FAQs for North Forest Hills Covenant

What has changed?

Chapel Hill Town Council made changes to housing zoning rules for homes in North Forest Hills Neighborhood on June 21st, 2023. These changes allow the building of duplexes in lots that were previously zoned for single family homes. The impacts of this decision on the neighborhood are unknown. Neighbors in the North Forest Hills Neighborhood are developing covenants that revert the zoning rules to those prior to the changes made on June 21st. The goal of developing property covenants is to preserve the strong community that embodies the North Forest Hills Neighborhood, while the impact(s) of the zoning rules play out.

What is a property covenant?

A property covenant is an agreement between two or more parties regarding certain use of a piece of property. These are typically put in place during the development of a neighborhood and are routinely part of Homeowner Association (HOA) agreements. The North Forest Hills Neighborhood is developing a property covenant that reverts the housing rules to those prior to the June 21st change by the Chapel Hill Town Council. Essentially, the goal of this covenant is to prevent the building of duplexes, which could be developed for student housing given our proximity to Carolina North and bus service.

What is the process?

We have engaged Bill Aycock, a real estate attorney, who is helping other neighborhoods in Chapel Hill develop similar property covenants (such as our neighboring Stateside). Bill will search for any old neighborhood covenants and prepare a draft covenant for us that embodies the intent of any expired covenants and Zone R-1 rules. R-1 is our current zoning before the Town Council voted for the change. A small group of neighbors who signed the letter of engagement with the attorney will review the draft and come to consensus on any needed changes. Then the final covenant will be shared with everyone in the neighborhood with an invitation to sign. Those who want to sign will then sign and have notarized a signature page that is then recorded along with the property deed. We will have “signing parties” to make this easier for everyone.

How much does it cost?

Expect to pay $50-100 per household to participate in the neighborhood covenant. This is a one-time cost; participation in the property covenant will not require any future legal costs (such as maintenance fees).

Does it affect the entire neighborhood or only the lots of those who sign the covenant? This is a voluntary covenant that only binds properties that sign the covenants. Those who do not sign are free to build a duplex on their property, or the next buyer can build a duplex on the property.

How does a voluntary covenant help maintain our neighborhood as a single-family home neighborhood? Bill Aycock said in his experience anything over 50% participation in a neighborhood becomes meaningful. Although this is not a perfect solution, it's the best we can do.

What if I’m not sure now but later change my mind and want to also sign the covenant? There is a clause in the draft covenant that allows current residents and new owners to easily add on to the covenant. There is a possibility of greater participation in the future.

How long is the covenant good for?

The initial term will be for 10 years with 5 year auto-renewals.

How do we terminate the covenant after initial 10-year term?

To minimize any further out of pocket expenses, a termination agreement is also being drafted along with the property covenant. Following the initial term (or every five years thereafter), the covenant can be terminated if >50% of participating covenant neighbors sign the termination agreement.

What streets are included?

From the Intersection of Dixie and Collums to the entrance on Piney Mountain Road, Seminole, Indian Trail, Forest Hills Rd, Lake Ellen Dr and Falls Road.

What about Stateside, Buena Vista, Highlands, and part of Dixie? - this section of the neighborhood, is considered a unique subdivision and neighbors there are working separately on a covenant for that part of the neighborhood. Currently, 80% of the Stateside subdivision neighbors have responded positively to signing covenants.

How many lots/homes are included for our section of the neighborhood?

136

Who enforces the covenant?

The covenants are a private contract between property owners. The Town of Chapel Hill would not be the entity to enforce covenants. Similar to HOA's, the Town does not enforce HOA violations in Chapel Hill neighborhoods.

In a real estate transaction, the title search would indicate covenants so buyers would understand any development restrictions before buying a property. According to Bill Aycock, a mortgage company would not provide financing for any type of development that would violate covenants. In the unlikely event construction starts on a property with signed covenants (development in violation of covenants), one neighbor or a group of neighbors can file an injunction in court to stop that development.

How does having this proposed covenant on your property affect your future property values?

The impact of the rule change and covenants on property values are unknown and challenging to predict. For example, selling a property to a developer may results in a higher home sell. However, the building of duplexes may reduce the value of neighboring homes. Given the uncertainty, the covenant provides a prudent way to “wait and see”, as the real world impact of the zoning changes will be observed over the next 10 years.

How do the new zoning rules that will allow the building of duplexes increase affordable housing?

The Chapel Hill planning department has stated publicly multiple times and in writing that the new zoning rules will not increase affordable housing. Karen Stegman of the Town Council during the June 21st meeting when they voted said the zoning changes were never intended to increase affordable housing. The goal was to increase housing density. https://chapelhill.granicus.com/player/clip/6564?view_id=7&redirect=true&h=8dfa5459d129533c4db7160fe940b8dc 2:11:15 time

What about if your lot is < 17,000 square feet?

Chapel Hill Planning Department staff has informed that a duplex cannot be built on a lot < 17,000 square feet under newly voted on zoning rules. We don’t know how the town might revise these rules in the future.

Other resources

UNC Chapel Hill Housing Update - On November 7, 2022 the Daily Tar Heel published an interview with Beth Mayer-Davis incoming dean of the UNC Graduate School. Ms. Mayer-Davis stated her priority will be to increase incoming enrollment for the graduate school by 10,000 students, almost doubling the graduate school. Housing needs will increase as UNC expands enrollment.

June 21st Town Council meeting video

https://chapelhill.granicus.com/player/clip/6564?view_id=7&redirect=true&h=8dfa5459d129533c4db7160fe940b8dc Planning Department presentation 1:05:34

Council comments 1:50:42

Karen Stegman 2:09:13

Adam Searing 2:15

Pam Hemminger 2:30:13