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Real Estate - Residential

With Tax Help Comes Some Affordable Housing

By Cece Nunn, posted Sep 23, 2016
Robert Campbell (from left), ECCDI chairman; David Maurer, architect with TightLines Designs; and Keith Walker, ECCDI president, are shown at the opening of Eastport at the Park apartments in Beaufort. (Photo c/o ECCDI)

The developers of a planned apartment community at 5025 Carolina Beach Road hope to get started on the 80-unit project by March.

But Woodridge Pointe, where rents will be well below market rate, wouldn’t have been able to move from the planning stages without Low-Income Housing Tax Credits. 

The credits are especially important, officials say, in areas like Wilmington, where housing and land costs are outpacing wage growth and the need for housing that doesn’t cost more than 30 percent of a resident’s income is a growing concern.

Connelly Development was awarded $605,000 in federal tax credits this year, the N.C. Housing Finance Agency announced recently. Of the seven Wilmington-area projects that had submitted preliminary applications for the credits, only Woodridge Pointe received them.

“We’re excited about coming to Wilmington and providing this housing,” said Bill Chamblin of Connelly’s development division. “I think it will be a good addition to the neighborhood and the community.”

Richard Cotton, managing director of Multifamily Realty Advisors and a commercial broker who specializes in the sale of apartment communities and apartment development sites, said his firm represented Connelly Development in connection with the land acquisition for Woodridge Pointe. Cotton called the tax credits “perhaps the most important resource currently available for creating affordable housing in the United States.” 

The credits offset the cost of building apartments for developers, which then allows them to charge tenants less than the current market rate. Rents at Woodridge Pointe will be $569 for a one-bedroom apartment, $689 for two-bedrooms, $779 for three bedrooms and $838 for four bedrooms, Chamblin said.

In 2011, Connelly Development was awarded nearly $849,000 in credits to build Westgate Senior Apartments in Leland, according to the N.C. Housing Finance Agency. The agency’s lists of funded projects in the state show that no newly planned apartment communities in New Hanover County had been awarded the tax credits since 2013, when 60-unit Lockwood Village on South College Road received them in the amount of $540,000.

In addition to Woodridge Pointe, the rehabilitation of Greentree Apartments, to be renamed Spring Branch Apartments, was also awarded credits, in the amount of $816,440. 

The developers of a project called Cypress Cove, a 200-unit apartment building on 14 acres at 621 Emory St., received a tax-exempt bond with a $14 million volume and 4 percent in federal tax credits. 

“We’ll use that as a way to leverage an investor and conventional debt to build out an approximately $26 million apartment complex,” said Keith Walker, CEO and president of East Carolina Community Development Inc. (ECCDI). 

ECCDI is a not-for-profit 501(c)3 agency that applied to the state and worked with Wilmington Housing Authority CEO Katrina Redmond and the city of Wilmington to get the Cypress Cove project funded.

“We’ve been working on this for about two years now. It took us time to find a tract of property that was available that we could build on,” Walker said, adding that ECCDI was helped in the search by Adam Nicholas, a real estate broker with KW Commercial Realty in Wilmington.

A lack of affordable housing, Walker said, can affect a community’s ability to attract new employers.

“The No. 1 issue in economic development across the region is affordable housing,” he said. “And East Carolina Community Development has been a leader in affordable housing since 1990.”

The agency currently has about 800 units, in Carteret, Craven and Onslow counties. Cypress Cove will look much like Eastport at the Park Apartments in Beaufort, Walker said.

The option to rent an apartment at a lower rate can give more people the chance to live in a community where market rate rents rise above $900 and $1,000. Rents at Cypress Cove will range from $635 to $859. 

“Just being able to pay for day-to-day goods and maybe a car takes the average worker out of the ability of owning a home,” Walker said. “I really suspect in places like eastern North Carolina, not just Wilmington, you’re going to see more and more efforts to build more affordable rental housing.” 

The city of Wilmington and New Hanover County have been placing a greater emphasis on affordable housing solutions, forming a task force to tackle the issue. 

The Cape Fear Housing Coalition, in conjunction with the University of North Carolina Wilmington, recently released the results of a survey that was offered online and on paper copies throughout the community. A large percentage of the 659 respondents asserted that affordable housing would have a positive impact on the economy but come with a price of increased traffic. 

They generally endorsed the idea that finding quality affordable housing was challenging for several different groups (those with incomes less than $24,000, young adults, families with children and renters), and 80 percent of respondents asserted that an affordable monthly housing payment would be less than $1,000.

“I think this survey is a great start and hopefully will lead to a more comprehensive study of some kind here in the Cape Fear region on housing,” said Paul D’Angelo, chairman of the Cape Fear Housing Coalition and a member of the city-county task force.

In August, the N.C. Housing Finance Agency announced that tax credits and bonds were approved for 59 projects by the N.C. Federal Tax Reform Allocation Committee, based on recommendations from the finance agency, from 172 applications that were received.

The Wilmington-area tax credit competition consisted of two proposed projects of new construction in Brunswick County and two proposed projects of new construction in New Hanover County. The proposed Spring Branch Rehab and Cypress Cove bond projects were not part of the tax credit competition, Cotton said.

“New Hanover County and Wilmington are very fortunate to have three affordable housing projects to receive funding this year,” Cotton said. “Unfortunately, for the first time in many years, Brunswick County did not receive funding this year.”

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