AGENDA ITEM EXECUTIVE SUMMARY
ITEM TITLE*
title
Provide preliminary approval to act as issuer of multifamily housing revenue bonds for the acquisition and rehabilitation of Elliott Woods and Chase Park Apartments
presenter
RESPONSIBLE STAFF, TITLE, DEPARTMENT*
Sarah Osmer Viñas, Director, Affordable Housing and Community Connections (AHCC) Department
Emily Holt, Affordable Housing Manager, AHCC Department
Maggie Simon, Affordable Housing Development Coordinator, AHCC Department
Amy Oland, Director, Business Management Department
STAFF RECOMMENDATION*
Staff recommends that Council approve the resolution to issue multifamily housing revenue bonds on behalf of Vitus for the Elliott Woods and Chase Park Apartments projects.
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ACTION/DECISION POINTS*
Council must approve or reject the Town acting as conduit debt issuer of multifamily housing revenue bonds for the Elliott Woods and Chase Park Apartments projects.
LEGISLATIVE CONTEXT*
This project will be funded, in part, with low-income housing tax credits. In order for the project to receive the low-income housing tax credits, it must be financed in part with tax-exempt bonds and be approved for the tax credits and an allocation of bond volume cap by the North Carolina Housing Finance Agency (NCHFA). 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 has 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. The inducement resolution that the Town Council is being asked to adopt at this time indicates the Town’s willingness to serve as the issuer for the bonds and is required as part of the developer’s application to the NCHFA for the bond volume cap and tax credits.
BACKGROUND AND CONTEXT*
An affordable housing developer, Vitus, approached the Town to act as a conduit debt issuer for up to $10 million in bonds for an affordable housing rehabilitation project proposed for Chapel Hill.
Elliott Woods and Chase Park Apartments are two low-cost apartment communities in the Town of Chapel Hill. They have 79 units, one of which serves as a leasing office. The buildings were originally built- in 1974 and need repair. Half of the units are covered by a Housing Assistance Payment (HAP) contract with the U.S. Department of Housing and Urban Development (HUD) to dedicate project-based Housing Choice Vouchers to the project. 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, leasing office upgrades, new playgrounds, and updated security features).
§ Building exterior upgrades (e.g., new roofing, siding and trim, unit entry doors, painting and lighting)
§ Interior renovations (e.g., new flooring, countertops, appliances, water heaters, lighting and HVAC)
The upgrades will require tenants to temporarily relocate to a nearby hotel on a rotating basis for up to 18 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 around December 2025, and is anticipated to be complete by summer 2026.
To finance the project, Vitus is applying for 4% Low-Income Housing Tax Credits (LIHTC) from the North Carolina Housing Finance Agency. In addition, at least 50% of the redevelopment project must be financed with tax exempt bonds, for which Vitus has asked the Town to serve as conduit bond issuer.
Tonight’s authorization is a preliminary step that would establish the Town’s willingness to issue the bonds if all other required project approvals and funding are secured. The Town must hold an additional Council public hearing and act on the final approval resolution in fall 2025. The Town’s willingness to act as the issuer of the bonds does not constitute approval for the proposed affordable housing project for any other purpose including, but not limited to zoning, land use, permitting, or any other aspect of the project that may require approval by the Town or any department or agency of the Town.
TRADEOFFS, ALTERNATIVES, IMPACTS
If Council decides to approve the issuance of multifamily housing revenue bonds for these two communities, it’ll support the redevelopment and preservation of two affordable housing communities that provide deeply affordable housing to the Chapel Hill community.
If the Town declines to act as the bond issuer, the project must find another bond issuer, either Orange County, the North Carolina Housing Finance Agency, or potentially the Durham Housing Authority. Town Council approval is required for either Orange County or the Durham Housing Authority to act as the bond issuer. As bond issuer, the Town will have more involvement and awareness in the deal since it will be a party to the bond documents, will receive annual reports regarding the project from the developer, and would have certain rights to receive information about the project or inspect the project, upon request.
FINANCIAL IMPACT
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 $200,000, which we will be able to invest in future affordable housing projects and/or administration of bond funding.
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 and maintains 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. Vitus intends to reach out to residents immediately upon purchasing the property.
ATTACHMENTS
Resolution
Elliott Woods - Chase Park Apartments Bond Inducement Application
A RESOLUTION GIVING PRELIMINARY APPROVAL TO ISSUE MULTIFAMILY HOUSING REVENUE BONDS AS CONDUIT ISSUER (2025-06-11/R-5)
WHEREAS, the Town Council (the “Town Council”) of the Town of Chapel Hill, North Carolina (the “Town”) met in Chapel Hill, North Carolina at 6:00 p.m. on the 11th day of June, 2025; and
WHEREAS, pursuant to Section 160D-1311(b) of the General Statutes of North Carolina, the Town is granted the power to exercise directly the powers of a housing authority organized pursuant to the North Carolina Housing Authorities Law, Article 1 of Chapter 157 of the General Statutes of North Carolina, as amended (collectively, the “Act”); and
WHEREAS, the Act in N.C.G.S. § 157-9 gives the Town, exercising the powers of a housing authority, the power “to provide for the construction, reconstruction, improvement, alteration or repair of any housing project” and “to borrow money upon its bonds, notes, debentures or other evidences of indebtedness and to secure the same by pledges of its revenues”; and
WHEREAS, Vitus Development III, LLC, a Delaware limited liability company, or an affiliated or related entity (the “Company”), intends to provide affordable housing in the Town; and
WHEREAS, the Company has applied to the Town for assistance in financing the acquisition, rehabilitation and equipping of a 79-unit multifamily residential rental development known as Elliott Chase Apartments and located in the Town (the “Development”); and
WHEREAS, the Company has described to the Town the benefits of the Development to the Town and the State of North Carolina and has requested the Town to agree to issue its multifamily housing revenue bonds in such amounts as may be necessary to finance the costs of acquiring, rehabilitating and equipping the Development; and
WHEREAS, the Town would be acting as a “conduit” issuer for such bonds, and would have no financial liability whatsoever for such bonds, which will not constitute a debt or a pledge of the faith and credit of the Town, but will be payable solely from the revenues and other funds provided by the Company; and
WHEREAS, the Town is of the opinion that the Development is a facility that can be financed under the Act and that the financing of the same will be in furtherance of the purposes of the Act;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that:
1. It is hereby found and determined that the Development will involve the acquisition, rehabilitation and equipping of a multifamily housing facility, and that therefore, pursuant to the terms and subject to the conditions hereinafter stated and the Act, the Town agrees to assist the Company in every reasonable way to issue bonds to finance the acquisition, rehabilitation and equipping of the Development, and, in particular, to undertake the issuance of the Town’s multifamily housing revenue bonds (the “Bonds”) in an amount now estimated not to exceed Ten Million Dollars ($10,000,000) to provide all or part of the cost of the Development.
2. The Bonds shall be issued in such series and amounts and upon such terms and conditions as are mutually agreed upon between the Town and the Company. The Town and the Company shall enter into a “financing agreement” pursuant to the Act for a term and providing for payments sufficient to pay the principal of, premium if any, and interest on the Bonds and to pay all of the expenses of the Town in connection with the Bonds and the Development. The Bonds will be issued pursuant to an indenture or security agreement between the Town and a trustee (the “Trustee”) or the bondholder which will set forth the form and terms of the Bonds and will assign to the Trustee for the benefit of the holders of the Bonds, or directly to the bondholder, the Town’s rights to payments under the financing agreement, except the Town’s right to payment of fees and expenses and indemnification. The Bonds will be private activity bonds issued under Section 142 of the Internal Revenue Code of 1986, as amended (the “Code”). The Bonds shall not be deemed to constitute a debt or a pledge of the faith and credit of the State of North Carolina or any political subdivision or agency thereof, including the Town, but shall be payable solely from the revenues and other funds provided under the proposed agreements with the Company.
3. The Town intends that the adoption of this resolution be considered as “official action” toward the issuance of the Bonds within the meaning of the regulations issued by the Internal Revenue Service pursuant to Section 1.150-2 of the Treasury Regulations issued under the Code.
4. The Town hereby authorizes the Company to proceed, upon the prior advice, consent and approval of bond counsel and the Town’s counsel, to obtain approvals in connection with the issuance and sale of the Bonds and to obtain an allocation of a sufficient amount of the State of North Carolina’s “private activity bond limit”, as required by Section 146 of the Code and as defined in Section 146 of the Code, for the Bonds.
5. It having been represented to the Town that it is desirable to proceed with the acquisition, rehabilitation and equipping of the Development, the Town agrees that the Company may proceed with plans for such acquisition, rehabilitation and equipping, enter into contracts for the same, and take such other steps as it may deem appropriate in connection therewith, provided that nothing herein shall be deemed to authorize the Company to obligate the Town without its written consent in each instance to the payment of any monies or the performance of any act in connection with the Development and no such consent shall be implied from the Town’s adoption of this resolution. The Town agrees that the Company may be reimbursed from the proceeds of the Bonds, if and when issued, for all qualifying costs so incurred as permitted by Treasury Regulations Section 1.150-2.
6. All obligations hereunder of the Town are subject to the further agreement of the Town and the Company to terms for the issuance, sale and delivery of the Bonds and the execution of a financing agreement, indenture or security agreement and other documents and agreements necessary or desirable for the issuance of the Bonds. The Town has not authorized and does not authorize the expenditure of any funds or monies of the Town from any source other than the proceeds of the Bonds. All costs and expenses in connection with the financing and the acquisition, rehabilitation and equipping of the Development, including the reasonable fees and expenses of the Town’s counsel, bond counsel and the placement agent or underwriter for the sale of the Bonds, shall be paid from the proceeds of the Bonds or by the Company, but if for any reason the Bonds are not issued, all such expenses shall be paid by the Company and the Town shall have no responsibility therefor. It is understood and agreed by the Town and the Company that nothing contained in this resolution shall be construed or interpreted to create any personal liability of the officers or council members from time to time of the Town.
7. The Town’s agreement to act as the issuer of the Bonds to finance the Development shall not be construed as approval of the Development for any other purpose including, but not limited to, zoning, land use, permitting or any other aspect of the Development that may require approval by the Town or any department or agency of the Town.
8. The officers of the Town are hereby authorized and directed to take all actions in furtherance of the resolution and the issuance of the Bonds.
9. The Town hereby approves McGuireWoods LLP, Raleigh, North Carolina, to act as bond counsel for the Bonds.
10. This resolution shall take effect immediately.
This the 11th day of June, 2025.
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