March 19, 2026
To: Durham City Council
Fr: 505 Working Group

Re: Recommendations (link to slides) for building affordable apartments at 505 W. Chapel Hill St.

Background: The Working Group (see below for membership) was convened by the City in December 2025 to determine the spatial and financial considerations for developing affordable housing at 505. With active support from City staff, HR&A Advisors, and Perkins&Will, we met six times in January and February 2026. We appreciate the opportunity to share our expertise, work constructively with City staff, and present our findings and recommendations to Council.

Assumptions: In keeping with past RFPs for the site and years of advocacy by a range of community organizations, we based our work on these assumptions:

• Maximize # of affordable units (minimum 80) available for 60% AMI & below
• Given the high value of the land, seek an efficient affordable housing footprint
• Meet all NC Housing Finance Agency, LIHTC and City of Durham requirements for amenities, open space, parking, and configuration
• Choose a project size that is competitive for a 9% LIHTC Award
• Affordable housing must be able to proceed independently of plans for the Milton Small Building and other future development at the site.

Our process: We focused on the Northwest corner (intersection of S. Gregson St. and W. Chapel Hill St.). We considered multiple massing studies prepared by Perkins&Will, consulted with City staff and HR&A, and engaged a licensed general contractor to generate cost estimates for the two most feasible scenarios:

Scenario 1: Use a 9% LIHTC award to build a standalone 5-story wood-framed structure housing 80 apartments. 80 surface parking spaces wouldbe available to the South of the building.

Total acreage: 1.64 acres. ESTIMATED gap subsidy required: $4.2 Million.

Scenario 2: Use a 9% LIHTC award to build a standalone “5 over 2” structure -- 5 stick-built floors housing 80 apartments over 2 concrete floors providing 80 units of structured parking. Same apartment configurations and amenitiesas Scenario 1.

Total acreage: .8 acres. ESTIMATED gap subsidy required: $6.03 Million.

Findings: Building 80 affordable apartments is clearly feasible on the NW portion of 505 and will not prevent other future development of the site. 505 is an excellent candidate for affordable units given its proximity to public transit and downtown, and an 80-unit development would be competitive for a LIHTC award in 2027. The cost per apartment is comparable to other City-funded affordable housing projects.

Recommendations:

• Pursue Scenario 2: Build 80 affordable apartments over structured parking onthe NW corner, leaving room for a 2nd LIHTC building of 55 units on the SW corner in a future development.
• By July 2026 select a qualified LIHTC developer with a proven track record in Durham to develop a detailed plan for Council consideration in Fall 2026 and a LIHTC pre-application in January 2027.
• Offer a long-term ground lease at nominal cost to the developer.

505 Working Group

1. Ted Heilbron, Principal Kelley Development Company
2. Ketty Thelemaque, Lead Organizer Durham CAN
3. Rick Larson Member, Duke Memorial UMC (505 Consortium, Durham CAN, PA Member)
4. Gregg Warren, Former DHIC President (PA Member) Raleigh Housing Authority Board Member
5. Sherry Taylor, Executive Director, Durham Community Land Trustees
6. Yolanda Winstead, President & CEO  DHIC

City/Staff Consultants

1. Jennifer Duru – General Services Department
2. Aarin Miles – Senior Assistant City Attorney
3. Stacey Poston – General Services Department
4. Sarah Viñas- Housing & Neighborhood Services
5. Sara Young – City/County Planning & Development
6. Julie Brenman – Facilitator, Fountainworks
7. Samuel Jacobs - HR&A Advisors
8. Mark Kubaczyk – HR&A Advisors
9. Stephen Conschafter – Perkins&Will
10. Stephen Sefton – Perkins&Will
11. Marlen Veith – Perkins&Will