Winston-Salem council bullish on affordable housing project

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Michael Suggs of Goler CDC (left) and Derwick Paige
Michael Suggs of Goler CDC (left) and Derwick Paige

by Jordan Green

The Winston-Salem City Council is looking favorably on a nonprofit’s request for loan forgiveness to develop affordable housing in the northeast corner of downtown. 

The finance committee of Winston-Salem City Council gave the green light to public financing of a proposed affordable-housing project at the corner of Patterson Avenue and Martin Luther King Jr. Drive on Monday.

The project is part of a long-running, public-private partnership between the city and Goler Community Development Corp. to redevelop the vacant lot at a corner that functions as downtown’s northeast gateway. The lot is adjacent to the new Mudpies Downtown East daycare and a couple blocks away from the Wake Forest Innovation Quarter and the planned Bailey Power Plant office and retail complex. The city has made a significant investment in the area, part of the eastern flank of downtown, including subsidies for a parking garage and loans totaling $500,000 to Northwest Child Development Centers for building construction and operations of the daycare center.

Under the proposed deal with Goler CDC, which comes before the full council on Aug. 18, the city would hand over 1.73 acres to the nonprofit by forgiving a $525,000 loan. The nonprofit has entered into an agreement with Laurel Street Residential, an affordable-housing developer, to build 135 apartment units, ranging from studios to two-bedroom apartments for small families. Under the terms of the deal, the debt would be repaid to the city through property taxes over the course of 15 years. While the debt was being repaid, the developers would be required to provide at least half of the units to households earning 80 percent of the area median income, and then maintain at least 15 percent of the units as affordable housing for the next 15 years.

“I think they’re going to have a niche of people who work at the research park,” said Assistant City Manager Derwick Paige, who helped structure the deal.

“Lab technicians, I would guess, would be in that range of $30,000 per year,” he said, adding that restaurant servers and bartenders at the planned Bailey Power Plant would also be able to afford the apartments. “While a PhD may want to live there, they’ll need to make sure there are units available for people who earn less.”

The finance committee unanimously approved the package, and council members expressed enthusiastic support for the deal.

“One of my concerns was, how do we maintain affordable housing for downtown for an extended amount of time?” said Councilman Derwin Montgomery, who represents the East Ward. “And so with this actual project we have the opportunity to bring affordable housing into the downtown core and have it there for at least 30 years. And for me, I think that is something we should applaud ourselves for.”

He added that the deal accommodates working people who might not qualify for public housing, while getting priced out of the premium downtown market.

Based on an estimated $12 million overall investment, Goler CDC Chairman Michael Suggs and Laurel Street Residential President Dionne Nelson noted in a letter that the deal represents a 1 to 20 leverage of public dollars, adding, “We feel the affordability commitment we have proposed is an appropriate return on the city of Winston-Salem’s investment.”

The city acquired a stake in the project in 2008 when city council agreed to buy the debt from the previous lender, Local Initiatives Support Corp., to prevent the property from going into foreclosure. The city paid $750,000 to LISC and $25,000 to BB&T at the time. In 2011, the city sold a portion of the property to the nonprofit Northwest Child Development Centers. That deal was financed through a forgivable loan based on a combination of tax and job-creation credits.

Suggs said he was reluctant to speak on the record for this story before council considers full approval of the project next week, but said, “We’re committed to ensure that downtown living is affordable to all income levels. That’s what Goler has been committed to since its inception.”

Suggs holds a mixed record as a partner in land development with the city. Apart from his role with Goler CDC, he purchased the former Smith Dry Cleaners property with another investor, Ivan Robinson, in 2004. City council approved a $150,000 loan to remediate the land, which was held as collateral. The property was cleaned up, but Robinson and Suggs never made any payments on the loan. The city took possession of the lot through foreclosure earlier this year.

Councilman Robert Clark, the chair of the finance committee, said he was not familiar with the Smith Dry Cleaners project. But he said the city has a positive working history with Goler CDC, adding, “I think they have done a good job with the project’s they’ve done.”

Clark said Goler has developed senior housing in the area. Other developments, including the daycare center, Truliant Credit Union and an outpatient clinic operated by Baptist Hospital also bode well for growth.

“The land’s been vacant a long time,” Clark said. “I’m more concerned about knowing who the developer is. That’s who we’re really betting on — who has skin in the game.”

Clark said he looks forward to receiving additional information from Laurel Street Residential before voting on the project next week.

The finance committee also approved a $319,175 loan to the Housing Authority of Winston-Salem to acquire and demolish the former Brown Elementary School for development of an apartment complex for seniors on Highland Avenue. The loan would be repaid through federal tax credits approved by the state Housing Finance Agency or through a five-year deferred payment plan.

“With all the federal dollars that taxpayers have been spending in that area, if we do not move forward, there’ll just be an eyesore over there,” said Mayor Pro Tem Vivian Burke, who represents the Northeast Ward.

Paige told council members that he would also be bringing a loan request to the finance committee next month from two local developers who are responsible for the West End Mill Works complex. The proposed loan of $195,000 would help finance Phase II of the project. John Bryan and Dewey Anderson have already invested $1.4 million to redevelop 16,800 square feet in the adaptive reuse project, according to city documents, while creating nine new businesses and 100 new jobs. The tenants, who are curated by the developers, include Hoots Beer Co., Sutler’s Spirits distillery, the Porch restaurant, the Breathing Room and Eight Points Muay Thai & Fitness.

The site of a planned affordable-housing development
The site of a planned affordable-housing development

Councilwoman Denise D. Adams, who represents the North Ward, suggested that if the city granted the loan, the developers should be required to provide information about their utilization of minority contractors, adding that the city could also ask for a public-parking giveback in exchange.

“Those 100 jobs that they created for nine new businesses, I need to know what the nine new businesses were, the names, and what kind of wages are they paying those 100 jobs,” Adams said. “And I also need to know, were there any historically underutilized businesses or MWBEs that were used in the development of this property?

“And the interest rate on the loan, if we gave it to ’em — you used a good word: ‘hoping for,’” she continued, alluding to Paige’s presentation. “What’s the market rate that we’re talking about? And we can make it higher. Because we’re the city.”