Should a Planned City Development at Durham Station Have All Affordable Housing? | News
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Friday, October 6, 2017

Should a Planned City Development at Durham Station Have All Affordable Housing?

Posted by on Fri, Oct 6, 2017 at 6:21 AM

click to enlarge A proposal for affordable housing, retail and office space adjacent to Durham Station. - DHIC, SELF-HELP VENTURES
  • DHIC, Self-Help Ventures
  • A proposal for affordable housing, retail and office space adjacent to Durham Station.
Durham City Council members on Thursday got an update on plans to build affordable housing next to the Durham Station transportation hub—but they still have decisions to make on what the development will look like.

A year ago, the city issued a request for proposals to develop the two-acre site, which is city-owned, stipulating that 80 percent of the apartments be set aside for tenants earning less than 60 percent of Durham’s median income. They got one proposal back, from DHIC Inc. and Self-Help Ventures.

Since then, the two groups, along with city staff and Cline Design Associates, have been trying to figure out how to design an attractive building that makes efficient use of the L-shaped lot, provides parking for tenants, makes the most of city dollars, and scores well on an application for low-income housing tax credits.

On Thursday, Self-Help and DHIC presented four possibilities for the lot: two that fit the bill of the original RFP and two that demonstrate "the city and development teams' best professional opinion on the most effective utilization of the site and city resources."

In all cases, there would be eighty units of housing for people earning $43,980, which is 60 percent of the area median income for 2017. What varies is the combination of market-rate housing, office space, and retail space. Developing the affordable housing units would require a city subsidy of $2.8 million–$6.4 million depending on which plan is selected. Per the fair housing law, all of the units would have the same finishes.

The cheapest option, with a total development cost of just under $12 million, calls for sixty-two thousand square feet of office space, twelve thousand square feet of retail space, and no market-rate housing. After the meeting, council members Charlie Reece, Jillian Johnson, and Steve Schewel said they preferred that plan (shown above) because it delivers what the community wants—affordable housing—at the lowest cost to the city. Johnson pointed out that the site is already surrounded by market-rate housing.

Mayor Bill Bell said he favored a concept that includes eighty affordable units, twenty-one market rate units, fifty-four thousand square feet of market space, and twelve thousand square feet of commercial space. That plan is the second most expensive, at $14.5 million.

While market-rate units are often favored to help subsidize building costs, in this case, the development team and city staff found the inclusion of market-rate apartments actually widened the gap between funding and costs.

"This is due to the combination of the high construction costs associated with structured parking, and the lower rents anticipated on the market-rate units because the finish levels would be below typical luxury apartments in the area," a staff memo reads. "As a result, the market rate units do not generate enough rent to cover their construction costs. Unless a revenue source outside of City funding is identified, these scenarios appear to be financially infeasible."

The council is expected to revisit the decision at its October 15 meeting. They are under a time crunch—a preliminary application for low-income housing tax credits is due in January.

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