An experiment that’s been years in the making soon will transform land in downtown Durham into 82 affordable apartments.
City leaders, local investors and affordable-housing advocates broke ground Tuesday morning on the Willard Street Apartments.
The mixed-use development, which initially was called the Jackson-Pettigrew project, will rise on unused city-owned property next to the Durham Station Transportation Center on Pettigrew Street.
It’s a first-of-its-kind partnership in affordable housing that city leaders hope to replicate, said Mayor Steve Schewel. Planning for it began under former Mayor Bill Bell.
The apartment complex will fill a 1.25 acre, L-shaped piece of land the city obtained when it bought property for the Durham Station more than a decade ago.
The six-story building, which includes a two-level parking deck, four floors of apartments and commercial space, will face Willard Street. A future second phase could face Jackson Street.
Raleigh-based DHIC, which specializes in affordable development, is the lead developer of this project.
The Willard Street Apartments will be Durham’s attempt to keep downtown affordable for some residents, Schewel said.
“As a city and as a community, we’re putting a stake in the ground,” Schewel said. “We are making it clear that we are committed to ensuring Durham remains a community for people of all incomes and backgrounds.”
The development was envisioned more than five years ago when Durham CAN (Congregations, Associations and Neighborhoods) and others began asking for an inventory city-owned properties in walking distance of bus stops where affordable housing could be built. Willard Street was the location chosen for the first development.
Making the Willard Street Apartments mixed-use made it more attractive to Durham CAN’s Herbert Davis, senior pastor at Nehemiah Christian Church downtown.
“A development like this doesn’t have the stigma of other public housing,” he said. “We need more affordable housing in Durham, and this moves us in that direction.”
But it also made the development more difficult to finance, said Self-Help Credit Union Vice-President Tucker Bartlett. Self-Help is undertaking the ownership of the commercial space in the development, he said.
“An apartment building has straight-forward financing,” he said. “A development like this creates a more complex financing plan, but we were able to make it happen. We had to be innovative.”
Part of that was financing the commercial and residential separately, he said.
The Willard Street Apartments will cost about $21 million, project leaders say.
The city is donating the land for the development, which has an appraised value of $2.8 million, and will chip in an additional $3.6 million, The News & Observer previously reported. Duke University and the A.J. Fletcher Foundation committed to providing a $2.5 million to $3 million grant toward the project. The city also received tax credits, which are expected to create $9 million worth of equity toward the total development cost.
The U.S. Department of Housing and Urban Development describes the tax credit as “the most important resource for creating affordable housing in the United States today.”
The one- and two-bedroom apartments will be available for people who earn 60% or less of the area median income, or AMI, which for Durham is $28,313 for one person, $32,363 for two people and $40,425 for a four-person household. Twenty-one units will be offered to people making up to 30% of the AMI.
Durham County is following the city’s lead. It intends to construct affordable housing on two county-owned parking lots. County leaders announced their partnership with private developers to construct 355 affordable housing buildings on the 300 and 500 blocks of East Main Street. Construction could begin in late 2020 with completion about two years later.
Nearly a third of all households in Durham County spend more than 30% of their income on housing and utilities, according to the N.C. Housing Coalition. Among renters, it’s almost half.
Construction on the Willard Street Apartments will last about 18 months, with completion expected by the end of 2020, project leaders said.