State extends Rolling Hills deadline
State officials have agreed to a finance rollover that gives the city-chosen developer of the Rolling Hills apartment project more time to complete its 132-unit first phase.
The arrangement allows McCormack Baron Salazar, the St. Louis firm overseeing the project, to swap $1.3 million in low-income housing tax credits it received in 2011 for $1.3 million in new ones next year.
The 2011 award required McCormack Baron to complete 80 subsidized units by Dec. 31, a deadline that’s been in question for months following problems with the initial prep work on the site.
Now, the company will be looking to complete 10 buildings in March, another in April and the last in June, said Karl Schlachter, a McCormack Baron senior vice president.
The new credits will require the 80 subsidized units to be on line by the end of 2014.
“We’ll be able to focus on quality in workmanship and making it come out the best it can be,” Schlachter said. “Otherwise, we would have been crunched into a pretty severe deadline. We would have figured it out, but it wouldn’t have been pretty.”
The deal received final approval Tuesday from a panel of state cabinet members that includes N.C. Commerce Secretary Sharon Decker, budget director Art Pope and Treasurer Janet Cowell.
Its vote followed about nine months of talks between McCormack Baron and officials at the N.C. Housing Finance Agency. The finance agency has nominal control over the issuance of the tax credits, subject to oversight from the cabinet committee.
Schlacter said his company alerted finance agency officials to the problem in March. They eventually wrote new rules to allow a type of swap that’s been used in other states but was new to North Carolina.
An approval “has been anticipated for several months now,” he said
Housing Finance Agency officials were “very supportive and helpful along the way,” he said. “They knew how important the project was to the city. They did what they needed to do and did it in a very cooperative fashion. It was not a fight at all.”
In return for the swap, McCormack Baron had to go along with the state’s insistence that it not apply for new tax credits for the second phase of Rolling Hills in 2014.
That was acceptable in part because company officials were “not sure we would have been ready” to apply for second-phase credits next year, given the need to close out the first phase, Schlachter said.
City Manager Tom Bonfield said the delay also benefits the city because it means the second phase won’t be in head-to-head competition next year with a likely application from the prospective redeveloper of the former Whitted Junior High School.
The Whitted school is also in the Rolling Hills/Southside area. The building belongs to Durham County, which has picked an Atlanta firm, The Integral Group, to convert it into a mixed-use project that will include a pre-school and 89 apartments.
Integral applied to the state for low-income housing tax credits this year but was turned down. County officials are hoping the application, like Rolling Hills in 2011, has better luck its second time in the hopper.
Schlachter and Bonfield also noted that the change of deadline means McCormack Baron won’t have to pack the 80 “affordable” units financed with tax credits into the first few buildings completed at Rolling Hills.
That would’ve run counter to the city’s initial intentions that the subsidized units be scattered in amongst others in the project that will rent for market rate.
“At the end of the day, it may turn out better all the way around, certainly because of the ability to spread tax-credit units through the entire phasing,” Bonfield said of the deadline extension.