The Fayetteville City Council on Jan. 12 voted unanimously to authorize amended loan documents that temporarily subordinate the city's HOME-program loan so the Aubrey Hills affordable housing project can borrow gap financing to finish construction.

City staff and the developer told council the project, originally planned at 52 units and later scaled to 32, is fully affordable and had drawn $858,000 against a $2,145,000 city commitment. Rising construction costs left the developer seeking roughly $500,000 more; staff said a smaller $350,000 loan would be placed ahead of the city's lien to allow timely completion.

"If we don't do this, the project could enter into financial distress or potentially foreclosure," Economic and Community Development staff said during the presentation, noting the total project is about $10,000,000 and the city's HOME loan remains in a subordinate position relative to primary financers under typical practice for affordability projects.

Council asked for clarifying numbers. Staff confirmed $858,000 has been drawn to date, leaving $1,287,000 on the city's committed loan; the requested priority loan is $350,000 of an approximately $500,000 borrowing plan the developer is pursuing.

Supporters said the city routinely fills financing gaps on projects intended to preserve workforce and affordable housing. "We're here to help fill the gap to make projects work where affordability is secured," a staff presenter said.

Councilmember Green moved to authorize execution and filing of the amended loan documents; the motion was seconded and carried unanimously.

The city will record the subordination and continue monitoring the development under existing HOME-program oversight and state monitoring tied to tax-credit and other investors. Staff said the city will continue annual monitoring of the 11 HOME-designated units tied to the city commitment.

Next steps: staff will finalize the amended loan documents and file recorded instruments as required; council did not set additional conditions on the authorization at the meeting.