Leery council pursues contract with developers of planned apartments, wants guaranteed affordable housing

Plans are proposed to build affordable housing on the Starway Flea Market property. (Port City Daily photo/Alexandria Sands Williams)

WILMINGTON –– Wilmington City Council tabled a rezoning decision Tuesday that would allow for new apartments at Starway Flea Market. The city is aiming to reach a contractual agreement with the developers it has never worked with before, to ensure the land is rezoned back to commercial if they fail to deliver affordable units.

Typically, council could approve the zoning change contingent upon the land being used only for affordable housing through a conditional district rezoning, which requires applicants to specify what they are building prior to receiving approval. However, due to a time crunch in qualifying for state funding, the applicant is seeking a general rezoning from commercial to multi-family residential.

READ MORE: Rezonings, conditional rezonings, and special use permits, what’s the difference?


Council members were cautious about what would become of the 15.6-acre property if the workforce housing project was denied state funding, and the land was then zoned for dense housing. Mayor Pro-tem Margaret Haynes suggested the developers could either resell the property at an elevated value or move forward with a costly community.

“We just all want to make sure we get affordable housing,” Haynes said, “and that we don’t get another one of these sort of semi, God-awful massive apartment buildings at market rate that a lot of people can’t afford.”

Council member Kevin O’Grady said the site “cries out to have a conditional district,” which would give the council insight into building heights, traffic plans and other details ahead of approval.

Design Solutions’ Cindee Wolf, who is applying for the rezoning on behalf of the property owner, explained obtaining conditional approval would prolong the process. She said the developers would likely miss their deadline to submit the state tax credit application, making the affordable housing project unattainable.

“Maybe you should have started earlier,” Haynes suggested.

The plans

Known as the Starway Flea Market, the land in question currently hosts vendors and shoppers on weekends. The site historically acted as a drive-in theater, accommodating up to 700 cars, from 1955 to 1985. The flea market opened soon after and has continued to operate since.

Bradley Housing and Kelly Development are now eyeing the site as the next undertaking in their joint venture to establish workforce communities in the southeast. Plans for the property include 278 affordable housing units, with a mixture of one, two and three bedrooms. The community would target the local workforce earning 60% of the area’s median income.

Wolf suggested there is no interest in developing the land for commercial uses. She believes the property is underutilized considering its proximity to the bus line and walkability to businesses.

O’Grady quickly spoke against the project as a straight rezoning. He had questions about what exactly would be built, the guarantee of an affordable housing component, the height of structures and especially traffic management.

“We don’t know any of that,” O’Grady said. “How can we possibly approve this? I’m, like, a hard no right now. I’m going to be hard to convince.”

Wolf argued the project would still abide by general standards laid out for multi-family housing in the city’s land development code and would still address the impact on surrounding neighborhoods. Since conditional zoning is more “task intensive and time-consuming,” she said, that raised concern about finalizing their North Carolina Housing Finance Agency’s Low-Income Housing Tax Credits application by end of the year.

She also pointed out that the council does not hear conditional district petitions around municipal elections, which may delay approval until 2022.

“What if you don’t get the tax credit project? Now we’ve done a general rezoning and made this available for residential development and no conditions and no affordable housing,” O’Grady questioned.

He and councilman Neil Anderson were frustrated with not being able to clearly see what the project would entail. Anderson asked for pictures of similar projects –– “We’re like Kindergarteners,” he said –– while O’Grady was largely concerned with funneling drivers through an adjoining neighborhood. Wolf reiterated a traffic impact analysis was underway.

“We need some sort of more significant guarantee then, ‘Hey, we’re good guys and we’re gonna do it. Trust us,’” Haynes said.

Council members reiterated they wanted the affordable housing project to come to fruition but were hesitant to blindly trust the developers, which several said they have never worked with before; however, Wolf is a regular at meetings.

“I don’t want to beat you up like everybody else did and say that I don’t trust you. I think, on all of the other council meetings when you bring something before us, we trust you. So I trust you tonight,” councilman Kevin Spears said, though he added that he hoped no one tries to “dupe” council.

Government funding

Kelley Development Company’s Ted Heilbron expressed confidence to council in securing funding for the project via a 4% low-income housing tax credit and tax-free bond allocation, which is not competitive compared to the 9% tax credit, he said.

“If your project pencils, you will get funded,” Heilbron declared.

In the last two decades, more than 3,500 of these 4% units have been built across the state, according to Heilbron’s presentation; only 200 are in Wilmington. Heilbron partially attributed the port city’s low total to its shortage of available land.

The flea market is also located in a U.S. Department of Housing and Urban Development qualified census tract that is eligible for an extra 30% allocation of tax credits, Heilbron said. He said that provides a $5- to $6-million boost in funds the project needs to materialize.

Heilbron added that he believes the flea market is the only 10-plus acre site in Wilmington’s qualified census tracts that is available and suitable for apartments.

“To bridge the housing gap here in Wilmington, sites in the QCT, like ours, must be capitalized on and cannot be lost to market-rate development,” Heilbron said.

Drafting a contract

City council agreed unanimously to continue the agenda item, and push the public hearing to Sept. 21, to allow time for the city attorney’s office to pen a contract with the applicant and property owner. The agreement is expected to mitigate any worries that the developer would turn around and build a use permitted by right in multi-family residential other than affordable housing.

The contract, as described by city attorney John Joye, would require the property owner to notify the city if it intends to sell the property or the applicant to disclose if the project is denied the necessary state funding.

Joye said if it received that notice, the city council could then initiate a rezoning to return the land to the original community business and commercial services districts.

However, Joye warned the notice contract is an “imperfect assurance” because if the developer initiated a legal use, the use would be grandfathered in, or if development approval –– such as a building permit –– is obtained, they would have vested rights.

“I don’t believe that would be very likely,” Joye said. “But council would be taking a lesser –– but still a certain –– amount on faith.”


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