The team behind an affordable housing development slated to break ground on Willard Street next year is already looking toward a phase two.

Willard Street Apartments is a joint venture of DHIC and Self-Help Ventures, along with the city of Durham. On Thursday, representatives gave an update to the City Council, including how more housing could be built on the two-acre site next to Durham Station.

Last month, Willard Street Apartments was awarded a coveted 9 percent low-income housing tax credit, which will create about $9 million worth of equity toward the $17 million project. As a rule of thumb, the city expects just one Durham project can be selected for 9 percent tax credits each year.

Michael Rodgers, with nonprofit housing developer DHIC, says the project is the third largest in North Carolina to win a 9 percent tax credit. Under the Low-Income Housing Tax Credit program, companies buy the tax credits in order to offset their corporate tax obligations, creating the equity developers need up front to build.

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.

Phase one takes up about one and a third acres of the site.

The development will include eighty-two one and two-bedroom units of affordable housing in a four-story structure. Of those units, sixty-one will be targeted for people earning 60 percent of the area median income or less, about $48,000 for a family of four, and twenty-one will be for people earning 30 percent of the area media income or below. There will also be ground-floor retail on Jackson and Willard streets and parking, bringing the total development cost up to about $24 million.

Now that the tax credits have been secured, the development team will look at design and financing. They’re also looking at how to fill the remaining two-thirds of an acre with housing, which would require the property to be subdivided.

Developing multi-family rental housing in phase two would “require a substantial subsidy from the City to fill the anticipated gap, beyond what is reasonable based on the number of affordable units that can be created,” a city staff memo says. So, the development team is looking at whether offering condominiums for sale to people of different income levels would make the plan more financially feasible.

While the Durham Housing Authority plans to apply for a 9 percent tax credit for 2019 to redevelop one of its properties downtown, the development team behind the Willard Streets Apartments is planning a backup application to develop the second phase of the site. Whichever gets the lowest score from the North Carolina Housing Finance Agency would drop out of the running.

‘If both applicants were to receive the same score, the JV would remove their application from consideration with DHA submitting a final application in May of 2019,” the staff memo reads. “This process ensures that the Durham community has a competitive application for an award of 2019 LIHTC.”

Karen Lado, the city’s assistant director of community development, said the team is working on a concept for the building that could include be made into either rental apartments or condominiums. The development team plans to come back to City Council with a recommendation for phase two next May.

Construction could begin as early as next summer and wrap up in 2020; because the parking structure will bear the load for the residential building, construction of the housing units can’t begin until the parking is complete.