Affordable Housing Goals Update

Director Reginald J. Johnson| March 8, 2018

 Agenda
1. Executive Summary
2. Definitions and Process
3. Housing Data
4. Five Year Goals
5. Focus for FY18 and FY19
6. Resources and Results
7. Questions and Discussion

2
Executive Summary

3
Anticipated Results for FY18-19
 Plan and first phase of financing in place to redevelop Durham
Housing Authority (DHA) downtown properties; 356 DHA units
rehabilitated at three existing properties.
 Over 230 rental and for sale units completed or in process (new and
preserved)
 Over 40 owner occupied units repaired or rehabilitated
 New tools – Housing Trust Fund, Affordable Housing Incentives,
revised UDO
 New partnerships – city departments, GoTriangle, private and
community organizations

4
Projected Expenditures - FY18 and FY19
FY18 FY19
Goal 1
Partner with DHA on Redevelopments - 2,983,000
Support MF Rental Production/Preservation 5,221,977 2,500,000
Homeless Housing System Investments 957,237 1,020,785
Goal 2
Create and Preserve smaller scale units 2,032,375 2,293,370
Home Repair/Rehabilitation 696,348 845,000
Pilot Initiatives 10,000 60,000
Administration and Other
Section 108 Loan Payment 573,788 574,630
Code Enforcement 140,000 140,000
DCD Administration 597,753 584,647
County Collection Fee 64,236 56,966
Expenditures Total 10,293,714 11,058,399

5
Projected Revenues - FY18 and FY19

FY18 FY19
Federal Funds (HOME, CDBG, ESG, HOPWA) 3,520,426 3,393,000
Dedicated Housing Fund 5,871,644 5,696,616
Revenues Total 9,392,070 9,089,616
Revenues - Expenditures* (901,644) (1,968,783)

* Anticipated deficits to be filled by drawing down existing Dedicated Housing

Fund (DHF) fund balance, which as of June 30, 2017 was approximately $3.7
million.

6
Definitions and Process

7
Housing Affordability
 Rule of thumb is than households shouldn’t pay more than 30% of gross
household income on housing
• Mortgage, insurance and taxes
• Rent and utilities
 Affordable housing generally targets “low-income” households at or below
80% of Area Median Income
“Extremely Low” “Very Low” “Low”
Midpoint

0% 30% 50% 80% 100% High

INCOME
DISTRIBUTION
8
 2017 HUD Income Limits
Household Size 30% AMI 50% AMI 80% AMI

1 person 15,400 25,700 41,100

2 person 17,600 29,350 46,950
3 person 19,800 33,000 52,800
4 person 22,000 36,650 58,650

Housing Cost Burden

 Not cost burdened: Total housing costs represent < 30% of gross household income
 Moderately cost burdened: Total housing costs represent 31-50% of gross household income
 Severely cost burdened: Total housing costs represent >50% of gross household income

9
Timeline
Plan
Implementation

Homeless
City Council housing
approves two assessment
DCD cents for DHF 2017-2018
Reorganization June 2017
2016-2017
Five Year
Goal
Adoption
June 2016
Housing
Profile
Dec. 2015

10
Housing Data

11
Cost Burdened Renter Households
As of 2012, there were 19,500 low-income renters (42% of all renters) who were paying
more than 30% of their total income for housing. Almost 11,000 were paying over 50% of
their income for housing.
12,000

No Cost Burden Moderate Cost Burden Severe Cost Burden

10,000
701

Number of households
8,000 2,746

3,449

6,000
7,367

4,499
4,000

5,413
2,000
759
2,223
1,107
-
Low Very Low Extremely Low
12
Household income
Cost Burdened Owner Households
As of 2012, there were almost 7,800 low-income owners (15% of all owners) who were paying more
than 30% of their total income for housing. Over 4,000 were paying more than 50% of their income
for housing.

No Cost Burden Moderate Cost Burden Severe Cost Burden

8,000

Number of households
7,000 837

6,000
2,552
5,000

4,000

3,000
1,466
2,000 4,136
1,831
654
1,000
442
1,023
524
-
Low Very Low Extremely Low
13
Household income
Distribution of Severely Cost Burdened Low Income Households
Renter households: 11,141 Owner households: 4,287

14
Rental Housing Supply Gap
Citywide, there is a shortage of units affordable to extremely low and very low income
households.
Rental Affordability, by Income Group
160
142
140

For example, for every 120

100 100 100
100 renter households 100
with incomes below 80
79

30% AMI, there are 38

60
rental units that are
38
affordable to them. 40

20

0
0-30% AMI 0-50% AMI 0-80% AMI

# Households # Affordable Homes 15

Median Home Values

 Lowest median home values

(lightest color) are clustered in east
Durham, highest in SW Durham and
downtown.
 From January 2011-January 2018
median home values rose 21%, to
$196,000. Median listing price rose
77% in that same period, to
$282,000. (Source: Zillow)

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Five Year Housing Goals (FY18-FY22)

17
Affordable Housing in Context
Economic
Opportunity

Land Use

City of
Durham
FY18-FY22
Housing
Goals

18
Five Year Goals (FY18 –FY22)
1. Preserve and expand supply of affordable rental units
and rental assistance, with a focus on households <50%
AMI

2. Maintain affordability and protect very low-income

households in neighborhoods experiencing significant
housing cost increases

3. Engage the larger Durham community to make

affordable housing a citywide priority

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Goal 1: Preserve and Expand Rental Housing
Strategies
a) Work with the Durham Housing Authority (DHA) to stabilize and
improve existing housing and expand overall supply
b) Strengthen the homeless housing system → Homeless Housing System
Assessment and Recommendations
c) Produce green, affordable rental housing for households <50% AMI
d) Preserve existing rental housing for households <50% AMI
e) Engage market rate developers in producing affordable housing
through an enhanced density bonus

20
Goal 2: Maintain Affordability in Appreciating Neighborhoods

Strategies
a) Create affordable homeownership opportunities with long-term
income restrictions
b) Create smaller-scale, affordable rental options
c) Support existing low-income homeowners, though rehabilitation
and repair funds and expanded use of property tax relief
programs
d) Support neighborhood-led stabilization efforts

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Goal 3: Engage Larger Durham Community

 Leverage high levels of community and political support

 Potential strategies:
o Create community advisory group
o Explore community-based fundraising
o Engage faith community and/or other institutional players
(e.g. colleges, hospitals)
o Enlist volunteer support for housing organizations and
projects
o Other?

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Focus for FY18-FY19

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Goal 1: Produce and Preserve Rental Housing

1. Partner with the Durham Housing Authority (DHA) on creation of

downtown plan and redevelopment of DHA sites in downtown area
2. Support production and preservation of multifamily affordable units
3. Strengthen the homeless housing system → Homeless Housing
System Assessment and Recommendations
4. Support land use strategies to advance affordable goals: density
bonus, UDO review (joint strategy with Goal 2)

24
Goal 1: Produce and Preserve Rental Housing

Partner with DHA Downtown planning Phased downtown

process development strategy
on downtown with cost estimates -
plan and Oldham/Liberty 9% December 2018

Activities
Strategy

Results
redevelopment of LIHTC application
2019, including Funding in place for
DHA sites first phase – August
Transfer of rental 2019 (project
assistance – Jackson completion 2021)
Street 356 rehabbed
Rehab of Damar, extremely affordable
Morreene and Laurel rental units (June
Oaks 2019)

City Investment: $3.0 million in FY19

25
Goal 1: Produce and Preserve Rental Housing

Support Development on Southside – 58

City-owned sites – affordable units, Dec.
production and 2017
preservation of Southside, Jackson

Activities
Street Jackson Street – 82
Strategy

Results
multifamily rental affordable units, est.
City funding of 2020
affordable
Other developer
developer projects projects – 80+ units in
pipeline
Potential Housing
Trust Fund/Loan Housing Trust Fund
Fund) – also created (est. end 2019)
supports Goal 2

City Investment: $5.2 million in FY18 (includes $3.6 million for Jackson Street); $2.5
million in FY19, contribution of City land, additional capital for Housing Trust Fund TBD

26
Joint Strategy: Goal 1 and Goal 2

Support land use Affordable housing Effective density bonus

incentives (including and related incentives
and regulatory in place in future
strategies to density bonus) in
compact districts

Activities
future compact
Strategy

Results
advance districts Greater diversity of
affordable housing options
housing goals Remove regulatory encouraged citywide
obstacles to create (e.g. missing middle,
(City/County Accessory Dwelling
opportunity for a
Planning lead) wider range of Units)
housing choices Lower development
costs for affordable
units

27
Goal 2: Maintain Affordability in Appreciating Neighborhoods
1. Create and preserve scattered, smaller-scale rental and for sale
units in appreciating neighborhoods: SWCD, NECD, SECD, major
bus and future light rail transit corridors
2. Stabilize existing very low-income homeowners with
rehabilitation and repair assistance
3. Pilot new approaches to neighborhood stabilization, including
community-based stabilization and property tax outreach

28
Goal 2: Maintain Affordability in Appreciating Neighborhoods

Create and City funding for

preserve affordable Developer projects –
scattered, developer projects 40+ units in pipeline

Activities
Strategy

Results
smaller-scale Development on
Southside – 12 units
rental and for City-owned land –
in pipeline
sale units in Southside west,
other parcels TBD Acquisition fund
target
neighborhoods Potential acquisition created (establish
fund/land bank (also end of FY19)
Goal 1)

City Investment: $2 million in FY18; $2.3 million in FY19; contribution of land;

additional funds for Housing Trust Fund TBD.

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Goal 2: Maintain Affordability in Appreciating Neighborhoods

Stabilize existing Revamped minor 30+ owner occupied

very low-income repair program homes repaired
homeowners Substantial 10+ owner occupied

Activities
Strategy

Results
with rehabilitation homes rehabilitated
rehabilitation program up and Established
and repair running coordination among
assistance Increased repair providers
engagement and
coordination on
repair and
rehabilitation needs

City Investment: $696k in FY18; $845k in FY 19

30
Goal 2: Maintain Affordability in Appreciating Neighborhoods

Pilot new Support Community Volunteer-led repair of

Building through
approaches to Neighborhood
properties owned by
low-income
neighborhood Preservation Initiative

Activities
homeowners
Strategy
stabilization

Results
(NIS lead)
Support outreach to
increase utilization of
existing property tax
credits
Pilot Long Term
Homeowner Grant in
three neighborhoods
Increased utilization of
existing property tax
credits
Small grants for low-
income long-term
homeowners facing
property tax increases

City Investment: $10k in FY18; $60k in FY19

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Goal 3: Engage the Larger Durham Community

1. Build partnerships internally and externally to advance affordable

housing goals, such as:
• City/County Planning – Affordable Housing Incentives, expanding
housing choices
• Neighborhood Improvement Services (NIS) – Community Building Pilot
• GoTriangle – joint development opportunities
• Duke and other partners – Affordable Housing Trust Fund/Loan Fund

32
FY18-FY19 Resources and Results

33
Anticipated Results for FY18-19
 Plan and first phase of financing in place to redevelop DHA downtown
properties; 356 DHA units rehabilitated at three existing properties
 Over 230 rental and for sale units completed or in process (new and
preserved)
 Over 40 owner occupied units repaired or rehabilitated
 New tools – housing trust fund, affordable housing incentives, revised
UDO
 New partnerships – city departments, GoTriangle, private and
community organizations

34
Anticipated Results for FY18-19

By end of FY19
FY18-FY22 % of FY18-
Estimated Completed or FY22
Results in process Estimate

DHA rental units preseved - 356 n/a

Rental units created or preserved 450 218 48%
Homeownership opportunities created 150 12 8%
Owner occupied homes rehabilitated 50 10 20%
Owner occupied homes repaired 150 30 20%

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FY18 and FY19 Projects Summary
• Jackson Street
• Southside Homeownership - Phase II
• The Lofts at Southside - Phase III
• Homeless Housing System
• Multifamily Rental Preservation (multiple projects)
• Small Scale Rental Preservation (multiple projects)
• Minor Repair Program
• Substantial Rehabilitation
• Property Tax Relief Program

36
FY18 and FY 19 Projects Summary - continued
Partnership with Durham Housing Authority (DHA)
• Rental Assistance Demonstration (RAD) Conversion
o Morreene Road
o Damar Court
o Laurel Oaks
• Downtown Redevelopment Plan
o Oldham Towers
o Fayette Place
o Liberty Street
o DHA Central Office
o J.J. Henderson
o Forest Hills

37
Challenges
• Limited supply and high competition for most important rental housing
subsidy- 9% Low Income Housing Tax Credit (LIHTC)
o Current State allocation rules limit Durham to one 9% LIHTC most years
o LIHTC pricing has declined as a result of federal tax reform, resulting in
need for additional subsidy from other sources
• Limitations of affordable housing tools available to local governments
• Need to increase affordable housing developer capacity and build
project pipelines, especially for multifamily rental
• Need to consolidate internal City capacity, launch new programs and
increase coordination across departments
• Speed and magnitude of housing market changes

38
Projected Expenditures - FY18 and FY19
FY18 FY19
Goal 1
Partner with DHA on Redevelopments - 2,983,000
Support MF Rental Production/Preservation 5,221,977 2,500,000
Homeless Housing System Investments 957,237 1,020,785
Goal 2
Create and Preserve smaller scale units 2,032,375 2,293,370
Home Repair/Rehabilitation 696,348 845,000
Pilot Initiatives 10,000 60,000
Administration and Other
Section 108 Loan Payment 573,788 574,630
Code Enforcement 140,000 140,000
DCD Administration 597,753 584,647
County Collection Fee 64,236 56,966
Expenditures Total 10,293,714 11,058,399

39
Projected Revenues - FY18 and FY19

FY18 FY19
Federal Funds (HOME, CDBG, ESG, HOPWA) 3,520,426 3,393,000
Dedicated Housing Fund 5,871,644 5,696,616
Revenues Total 9,392,070 9,089,616
Revenues - Expenditures* (901,644) (1,968,783)

* Anticipated deficits to be filled by drawing down existing Dedicated Housing

Fund (DHF) fund balance, which as of June 30, 2017 was approximately $3.7
million.

40
If Additional Revenue were Available
• Support City’s investment in a Housing Trust Fund and/or
other leveraged loan funds for affordable housing
o Could be used to support acquisition of land and existing units for
creation/preservation as affordable
• Provide subsidy for large redevelopment projects – e.g.
Fayette Place, DHA redevelopments
• Expand resources for homeless housing system – Homeless
Housing System Assessment and Recommendations

41
Questions and Discussion

42