Tax credits denied for Whitted School project

Aug. 26, 2013 @ 09:37 PM

Officials at the N.C. Housing Finance Agency turned down a request for tax credits that would fund the proposed conversion of the former Whitted Junior High School into low-cost homes.

The Whitted application was one of two the agency considered for a Durham based project. It did fund the other, which would place 60 low-cost units on a now-vacant site near Hope Valley Farms.
County officials were aware of the decision and consider it a temporary setback for the Whitted project.
“That’s an annual kind of thing,” County Manager Mike Ruffin said, noting that the state agency considers tax-credit applications every summer. “If you remember, they said it’s not a guarantee. It sometimes takes two or three cycles before those come through.”
The county owns Whitted School and is working with an Atlanta developer, the Integral Group, on the redevelopment of the site. Integral’s plan combines 89 homes with a pre-school run by the Durham Public Schools.
Ruffin’s point about it sometimes taking several tries to secure N.C. Housing Finance Agency approval of tax credits for a project recalled the city government’s experience with the nearby Rolling Hills project.
State officials in 2010 did in fact turn down the first request from McCormack Baron Salazar, the city’s private-sector partner on Rolling Hills. They approved the second, in 2012.
Integral Vice President Daryl Jones wrote county, city and DPS officials late last week to ask for a round of consultations on what to do next.
Jones said the company was “extremely surprised and disappointed” by the state agency’s decision but still sees Whitted as “a very viable project.
“We need your continued support now, more than ever,” he told officials. “Let me assure you that while this is a significant bump in the road, it is only that: a bump in the road. We feel extremely confident that a ‘bad case’ scenario is that our project is delayed one year.”
Jones also said it appeared that rules involved in the state review process “clearly put Durham at a disadvantage to other counties.” He did not elaborate, but the Housing Finance Agency does allot credits on a regional basis.
It also reserves a portion of the credits for the state’s two largest communities, Wake and Mecklenburg counties, and uses a quota system that allows it to fund more projects in them.
Five Wake County and two Mecklenburg County projects received tax credits for 2013. The agency also awarded credits to two projects each in New Hanover, Rowan and Wilson counties.
The tax credits are a key part of the financing for many housing projects that cater to low-income renters. The credits entice private-sector lenders to invest in projects; the lenders in turn get the tax write-off.
Integral had asked for an award of $710,000 in tax credits, and was figuring to use it to attract several times that more in private-sector investment.
It has indicated that the planned redevelopment should cost about $21.1 million. Jones in March told the City Council tax credits would generate about $7.2 million of that.
The project budget also relies on $1.5 million from the county, $5 million from DPS and $500,000 from the city.
The Hope Valley Farms-area project that did receive credits, Vermillion, targets a 10.4-acre site off Cook Road. Its developer, Jim Yamin, plans to build 60 townhouses.
Yamin’s plan is a scaled-down version of one he sought City Council zoning approval for in the spring. He then hoped to build 83 apartments; neighborhood objections prompted the reduction.
The Housing Finance Agency awarded Yamin’s project $450,000 in tax credits plus an additional $800,000 loan designed to ensure its 60 units are affordable to families who make up to 60 percent of the area median income.