NEWS

$59 million housing project Starway Village in Wilmington closer to reality with new funding

Emma Dill
Wilmington StarNews
A rendering of Starway Village, a 278-unit workforce housing development proposed off Carolina Beach Road.

With funding falling into place, a $59 million affordable housing project off Carolina Beach Road could be getting closer to becoming a reality.

The project, called Starway Village, is set to bring 278 apartments priced at 60% of area median income to the site of Starway Flea Market. Developers say the project will offer more affordable housing options for New Hanover County's workforce, including teachers, police officers and restaurant and retail workers.

New Hanover County needs approximately 10,000 more affordable housing units to fill a gap in its rental housing stock, according to a study commissioned by the Workforce Housing Advisory Committee, a joint effort from the city of Wilmington and New Hanover County.

On Monday, the New Hanover County Board of Commissioners approved a budget amendment that allocates more than $1.8 million to the project. This is the first time the county has provided direct gap financing funds for an affordable housing project. 

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People walk around Starway Flea Market in Wilmington, N.C., Sunday, July 18, 2021. The Wilmington Planning Commission approved a rezoning along Carolina Beach Road to allow for the construction of affordable apartments on a site that currently is home to the market.

The funding comes from a re-shuffling of money New Hanover County received from the American Rescue Plan, a federal economic stimulus bill. New Hanover County previously planned to spend the $1.89 million now intended for Starway Village on water and sewer projects.

The project is also set to get approximately $3.5 million in American Rescue Plan funding from the city of Wilmington. The Wilmington City Council is expected to vote on the funding at their Nov. 3 meeting, Rebekah Roth, the director of New Hanover County's Planning and Land Use Department told the Board of Commissioners Monday.

The money is needed to make up the nearly $5.4 million funding gap developers Bradley Housing Developers and Kelley Development Company will need to fill to bring the project to fruition, according to the funding request.

Even though projects that use 4% Low Income Housing Tax Credits cap their rents at 60% of area median income, they still pay market rate construction, real estate and operating costs, according to Ted Heilbron, a principal with Kelley Development Company. That sometimes leads to a funding gap for the project.

Rent caps also limit the size of the mortgage developers can secure, which contributes to the funding shortfall, Heilbron wrote in an email to the StarNews.

Money approved by the Board of Commissioners will go toward the development's overall project to pay for construction, design and real estate costs.

The company aims to raise approximately $53.9 million to pay for the project. Approximately $23.4 million will come from the sale of the development's federal income tax credits. The remaining $30.5 million will come in the form of a commercial mortgage, according to Hailbron.

The need for the gap funding is primarily driven by the cost of purchasing the site's 15.6 acres and the cost of extending Maryland Avenue through the project to connect with Carolina Beach Road. 

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A rendering of the pool and clubhouse area at Starway Village, a 278-unit workforce housing development proposed off Carolina Beach Road.

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The project's developers have applied for a 4% Low Income Housing Tax Credit with the North Carolina Housing Finance Agency. The tax credit provides an incentive for developers to construct or rehabilitate affordable housing units.

Since 2000, there have been just 200 new construction projects in New Hanover County that have been financed through 4% Low Income Housing Tax Credits, according to the funding request.

The development site is also located in a qualified census tract, which means that the project is eligible to receive 30% more in tax credits, the funding request states. The Department of Housing and Urban Development explains qualified census tracts exist in areas where half of residents make less than 60% of area median income.

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All units will be priced at 60% of the area median income with rents ranging from $754 for a one bedroom apartment to $999 for an apartment with three bedrooms and two bathrooms. The development will include 34 one bedroom apartments, 154 apartments with two bedrooms and two bathrooms and 90 with three bedrooms and two bathrooms.

People walk around Starway Flea Market in Wilmington, N.C., Sunday, July 18, 2021. The Wilmington Planning Commission approved a rezoning along Carolina Beach Road to allow for the construction of affordable apartments on a site that currently is home to the market.

This summer, the Wilmington Planning Commission unanimously approved rezoning the land from a community business and commercial services designation to multiple-family, medium-density residential. The Wilmington City Council approved the rezoning in September.

The site has served as Starway Flea Market for more than 30 years. Before that, the land was used as a drive-in movie theater. Starway Theater opened in 1955 and closed in 1985. It became a flea market shortly after.

Reporter Emma Dill can be reached at 910-343-2096 or edill@gannett.com.