The Durham Community Land Trustees (DCLT) has acquired some property that it plans to keep affordable for current residents.
Last month, the DCLT acquired 1600 Anderson Street, a 48-unit market-rate apartment building near the corner of Chapel Hill Road and Anderson Street. Additionally, the nonprofit acquired 2.28 acres of land nearby and plans to develop new townhomes for households earning 80 percent or below the area median income (AMI). Through DCLT’s stewardship, both sites will remain affordable going forward.
Nonprofits like DCLT that want to compete in the commercial real estate market enter at a disadvantage. Out-of-state firms and Wall Street interests can more easily offer upfront bids and due diligence. Sherry Taylor, DCLT executive director, has experience working in the commercial real estate market, but spearheading a nonprofit development firm has presented new challenges.
“It’s been a long road,” Taylor says. “I’ve been with DCLT for four years, and for four years, I’ve been trying to purchase an apartment complex for the organization.”
Acquiring an apartment building has been Taylor’s white whale.
“The problem wasn’t that properties didn’t come up for sale,” she says. “The problem was our offer would always get outbid.”
Firms like DCLT are in a race against market forces when a property becomes available, and because it’s a nonprofit, it starts behind other developers who have large sums of cash on-hand and access to loans that give them a competitive advantage.
“Real estate is opportunistic,” Taylor says. “Just because you want something doesn’t mean you get it.”
In neighborhoods where the cost of housing hasn’t spiked yet, naturally-occurring affordable housing (NOAH) is still achievable. But investors and other opportunistic real estate firms are lurking, ready to capitalize on the low cost of acquisition. Sometimes, developers tack a few inexpensive bells and whistles onto the property before adding the “luxury” tag and hiking the rent.
“Investors will look for NOAHs so they can do what we call a repositioning, which means they paint, they put in granite countertops, and they raise the rent as soon as they can,” Taylor says. “So people in our community have been experiencing rent increases of three, four, $500 when a property changes hands.”
As out-of-town interests buy more property, folks in the community who more acutely understand the local housing crisis become invaluable allies. For the Anderson Street apartments, DCLT forged a relationship with the property owner who Taylor says was “mission-aligned.” One of the previous owner’s concerns was that tenants would be forced to leave after the sale increased the cost of living.
“We were a perfect buyer because we’re not going to come in there and raise the rent by $500,” Taylor says. “That’s not going to happen.”
The City of Durham and Durham County contributed to the purchase. In June, the Durham County Board of County Commissioners approved the selection of DCLT as the vendor for the county’s land trust investment program. DCLT received $1,500,000 in American Rescue Plan Act funds from the county in an effort to bolster Durham’s affordable housing stock.
“Finding multifamily properties suitable for inclusion in the land trust can be very challenging, so the County is appreciative that DCLT was able to find such an opportunity so early in the term of the ARPA Land Trust Investment Program and is pleased to be able to support the acquisition with a portion of the County’s ARPA funds,” a representative told the INDY via email.
Workforce housing has been a priority for local officials. The Anderson Street apartments and the 2.2 acres are in close proximity to Duke University’s Central Campus and Duke Hospital, where affordable housing for campus and hospital staff is a premium. In downtown, the city, county and other partners are collaborating to bring over 1,000 units to the market with projects at 300 and 500 Main Street, Commerce Street, and a veteran’s housing community made from rehabilitated shipping containers called Guthrie Village.
DCLT has set ambitious goals through its “Bringing Durham Home” initiative. The organization aims to raise $25 million dollars to acquire 245 rental and for sale units. Taylors says DCLT will have to use the full range of housing types—shipping containers, modular homes, single-family homes, townhomes, condos, and multifamily buildings—to meet the affordable housing needs of the community.
“DCLT’s portfolio of rental and homeownership opportunities is getting more innovative,” Taylor says. “We know we have to partner to be able to do the same amount of work we were doing before, because the prices of land and construction are so high.”
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