Durham working group recommends 80 affordable units at 505 West Chapel Hill; council signals support for structured parking and summer developer selection

A volunteer working group and city staff told Durham City Council on March 20 that the city-owned site at 505 West Chapel Hill Street can competitively host an 80‑unit affordable housing project under North Carolina Housing Finance Agency (NCHFA) 9% low‑income housing tax credit (LIHTC) rules, but doing so will require subsidy and fast action.

The group’s recommended approach — labeled the preferred scenario — places five stories of wood-framed apartments atop a two‑story concrete podium (structured parking). Working-group members said that configuration preserves the largest remaining contiguous parcel for future development while meeting the scoring priorities in the current NCHFA Qualified Allocation Plan.

"Affordable housing at 505 is a strong candidate for a LIHTC award," said Ketty Telmac, a working-group member, summarizing the team’s conclusion that the site would score highly under current rules. Finance lead Greg Warren told council the project would likely need roughly $4 million to $6 million in gap subsidy from the city and other partners to deliver the initial 80 units.

Council members focused on two trade-offs: cost now versus flexibility later. The cheaper option — surface parking — would reduce upfront subsidy but risk encumbering the land and making later redevelopment or a second phase more difficult under LIHTC regulatory and financing constraints. "If we put a surface lot there, there's a risk that we would not be able to transition that lot into other uses in the future," the working group warned.

Several council members responded that preserving future development options mattered. "We don't want to take high-value land in the middle of the city and encumber it with parking," one council member said, backing the podium scenario. Others asked staff to confirm whether a reduced parking ratio could be negotiated with NCHFA given the site's transit access; staff said NCHFA has previously granted waivers but requires project‑by‑project negotiation.

Timing was central. The working group recommended the city select a qualified LIHTC developer by July 2026 so that the developer could prepare a detailed plan and submit a January 2027 LIHTC pre‑application. Staff said the city expects roughly $4.9 million in potentially available housing funds for the next fiscal year (about $4.0 million in dedicated housing fund plus an estimated $975,000 in HOME‑eligible funds), and that a formal commitment for LIHTC gap funds would be needed by May of the application year.

Council members asked staff to convene potential subsidy partners and to return with a concrete plan for meeting the July developer‑selection timeline if possible. Preservation North Carolina, which is negotiating an option to purchase the adjacent Milton Small Building, told the council it would bring any proposed buyer and a rehabilitation agreement back to the city for review before finalizing a sale.

What happens next: council members and staff agreed to refine the timeline and funding plan. Staff was asked to prepare proposed procurement and developer‑selection steps, work with preservation partners on the Milton Small Building agreement language, and report back with specific documents for council review. The council did not take a formal binding vote on a redevelopment contract at the meeting but provided a clear direction to pursue the podium (structured parking) approach and to accelerate developer selection this summer.

Provenance: The working-group presentation and council discussion occur in the meeting transcript beginning with the redevelopment presentation (topic intro SEG 1049) and continuing through follow-up discussion and preservation conversation (topic finish SEG 4296).