Affordable housing and retail and office space are slated for a two-acre site adjacent to Durham Station.
Durham City Council members and staffers, along with a development team composed of Self-Help Ventures Fund and DHIC Inc., have been contemplating how best to use the city-owned site for about a year. On Monday, the council unanimously approved a concept that includes eighty units of affordable housing, sixty-two thousand square feet of office space, parking, and twelve thousand square feet of commercial space. The housing will allow for twenty housing vouchers, which are administered by the Durham Housing Authority and subsidize low-income tenants’ rents.
Tucker Bartlett, with Self-Help Ventures Fund, said the development team will begin lining up retail and office tenants immediately; rent from those spaces helps this concept have the smallest funding gap of four proposals presented to the council.
The city would have to come up with about $2.8 million toward the development. Including the costs of the parking structure, the proposal rings in at just under $15 million. Low-income housing tax credits would cover about $10 million. Housing vouchers would contribute another $920,000, and the office/retail space about $860,000.
Development costs don’t include the price of the land, which is valued at about $2.8 million. Under the proposal, the city would sell the property for $1.
The proposal is in line with the city’s goals. It would place affordable housing near a transit hub and future light rail station, bring lower rents into a pricey downtown area, and utilize one of the largest city-owned properties downtown with potential for reuse.
All four concepts included eighty units of affordable housing. Michael Rodgers, with nonprofit housing developer DHIC Inc., said that’s the highest number likely to be competitive in the North Carolina Housing Finance Agency’s application process for tax credits. The plans varied in the combination of affordable and market-rate housing, office space, and retail space.
Market-rate apartments can help subsidize the cost of the affordable housing developments and discourage isolated pockets of low-income households. But in this case, the development team found those units would actually widen the funding gap because the site is surrounded by high-end market-rate apartments. By law, all units in a mixed-income development must have the same finishes, so market-rate apartments at this project wouldn’t command the same rent and wouldn’t generate enough revenue to cover construction costs.
The project is on a tight deadline. A preliminary tax-credit application is due in January, with the full application (and detailed financing commitments) due in May. If all goes to plan, construction would begin in early 2019 and finish in December 2020.