Durham City Council members heard some concepts for building a second phase of a planned affordable housing development next to Durham Station during their work session today.

Construction on phase one of the Willard Street apartments could begin as early as this summer. When it opens in December 2020, the city-backed project will include eighty-two units affordable to households earning 60 percent or less of the area median income, about $44,000 for a family of four, as well as parking and retail space. That phase was awarded a 9 percent low-income housing tax credit in August, which will create about $9 million worth of equity toward the $17 million project.

The city has already committed $3.6 million to Phase One (and conveyed the land, valued at $2.8 million, for $1). Duke, Capitol Broadcasting and the AJ Fletcher Foundation are kicking in another $2.5 million.

The same development team behind the first phase – Self-Help Ventures Fund and DHIC – will be seeking low-income tax credits for a second phase in mid-January. In order to apply, the team needs control of the 0.6-acre site, which they city would also convey for $1.

But, in order to be sure the city has a strong application for the tax credits, the Durham Housing Authority will also be submitting an application to redevelop the J.J. Henderson senior housing tower as part of the agency’s full scale redevelopment plans. (More on how low-income tax credits work here.)

If the Willard Street application scores best, it will move forward. If the scores are equal or the DHA application does better, it will move forward. (The City Council doesn’t typically take action in work sessions and did not vote on a request from the development team for $85,060 in predevelopment costs to help with the application process).

If Willard Street phase two is awarded tax credits, the plan is to build fifty-six units affordable to people at or below 60 percent area median income. According to Karen Lado, assistant director of community development for the city, these would most likely be reserved for seniors because the North Carolina Housing Finance Agency, which administers the tax credits, requires certain amenities be included in family housing buildings and there isn’t room for those amenities on this site. The city would need to kick in about $2.2 million to make that scenario happen.

Lado said there is a “well-defined” need for affordable senior housing in Durham, especially close to transit. This site is adjacent to Durham Station, the city’s hub for bus service which will also get a stop on the Durham-Orange Light Rail line.

If the project isn’t awarded tax credits, the development team would come back in the fall with a viable option to build out the site without them. Lado said that would likely include mixed income, for sale units. That would require a lower, subsidy from the city, Lado said – about $500,000. If phase two doesn’t get developed, the city would owe the development team $925,000 for parking that is being proactively included in a deck being built as part of phase 1.

Also on the affordable housing front, Habitat for Humanity plan to use a $497,000 grant from the city to build twenty-five new homes was also on Thursday’s agenda. That item – to authorize the expenditure – saw very brief discussion and no action.

The homes will be located in the Southside area, Northeast Central Durham, and census tracts 13.01 and 13.03, which have been identified as priorities by the city and are located along Fayetteville Street south of N.C. 147.

The money will come out of the city’s dedicated housing fund. Reginald Johnson, the city’s director of community development, says the homes would be guaranteed to remain affordable for twenty years.

The houses would be sold to eligible buyers with incomes at 60 percent of the area median income or less through Habitat’s normal sweat equity process. Since 1985, Habitat has built and sold more than 380 affordable homes in Durham. In the past five years, more than one hundred were built, with at least eighty percent located in Northeast Central and Southwest Central Durham.

Habitat already owns three lots in Southside and two in tracts 13.01 and 13.03. The remaining twenty are in Edgemont and currently owned by the Durham Housing Authority.