Monday, April 22, 2024

Government trifecta gap-funds $14.4M for Starway’s affordable housing project

Starway Village will be an incoming apartment complex at the existing flea market off Carolina Beach Road. (Port City Daily/Alexandria Sands Williams)

WILMINGTON — Local affordable housing has received a major financial boost from the state government, after the city and county committed money earlier in the year from ARPA funds.

With the final push of a $9-million grant from the North Carolina Office of Recovery and Resilience, a group of collaborators are touting Starway Village as the largest public-private affordable housing partnership statewide. It will receive a total $14.4 million in gap funding to bring 278 workforce housing units to the area.

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

“I think everybody’s looking at this thing in a partnership way — what we can do to all collectively use our resources to come together to help some of these [projects] get funding, especially on tax credit projects that we will see in the foreseeable future,” Mayor Bill Saffo said in a meeting Tuesday with local media.

Both the City of Wilmington council and New Hanover County commissioners voted last fall to use funds from the American Rescue Plan Act — $3.5 million from the city and $1.8 million from the county. It’s the first affordable housing collaborative the two municipalities have partnered on.

Bradley Housing Developers, LLC and Kelley Development Company will break ground on Starway Village by next May. Kelley Development Company’s Ted Heilbron said Tuesday he estimated 20 months to complete construction.

“We wish we could make this go faster,” Heilbron said. “But, unfortunately, it’s a large development and takes time.” 

City and county leaders on the Workforce Housing Advisory Committee commissioned in 2020 the Bowen National Research Report, which pointed to the county needing to add 460 units per year to keep up with growing demand — equaling more than 10,000 units over the next decade.

From 2010 to 2020, the area was averaging only 40 units a year — roughly 397 total — yet saw growth from 202,698 to 225,702 people living in the county. In 2018, when Hurricane Florence hit, the affordable housing need was exacerbated. According to the city, lower-income households were affected when at least 1,200 rental units were damaged, such as Jervay and The Glenn, both shuttered after the storm.

NCORR awarded $23.3 million last week from its Affordable Housing Development Fund to three municipalities to help provide funding for “multi-family rehabilitation and construction outside of the 100-year floodplain,” according to a press release from the North Carolina Department of Public Safety. Money was awarded for projects in Morehead City and Greenville, also impacted by hurricanes Matthew and Florence.

Starway Village will take in multi-family and single-family tenants that make 60% of the average median income — or approximately $30,000. By applying for 4% Low-Income Housing Tax Credits from the North Carolina Housing Finance Agency, it’s targeting teachers, emergency responders, healthcare workers, and others as tenants.

The rendering of Starway Village, slated to welcome residents by 2025. (Courtesy photo)

The tax credits will allow the developer to keep rent affordable — expected to start at $750 for a one bedroom — as compared to traditionally financing the $59-million project through a debt service. Costs have already increased since Starway Village was pitched in April 2021, due to inflation on materials and increased interest rates. Heilbron projects a 30% rise.

“Interest rates have more than doubled and that impacts our ability to borrow private funds to help build the project,” he added. “So when your costs are going up, and your cost of capital is also going up, in the nature of what we do, and we’re not increasing rents … it creates holes in the funding for the projects.”

Heilbron was clear, without all three government entities’ help, Starway Village “in its current form” would not be possible. It would have to downsize, lowering its units, and by proxy, reducing the impact on the community.

The $9 million from NCORR offered the project a lifeline because the grant is more flexible.

“From the cost of acquiring the land to the cost of pre-development, zoning, inspections, things like that, as well as the cost of vertical construction, we are able to supplement where other funding sources might have more restrictions,” NCORR director Laura Hogshead explained in the meeting.

Starway Village will take up 15.6 acres, purchased for $4.4 million, according to previous Port City Daily reporting. Currently, the site is home to the Starway Flea Market and was once a drive-in movie theater in the mid-20th century. A $1 million road extension of Maryland Avenue to Carolina Beach Road will need to be completed as part of the site plan as well.

The complex is integrating existing infrastructure and will be centrally located to grocery stores, restaurants, medical and recreational facilities. Located at 2346 Carolina Beach Road, the apartments — with 20 fully accessible ADA units — are expected to be rented within six months.

Government officials on the call Tuesday are looking at Starway Village as a model of inspiration moving forward. Around 235,000 people currently live in the county borders, with over 314,000 projected to move in by 2040.

Currently, there is only 18% land, or a little over 24,000 acres, undeveloped in New Hanover, a majority in the northern part. Infill development is starting to take shape for other areas, such as midtown’s Bradley Heights

“We’re looking forward, here at the county, to have additional money set aside by the board of commissioners, $15 million over the next five years, where we can fund projects like [Starway Village] again in the future,” New Hanover County senior planner Rachel LaCoe said in the meeting. “This year alone, our $3 million investment will, in addition to this project, bring 152 units of affordable housing for two other low-income housing tax credit projects. They’re a little bit different of a structure.”

Saffo said, for a year now, the city has been working with developers to put 10%, 15% or 20% of units in “the affordable range and keeping them locked in for about 15 years.”

He also mentioned the city’s new land development code essentially reduced the density by-right, but allows exceptions for developers who include an affordable housing component.  

“I think it will pay dividends in the long run,” Saffo said.

With less land in the city’s 51 square miles, the mayor pressed upon the need to further creativity in the housing market, such as adding accessory structures, like garage apartments and mother’s quarters.  

“It’s very important, I think, to understand that there’s no one magic bullet solution to providing safe, decent, affordable housing in our communities,” City of Wilmington community development housing planner Suzanne Rogers added.

She noted the city’s investment in Canopy Point — a senior housing development project that will provide 72 homes to senior citizens. “We will continue to work with smaller investors and also folks who are interested in homeownership, as well as work with existing homeowners,” Rogers said.

While NCORR could work directly with developers, Hogshead said banding with local municipalities is preferred because the benefit is more pinpointed.

“If we are approached by others who are interested in funding for projects, we always look to make sure that they have strong support from their local government units — because local government folks, we believe, know what’s needed in their communities better than we can assess,” she said. 

Catch up on all of PCD’s Starway Village coverage here

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Shea Carver
Shea Carver
Shea Carver is the editor in chief at Port City Daily. A UNCW alumna, Shea worked in the print media business in Wilmington for 22 years before joining the PCD team in October 2020. She specializes in arts coverage — music, film, literature, theatre — the dining scene, and can often be tapped on where to go, what to do and who to see in Wilmington. When she isn’t hanging with her pup, Shadow Wolf, tending the garden or spinning vinyl, she’s attending concerts and live theater.

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