NHC Commissioners to consider doling out $3M in loans for affordable housing

NEW HANOVER COUNTY —The first in what will be years of public investments in housing will be considered on Monday.

The New Hanover County Board of Commissioners will view a proposal to give a pair of developers $1.5 million loans to build 152 housing units targeted at people who make less than the median income — about $69,000 in New Hanover.

READ MORE: NHC commits $15M to affordable housing, ditches $50M housing bond

County staff is recommending East Carolina Community Development and Terroir Development receive the loans. East Carolina is a nonprofit based out of Beaufort with a long list of apartment developments throughout the region, including Wilmington’s Cypress Cove Apartments. 

The company’s affordable housing project will have 68 units. Though full applications for the developers were not available in the meeting agenda packet, East Coast received approval for the project from the county in May. It’s to be located at 3120 Alex Task Dr.

The project targets seniors mainly making at or below 60% median income, though some will be available for people making even less. Seventeen of the units will be available for tenants making 30% median income and 11 will be affordable to those bringing in 50% of the median.

Terroir is based in Wilmington and the county planning board approved an affordable housing credit for its 84-unit project on Gordon Road in 2021.  

The firms have been awarded state tax credits from the N.C. Housing Finance Agency and the Terroir project includes handicap accessibility to all its facilities.

Both developers already have zoning and site plan approval and requested 20-year, $1.5 million loans with 2% interest rates from the county. The public contributions will only cover a small part of developer’s costs, as East Carolina’s project will run roughly  $15.4 million and Terroir’s total comes in at $18.2 million. The firms have both secured loans to cover the remainder of the cost.

Terroir’s development will be aimed at people earning 80% of the median income or less, and 21 of the units will be affordable to people at 30% of the median. For the lower-income units, Terroir development will accept Section 8 vouchers,  a program of the U.S. Department of Housing and Urban Development to assist “very low income families.” According to the N.C. Housing Finance Agency, federal tax credits are worth 9% of the qualified cost of a building.

The projects outranked four other proposals submitted as part of the county’s new workforce housing services program. The commissioners signed off committing a total of $15 over the next five years to supporting affordable housing in February and staff proposed a framework for the commitment in June.

The county’s first idea for affordable housing development was a $50 million bond package, but the commissioners threw away that idea before it made it to a ballot referendum. The bond tested poorly with voters when UNCG and the Wilmington Chamber of Commerce surveyed them because of the tax increase that comes with a bond issue.

A county and city housing survey estimages a gap of more than 23,000 housing units over the next 10 years.

The county put together a team to rank the applications taking into account financial feasibility, the quality of the projects based on zoning and materials and a good developer track record. Applications closed on Aug. 8 and a team of staff met Aug. 23 to evaluate the requests.

The presentation in Monday’s agenda  provides some rationale on why East Carolina and Terroir came out on top in the process. It notes Cape Fear Habitat for Humanity’s $1.5 million request scored well, but the cost-per-unit and percent of the project total too was high. The county also donated four of the lots to the nonprofit.

Supporting the $4.6 million, 17-unit project would have rung up $71,426 per unit for the county as opposed to $22,058 per unit for East Carolina’s development and $17,857 per unit for Terroir.

Fifteen of the 21 units with American Rescue Plan Act money to the tune of a $274,701 grant and $50,000 of additional grant money from the county. 

Wilmington Area Rebuilding Ministry requested $502,000 to make “urgent” repairs to 60 homes in the area over the course of two years. The committee decided it needed more information about the period of affordability for the housing to consider funding the project. The projects getting funding recommendations each have 30-year guarantees on their affordability via low-income tax credits.

Funding was not recommended for the Wilmington Realtors Foundation’s request because the project had an 80-120% median income range. The committee wrote the $250,000 unit cost “lessens the likelihood of short-term and long-term affordability for moderate income households.”

Cape Fear Collective’s application did not include a total project cost and the committee recommended strengthening the proposal’s budget, scheduling and site specifics.

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