RALEIGH, N.C. — Raleigh is having a moment. Apple and Amazon, giants of American enterprise and darlings of the tech world, are sniffing around the once sleepy provincial capital of North Carolina. The question is, is the city ready for them?
Most rumors are swirling around Apple, which revealed in January it would announce the location of a new U.S. campus, its fourth, “later in the year.” Unlike Amazon, the company has conducted its search largely in private, but word of negotiations between Apple CEO Tim Cook and North Carolina Gov. Roy Cooper leaked in May, and internet prognosticators and local gossip have linked the two ever since.
But if Apple does choose Raleigh — likely bringing thousands of high-paying jobs along with it — some experts say the city is unprepared for what comes next.
“It’ll be terrible from a housing perspective. We have not planned ahead for that,” says Mai Thi Nyguen, a professor of city and regional planning at University of North Carolina-Chapel Hill. “Right now the Triangle is experiencing a housing crunch. We have an affordability problem as it is.”
The city of about half a million, and the surrounding Research Triangle, are struggling to keep up with the population growth of recent years, Nyguen says. Technology companies like Red Hat and Citrix have brought thousands of jobs to the area, adding more high-paid workers to a region still growing from a biotechnology boom years ago. The result has been a rapidly rising population and a housing market that can’t keep up.
Wake County, where Raleigh is located, “is adding 64 people a day, so the market is changing rapidly,” says Samuel Gunter, interim executive director of the North Carolina Housing Coalition. “What used to be a pretty affordable market is no longer that way.”
Raleigh’s median home list price has risen by more than 50 percent, from $230,000 in July 2013 to $349,000 in July 2018, a bigger jump than similar tech boom towns like Austin, Texas, according to real estate data company Zillow. And the number of homes available for less than $150,000 in the Triangle has fallen by 92 percent in the last five years, by one estimate. “Folks are driving by and knocking on doors of homes that aren’t for sale and offering cash,” Gunter says.
Though Raleigh is building homes at a higher pace than many established tech hubs like San Francisco, much of it is out of reach for existing residents.
“While rents and mortgages are skyrocketing, our salary numbers are pretty much flat,” Gunter says. “So folks who have been here who aren’t getting a six-figure tech job, their wages stay pretty much the same, but the housing market they’re pretty much priced out of.”
The pricing spike and housing demand have already pushed many residents to surrounding communities, like Apex — now America’s fastest growing suburb, according to Realtor.com. That displacement will likely only increase with the arrival of thousands of highly-paid tech workers (Apple has not released exact employee estimates, though some have speculated the company could create as many as 10,000 jobs).
A worker influx, including from companies likely to follow in Apple’s wake, will also put pressure on the area’s public infrastructure, says Allan Freyer, director of workers rights at the North Carolina Justice Center, a public policy nonprofit.
“All these new workers are going to need to go to school; they’re going to need to go on the highway,” he says. “It’s not the worst problem to have. We want new jobs and big companies. The question is, are we well-positioned to provide the infrastructure and public services that we’re going to need?”
The incentives package being offered to attract big employers like Apple and Amazon — dialed up by the legislature as Apple rumors gained steam — is heavy on tax breaks and could complicate the infrastructure-building effort, Freyer says. The updated incentives would nearly eliminate the corporate tax liabilities for Apple or other “transformative” companies for 30 years, provided they meet certain job and investment targets.
“The Rube Goldberg incentives plan the legislature passed will make it a lot harder in the short term for local government to raise revenue,” he says. “If the company isn’t paying income tax basically for 30 years, the question is how do we pay for all the new infrastructure in schools, in hospitals, in roads that we’re going to need to absorb these 50,000 new (Apple and Amazon) jobs?”
The area’s local leaders and residents, however, have so far shown a willingness to invest in the future.
Back in 2016, before speculation about Apple’s move, Wake County voters approved a sales tax hike as part of a 10-year, $2.3 billion transit plan for the area that includes expanded bus service, and though progress has been halting, the area’s first light rail, connecting Durham and Chapel Hill, is in the works. And in July, the first trains left a new, modern train station in Raleigh’s downtown, with more Amtrak routes planned.
Whether those projects will be enough to accommodate another population boom or attract transit-conscious companies like Apple and Amazon remains to be seen.
“Apple presents a unique opportunity. The project is very large and will have a transformative effect on the region,” says Freyer. “We need to harness that opportunity so the state gets the most out of it we can. If we get the jobs but don’t build the schools, we can’t. If we get the jobs but don’t build the highways, we can’t.”
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Apple, Amazon Could Strain Raleigh?s Resources originally appeared on usnews.com
