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Developers Seek $5.4M In Gap Financing From City, County For Affordable Housing Project

By Cece Nunn, posted Oct 13, 2021
Starway Village would provide 278 units of affordable housing on Carolina Beach Road. (Rendering courtesy of New Hanover County)

City and county funding, in the amount of nearly $5.4 million, could be used as gap financing for a Carolina Beach Road affordable housing project if a development team's request is granted.

The New Hanover County Board of Commissioners is expected to discuss contributing $1.9 million in American Rescue Plan (ARP) funds to the financing during its meeting Oct. 18 at the request of developers proposing 278 apartments on the site of the Starway Flea Market.

The total request for the project, $3.5 million of which could come from the city of Wilmington’s ARP funds, would leverage nearly $54 million in tax credit equity and financing, according to a letter to County Manager Chris Coudriet from Suzanne Rogers, community development and housing planner for the city.

The Wilmington City Council at a meeting in September approved a rezoning request for the site of the redevelopment project, Starway Village.

The complex, at 2346 Carolina Beach Road, would include one- to three-bedroom apartments affordable to working households earning from $32,000 to $50,000 a year, depending on family size, Rogers wrote. Workers who could live there include hospital staff, teachers, law enforcement officers, restaurant employees and hotel staff, among others, she wrote. 

Starway Village developers with Bradley Development and Kelley Development Co. stated in their gap funding proposal, “To cut to the heart of the conversation, Starway Village’s gap funding needs are primarily caused by two items within our budget – the cost of purchasing the real estate and the cost of expanding Maryland Avenue through the project to Carolina Beach Road.

“As it relates to real estate costs, our $4.25M purchase price (~$15,000 per each of the 278 units) was driven by competition for the limited supply of undeveloped land in Wilmington, particularly for real estate proximate to commercial/employment districts.”

Asked about the particulars of the gap financing arrangements, Ted Heilbron of Kelley Development Co., said the details are not yet settled. "We are hopeful that both the city and the county will embrace this opportunity and look forward to working out the details with each of them," he said in an email.

The proposal provides further insight into the current real estate market.

“Our efforts to secure control of the former Starway Flea Market site were complicated by simultaneous interest from market-rate apartment developers, emblematic of how aggressively the market-rate apartment community is pursuing the balance of New Hanover/Wilmington land suitable for multifamily development (and driving up real estate costs in the process),” the developers stated. 

Rogers said Wednesday that the city has provided gap financing for affordable housing projects in the past, including Lockwood Village apartments off South College Road

According to a proposed county budget amendment, “While this would be the first time the county has provided direct gap financing funds for an affordable workforce housing project, the per-unit assistance that would be provided – $6,800 – would be in-line with other affordable housing initiatives and is less than the $10,000 per unit gap financing outlined in the proposed housing bond framework discussed at the joint city and county meetings.”

No matter what the New Hanover County Board of Commissioners decides at its meeting scheduled for 9 a.m. Oct. 18, the Wilmington City Council still has to consider and vote on the city's potential portion of the gap funding. The county received $45.5 million in ARP funds while the city was allocated $26 million. 

Rogers said she believes the pieces will come together for the Starway Village gap financing.

“Support for this project further demonstrates the collaboration between the city and county to address the significant shortage of workforce housing in our community,” Rogers stated in her letter to Coudriet. “The project will stand as an example of quality workforce housing developed through a partnership of government and the private sector.”

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