Durham Officials Push for Affordable Housing in Southpoint Redevelopment

Members of the Durham Planning Commission last month called a plan to redevelop the Streets at Southpoint mall “transformational” and “massive.”

Then they voted overwhelmingly to oppose recommending the project to the city council.

At the heart of the planning commission’s thumbs-down 10-3 vote was the complete absence of affordable housing in the redevelopment that will span more than 1.9 million square feet of land along the 6900 block of Fayetteville Road and 8060 Renaissance Parkway.

Low-income families and workers such as those who staff the mall’s shops and restaurants would, by default, not be welcome to live in the proposed development, which one commissioner likened to a new downtown district for southern Durham County.

Despite the city’s elected leaders’ calls for equity and shared prosperity, the verdict is still out as to whether they will approve the rezoning of Southpoint for the mammoth, mixed-use development.

Council member Leonardo Williams told the INDY this week that while the proposals have not yet come before the council, he and his fellow council members “are paying attention” to ongoing developments with both the Northgate and Southpoint locations.

“Look at what North Hills and Fenton [in Cary] did with, in addition to chain stores, adding boutiques and housing,” Williams said.

“Southpoint has to evolve,” he added. “The challenge is that it’s really expensive. First of all, we have to decide what is affordable housing. What does that mean? Affordable housing for whom? We have to be very clear on what type of affordable housing we’re talking about.”

City council member Jillian Johnson emphaszied that the council can’t legally deny a rezoning due to a lack of affordable housing. 

Johnson added that although the project has not yet come before the council, she “in a general sense supports turning parking lots into housing and retail space.”

Durham attorney Patrick Byker, representing Southpoint on behalf of owner Brookfield Asset Management, said during a March 14 planning commission meeting that the development would take place on seven parcels of land that are now parking lots. The plan calls for 300,000 square feet of office space, a 200-room hotel, and up to 1,382 apartment units.

Planning commissioner Nate Baker summed up the sentiments of the commission’s majority when he noted during the more-than-one-and-a-half-hour hearing that “a lot of people are looking for places where they can live, where they can get to places, and walk to places; and I think that’s really important that we’re creating a higher supply of these kinds of neighborhoods.”

Then Baker cut to the chase and asked Byker what percentage of the planned 1,382 apartment units would be set aside for affordable housing.

“There would be no affordable units on [the development] site,” answered Byker, who added that the developers “would be looking [at] an affordable housing project that’s in a qualified census tract” that would give “much greater bang for the buck in those housing venues.”

According to the U.S. Department of Housing and Urban Development, qualified census tracts are identified as communities with a large proportion of low-income residents.  

“OK, none?” Baker asked. “Absolutely none on the site?”

“That’s correct,” Byker answered.

“So none, not in my backyard,” Baker reiterated.

Byker explained that affordable housing on the development site would not be financially feasible because the NC Housing Finance Agency requires 1.75 parking spaces per affordable unit in order to issue a tax credit. 

“The financing gap per unit under current conditions with interest and building costs is around $65,000 a unit,” Byker said. “In a qualified census tract it’s $45,000. So when you put all these factors together it’s inefficient to try and build affordable housing that’s not in a qualified census tract.”

Planning commission chair Austin Amandolia asked Byker if the developer had made a proffer related to affordable housing at the redevelopment site.

“We don’t have a partner identified yet,” Byker said. “We’re waiting on the city and county to allocate ARPA [American Rescue Plan Act] funds. That process is ongoing and should be done in the next several weeks. Once that process plays itself out, we’ll be able to identify where there’s a shovel-ready partner where we can step in and provide financing.”

It’s no secret that Durham has struggled in recent years to address a housing shortage that’s felt most acutely by low-income families. The issue has been exacerbated by apartments that have become increasingly unaffordable and rapidly rising housing costs. This is particularly true in historically affordable neighborhoods near the city center where gentrification is happening rapidly. 

The majority of the planning commissioners were not impressed with Byker’s explanation that the developers could not fork over an extra $20,000 to perhaps include 75, 50, or even one affordable housing unit in their plan to build more than 1,300 apartments. The commissioners were concerned that city and county employees along with the mall’s workforce would not be able to afford to live at the proposed redevelopment site.

“I’m concerned about projects that come to us where the developer is not going to provide a good-faith effort at an attempt to [include] affordable housing as an intricate component of their project,” commissioner Stephen J. Valentine said. “I’m very concerned about that.”

Another commissioner, Garry Cutright, echoed Valentine’s concern.

“I don’t want to beat a dead horse,” he said, “but have you looked at providing [affordable units] at just 80 percent to 100 percent of the average median income … where we can get firefighters and teachers to be able to utilize all of the amenities on the site?”

Cutright added that he recognized the dollars-and-cents challenges posed by the inflated costs of parking spaces that accompany affordable housing. But he wondered if the developers could navigate through their own financial models that don’t have the same constraint from financing via a qualified census tract.

Byker said the developers did indeed evaluate building affordable units at the 80 percent average median income.

“And it was not financially feasible given the underwriting standards of our financing partner,” he said. “It was not feasible given the parking requirements of the North Carolina Housing Finance Agency. It’s simply not something our financial partner is able to approve.”

Another planning commissioner, Anthony Sease, said that the issue of affordable housing had not been “treated sufficiently by hanging it on the efficiency question or the census tract designation.”

“Because, yes, we may have less efficient yield of the number of units of affordable housing, but the people who work at all the [mall] stores get here by bus today, a lot of them,” he said. “And the ethos you’ll hear expressed over and over again in this community is that people should have equity and more access. And I think that includes equity in access and seeking ways to include some affordable housing.”

Sease also pointed to “very, very small projects” south of the redevelopment location “that have come before the planning commission that included an offer of affordable housing on-site.”

“Given the scale of this project, I would encourage the applicant to consider ways around these issues,” Sease added.

The mall, unlike a number of indoor malls across the country, remains vibrant. 

Southpoint’s 140 retail shops account for a 97 percent occupancy rate, and with 13 million visitors each year, it is Durham County’s largest generator of property and sales taxes.

While noting that the mall is “facing increasing competitive pressure from mixed-use districts in other nearby cities and counties,” Byker cautioned that “the worst thing you can do is rest on your laurels.”

“This is about Southpoint’s future and creating success for another 20 years,” he added.

Meanwhile, Baker pointed to Durham’s four-year comprehensive plan and listed points in the plan that appear to be diametrically opposed to a redevelopment plan at the mall, which opened its doors in 2002 and spurred unprecedented growth and development in southern Durham County.

The plan, Baker said, calls for developers to collaborate with residents in proposed mixed-use communities and “focus on those most in need of affordable housing and transportation.”

Baker also noted that while the plan “encourages the retrofitting of aging and vacant shopping centers for development, it also encourages pedestrian-oriented places that include affordable housing that provides reasonable access to necessary goods and services.”

The goal, Baker said, is to “equitably distribute affordable housing throughout the county.”

“I’m simply not willing to abandon all of the work we’ve done putting together this comprehensive plan,” he added. “The big question here is, is this going to be a giant, exclusionary private development, or will this weave into the fabric of the city?”

Amandolia, the planning commission chair, was even more succinct.

“I’m hearing [about] market-rate housing here and affordable housing there,” he said. 

“It sounds a lot like segregation,” Amandolia said and emphasized that people who “do service” at the mall can’t live there.

“It’s wrong.”

Disclosure: Zuri Williams, a member of the Durham Planning Commission, is the daughter of writer Thomasi McDonald.

Follow Durham Staff Writer Thomasi McDonald on Twitter or send an email to tmcdonald@indyweek.com.

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