Durham Hosiery Mill refinancing in the works
City officials appear likely to assist a mortgage refinancing for the Durham Hosiery Mill that will free up money for the historic property’s maintenance.
The $2.3 million deal will lower interest payments on the mill’s first mortgage and spin off about $330,000 in excess cash to be escrowed against future repair bills, Community Development Department officials say.
The City Council has to help by subordinating to the first mortgage about $2.8 million in loans it originally extended to the project in 1986. Members have scheduled a vote on the request for Jan. 7 and are expecting no controversy.
The mill was renovated in the late 1980s and now serves as low-income housing for elderly people and those with disabilities. The money the city put into the project orginally came from the federal government and, though labeled a loan, was actually more of a grant.
It’s “highly unlikely that much of that will ever be paid back,” Community Development Assistant Director Larry Jarvis said of the city’s $2.8 million contribution to the renovation.
The city does receive a 15 percent share of the mill’s surplus cash flow. Its end is expected to amount to about $10,904 a year.
The Durham Hosiery Mill dates from the early 1900s and stands close to the corner of Angier Avenue and East Main Street. It was the flagship of a chain of textile mills that also included what today is Carrboro’s Carr Mill Mall.
At various times it’s also served as a tobacco-drying warehouse, a National Guard armory and a flea market, according to a history compiled by Durham preservationist Gary Kueber.
The 1980s renovation turned the interior of the complex into 151 apartments while preserving its exterior, including an ornate tower that faces Angier Avenue.
Kueber’s history, posted on his “Endangered Durham” blog, noted that the renovation had been controversial among regulators at the U.S. Department of Housing and Urban Development.
At the time, HUD staffers opposed placing “senior housing 40 feet from a railroad track in a former industrial building that might contain hazardous material in an ‘unsafe, deteriorated neighborhood,’” Kueber said.
Support for the project from HUD’s then-secretary, Samuel Pierce, sufficed to overcome the staff opposition. Pierce, an appointee of President Ronald Reagan, had once been a law partner of a Durham mayor, Charles Markham.
Project backers wound up financing the renovation with a $5.4 million loan from the HUD-controlled Federal Housing Administration and the $2.8 million the city put in.
The loan package was restructured in 2002 to head off a bankruptcy. The mill belongs to a shell corporation controled by a Massachusetts company, HallKeen Management Inc.
Since 20002, it’s operated on “generally a break-even basis,” Community Development Director Reginald Johnson said.
The new refinancing “puts the project on stronger financial ground,” among other things by lowering the rate on the FHA-held first mortage from 7.65 percent to 2.8 percent, Jarvis said.