The fallout continues from the U.S. Department of Housing and Urban Development’s audit into the activities of the Durham Housing Authority. In the latest reversal for the DHA, the agency has admitted that its attempts to convert the former Fayetteville Street public housing project into a privately owned affordable apartment complex have failed. Many of the problems the HUD audit discovered at DHA involved the Fayetteville Street project.
“The deal is not going to close,” Robert “Bo” Glenn Jr., housing authority board member, said to the Durham Herald-Sun. “Given the present environment, I don’t see a private investor coming in — not with the cloud hanging over it.”
In a complex series of transactions, the housing authority in December 2002 sold the public housing complex for $1 to Fayette Place LLC. Fayette Place, in turn, was owned by two nonprofit subsidiaries of the housing authority. The transfer was made to obtain federal tax credits for developing low-income housing. The bulk of the $12.5 million needed to remodel the non-air conditioned, boxy brick-and-concrete public housing units into modern Victorian-style duplexes would have come from mortgage revenue bonds and private investors.
The principle force behind Fayette Place was James Tabron, then DHA’s executive director. In April 2003, Tabron was forced to resign from the public housing agency for charging $12,500 in personal purchases, including a $1,750 gold ring for his daughter, to the agency’s credit cards. Discovery of Tabron’s unauthorized credit card purchases also prompted the HUD audit.
It has since come out that Tabron was also engaged in self-dealing. Tabron ran a consulting business on the side with Troy Chapman, director of the Chester County, Pa., housing authority. Chapman was to be paid a $450,000 “developer’s fee” upon completion of the Fayette Place project.
The HUD audit uncovered more than $5 million in questionable spending by DHA. It also recommends that the federal agency take over control of DHA, freeze spending on a $35 million federal housing grant Durham received, and discipline certain officials.
Even before the release of the audit, the Fayette Place project was in trouble. The sluggish economy had put downward pressure on rents generally, making it difficult for the authority to attractive private investors to the project.
The housing authority has spent more than $1 million on the project. To what degree it is liable for an additional $1.3 million in pending and disputed charges remains to be determined.
To make matters worse, DHA moved families out of Fayetteville Street in anticipation of remodeling the property, aggravating a public housing shortage in the city. The Herald-Sun reports that only 43 of the 200 units are occupied. Twenty of those families didn’t pay their rent in May. Even with only limited maintenance being done, the complex lost $20,000 during the first five months of the year.
Charlotte to scrap housing bonus?
The city of Charlotte is considering dropping plans for a so-called “density bonus” for developers that build affordable housing.
“We just didn’t see that we were going to be able to garner a huge impact,” City Council member Pat Mumford told The Charlotte Observer.
Charlotte, like many other jurisdictions, limits the number of new houses that can be built per acre. A density bonus is a higher maximum density for developers that agree to build lower-cost housing. The theory is that by spreading the fixed cost of land over more houses, the cost of each resulting new home would be lower.
Charlotte leaders cite a number of reasons for their lack of enthusiasm for a density bonus in the city. The city’s affordable- housing policy is focused on ensuring an adequate supply of rental housing, not the creation of new low-cost single family homes. Indeed, neighborhood groups point out that there is no lack of lower-priced homes in the city.
Charlotte already has a housing trust fund. The fund has allocated $23 million to build more than 1,800 lower-cost housing units. The idea of the density bonus was originally proposed by the same study group that suggested the trust fund.
City staff also notes that density bonuses have been only moderately effective in other cities. To achieve a major increase in lower-priced new-home construction, mandatory set-asides would be required. City Council has shown little interest in exploring that concept.
Chapel Hill alcohol rule change?
Chapel Hill officials are examining the possibility of amending the town’s alcohol ordinances to allow restaurants to sell alcohol at tables on public sidewalks.
Since 1995, the town has allowed restaurants with the appropriate permits to set up tables and chairs on public sidewalks provided a six-foot wide path remained clear.
There is one type of menu-item that can’t legally be served at these tables though: alcohol. State law when the town ordinance was adopted allowed alcohol sales only within inside barriers “of sufficient integrity.” The town’s regulations still apply this standard, despite a subsequent change in state law.
Robert Poitras, owner of the Carolina Brewery on West Franklin Street in Chapel Hill, notes that restaurant can now serve drinks at street-side tables in Raleigh, Wilmington, Charlotte, and Asheville.
“We think Chapel Hill would benefit from this because the downtown is losing businesses to Southpoint Mall and to Raleigh and Durham,” Poitras said to the News & Observer of Raleigh. “We just want to be able to sell alcohol in a responsible manner. We would limit the hours. But it’s the summertime, and people want to be outside.”
At least one town official is sympathetic to Poitras and other restaurant owners. “I think it’s a good idea,” Mayor Kevin Foy told the newspaper. “I think there’s a way we can work it out.”
Mike Lowrey is associate editor of Carolina Journal.