Durham Council authorizes talks with Preservation North Carolina for Milton Small building; asks staff to test affordable‑housing options

Durham City Council on Tuesday moved to pursue a two‑track approach for the long‑vacant 505 West Chapel Hill Street site: negotiate with Preservation North Carolina to preserve and market the Milton Small (Home Security Life) building, and ask staff to quickly convene affordable‑housing experts to test whether housing can be built on part of the site without foreclosing denser development later.

City staff and consultants from HR&A Advisors told the council that full, large‑scale redevelopment of the entire four‑acre site is unlikely to be financially viable now without substantial city subsidy. HR&A Director Mark (HR&A) summarized the economics presented to the council: “Unless it’s low‑rise market‑rate housing, the city will need to participate in financial support of redevelopment of any of these individual uses.” The consultant estimated total costs to rehabilitate the Milton Small building at roughly $25–30 million (total project cost), noting that historic tax credits and other subsidies affect developer pro formas.

Preservation North Carolina offered a statutory route that would let a nonprofit acquire an option to purchase a historic, government‑owned property and then re‑sell it to a vetted preservation‑minded buyer subject to protective covenants. Kathleen Turner of Preservation North Carolina told the council the nonprofit’s approach reduces the uncertainty that a sealed‑bid disposal can cause and helps match the site with developers that specialize in rehabilitating historic properties. “This allows your local government to sell a historic surplus property by private negotiation to a nonprofit preservation organization, so long as protective covenants are attached,” Turner said.

Council members spoke at length about trade‑offs between preservation, interim activation, and affordable housing. Several members — including Council members Baker, Kopack and Cook — expressed support for pursuing preservation while still seeking ways to deliver as much affordable housing as feasible. Council member Kopack said he wanted staff to test assumptions about parking requirements and Low‑Income Housing Tax Credit (LIHTC) structures, noting differences between 4% and competitive 9% credits and their implications for parking, developer financing and long‑term compliance periods.

Public speakers representing Durham CAN, Durham Coalition for Affordable Housing & Transit, and neighborhood faith groups urged the council to move quickly on affordable housing at 505. James Blake of Fisher Memorial United Holy Church said the community has “been waiting for 8 years” for housing at the site and urged the council not to delay action that could deliver housing for people who currently cannot afford to live in Durham.

Council direction: Council members agreed on a near‑term package of actions. They authorized staff to enter negotiations with Preservation North Carolina and to subdivide roughly an acre around the Milton Small building to enable that organization to market the building to qualified preservation developers. In parallel the council asked the city manager to convene a short advisory group of technical experts and community representatives — including affordable‑housing developers, Durham CAN, and Downtown Durham Incorporated representatives — to test three technical questions: (1) what parking ratios will lenders and NCHFA require for affordable housing on the site; (2) how much city subsidy would be required under plausible 4% or 9% LIHTC financing stacks; and (3) how different development footprints (surface parking vs. structured parking) would change subsidy needs and the amount of site area consumed.

Staff said the advisory group will be small and technical, intended to produce initial findings and options within a compressed timeframe. Council members suggested an initial report back in the first quarter following the meeting (members discussed roughly a 3‑month horizon for first findings), with a commitment that any sale or binding agreement would return to council for approval.

Next steps and practical constraints: Staff emphasized the trade‑offs that drive the analysis. Affordable‑housing developers and tax‑credit rules often require on‑site parking and have compliance periods (for example, the 15‑year compliance period associated with certain LIHTC uses), which can limit how much land remains available for future redevelopment. Preservation North Carolina and HR&A said use of historic rehabilitation tax credits and negotiated covenants can reduce the city subsidy needed to rehabilitate the Milton Small building, but that rehab and long‑term site planning remain complex and dependent on subsidy, financing and market cycles.

Council members asked staff to return with precise options, subsidy estimates and the advisory group’s analysis before committing to any sale, lease or long‑term binding agreement.