Decision time for Rebuild Durham

jwise@newsobserver.comAugust 3, 2013 

  • Stories to Watch

    Affordable housing is one of The Durham News’ Stories to Watch for 2013.

    Mayor Bill Bell made low-cost housing a city priority in 2012, leading to a “penny for housing” property-tax increase to create a “dedicated funding stream” to address it. Toward the same end, some are calling for mandatory inclusion of low-cost dwelling units in new developments and/or public incentive grants to encourage them.

    Lincoln Apartments, where about 100 families faced eviction when their landlord went out of business in 2012, dramatized the hardships poor residents face in finding, and keeping, places to live.

    For background, see:

    • “New incentive sought for affordable housing,” June 8, 2013, bit.ly/15wfwpE

    • “Affordable housing seen as key for light-rail money,” May 21, 2013, bit.ly/12GxvMi

Rebuild Durham Inc., a nonprofit in the business of affordable housing, owes the city $366,322.85 on obligations dating back 14 years. It’s been three years since the agency last made a payment.

City administrators want to revise the loan terms, but at least one City Council member wants to put an end to them.

“It was a mistake for us to get involved with this, and we should do the quickest thing we can to get out of it,” Councilman Eugene Brown said.

Other council members aren’t so sure that getting out is the thing to do.

“The horse is out of the barn,” said Councilman Don Moffitt. “My inclination is to … create a structure that gets them down the road, maintains the affordable housing … and may – may – increase the likelihood of recovering city funds.”

Rebuild Durham owns 13 single-family houses with a total tax value of $1,117,620.

However, Rebuild Durham’s latest available Internal Revenue filing, in August 2012, valued them at just $774,476 as of Dec. 31, 2011. Its liabilities exceeded its assets by more than $200,000, and it has reported no paid employees since 2008.

The city’s Community Development office has proposed taking the title to one of the houses, which is in the Southside revitalization project area, and forgiving any more loan payments unless Rebuild Durham sells the houses.

“We’re doing the best we can with a challenging situation,” Community Development Director Reginald Johnson said, and it is likely that, with his proposal, the city will never get its money back.

However, he said, “The bottom line is, we do have affordable housing.”

The restructuring proposal was in line for council approval at its Monday meeting, but discussion at a July work session left enough questions and discomfort to postpone a decision. Rebuild Durham grew out of former Community Development Director Kendall Abernathy’s idea to turn boarded-up eyesores into low-cost rental homes. The agency was incorporated in May 1999. The next year, the city made a loan of up to $460,000 from a federal housing appropriation.

When City Manager Tom Bonfield appointed Johnson to head Community Development in 2011, sorting out the Rebuild Durham situation was one of his assignments. Last year, the city paid off $366,322.85 to settle the federal obligations, and Johnson said he would come up with a recommendation on what to do next.

“It has taken us a little while to come to this step,” he said.

Wise: 919-641-5895

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