CHAPEL HILL- The Chapel Hill Town Council on Monday unanimously endorsed a new plan to increase the town’s supply of affordable rental housing. While housing advocates applauded the move, they told the council it won’t work without money. Council members agreed, saying it might be time to consider dedicating one cent of the tax rate to fund the plan.

“I would to ask the [Town] Manager, when he brings us his proposed budget for next year, that it has the one cent tax on it,” said George Cianciolo. “Because I think it’s time that we started investing in something that the citizens have said repeatedly that they want to see.”

Approximately 54 percent of all housing units in Chapel Hill are rentals, far more than in surrounding areas. But demand outstrips supply. A 2010 study suggested the town would need to add 1,200 rental units to serve the population, but in the past five years only 539 units have been approved, none of which are priced to serve those needing workforce housing.

About 2,100 people are on the wait list for public housing or voucher programs in Chapel Hill, and wait time can range from one to five years. Compounding the problem, federal funding has been steadily reduced and town staffers say payments into the town’s affordable housing fund from local developers are unpredictable at best.

Mayor pro tem Sally Greene, who co-chaired the Mayor’s Committee on Affordable Rental Housing, said the council could consider several options for creating a dedicated local revenue stream.

“Either carve out a penny on the existing tax rate or add a penny to the tax rate,” said Greene. “There’s also a discussion we could have about whether to have a bond referendum that is connected to affordable housing.”

Adding one penny to the property tax rate would generate approximately $729,000 annually. Lee Storrow said finding that money in next year’s budget could be a challenge. He asked for staff to come up with a plan to incrementally increase the funding over a period of years.

“Is there a three-year plan or a five-year plan for us to build to a designated town-generated revenue source?” asked Storrow. “It’s really important, because when I came on the council and realized the limited amount of funds that the town was spending on affordable housing it did make me feel uncomfortable.”

The majority of the council supported the concept of dedicating tax dollars to affordable housing. The precise timing and amount will be discussed when the town manager presents a budget plan later this spring.

The council voted unanimously to adopt the new affordable rental housing strategy. In addition to identifying sustainable funding, the plan calls for a senior staff member to focus on affordable rentals, encouraging partnerships between private builders and nonprofits, and the creation of a housing advisory board to monitor implementation of the strategy.