gronberg@heraldsun.com; 419-6648
DURHAM -- City Council members on Thursday committed $65,000 to the planning of a new development in the Rolling Hills area, and appear likely to follow up early next month by adding another $355,000.
The money will cover the shortfall that opened when a private-sector developer, St. Louis-based McCormack Baron Salazar, couldn't come up with funds to help pay for the planning work.
City and McCormack Baron officials still intend to go through with the project and want to complete the up-front planning by May, in time to apply for tax credits and other financing.
They estimate that about 70 percent of the work will be done by January, in time to give preliminary documents to the N.C. Housing Finance Agency.
The city had previously earmarked $325,000 to planning, in the expectation of seeing that matched by McCormack Baron, and has spent millions buying up privately held land at the Rolling Hills site off Lakewood Avenue.
But "we are where we are and, hopefully, we'll move forward in a positive fashion," Mayor Bill Bell said. "I think this is the start of a good process."
The St. Louis company tried to raise its share of the planning money from local interests instead of committing its own cash. But its fundraising fell through last year when the economy tanked.
The two sides, city and company, hope to develop about 250 units of rental housing around Rolling Hills and the adjoining Southside neighborhood.
The Self-Help credit union, meanwhile, is buying up properties in Southside and hopes to build about 40 owner-occupied houses in conjunction with the project.
Self-Help's construction director, Roger Childs, told council members that while his company controls nearly 85 lots, its leaders think it's too risky to try developing them "without a much bigger plan that redevelops the whole neighborhood."
In comparison with other parts of the city, "there's so much violence, there's so much drugs and there's no homeownership," Childs said.
The idea is that building the new rental units would stabilize the area by improving public and business-community perceptions. Bell and other council members stressed that whatever gets built there has to be at least as good, quality-wise, as the new homes the city built in North-East Central Durham in the Eastway Village project.
But in addition to the obvious business risks, city leaders would likely have to commit to the project most of the grant revenue they expect to receive from the federal government over the next few years to build or repair housing.
Larry Jarvis, assistant director of the city's Community Development Department, said it would probably take $15 million to "get to that tipping point" where the neighborhood would begin to attract private investment.
He also acknowledged that there's "no capacity" on the city's part to borrow money with the expectation of paying it back from local tax revenues. That means relying on federal housing money, or on a $31.2 million federal economic-stimulus grant officials hope to land.
Council members acknowledged that from the grant standpoint, there will be little left over for other housing projects if they go ahead with building at Rolling Hills.
But Bell said the council's philosophy in such matters is to target "those neighborhoods that are most economic distressed." The Rolling Hills and Southside area "meets that criteria," he said.
Thursday's vote on committing the additional $65,000 was a 6-0 decision, unanimous except for Councilman Farad Ali, who was absent from the special meeting.
City Manager Tom Bonfield said a vote on the remaining planning money will follow on Oct. 5.
