Durham, North Carolina

A City of Thriving, Livable Neighborhoods

Business View Magazine profiles Durham, North Carolina, a city of 250,000 in North central North Carolina, approximately 25 miles northwest of Raleigh.

In 1701, the English explorer, John Lawson, called the area which was to become Durham, North Carolina, “the flower of the Carolinas.” Originally inhabited by the Eno and Occoneechi Tribes, the land was settled during the mid-1700s by Scots, Irish, and English. Over time, Durham and its surrounding counties became well-known for the region’s mild and flavorful tobacco grown and processed by the Bull Durham Tobacco Company as well as firms owned by Washington Duke and his family, which were, one day, to become the world’s largest tobacco manufacturing conglomerate.

In the early 20th century, Duke Power (now Duke Energy) began bringing in electricity from the hydroelectric dams in the western mountains of North Carolina, through the newly-invented technology of high voltage power lines. The early electrification of Durham also helped encourage a growing textile industry located just outside the city. Drawing a labor force from the economic demise of single family farms in the region at the time, these textile mills soon doubled the population of the city.

In the 1950s and ‘60s, what is now the world’s largest university-related research park, Research Triangle Park, was carved from Durham pinelands as a special Durham County tax district. 170 major research and development companies, including Bayer, GlaxoSmithKline, IBM, Underwriters Laboratories, and agencies such as the EPA, employ more than 39,000 full-time employees there. Today, the population of Durham is about 252,000, with 543,000 residents in the four-county Durham-Chapel Hill Metropolitan area.

With the waning of the tobacco and textile sectors toward the latter part of the last century, coupled with the increased migration of retail institutions and population to its surrounding suburbs, Durham’s downtown began to decline. However, in recent years, the city has stepped up its downtown revitalization, spurring an economic and cultural renaissance. Partnering with private developers, Durham continues to revive many of its former tobacco districts – projects supplemented by the construction of the $47 million, city-owned, Durham Performing Arts Center (DPAC) and the new Durham Bulls Athletic Park (DBAP). The American Tobacco Historic District, adjacent to both the DBAP and DPAC is one such project, having successfully lured a number of restaurants, entertainment venues, and office spaces geared toward hi-tech entrepreneurs, investors, and startups. Additionally, many of the historic tobacco buildings elsewhere in the city have been converted into loft-style apartment complexes, bars, entertainment venues, art studios, and co-working spaces.

“So now, there’s a thriving population of residents in the downtown area,” says Reginald J. Johnson, Durham’s Director of Community Development. But while newcomers are beginning to fill the market-rate units downtown, Johnson’s office is more focused on the ring of neighborhoods surrounding the downtown core, directing its services especially to low and moderate income citizens who need financing and other housing services in order to fully claim their part of the city’s redevelopment agenda. “Our mayor didn’t want just a successful downtown,” Johnson says, “but also wanted to have some of that spillover occur in a positive way to the neighborhoods adjacent to and surrounding the downtown area.”

One such community redevelopment initiative under the aegis of the Department of Community Development is the Southside Revitalization Project. “This is a project that includes the building of mixed-income apartments, as well as single family homes in a neighborhood that had suffered from disinvestment with dilapidated and boarded-up houses, vacant lots, and very low homeownership rates,” Johnson explains. “Similar to the strategy in revitalizing Durham’s downtown, our goal was to make strategic investments in that neighborhood so that the private market would eventually come in and build on its own. Prior to the City’s investments, a person could not come in and build a house and sell it for what he or she built it for because of the challenges in the neighborhood.”

“In addition, the City owned a 19-acre site that, over the past 20 years, had had two failed developers. The city had to foreclose on the second developer and subsequently owned major portions of the site with along with approximately 50 other individual owners,” Johnson continues. “The question was, in this near-downtown neighborhood, was there any other way we could create an environment where private dollars could come in to help us reinvigorate it? So, we began buying out the other owners in order to gain control of the entire site, and we worked with the leadership in the community and decided to come up with a multi-pronged approach that included the creation of some high-quality apartments using Low-Income Housing Tax Credits. The unique thing about those 132 units in 12 buildings is that 80 of the units are affordable and income-based while 52 units are at market-rate.

“The project needed to be positioned to attract people who enjoy housing options as well as provide quality housing for people who were living on a fixed-income or at a low to moderate income level. The City of Durham selected a nationally regarded developer – McCormack Baron Salazar – that was successful in being awarded tax credits. The developer advised the City that for this project to be successful it needed to have a larger footprint and that larger footprint included an adjacent neighborhood – the Southside Neighborhood. The City partnered with Self-Help, a North Carolina-based, national, Community Development Financial Institution (CDFI), who purchased lots in this neighborhood. The City then purchased lots from Self-Help and developed a plan to build about 48 houses using local dollars and a portion of federal entitlement dollars. The use of those federal funds required that at least fifty-one percent of the houses be sold to persons of low and moderate income as defined by the U.S. Department of Housing and Urban Development (HUD). The balance of those units could be sold to anyone who wanted to buy and reside in a house in that area. The City selected two builders to build those houses, market them in partnership with our Department, and sell them. We’re pleased to report that all 48 lots have been contracted and 44 households have closed on their houses and are living in them right now.”

Of the 24 existing homeowners, nine decided to participate in the substantial rehabilitation of their homes at no cost to them so their houses would complement the new houses being constructed. “We temporarily relocated them while their homes were being rebuilt, and then they moved back in,” says Johnson. Shepherd Smith, a Project Manager in the Community Development Department adds: “We also included two replacement homes for two income-eligible homeowners in that neighborhood, whose houses were deteriorated beyond repair and therefore could not be cost-effectively rehabilitated.”
The Department of Community Development also makes sure that the houses in its portfolio are affordable by providing “layered financing.” “If a potential Southside homebuyer has an income defined as low to moderate, they qualify for their primary lender’s first mortgage, and would be assisted with three or four supplemental mortgage loans ranging from zero to two percent interest to ‘layer’ with that first mortgage financing. Underwriting guidelines, developed by the Department of Community Development, govern the process making a path for moderate income families to affordably purchase their homes.”

John Murphy, another Project Manager, further explains the Department’s additional housing services for potential, lower-income buyers: “Unlike traditional market-rate borrowers, sometimes low to moderate-income borrowers may need additional time and guidance in becoming ‘mortgage-ready’. Some first-time buyers may not even believe that they can have homes. The Department of Community Development has housing counseling services available to work closely with potential buyers to help counsel them to improve their credit, lower their debts, and save for down their payment and closing costs. Our certified housing counselor spends time working with those borrowers to meet the families’ goal of owning their own homes. And sometimes, we have to cultivate and develop them because they don’t always come knocking at the door. It’s not always self-evident that a person will be able to purchase a home.”

Another of the City housing initiatives in Southside is the Piedmont Rental Project. “This is a project element where the City partnered with a non-profit organization, Durham Community Land Trustees (DCLT), to rehabilitate some small City-owned houses and duplexes that are now rented to veterans,” says Johnson. “Between The Lofts affordable rental developments and our completed homeownership development were a row of boarded-up and vacant houses that have been stylishly rehabilitated into permanently affordable rental units dedicated to below 30 percent area median income households who are often the hardest populations to house. Many of the first tenants were homeless veterans.

“In Southside, the City used a U.S. Department of Housing and Urban Development (HUD) designation called Neighborhood Revitalization Strategy Area (NRSA), which is not terribly common for cities to use. Part of the uniqueness of this project is that it used a HUD Section 108 loan – essentially borrowing funds against future Community Development Block Grant (CDBG) allocations. And that up-front loan enabled a lot of the critical infrastructure to be put in place for the overall project components in the Southside Neighborhood Revitalization Strategy Area.”

Rounding out the Southside revitalization project is the conversion and expansion of a long-vacant historic high school building into 79 units of affordable rental housing for seniors. “The Whitted School is another collaborative partnership the City of Durham entered into with the Durham Public Schools and Durham County who owned the boarded-up three story structure,” Johnson noted. “The Whitted School is historic both because of its circa 1922 architecture, but also because it was the City’s first high school built to educate African Americans. The strategic investment in Whitted took an eyesore that was a drag on the neighborhood and is turning it into a positive; a completely refurbished multi-generational facility combining elderly housing with 11 pre-kindergarten classrooms to be operated through the Durham Public Schools.” The City invested $600,000 of federal funds into the project, along with investment by Durham County and the Durham Public Schools. The developer, the Integral Group of Atlanta, leveraged an allocation of Low Income Housing Tax Credits and Historic Tax Credits to help fund the approximately $23 million project.

In addition to the Southside project, Johnson highlights an ongoing relationship the City of Durham has with Habitat for Humanity, the well-known, nonprofit housing organization. “Another positive neighborhood development initiative we’re proud of is a partnership with Habitat for Humanity,” he says. The Department works together with Habitat to revitalize another area-adjacent to downtown, North East Central Durham. “The City provides second mortgages at zero percent interest for the homes that Habitat builds or rehabilitates and then sells to low- to moderate-income first time homebuyers.” North East Central Durham has a 61 percent poverty rate and has had many homes in need of major repair, vacant lots, and boarded-up and abandoned houses. “Going back to its founding in Durham in 1986, Habitat has produced approximately 350 new build or rehabilitated homes in that targeted area,” he adds.

Another housing development outside of Durham’s Southside revitalization that is widely recognized, is a housing development known as the Denson Apartments for Veterans. Community Development Director Johnson explains further: “Denson Apartments for Veterans are two apartment complexes developed separately on the same site in partnership with a non-profit development organization called CASA.”

“CASA is the acronym for Community Alternatives for Supportive Abodes,” says Project Manager Smith. “They have several hundred units that they’ve built, own, and manage in Raleigh, North Carolina, and several years ago, they came to Durham. They provide permanent housing for formerly homeless persons with disabilities. For Denson I and Denson II, CASA was primarily targeting homeless veterans with disabilities because there’s a shortage of veteran housing in Durham. Denson is named after a retired federal judge, Alex Denson, who is an advocate for homeless populations and also served on CASA’s board for many years. The project is built on less than two acres and consists of two phases. Phase I provided 11 one-bedroom apartments, a community room and some outdoor space. That development is completed and fully occupied at this moment. Phase II is nearing completion with a projected September 2016 opening, and will provide 12 additional, one-bedroom apartments for veterans.”

Johnson proudly states that Durham’s Department of Community Development projects have been recognized with awards from the National Community Development Association as well as the North Carolina Housing Finance Authority for its continuing efforts in providing affordable housing, home financing, neighborhood revitalization, and other supportive services to Durham’s low to moderate-income population, which, under the city’s Strategic Plan, is designed to ensure that the “flower of the Carolinas” continues to have thriving, livable neighborhoods for all of its citizens.

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AT A GLANCE

WHO: Durham, North Carolina

WHAT: A city of 250,000

WHERE: : North central North Carolina, approximately 25 miles northwest of Raleigh

WEBSITE: www.durhamnc.gov

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