funding, however, is only awarded to private or nonprofit partners—not to government entities. For this reason, governments (such as Dare County) cannot receive LIHTC credits to construct new housing developments or to rehabilitate existing housing developments. Instead, government entities must award any credits that are awarded to a private developer to use when funding a particular project.

A particular site’s ability to qualify for LIHTC credits depends on a number of criteria, including the following:

• neighborhood characteristics

• proximity of amenities (such as grocery stores and pharmacies) 

• a bus/transit system within walking distance

• the absence of incompatible uses (such as a landfill, wastewater treatment facility, adult entertainment, active railroad tracks and an electricity substation

For more information about LIHTC, click here.

Dare County has been working diligently to address the essential and workforce housing issue within the community for several years.

Cluster Housing:

Recognizing the ongoing challenges that the lack of local long-term housing continues to have on those who live and work in Dare County—and in an effort to help facilitate the development of new year-round housing options for members of the essential workforce—several amendments to the Dare County Zoning Ordinance were made throughout 2018 and 2019. These amendments are in effect for the unincorporated areas of Dare County. 

By definition, cluster home developments consist of more than one residential dwelling that is situated on one parcel of land, and the dwellings must be occupied on a long-term basis rather than as short-term vacation rentals. 

As of September 2021, the Dare County Board of Commissioners had approved four cluster housing site plans that are dedicated to offering long-term housing. Two of these cluster housing developments have already been completed: a six-unit cluster in Rodanthe and a three-unit cluster in Avon. 

The two remaining cluster housing development sites that have been approved by the county—which include four two-bedroom homes on a site in Frisco and 11 three-bedroom homes on a site in Waves—are currently pending.  

Development Finance Initiative:

In February 2020, the Dare County Board of Commissioners partnered with a team of experts from the UNC School of Government’s Development Finance Initiative (DFI) to work toward finding a solution to the ongoing essential and workforce housing challenges in Dare County.  

DFI was selected by the Dare County Board of Commissioners due to its real estate development and financial expertise, which helps the organization to secure very competitive federal funding for transformative housing development projects by attracting private investment. 

DFI has been tasked with performing a housing needs assessment, identifying suitable housing sites and soliciting private development partners as part of the process of providing essential and workforce housing within Dare County. 

For more information about DFI, click here.

Dare County’s Beach Nourishment Fund is funded by a 2 percent portion of the 6 percent Occupancy Tax of gross receipts derived from the rental of rooms, lodging, campsites or similar accommodations that are furnished by any hotel, motel, inn or tourist camp—including private residences and cottages that are rented to transients. 

This 2 percent portion reserved for beach nourishment is restricted by legislation to be used for the placement of sand from other sand sources, the planting of vegetation and the building of structures that are in conformity with the North Carolina Coastal Area Management Act (such as sand fences and dunes) on beaches of the Atlantic Ocean of North Carolina for the purpose of widening the beach to benefit public recreational use and mitigating damage and erosion from storms to inland property.

Dare County is not authorized to reallocate the distribution of these Occupancy Tax funds for other purposes—such as the development of essential and workforce housing complexes. In addition, Dare County—as a government agency—does not have the authority to develop and operate/manage an apartment complex or housing units. This work must instead be performed by private investors and private developers.

In addition to a lack of land that can be developed within Dare County, in order to develop essential housing that members of the area’s workforce can afford, potential properties must meet certain requirements to qualify for the tax credits that make these developments possible. 

Without the tax credits that are awarded to the developers who are tasked with constructing these essential and workforce housing units, the costs associated with doing so would require developers—and later the rental property management companies—to charge market rate for the units they are renting out to ensure a return on their investment.  

Because Dare County is a tourist-driven area with a high demand for rentals—both weekly vacation rentals and year-round rental units for those who live and work on the Outer Banks—the market rate of such units would likely render these properties unaffordable for the vast majority of those who fall into the workforce and essential housing category due to their income levels.

Dare County officials have identified and have looked into privately owned properties that could potentially become the site of essential and workforce housing developments; however, it’s important to note that not every piece of available property is suitable for development. 

This may be because the property in question will not qualify for the tax credits that are necessary for developers to receive in order to ensure the units can ultimately be offered at rates that target low-income and moderate-income households—rather than the market rate, which, in a tourist-driven area like Dare County, would likely cost significantly more than would be affordable for members of the area’s essential workforce. 

In addition, some parcels of land may not be suitable for the construction of housing developments because of the natural characteristics of the property due to factors that range from topography, flood risk and wildlife habitation to the parcel’s proximity to protected land and waterways.

The housing developments that have been proposed will include units that vary in size to include both one-bedroom units and two-bedroom units and would therefore likely accommodate families. 

These proposed housing developments are designed to be considered “affordable” for those who are members of the essential workforce in Dare County but will not be rented out exclusively to these employees only. 

In addition, Dare County does not have the authority to operate or manage a housing development; therefore, those who are accepted as renters of a potential property will be determined at the discretion of the development’s future property management company. 

Dare County officials are aware of the need for essential and workforce housing on Hatteras Island and are working to address this issue. 

For more information regarding the various criteria a particular parcel must meet in order to be considered suitable for the development of essential and workforce housing, see FAQ #5.

The Section 8 Housing Choice Voucher Program is the federal government’s major program for assisting very low-income families, the elderly and the disabled and is not the same as what is being proposed with Dare County’s essential and workforce housing initiative. 

The essential and workforce housing would be considered “affordable” for households with low to moderate incomes—typically households whose earnings are between 50 percent and 120 percent of area median income (AMI). As of July 2020, the AMI for a four-person household was estimated to be $69,400 in Dare County.