Fayetteville City Council approves affordable housing projects

By Stephanie Meador, posted Aug 9, 2023 on BizFayetteville.com

Image courtesy of Shangri-La Industries and Step Up

Following a study conducted in 2021, it became clear that there is an extreme need for affordable housing in Fayetteville for low-income residents. Since then, there have been new policies and procedures implemented to allow for more development partners and smaller scale rental developments, as well as exploring how government funds can be used to develop affordable housing projects. All of that work over the past 13 months built up to a proposal to the City Council of affordable housing projects in the pipeline.

Fayetteville Economic & Community Development Director Christopher Cauley presented five affordable housing projects to the City Council during a work session on Aug. 7. The Council approved four of the proposed projects and voted to table the fifth for the time being.

The four approved projects were the following:

Step Up on Eastern - This nonprofit plans to convert the Night Inn on 511 S. Eastern Blvd. into supportive housing in the form of 137 single room occupancy units. The project requires $3.4M in the form of a zero percent interest forgivable loan with a term of 20 years. Funding for this project would come from a special allocation of HOME funds that is limited to this purpose. Additional funding in the amount of $2M from ARPA will assist with startup and supportive services but leaves a gap for that purpose. The project is also planning to seek support from the County for supportive service funding and the Fayetteville Metropolitan Housing Authority (FMHA) for rental support in the form of project based vouchers and other assistance such as Housing Choice Voucher referrals.
- Todd Lipka, CEO for Step Up, was present at the work session and advocated for Step Up’s plans to convert the Night Inn into supportive housing. One of Step Up’s specialties is motel conversions: “What we do is convert the motel unit into a studio apartment, we add a kitchenette, we do a complete refresh and turn it into permanent housing and when I say permanent housing, it's actually permanent supportive housing, because we provide on staff support services that help individuals make the transition from living on the street and sleeping on the street, to sleeping in a bed,” remarked Lipka at the meeting.
- Step Up reports a 98 percent retention rate with this supportive services model.
- “This is significant for city council and for our community, because…this is permanent supportive housing, which means that people will live there for as long as they need to, and they get support from mental health services and case managers to build the skills that they need to live on their own if they're able to…So it is a very, very different thing than [what] Fayetteville has right now, and it gives us an opportunity to take 137 people off the street,” remarked Cauley.
Fayetteville Gardens - Orbach Affordable Housing is a nationally recognized private developer proposing to rehab 100 units of family apartment rentals that are 40 years old. The property is located at 2915 Gordons Way (off of Raeford Rd.). This project seeks to address ADA accessibility, energy efficiency, and much needed repairs. This project has already secured affordable housing with a 20 year contract with HUD for voucher support. The project requires a $1.25M loan and the terms of the loan are not yet set but would likely be in the form of a two percent interest loan with a balloon payment at the end of 20 years. The developers requested ARPA funding.
- Cauley shared that though this project is not adding additional affordable units it is still a valuable effort for assisting the residents of Fayetteville in affording a comfortable life. “We get the opportunity to really make a beneficial impact and make the place handicap accessible, to bring it up to current day standards and so that's something that challenged me a little bit to to look at it that way and say you know, it's not just about adding more units, sometimes it's about increasing people's quality of life,” stated Cauley.
Hillside Manor - Hillside Manor-FMHA, LLC is a privately owned affordable housing development (associated with FMHA) in need of substantial repairs to address health, safety, and accessibility. Funding in the amount of $1.8M will come from the City’s annual allocation of HOME funds, the terms of the loan are not yet set but would likely be in the form of a two percent interest loan with a balloon payment at the end of 20 years.
- “We need to spend that money to help people and to do housing projects. So it helps the city out just as much as it helps the housing authority for us to invest in that property, upgrade the ADA access, bring it up to current day standards and impact those 36 households with the seniors in them,” said Cauley as he explained why this project was an appropriate choice for these HOME funds.
S. Cool Spring St. - Innovative Builds, Inc. is a private developer producing 8 rental units by renovating an existing property. The property has previously been declared a nuisance property by the City and substantial rehabilitation is needed to bring it up to current requirements. Funding in the amount of $400k will come from the City’s annual allocation of HOME funds, the development requires a two percent interest loan fully amortized over 30 years.
- This project, like the Step Up project, is unlike any project the city has done before. “What we're looking to do is for that [property] to be like the impetus to change in that neighborhood. So we're not looking to gentrify because we're looking to make that change happen with affordable housing as one of the key pieces of it, but you know, you're going from vacant lots and dilapidated structures to newly refurbished rental property, and then we can start moving down the street and building on those empty lots and capitalizing on the money that we have for affordable housing,” remarked Cauley.

The fifth project that was tabled was the Blanton Green II project. The City loaned this development $380k in 2009 with HOME funds. The current term of the loan is for 20 years at two percent interest with a balloon payment at the end of the term. The primary mortgage matures on Nov. 1, 2033 but the City’s loan is currently due to be fully repaid. The property management company is requesting that the City extend its loan terms to match the primary mortgage. If the City does not extend, the management company will have to refinance all the debt, resulting in a higher interest rate. This would in turn cause them to increase rent.

The work session can be viewed in its entirety at the following link https://www.youtube.com/watch?v=MeeUBfZTSlw

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