The North Carolina Housing Finance Agency awarded the Chapel Hill affordable housing project Re-Imagine Trinity Court over $10 million.
The award, a nine percent Low Income Housing Tax Credit, will pay for about 70 percent of the development cost of the project.
According to the agency, this credit allows building owners the ability to take a tax credit equal to about nine percent of the "qualified cost" of building or rehabilitating a property.
Samantha Brown, the vice president for real estate development at Community Housing Partners, said if a housing developers receive credits, the credits can be sold to investors. Investors can then use the credits towards federal income taxes.
To be eligible for these credits, investors must keep rents affordable for a period of 15 to 30 years for families and individuals with incomes at or below 80 percent of the local median income, according to the North Carolina Housing Finance Agency.
Faith Brodie, Chapel Hill's public housing director, said the Town collaborated with Community Housing Partners due to the organizations experience, longevity and portfolio of previous developments.
She said Chapel Hill Public Housing submitted an application to receive the Low Income Tax Credit for Trinity Court in 2020.
“Those that seem to have a public-private partnership tend to do a little bit better in securing that type of funding because it’s the type of thing that the North Carolina Finance Agency wants to support,” she said.
Brown said the awarded tax credit makes it possible for developers to build affordable housing at Trinity Court.
“Without that $10 million plus, it would not be possible to put 54 units of affordable housing in Chapel Hill,” she said. “It just couldn’t happen any other way.”
Brown added that the project could have applied for the non-competitive four percent tax credit, but that it would have only provided enough equity to cover 30 percent of the project's total development costs.
She said construction on the project is expected to start around June 1, 2023, and be completed at the end of 2024.
Brodie said the tax credit award will reduce project costs of construction, development and architectural engineering.
According to the Chapel Hill Affordable Housing website, the new Trinity Court complex will serve residents making up to 80 percent of Chapel Hill’s area median income. Brodie added that the project will expand the previous 40 housing units to 54 housing units.
Trinity Court was vacated in 2018 due to leaking issues and structural deficiencies. Brodie said an initial architectural assessment revealed that rehabilitating the property would cost $6 million.
She said that the Town Council asked its Public Housing Department to research alternative options for the space, such as selling the land or tearing down the complex.
At that time, Brodie said she stumbled upon the Rental Assistance Demonstration program that is organized by the federal Department of Housing and Urban Development.
“So you go into this RAD program and one of the ideas that they offer is this private-public combination,” she said. “A private developer signs up to partner with the public housing authority to plan on how to do the redevelopment.”
Brodie said that initially, there were a lot of disheartening thoughts in the community because land in Chapel Hill is prime real estate and the Trinity Court property has been sitting empty since 2018.
“Once we got this award, once it was announced that we received this grant, I think that people are a lot more optimistic that we are going to be able to do something that is not only functional but beautiful and will make low-income families feel good about where they’re living, as opposed to being resigned to where they are living based on what they can afford,” she said.
Chapel Hill Town Council member Adam Searing said there is a huge and growing need for affordable housing in Chapel Hill.
“We have a lot of folks, especially very, very low-income folks who cannot afford to live here but we are asking them to work here as well,” he said.
He added collaboration between the Town, private industry developers and the federal and state governments is necessary to advance affordable housing opportunities in the Town.
Searing said Trinity Court is located within walking distance of University areas, downtown Chapel Hill and Umstead Park.
“It’s a place, I think, regardless of your income, you would be happy to live there in Chapel Hill,” he said. “If we have the opportunity to make and rebuild this affordable community there, then that’s just a huge win for everyone I think.”
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