Durham City Council Work Session – June 5, 2025

The Durham City Council held a work session on Thursday, June 5, 2025, beginning at 1:00 PM and adjourning at 6:18 PM. The meeting covered a lengthy consent agenda, public comment on several items, and in-depth discussions on the Durham Housing Authority (DHA) operational loan, the proposed redevelopment of 505 W. Chapel Hill Street, the Fiscal Year 2025-26 budget and Minimum Livable Wage (MLW) for part-time employees, and other operational contracts. Council voted to end negotiations with the Peebles Corporation for 505 W. Chapel Hill, directed staff to begin interim site programming and explore options for the historic Milton Small building and affordable housing, authorized a $1.5 M conditional loan commitment to DHA, and approved increasing the part-time pay step from 3% to 5%.

Consent Calendar

• Appointments: Ari S. Medoff to the Durham Convention Center Authority (mayoral appointee); Brian Wade to the Durham Workers' Rights Commission; Farrell Newman to the Durham Convention Center Authority; and Indranil Ghosh (renominated) to the Housing Appeals Board. For the Participatory Budgeting Steering Committee, council nominated Rosemary James, Daniel Seder, and Kenneth Webb (consensus not reached before the meeting).
• Administrative Items: Approved 30+ consent items en bloc, including budget-related ordinances (Item 6 – placed on GBA for separate vote), the DHA operational assistance loan commitment (Item 7), the Habitat for Humanity minor repair contract (Item 11, pulled for discussion), condemnation actions for bicycle/pedestrian improvements (Items 23, 24, 26), the 505 W. Chapel Hill Street update (Item 25, pulled for discussion), and numerous other contracts and interlocal agreements. Item 13 (Eviction Diversion Program with Legal Aid of NC) was placed on GBA due to a recusal. Items 43, 44, 45 (supplemental contracts) were added and approved after suspending the rules.

Public Comments & Testimony

• 505 W. Chapel Hill Street – Stella Adams (online) urged council to move forward with affordable housing on the site, noting that the city has only 16 naturally occurring affordable units for households below 30% AMI. Rick Watson (Durham CAN) and Rebecca (People's Alliance) presented a joint statement from six organizations, asking council to honor the RFP priority and negotiate a contract for 160–200 affordable units at 60% AMI in perpetuity, and to reject further delay. Kathleen Turner (Preservation North Carolina) and Julian Patterson (Preservation Durham) requested that the Milton Small building be carved out and sold directly to Preservation NC for preservation and adaptive reuse, citing state statute allowing direct negotiation for historic properties.
• Condemnation – Morreene Road – Katie Porter (homeowner at 302 Morreene Road) objected to the proposed condemnation, stating the city’s offer of $15,000 (later raised to $25,000) was unfair and would make her home unlivable with only one parking space. She requested good-faith negotiation and fair compensation.
• Habitat for Humanity Contract – No speakers signed up for this item, but the item was pulled for council discussion.

Discussion Items

• Durham Housing Authority (DHA) Operational Assistance Loan (Item 7) – Councilmember Rist, the DHA liaison, provided context: DHA serves over 10,000 residents (1 in 25 Durham residents), average public housing resident income is $13,000, and average rent is $249/month. DHA is classified as a “troubled agency” by HUD due to low assessment scores. Rent collection is at 65% (goal 98%), with $3.1 M in total outstanding tenant accounts receivable ($1.4 M for public housing alone). DHA has filed 86 eviction cases since July 2024, resulting in 13 evictions. The requested $1.5 M loan is to address short-term revenue shortfalls. Councilmembers expressed support for the loan but emphasized the need for transparency, accountability, and collaboration with community partners. Several members noted that federal disinvestment in public housing is the root cause. The loan is a conditional binding commitment; staff will negotiate specific performance requirements in the final agreement.
• Habitat for Humanity Minor Repair Program (Item 11) – The $1.7 M, three-year contract will fund repairs for homes of households at or below 30% AMI. Habitat representatives stated they have the capacity to handle the increased workload, though they will need to hire additional staff. Councilmembers inquired about performance metrics (annual goals for 113 units total) and Habitat’s recent leadership turnover. The contract was approved as part of the consent agenda after discussion.
• Condemnation Actions (Items 23, 24, 26) – Staff explained that condemnation is a last resort after negotiations. The Morreene Road bicycle/pedestrian improvements project requires easements and a small fee-simple taking. The homeowner (Katie Porter) expressed concerns about the adequacy of the offer and the impact on parking. Council asked staff to ensure that compensation reflects current property values (revaluation) and to engage in further good-faith negotiations. The resolutions authorizing condemnation were adopted.
• 505 W. Chapel Hill Street Redevelopment (Item 25) – City staff recommended ending negotiations with the Peebles Corporation after six months of talks failed to produce a viable term sheet. Key issues: the developer requested a $78 M subsidy ($150k per unit vs. market $40–50k for affordable housing), and the market rate and commercial components were no longer feasible due to economic conditions (tariffs, rising construction costs, high interest rates). Council voted 7–0 to end negotiations with Peebles. Council members expressed support for exploring a phased approach: preserving the Milton Small building (possibly through a direct sale to Preservation NC) and using the remainder of the site for affordable housing. Staff were directed to bring back options for interim site activation, preservation, and affordable housing development, with a report expected in August or September 2025.
• Fiscal Year 2025-26 Budget and Minimum Livable Wage (MLW) for Part-Time Employees (Item 6) – The City Manager presented scenarios for raising part-time pay to the new MLW of $21.90/hour. Three options were analyzed: (1) move all part-time employees below MLW to $21.90 (cost $500k in FY26, but creates compression among part-time grades); (2) raise the entire part-time pay structure by 31.5% (cost $1.8 M in FY26, but creates bypassing with full-time positions); (3) a partial approach raising the third grade to $21.90 (cost $1.1 M, still leaves 106 employees below MLW and creates some bypassing). The City Manager recommended against any of these options due to fairness and equity concerns for other employees. Council instead approved a separate request to increase the part-time pay-for-performance step from 3% to 5% (cost $270,000 for FY26), which will move 44 of the 234 part-time employees below MLW above the threshold. Council also declined to increase funding for Justice Matters (ILAP program) from $250k to $450k at this time, but indicated willingness to consider carryover funds later in the year.

Key Outcomes

• Approved the consent agenda (Items 1–12, 14–38, 43–45) with Item 13 placed on GBA and Items 14–15 pulled for context.
• Authorized the City Manager to issue a conditional binding commitment of up to $1.5 M to DHA (Item 7). Staff will negotiate performance requirements, including monthly financial reports and collaboration with community partners.
• Approved the three-year, $1.7 M contract with Habitat for Humanity for the Minor Repair Program (Item 11).
• Adopted resolutions authorizing condemnation for the Morreene Road bicycle/pedestrian improvements (Items 23, 24, 26). Staff will continue negotiations with property owners.
• Voted to end negotiations with the Peebles Corporation for the 505 W. Chapel Hill Street site (Item 25). Directed staff to (a) begin interim site programming, (b) explore options for preserving the Milton Small building (including direct negotiation with Preservation NC), and (c) bring back a phased plan for affordable housing on the remaining site. A report is expected in August or September 2025.
• Approved increasing the part-time pay-for-performance step from 3% to 5% (cost $270,000) for FY2025-26, effective July 1, 2025. The budget ordinance will be adopted at the next regular council meeting.
• Decided not to increase Justice Matters funding at this time; council will consider using carryover funds later in the fiscal year.
• Settled the agenda for the June 16, 2025 meeting, with Items 39–41 (public hearings) and Item 13 placed on the General Business Agenda.