AGENDA ITEM EXECUTIVE SUMMARY
ITEM TITLE*
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Public Hearing: Proposed Bond Issuance for the Redevelopment of Chase Park and Elliott Woods Apartments
presenter
RESPONSIBLE STAFF, TITLE, DEPARTMENT*
Loryn Clark, Interim Director, Housing and Community Development (HCD) Department
Emily Holt, Interim Assistant Director of Affordable Housing, HCD Department
Amy Oland, Director, Business Management Department
STAFF RECOMMENDATION*
Staff recommend that Council receive public comment on the Town acting as the issuer of multifamily housing revenue bonds on behalf of Vitus for the acquisition and rehabilitation of Elliott Woods and Chase Park Apartments communities.
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ACTION/DECISION POINTS*
Open the public hearing to receive comments. No formal Council action is required.
LEGISLATIVE CONTEXT*
This project will be funded, in part, with low-income housing tax credits. For the project to receive the low-income housing tax credits, it must be financed in part with tax-exempt bonds. For the bonds to be tax-exempt under the federal tax code, they must be issued by a governmental entity. The developer of the project requested that the Town serve as the conduit governmental issuer for the bonds. The Town has the statutory authority to serve as the issuer under NCGS 160D-1311(b). This statute gives the Town the authority to exercise the powers granted to housing authorities under NCGS Chapter 157, including the ability to issue bonds for housing projects. On June 12th, 2025, the Town adopted inducement resolution (2025-06-11/R-5) indicating the Town’s willingness to serve as the issuer for the bonds. The developer is now requesting the Town adopt a final resolution approving issuance of the multifamily housing revenue bonds and the related bond documents.
BACKGROUND AND CONTEXT*
An affordable housing developer, Vitus, approached the Town to act as a conduit debt issuer for up to $7 million in bonds for the acquisition and rehabilitation of two affordable housing communities proposed for Chapel Hill.
Elliott Woods and Chase Park Apartments are two affordable apartment communities in the Town of Chapel Hill. Together they include 79 units, one of which serves as a leasing office. The buildings were originally built in 1974 and need repair. Half of the units (39) are covered by a Housing Assistance Payment (HAP) contract with the U.S. Department of Housing and Urban Development (HUD). If acquired, the HAP contract will be renewed for another 20-year term, subject to federal appropriations. The other 39 units will remain affordable either through other types of HUD-issued vouchers (serving up to 80% AMI) and/or through the Low-Income Housing Tax Credit program (serving up to 60% AMI).
The current owner, INCHUCO, is negotiating the sale of the properties to Vitus, a national affordable housing developer that specializes in the preservation of affordable properties in high-need markets. Since 1996, Vitus has developed and/or acquired more than 10,000 affordable housing units in more than 100 properties, including 22 in North Carolina. Vitus intends to acquire and rehabilitate the communities to preserve them as quality, affordable housing. The rehabilitation will include:
§ Site improvements (e.g., paving, landscaping, addition of an ADA accessible route, upgrades to the leasing office to make it ADA accessible, new playground, and updated security features).
§ Building exterior upgrades (e.g., new roofing, repairs to siding and trim, new wood decking on exterior balconies, replacement of metal stairs and landings, full painting and lighting upgrades)
§ Interior renovations (e.g., new flooring, countertops, energy star appliances, low flow water fixtures, toilets and bathroom vanities, water heaters, lighting, HVAC mini split systems and full painting)
The upgrades will require tenants to temporarily relocate to a nearby hotel on a rotating basis for up to 22 days. No tenants will be permanently relocated, and all temporary relocation costs will be covered by Vitus. The property renovation will begin immediately upon the bond closing, estimated in spring 2026, and is anticipated to be complete by spring 2027.
To finance the project, Vitus has received 4% Low-Income Housing Tax Credits (LIHTC) from the North Carolina Housing Finance Agency. In addition, at least 25% of the redevelopment project must be financed with tax exempt bonds, for which Vitus has asked the Town to serve as conduit bond issuer.
TRADEOFFS, ALTERNATIVES, IMPACTS
If Council decides to approve the issuance of multifamily housing revenue bonds for these two communities, it will support the redevelopment and preservation of two affordable housing communities that provide deeply affordable housing to the Chapel Hill community. This type of preservation is consistent with the recommendations outlined in the Council-approved Affordable Housing Plan and with the Council’s Complete Community goals.
If the Town declines to issue the bonds, the project will not be able to move forward with the tax-exempt bond and low-income housing tax credit financing as planned. The developer could seek another potential bond issuer, but that would delay the project and would require Town Council approval for another local governmental entity to act as the bond issuer.
As bond issuer, the Town will have more involvement and awareness in the deal since it is party to the bond documents, will receive annual reports regarding the project from the developer, and will have certain rights to receive information about the project or inspect the project, upon request.
FINANCIAL IMPACT
The developer has asked the Town to act as conduit issuer for up to $7 million of bonds over 2-3 years. Acting as a bond issuer doesn’t carry a legal or financial risk for the Town. The Town will have no obligation to repay the bonds and is only facilitating the issuance, which allows the bonds to be tax exempt and qualify for low-income housing tax credits per the Internal Revenue Code of 1986, as amended. The bonds will not affect the Town’s debt capacity, limits or ratios. The Town would need to include a note in its financial statements describing the conduit debt issuance, but it would not show up as a liability in its financial statements since the Town does not have any financial obligation related to the Bonds.
As issuer, the Town will charge a fee to the developer estimated at $100,000, which we will be able to invest in future affordable housing initiatives.
Because the rehabilitation work will be financed by LIHTC, tax exempt bonds, and HUD-issued vouchers, the developer is not requesting additional subsidy from the Town.
COMPLETE COMMUNITY CONNECTION
The redevelopment of these communities supports the preservation of deeply affordable multifamily housing.
Community Impact
The Town serving in the role of bond issuer for these projects prevents the potential loss of much needed affordable rental housing and the associated displacement of low-income residents from the community. The project will maintain the affordability of these communities for an additional 20+ years.
COMMUNITY ENGAGEMENT
Staff have discussed community concerns about the current conditions at Chase Park and Elliott Woods with the current owner, as well as with Vitus. Vitus has expressed a commitment to transparent and consistent communication with residents about their redevelopment plans once they acquire the site and have engaged current residents about the proposed project. Vitus will increase engagement with residents immediately upon purchasing the property.
ATTACHMENTS
Public Hearing Staff Presentation
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