Durham Housing Authority Unveils $566 Million Downtown Redevelopment Plans

The Durham Housing Authority unveiled a $566 million plan to build twenty-five hundred housing units downtown.

The plans—presented to the Durham County Board of Commissioners Monday night—are part of the authority’s overall redevelopment of its public housing portfolio through the federal Rental Assistance Demonstration program. Renovations are underway at two DHA properties—Morreene Road and Damar Court—and the authority plans to redo the J.J. Henderson senior housing tower on Duke Street next. Properties downtown are being prioritized in order to financially support the redevelopment of other DHA sites.

DHA CEO Anthony Scott laid out plans for the redevelopment of seven properties downtown, including the DHA’s headquarters and two city-owned properties (the Rigsbee Avenue police substation and unused land near the mixed-income Southside housing development) that city officials asked the authority to consider in looking at how to maximize affordable housing downtown.

“We looked at the true cost of building these,” Scott told the board. “If we had five hundred sixty-six million today, we could build all of what you’re seeing.”

Currently, the DHA has 477 units at its downtown sites: J.J. Henderson, Liberty Street, Oldham Tower, Forest Hill Heights, and Fayette Place. Under the redevelopment plan, the authority would rebuild those units and add more than two thousand affordable and market-rate units. That means some DHA sites will become dramatically denser. Forest Hill Heights, which currently has 55 units, would have 575. Fayette Place, which is currently vacant, would get 560. Sixty units would be located in city- and county-backed affordable housing projects already in the pipeline.

“All of this is looking at how do we fully maximize what we can on each of these sites,” Scott said.

According to Scott, three-quarters of the downtown units would be affordable to people earning 80 percent of the area median income or below, which is about $58,000 for a family of four.

Asked by county commissioner Ellen Reckhow why the agency isn’t looking to increase the number of its own units for public housing residents, Scott said that Congress isn’t giving additional money for new public units. That’s why the agency is looking to the RAD program, which was created by the U.S. Department of Housing and Urban Development in 2012 to help housing authorities address a $50 billion backlog in public housing repairs.

Under the RAD program, public housing units are converted to HUD’s Housing Choice Voucher program, which has traditionally received more stable federal funding than the public housing program.

Housing authorities can partner with private investors and borrow money, which they can’t typically do. Federal regulations require housing authorities that are using RAD to replace every unit bedroom for bedroom through the redevelopment process. Existing residents also have a right to return to a unit, and RAD requires housing authorities to provide relocation expenses. Because the voucher program, like the public housing program, caps rent at 30 percent of a tenant’s household income, most tenants will not see their rent increase if they move into a redeveloped unit. While private partners and managers can be brought in, a public or nonprofit entity must maintain a controlling interest in the property.

With the exception of the Southside site and J.J. Henderson, the concepts all include other uses besides housing. 

“Overall, by developing properties in this way, we create stronger financial stability throughout the long-term operation of our developments,” Scott told the board.

The downtown work will be completed in seventeen phases, ten of which rely on 9 percent low-income housing tax credits from the North Carolina Housing Finance Agency. Those tax credits are competitive, and the city only expects to get an award for one 9 percent project each year, which means the downtown work would take at least ten years to complete.

The DHA has already submitted a 9 percent application to construct a second, new building on the J.J. Henderson site. The agency is seeking 4 percent low-income housing tax credits—which are not competitive—to renovate the existing J.J. Henderson building.

The work at J.J. Henderson is set to begin this year, with the final project being the Southside development, beginning in 2027.

Commissioner James Hill asked why the agency doesn’t plan to build out Fayette Place sooner. The twenty-acre property has been vacant since 2009.

Scott said “the market is not quite ready for Fayette Place to redevelop.” Work needs to be done to spruce up Fayetteville Street first, for example, in order to attract tenants, including a grocery store that neighbors have requested.

“We don’t want to underdevelop and later you find out you could have had a better opportunity,” Scott said. “With Fayette Place, we need a little more seasoning of the market in order for us to take full advantage of those twenty acres there.”

Scott asked commissioners to partner with the authority in its plans to redevelop the DHA office and the adjacent Durham County Criminal Justice Resource Center, which are across the street from one of two parking lots the county is redeveloping to include affordable housing.

Reckhow cautioned Scott not to expect a financial contribution, rather a land donation. The CJRC property is owned by the county and valued at $6.4 million. Scott said the DHA is projecting an $88 million gap in funding for the redevelopment plan and is talking to the city about how to fill it.

Scott said the authority would recruit locally—including among DHA residents—to fill construction jobs for the redevelopment, and he anticipates one hundred permanent jobs being created to operate the new buildings. According to Scott, 60 percent of DHA residents who are able to work are currently unemployed.

He also asked that commissioners help the agency lobby the North Carolina Housing Finance Agency to change its rules for how it doles out 9 percent low-income housing tax credits in order to help housing authorities redevelop aging properties faster.

“The uniqueness of the RAD program for a public housing authority warrants the state reconsidering how it allocates those nine percent tax credits,” he said.

Scott and Commissioner Wendy Jacobs underscored the importance of the Durham-Orange Light Rail Transit project to the success of the DHA’s redevelopment. Two-thirds of DHA units are within walking distance of a planned light rail station, meaning residents could use the system to access jobs. The average annual income of a DHA resident is $13,000.

The line will also attract people to the market-rate units that are part of the plan, Scott said, and income from those units is needed to subsidize the lower-rent ones.

The DHA’s plans are among several to increase the housing stock downtown. 

The city has backed the construction of eighty-two affordable units next to Durham Station, and the development team behind that project is working on plans to build another fifty-six units of affordable housing (likely for seniors) next door. The city has also said affordable housing is its top priority for the redevelopment of the old Durham Police Department headquarters on Chapel Hill Street. And the county plans to solicit developers to build nearly three hundred units of affordable housing on the two parking lots it owns on East Main Street.