The city of Durham will pitch in just over $2 million to help the Durham Housing Authority plan for the redevelopment of about fifty acres of downtown property that DHA owns.
The housing authority plans to redevelop more than eighteen hundred public housing units in the coming years through the U.S. Department of Housing and Urban Development's Rental Assistance Demonstration program, or RAD. Intended to address a more than $50 billion backlog of repairs in public housing communities nationwide, RAD allows housing authorities to borrow money and partner with private investors. In Durham, DHA hopes to use the program to fully rebuild aging buildings that need an estimated $19 million in basic repairs, plus more substantial fixes like failing roofs and plumbing.
Currently, DHA is renovating two of its neighborhoods, Morreene Road and Damar Court. Unlike those developments, other Durham public housing neighborhoods will be torn down and rebuilt as mixed-income and—in the case of valuable properties downtown—mixed-use communities.
Under former DHA CEO Dallas Parks, the housing authority planned to renovate all of its public housing properties, like what's being done at Morreene Road and Damar Court, which was initiated prior to Park's departure in 2016. There, residents have been moved into other apartments (most on-site but not all) while their own units are being redone. However, under CEO Anthony Scott, who was hired in June 2016, DHA plans to redevelop the rest of its public housing portfolio in phases with the aim of increasing the stock of affordable housing in Durham.
This is why DHA is focusing downtown first: to leverage developer fees and other revenues from those prime locations to support redevelopment at other sites. The agency hasn't decided which of its downtown sites will see work first, but it hopes to begin construction on one in early 2020.
Scott told the city council last week that the city won't be expected to pay pre-development costs for all the agency's redevelopment plans. The $2.13 million grant also won't cover pre-development activities at all of DHA's downtown sites, just the first phase.
Asked what it would cost for the city to cover pre-development for all of those properties, Scott said he didn't know. "We're not sure the full extent of what the future development deals will look like," he said.
Downtown, the housing authority owns J.J. Henderson, a senior housing tower; Oldham Towers, another senior housing building; the adjacent Liberty Street townhomes; Forest Hill Heights, in the Southside neighborhood; a vacant property south of N.C. 147 known as Fayette Place; and its headquarters on East Main Street.
All told, 577 DHA residents—including many kids and seniors—live in the downtown area, but there is the potential for much greater density.
Fayette Place (formerly known as the Fayetteville Street projects) consists of about twenty acres of unused land. Forest Hill Heights is barely populated, with fifty-five apartments on fifteen acres. Linked together, Oldham Towers and Liberty Street would total twelve acres.
In surveys, three-quarters of DHA's downtown residents said they want to return to a new unit downtown post-redevelopment (which they have a right to do under federal RAD regulations). But, as the INDY reported last year, many residents, particularly those downtown—with failed redevelopment efforts like urban renewal close in mind—are skeptical that the renovations will take place as planned and that they won't be displaced.
As with most affordable housing projects, DHA needs low-income housing tax credits to make this happen, and it needs money to get its application together by the January deadline. The agency is hoping to secure an elusive 9 percent tax credit for a project downtown.
Two development partners have been selected to help decide which property would make the best contender for those tax credits. According to meeting minutes for the DHA board, if none of the downtown sites are ready for a tax-credit application (which Scott told board members was unlikely), the city and DHA could work together to seek tax credits for a property known as "Southside III," adjacent to the city-backed mixed-income Southside apartments and homes. The site isn't part of the DHA's redevelopment plans, but the agency could locate units there, much like a future affordable development on Jackson Street where some units will be subsidized by DHA vouchers.
The money will go toward those pre-development activities, including architecture and land planning, engineering, inspections, and environmental reports. The grant agreement stipulates that that work be done in conjunction with the city, and that the city's money be used to support units affordable to households earning at or below 60 percent of the area median income, which is about $48,000 for a family of four. Although the council didn't vote on the grant Thursday (it's expected to be approved at the council's August 6 meeting), the money has been budgeted for the fiscal year 2019 housing fund.
"If the Council does not approve the proposed Predevelopment Grant Agreement, DHA will not be able to expand its development capacity in order to more effectively advance a significant development portfolio," a memo from deputy city manager Keith Chadwell reads. "The lack of capacity is likely to result in an inability to advance projects, which in turn could ultimately jeopardize the viability of future public housing redevelopment activities within Durham."
The grant agreement stipulates that the money may also be used toward "other publicly owned sites downtown." It's the second time DHA has asked for money from the city to help with RAD plans, the first being about $1.4 million to cover shortfalls when work at Morreene Road and Damar Court got off track. According to the staff memo, DHA will be coming back to the city for more money (the amount is unspecified) to support the redevelopment of Laurel Oaks.