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Market study: mid‑rise development at former DMV site not currently financially viable; staff to issue RFI
Summary
Planning staff reported that demolition is about 50% complete and that a market study found mid‑rise apartments would produce negative land value under current market conditions; staff recommended issuing an RFI, fast‑tracking smaller State Street parcels and exploring subsidy options including tax credits and project‑based vouchers.
City planning staff updated the council on the former DMV site and a market‑study analysis that complicates the city’s goal of achieving transit‑supported density and significant affordable housing on the block.
Ken Bowers, planning staff, said demolition and abatement on the site are about 50% complete and that staff are planning temporary activations including a community cookout on May 30 and quarterly anchor events. On market feasibility, Bowers summarized the consultants’ findings: lower‑density townhouses generate positive land value in the current market while mid‑rise multifamily prototypes — the typical drivers of transit‑oriented density — would produce negative land value today unless additional subsidy or a rare 9% low‑income housing tax credit were secured.
Bowers said one modeled scenario showed roughly $4.3 million of positive land value generated by a townhouse component that could offset negative values in mid‑rise buildings; he also cited a projection that building a city‑funded parking deck could cost about $11.2 million but would improve overall project viability.
Staff recommended issuing a request for information (RFI) to gauge market interest and potential partners, considering a smaller near‑term RFP for two State Street parcels that are financially viable today, and exploring financing options such as 4%/9% LIHTC and project‑based vouchers with the Raleigh Housing Authority. Bowers said an RFI approach is low risk and would inform a later RFP if market conditions improve.
Councilors asked about outreach to adjacent institutions (for example, Martin Street Baptist Church) and whether an affordable‑housing bond or revolving loan model would change feasibility; staff said those tools were worth exploring.
Next steps: staff will issue an RFI tailored to the DMV site, pursue community engagement on the State Street parcels, and further analyze financing tools and phasing options.
