DHA properties joining new HUD program

Apr. 29, 2013 @ 08:47 PM

Two of the Durham Housing Authority’s public-housing complexes are poised to become part of a national experiment that’s supposed to open new channels for it to raise money for their renovation and upkeep.

The authority wants to convert the Morreene Road and Damar Court apartments from traditional public housing into Section 8 rental units.

DHA would continue to manage them, but title to the properties would go to a new, private-sector entity that could mix and match different types of financing.

The approach is one the Obama administration, Congress and the U.S. Department of Housing and Urban Development are promoting heavily. They want the “rental assistance demonstration” project to take in 60,000 public-housing units nationwide.

For DHA, the motive for offering the 326 units in Morreene and Damar is simple and stems from the proven unwillingness of the federal government to appropriate enough money for major renovations.

“We need to be able to find a way to renovate these sites,” authority Chief Executive Officer Dallas Parks said. “We have $50 million to $60 million in capital requirements [across DHA’s entire portfolio] and are only getting $2½ million a year in capital funds.”

HUD officials in January said they’d offer an “initial commitment” accepting the 224-unit Morreene Road complex into the program.

Last week, the DHA board at HUD’s urging also agreed to offer Damar Court’s 102 units. The two complexes are adjacent to each other near Duke University. DHA acquired them from Duke in the late 1960s.

Parks said authority officials are also preparing applications to the program for two downtown public-housing complexes, Oldham Towers and Liberty Street. Between them, they include another 214 units.

Morreene Road’s inclusion in the program should facilitate an $8½ million renovation that will leave it looking “like a new site” and sustain it for another 20 to 25 years, Parks said.

Much of the money for the work would come from the private sector, from investors enticed to participate by a possible allotment to the project of low-income housing tax credits.

Also, the authority will “take a mortgage if we need to” to complete the financing, Parks said.

The concept is similar to the sort of public-private partnership the authority put together in the 2000s to fund the massive Hope VI redevelopment that replaced the former Few Gardens public housing complex in North-East Central Durham.

Damar Court’s financing likely won’t require tax credits because DHA has already done quite a bit of work to that property. There, “we will just get a mortgage,” Parks said.

The use of Section 8 rental subsidies will allow the current tenants of the affected complexes to continue living in them once they’re in the program.

HUD wants units in the program to cater to low-income renters who pull down less than 30 percent of the area’s median income, Parks said.

Two outside observers said the authority’s interest in participating in the initiative clearly stems from the dilemma it faces in trying to preserve its housing stock in the face of federal budget cuts.

“Given the fact we’re facing the loss of more and more federal money that would maintain and renovate our housing communities, we have to fund a way to do that and keep them affordable,” said City Councilman Steve Schewel, the city’s liaison to DHA.

“They have an aging housing stock,” added Ryan Fehrman, executive director of Genesis Home and a local affordable-housing activist. “They’re going to have to get creative and this is Mr. Parks thinking outside the box for how to move forward.”