Nearly a year after the Durham Housing Authority broke ground on the first of its redevelopment projects, the agency’s plans for a full-scale redo of its public housing properties are honing in on downtown Durham.
The housing authority is redeveloping most of its eighteen hundred public housing units through the federal Rental Assistance Demonstration program. The program lets housing authorities convert units from the historically underfunded public housing program to the Housing Choice Voucher program, which has received more stable funding from Congress. The RAD program also lets housing authorities borrow money, which they typically can’t do, and partner with developers to renovate and rebuild units suffering from years of decline.
The agency is looking to convert its properties into mixed-income and, in the case of some downtown developments, mixed-use neighborhoods, with the aim of increasing Durham’s affordable housing stock. Between its public housing and voucher programs, the DHA supports the housing of about 4 percent of the city’s population.
The first RAD conversions are underway at Morreene Road and Damar Court. Unlike other properties, those are being gutted rather than rebuilt. At Damar Court, 24 of 102 units were completed by press time, with another 30 set to reopen by the end of next week.
At Morreene Road, however, the timeline has been slowed because, according to DHA CEO Anthony Scott, the contractor struggled to find workers. No units have been completed, but 40 of 224 should be done by the end of the month. (Both sites were initially expected to be complete in April).
The next site to be redeveloped is J.J. Henderson, a senior housing site with 178 units on Duke Street. The DHA had planned to rebuild the adjacent Oldham Tower and Liberty Street developments on Main Street first, but it determined that J.J. Henderson had the best shot at securing 9 percent low-income housing tax credits from the state, meaning the project can claim tax credits for 9 percent of the cost of building or renovating a property each year for ten years.
The DHA will apply for the 9 percent credits this week to construct a new building on the J.J. Henderson property. That building is expected to have about eighty units that will house a mix of seniors and families. The agency will seek 4 percent tax credits—which are easier to get—to rehab the existing J.J. Henderson building from “top to bottom,” Scott says. One portion of that building—a one-story section that houses a community room—will be knocked down and replaced in the new building.
Construction of the new building is set to begin in early 2020 and is expected to cost about $14.1 million. Renovations of the existing building, also set for 2020, will cost about $19 million.
The DHA hasn’t decided what the breakdown of senior versus family housing will be, but Scott says it will at least maintain the current number of senior units. The agency should find out this summer whether it has been awarded the tax credits.
Durham, however, is only likely to be awarded one 9 percent tax credit project each year, so the city is submitting two applications to be sure it has a strong candidate. In addition to the DHA’s J.J. Henderson application, a development team behind a planned affordable housing project on Willard Street will apply for tax credits for a second phase of construction. Whichever application scores lower will be withdrawn, and if the projects get equal scores, the DHA project will move forward. Although details are still being refined, Willard Street Phase Two is also expected to house seniors, with fifty-six units available to people earning 60 percent of the area median income or less. In Phase One, which is expected to open in late 2020, twenty units will be subsidized by DHA vouchers.
The DHA hasn’t identified what site will be redone after J.J. Henderson. That will be based on an analysis of tax credit viability. But it will be downtown, because the DHA wants to leverage its prime properties to help pay for work at properties farther out. The agency plans to develop its East Main Street headquarters, Forest Hill Heights, Oldham Tower, and Liberty Street for uses other than housing.
According to Scott, work downtown will be completed in seventeen phases. Ten of them are intended to be 9 percent tax-credit projects. But because the city will only get one such award a year, the redevelopment of the DHA’s downtown properties alone will take at least ten years. That means it could be a decade before some sites outside of downtown, such as McDougald Terrace, Cornwallis Road, and Hoover Road, undergo redevelopment. (Laurel Oaks, a newer development, will see cosmetic updates beginning in March—work that was supposed to happen last year.)
“The focus has been very narrow on downtown,” Scott says.
Scott says all 447 DHA units downtown will be replaced, but it’s likely more will be added. He estimates that the number of units at the adjacent Oldham Tower and Liberty Street developments could double. There’s also plenty of unused land at the fifty-five-unit Forest Hill Heights, and Fayette Place—a twenty-acre DHA-owned site south of the Durham Freeway—is totally vacant. All told, the agency owns fifty acres downtown.
Along with other housing authorities, Scott is hoping to convince the N.C. Housing Finance Agency, which administers low-income housing tax credits, to change its rules so that housing authorities can use the credits to redevelop more of their properties faster, perhaps by exempting them from the competitive 9 percent credit application process, setting aside credits for redevelopment projects, or giving the authorities a bonus to boost their chances of getting an award.
Until that happens, the DHA will be forced to drag out redevelopment plans, making residents wait longer for updated housing and driving up project costs.
“There has to be another approach the state is willing to take for housing authorities that are taking a more comprehensive strategy,” Scott says. “The state of North Carolina really needs to figure out a way to support the most vulnerable population of households out there.”
Contact staff writer Sarah Willets by phone at 919-286-1972, by email at swillets@indyweek.com, or on Twitter @sarah_willets.