WILMINGTON — The Wilmington City Council voted to increase its return on investment on a public housing project last month, despite the developer telling council the result could affect the project.
At its Aug. 18 meeting, council approved $2-million in gap financing of Dawson Lofts II, though with double the interest rate than proposed after a push from Mayor Pro Tem Kevin Spears. Though council was overall supportive of the project, Spears’ terms only passed 4-3, with David Joyner, Cassidy Santaguida and JC Lyle dissenting.
Dawson Lofts II will erect in the place of Dawson Lofts I. Some of the units were damaged in 2018’s Hurricane Florence, so the new complex will tear down those units and replace them alongside dozens of additional units. The 24-unit community will become an 86-unit complex on Dawson Street.
The Wilmington Housing Authority is working with Blue Ridge Cascade on the $28.46-million project and has already applied for federal assistance through the Low Income Housing Tax Credit.
The project’s funding breaks down as follows:
- $12.8 million mortgage at a rate of 5.9% through Freddie Mac
- $10.7 million in tax credits
- $658,167 in investment contributions
- $900,000 in capital contribution for the land
- $905,388 in developer fee, deferred
Sam Weldon, vice president of development at Blue Ridge Cascade, confirmed a contribution from the city would be the last barrier to green lighting the project.
WHA’s original request to the city was for $2.5 million, though this was reduced to $2 million; city staff recommended $1.5 million after taking into account $660,000 the city previously provided to WHA for the purchase of property at Jervay Place, located near Dawson Lofts. Additionally, the city has around $3 million in affordable housing funds in this year’s budget.
Still, Weldon renewed the request for $2 million at a 1% interest rate to be paid back to the city. Council member Santaguida questioned what would happen if the city provided $500,000 short of what Weldon said the project needed and if there were other funding sources.
Weldon told council New Hanover County and the New Hanover Community Endowment are two other options, though Weldon deemed the city a more viable partner.
“We’ve experienced firsthand that housing is really not a priority right now with The Endowment; New Hanover County has been, I guess, maybe one-off investing into a deal that has a small percentage of workforce housing,” Weldon said.
Pointing out the city’s leverage over the project moving forward, Mayor Pro Tem Spears said he would like to see either more units dedicated to lower incomes or a higher interest rate on the project.
The units will be offered to residents making below the area median income, which in New Hanover County is around $75,000; 17 units will be offered at 30% AMI, 23 units at 50% AMI, 31 units at 60% AMI and 15 units at 80% AMI. Additionally, 10 units would be fully ADA accessible.
Spears wanted to shift more units to the lower AMI categories, but Weldon explained doing so would require more subsidies for the project and a reworking of the federal assistance application WHA has already submitted.
Weldon again renewed his request for $2 million at 1% interest, which would be $15,000 versus $30,000 at 2% interest, the project team would need to repay the city.
“I think everybody here, whether you lived here for a week, a year, or before Hurricane Florence, you’ve driven down Dawson Street, and these families deserve better, and we know that, and that’s why we’re here and partnering with WHA,” Weldon said.
Council member Joyner also pointed out the long waiting list for Wilmington Housing Authority units that can only be alleviated through building more units.
Lyle said she didn’t think it would be fair to ask WHA and Blue Ridge Cascade for a higher interest rate, pointing to a comment she received when she sat on the Wilmington Planning Commission.
“One of the executive directors of a local homeless group that’s in the housing coalition, came up and said, ‘We have to admit, we have to look and behave as if our community is desperate for affordable housing. We’re desperate for affordable housing, and we have people standing here willing to do it,’” Lyle said. “To jack this rate, which is going to impact the rents because that’s just the way the math works, I just don’t think that’s right.”
When Spears countered Weldon had jacked up his ask, Lyle said they, in fact, reduced it from $2.5 million.
Spears maintained his stance, motioning for approval with $2 million at 2% interest. When council member Cassidy Santaguida asked Weldon if he could make the project work at a 2% interest rate, he said he could make a 1.5% work.
“I do think the 2% could potentially have an impact on this project,” Weldon said.
Spears put forth his motion anyway; council member Salette Andrews tried to amend the motion with a 1.5% interest rate, though Spears rejected this. The motion passed with Spears, Andrews, Mayor Bill Saffo and Chakema Clinton-Quintana in favor.
After the vote, Port City Daily asked WHA how the project would be impacted by the 2% raise on Aug. 19; two days later, a spokesperson referred Port City Daily to Weldon, who did not respond.
Port City Daily asked WHA again to respond to the question on Aug. 25; six days later a spokesperson told Port City Daily the 2% interest rate would not impact the project.
Per Weldon’s comments at the council meeting, the developer is looking to begin construction on Dawson Lofts II in the first quarter of 2027.
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