Durham City Council Work Session – August 12, 2024

The Durham City Council held a work session on August 12, 2024, beginning at 9:30 AM. The meeting included roll call (all members present except Councilmember Baker, who had an excused absence), weather-related announcements, and a lengthy consent agenda. The primary focus was on the American Rescue Plan Act (ARPA) update and the redevelopment of 505 West Chapel Hill Street, where the council heard public comments, staff presentations, and extensive deliberation. Key decisions included direction to negotiate with Peoples Corporation as the preferred developer, with emphasis on a long-term land lease and increased affordable housing units.

Consent Calendar

• Item 1: Durham Cultural Advisory Board appointment – Barbara Lau.
• Item 2: Durham Sports Commission appointment – Monica Brown.
• Item 3: Durham Bicycle and Pedestrian Advisory Commission appointment – Philip L. Savakolis.
• Item 4: Annual attendance reports for boards, committees, commissions, and task forces (FY 2023–2024). Pulled by Councilmember Freeman due to concerns about accuracy of her own attendance. Council directed staff to review the dates.
• Item 5: 2025 city council meeting schedule. Pulled by Councilmember Wrist. Discussion centered on dropping the July 24 work session to avoid conflicts with a conference. Council agreed to move the item to the GBA (General Business Agenda) for further refinement, with a proposal to shift the July 24 meeting to July 31.
• Item 6: Resolution approving multifamily housing revenue bonds for 500 East Main Street (not to exceed $29 million).
• Item 7: Update on the redevelopment of 505 West Chapel Hill Street (presentation only).
• Items 8–15: Various condemnations, engineering agreements, grant acceptances, software agreements, and contracts – all approved.
• Item 16: ARPA update (presentation).
• Item 17: Unified Development Ordinance Text Amendment (Omnibus 19).
• Item 18: Citizen matter – Quincy Hokett (deer overpopulation in Trayburn).

Public Comments & Testimony

• Quincy Hokett (President, Trayburn Homeowners Association): Expressed community frustration with an estimated 70 deer per square mile (normal is 10–15), leading to car collisions, tick-borne diseases, and destruction of landscaping. He requested a variance to the city’s requirement of 5 acres and a 250-foot setback from homes for bow hunting, as his lots are too small. He stated that the North Carolina Wildlife Resources Commission and NC State University recommend culling. Deputy City Manager Keith Chadwell responded that staff is researching legal options for a variance or ordinance change and expects to bring a recommendation in 2–3 weeks.
• Rick Larson (Co-chair, Durham CAN Affordable Housing Action Team, representing six organizations): Expressed support for affordable housing at 505 West Chapel Hill Street, but argued that the current proposals (Peebles’ 92 units and Ackerage’s 101 units at 60% AMI) are only “passing” grades. He urged the council to negotiate for substantially more affordable units, even if it means less lab space. He also advocated for the city to retain ownership of the land via a long-term lease (50–99 years).
• Mick Rayner (Pastor, Duke Memorial Church, member of Durham CAN Clergy Caucus): Shared that his church helped 35 families with rent in 2023, but in just seven months of 2024, over 100 people have applied. He noted that many working people (nurses, recent graduates) struggle to afford downtown rent. He echoed the call for more affordable units at 505.
• Jane Williams (Coalition for Affordable Housing and Transit): Emphasized the rare unity of six diverse organizations (Durham CAN, Durham Committee on the Affairs of Black People, People’s Alliance, CAHT, NAACP, Duke Memorial Methodist Church) in supporting a substantial number of affordable units. She strongly urged the city to retain ownership of the land through a ground lease (50–99 years) to ensure perpetual affordability.
• Mayor Pro Tem Middleton (speaking as a citizen, not in official capacity): Noted that the coalition’s statements were not formally authorized by the organizations’ full membership. He cautioned against claiming a unified stance on specific numbers or negotiation points, though he affirmed general support for affordable housing.
• Julianne Patterson (Executive Director, Preservation Durham): Spoke in favor of preserving the historic Milton Small Building. She noted that the building is eligible for federal and state historic tax credits (up to 35% of renovation costs), which could reduce the need for public subsidy. She cited successful adaptive reuse of other historic buildings into hotels in Durham (21C, Unscripted). She urged the council to retain the building in negotiations.

Discussion Items

• ARPA Update (Presentation by Deputy City Manager Bertha Winbush):

  • The city received $51 million in federal funds. To date, 35 contracts have been executed, $5.6 million expended, and 144 invoices paid.
  • Staff recommended using the remaining unobligated funds ($314,793.56) to make one-time payments on COVID-era rent arrears for residents of Durham Housing Authority, which would reduce their payment plan balances. Councilmembers expressed strong support, noting that many residents are unable to enter payment plans due to large arrears.
  • A reallocation timeline was proposed: staff will return in October with a plan for any funds that cannot be spent by December 31, 2024 (the obligation deadline). The goal is to avoid returning money to the federal government.
  • Councilmembers praised the team’s work and asked for more details on desk reviews, site visits, and the risk of unobligated funds. The team assured ongoing monitoring.

• 505 West Chapel Hill Street Redevelopment (Presentation by Stacy Poston, General Services, and Mark Kirachi, HRNA Advisors):

  • The RFP was issued in November 2023 with six priority goals: affordable housing (60% AMI or below), historic preservation, significant commercial space (≥250,000 sq ft), signature urban design, celebration of cultural heritage (Hayti/West End), and long-term revenue generation.
  • Three developers submitted five proposals: Ackerage (base only), Conifer (base and alternative), and Peoples Corporation (base and alternative).
  • Staff recommended Peoples Corporation’s base proposal, which includes 92 affordable units (60% AMI), rehabilitation of the Milton Small Building into a hotel, 255,000 sq ft of commercial space, and a capital event (40% of net proceeds from sale after 10 years). The net present value (NPV) to the city is estimated at $22.6 million (using a 6% taxable bond, 20-year term).
  • Ackerage proposed 101 affordable units but only 3,000 sq ft of retail, no significant commercial. Conifer proposed 81 affordable units (plus 45 rent-restricted at 80–100% AMI) and 150,000 sq ft of commercial, but with a negative NPV (-$9 million base, -$1.6 million alternative).
  • After public comment and council deliberation, several members expressed support for Peoples Corporation but wanted to explore two key modifications: a long-term ground lease (instead of selling the land) and a higher number of affordable units. Councilmember Cook suggested a target of 175 units (as requested by the coalition). Councilmember Freeman noted that affordable units are not built until they are built, and the developer (Donahue Peebles) indicated openness to a ground lease and to maximizing affordability.
  • The city attorney and staff clarified that the council could direct staff to negotiate with Peoples without requiring a full RFP redo, and that a vote on a motion would provide fidelity for the developer. After extensive debate, the council reached consensus to direct staff to revise the motion (to be voted on at the next council meeting on August 18, 2024) to include consideration of a land lease and increased affordable housing units, while maintaining Peoples Corporation as the preferred developer.

Key Outcomes

• Consent Agenda: Approved as amended (items 1–3, 6, 8–15). Items 4 and 5 pulled for further discussion.
• Item 4 (Attendance Reports): Staff to review and correct if needed.
• Item 5 (2025 Meeting Schedule): Staff to bring back a revised proposal on GBA, with the July 24 work session likely moved to July 31.
• ARPA: Staff will return in October with a reallocation plan for any unobligated funds. The recommendation to use $314,793.56 for DHA resident rent arrears was well received and will be considered at a future meeting.
• 505 West Chapel Hill Street: Council directed staff to negotiate with Peoples Corporation as the preferred developer, with specific emphasis on two areas: (1) a long-term ground lease (instead of fee simple sale) to retain city ownership, and (2) maximizing the number of affordable housing units (at 60% AMI or below). Staff will bring back a revised motion and term sheet for council approval at the next regular meeting on August 18, 2024. The council also noted the importance of historic preservation, commercial space (including anchor retail), and sustainability features.