Last year, the county halted its five-year, $15 million affordable housing plan. Officials cited budget constraints and the affordable housing initiatives from the Endowment.
Now, the money for the new investment pool will come out of the county’s Revenue Stabilization Fund. The RSF is a fund of about $300 million created by the sale of New Hanover Regional Medical Center.
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The approval of the investment fund doesn’t mean the county is increasing density or approving more new housing development proposals. The fund takes existing development projects that might otherwise go ahead with private financial lenders and offers an alternative route to funding.
It consists of $4 million, with $2 million going to an existing project, and $2 million reserved for a potential future project. Each project will receive a maximum of $2 million or 20% of the development cost. In return, developers promise to keep the housing affordability at 60-90% AMI (area median income) for the first 10 years.
Investments are to be paid back within 10 years at a 5% interest rate. Money recouped by collecting interest will automatically be funneled back into the fund for future projects. The Board of Commissioners can also decide to allocate that money elsewhere at future budget meetings.
A staff presentation said the county offers a sweeter deal than the private investor market, where expected rates of return typically are around 15-20%. The presentation stated the housing fund is also expected to fast-track development times from 4 years to 18 months, reducing the holding period and financing costs.
The workforce housing investment fund proposal also included a list of possible incentives to be offered to developers. These are not guaranteed, but could be given on a case-by-case basis. They include: expedited plan review, coordinated planning and approvals, priority inspection services, and building fee reductions.
The board approved the fund’s first investment in the “Proximity Blue Clay” project. The plan is to build 236 townhomes on 28 acres in the northern part of the county on Blue Clay Road, near I-140. Cape Fear Development, the company behind the project, approached the county about the investment.
County officials say they’ll save the remaining $2 million in the fund until they find the right project to invest in.