WILMINGTON — Two years after residents of an affordable housing complex were given less than 30 days to vacate, Driftwood will be up and running again to serve as permanent housing for the chronically homeless and those with disabilities.
A collaborative effort to combat the already minimal stock of residential options, Cape Fear Collective, Good Shepherd and Norco Management will relaunch the 15-unit affordable housing complex. Located at 3820 Princess Place Drive, it will undergo extensive renovations with the goal to open by early 2023.
Cape Fear Collective, a nonprofit collecting and using data science to generate systemic change in the community, purchased Driftwood apartments for $1.2 million in May 2021 — just four months after private nonprofit Wilmington Housing and Finance Development announced the complex would be sold.
APG Capital, Raleigh-based owner of the building managed through WHFD, told media last year it was putting the complex on the market because it had become too costly to maintain. According to WECT, the rent money WHFD collected wasn’t covering the building’s expenses.
To develop Driftwood 16 years ago, the company utilized low-income tax credits to reduce the taxes a developer owes in exchange for agreeing to maintain housing at affordable rates for a certain period of time. It has since had to pay back part of the funds, since the complex was sold before its 20-year commitment expired.
APG also received a $250,000 grant from the U.S. Department of Housing and Urban Development prior to construction of the units.
“It’s unusual for a provider to tap out after 15 years,” Good Shepherd executive director Katrina Knight said. “The norm would be to keep it for the 20-year or 30-year agreement period, but they wanted out.”
The 12 tenants residing in the units at the time were told they had less than 30 days to vacate and find a new place to live.
Knight said she fears many were “lost to the streets” or ended up paying market rates they couldn’t afford for housing.
“They didn’t have the wherewithal to know, who to call for help or ask: ‘Where do I go?’” she said. “It was like yanking the rug out from under them.”
Good Shepherd was one of many local organizations, along with the Cape Fear Housing Coalition and the City of Wilmington, fighting on behalf of residents.
“At a time when we are so short on housing overall, particularly affordable housing, with folks with the fewest resources, even losing 15 units, which sounds modest, is a real crisis,” she said. “It’s important we were able to figure out someone that could intervene and rescue those units.”
Two residents “dug in their heels,” Knight explained and refused to leave their apartments. When Cape Fear Collective offered to purchase the building, Knight requested they be allowed to stay; the collective agreed.
She added former tenants who apply for housing on the property will take priority when the units open again.
Renovations will begin this fall, according to Cape Fear Collective CEO Meaghan Dennison. All major systems, she said, will be replaced and the interior of each unit will receive a full facelift: new floors, paint job, replacement of major appliances — “high-quality work.”
Dennison explained she will soon announce the detailed scope of rehab needed, as well as the chosen contractor and estimated costs, likely more than originally planned for in 2021 due to inflation.
The purchase of Driftwood was made possible through Cape Fear Collective’s social impact investments, launched last year, with an initial $2.5-million backing from Live Oak Bank. Cape Fear Collective Ventures is a social impact investment “aimed at raising capital to scale solutions in affordable housing and transportation challenges,” according to the organization.
Since then, other corporate banking partners and “high net-worth individuals” have contributed $17 million. The money is used to purchase and rehabilitate housing, provide gap financing to homebuyers and assist with rent or a mortgage for low-income individuals and families — making less than $45,000 for affordable housing and up to $65,000 for workforce housing.
“Investors are able to invest in the platform, it allows us to purchase properties at a competitive market rate and investors get a nominal return and full redemption over time,” Dennison explained.
Cape Fear Collective currently owns just over 100 affordable housing units, mostly in New Hanover County. It entered a joint venture with Brick Capital Community Development Corporation on one housing project in Lee County.
While Cape Fear Collective acted as the “catalyst” to get Driftwood off the market and preserved as supportive housing, it will not be involved in day-to-day operations.
“We are not housing experts or should or want to be providing those services,” Dennison said.
That’s where Good Shepherd and Norco come into play.
Norco Management oversees more than 1,000 affordable properties in North and South Carolinas. It will run the daily operations of Driftwood, including rent collection and maintenance issues.
Good Shepherd — one of the largest providers of homeless services in the region — will be the first point of contact for potential residents.
All tenants will be referred through the Tri-County Homelessness Interagency Council’s Continuum of Care entry process to screen for eligibility. Good Shepherd will hire a full-time social worker for onsite services that will be offered to assist tenants with life skills — such as ensuring transportation is available for appointments and grocery shopping
“I fully expect, just like other permanent supportive housing all around the country, these 15 residents, in very short order, will experience improvements in physical health, mental health and an overall sense of well-being,” Knight said.
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