The Davidsonian

Bungalows to Hit the Market: Affordable Complex Faces Uncertainty

A sign at The Bungalows. Photo by Nada Shoreibah ‘23

Nada Shoreibah ’23 (She/Her), Features Editor

Last month, a letter from Gerald Wright, Executive Director of the Davidson Housing Coalition (DHC), rocked the residents of The Bungalows. The letter delivered the news that the 32-unit affordable multiplex would be listed for sale sometime this fall. With the listing and possible sale of the property impending, residents are concerned that ongoing maintenance issues will not be prioritized or, worse, that a change in ownership might make their home financially unattainable.

Though nonprofits DHC and Mosaic Development Group oversee The Bungalows through the company Excel Property Management, they are not majority owners. The Town of Davidson granted the property to DHC in 1999 to support local affordable housing initiatives. The same day, DHC deeded 99.9 percent of the project to anonymous investors under the title Davidson Limited Partnership I. The partnership allows the private investors to profit from the Low- Income Housing Tax Credit, a federal tax reduction granted for investments into affordable rental housing, while the minority- owning entities manage the property. Since the 20-year tax credit window has closed, Davidson LP I no longer benefits from their end of the deal.

“The intention was the private investor would exit, and DHC and Mosaic would assume ownership,” said former mayor John Woods as quoted in a recent article by Lee Sullivan. “But for some reason, it was not put in writing.” The original contract between DHC and Davidson LP I does not grant the right of first refusal, which would have put DHC first in line to purchase the property, meaning that the Bungalows will go directly on the public market.

“We want to make you aware of this situation and assure you that it is DHC’s goal to secure ownership of The Bungalows and to maintain its affordability,” wrote Wright to the residents. “Upon completion of this negotiation, we do not anticipate there would be a great deal of change to your ability to call The Bungalows home. Please know that any newly formed partnership would be required to keep The Bungalows affordable for its residents.” In an “FAQs” section at the bottom of the letter, Wright added that once the property was listed, DHC was told to “expect closing within 3 to 6 months.”

Technically speaking, it is true that the affordability of The Bungalows is contractually protected for the next decade. The 1999 agreement between the Town and DHC stipulates that the land must be used for affordable housing projects until 2030, with an automatic three-year extension. According to Woods, an additional deed restriction requires that housing on the land remain affordable indefinitely. However, the second condition of the contract reads that the property “may be used for such other public purposes as is approved by the Grantor, which approval shall be spread upon the minutes of a meeting of the Board of Commissioners of the Town of Davidson.”

In practice, the designation “affordable housing” does not always live up to its promise. North Carolina Housing Finance Agency (NCHFA) guidelines cap rent for Bungalows residents at 50 percent of Area Median Income (AMI). Rent has historically stayed below this limit, which Wright informed residents of in his letter. What residents do not know is how far below 50 percent AMI their current rent falls, or which figure their current rent is based on. Their current landlords could be using the 2018 AMI, while new owners might use the post-census 2022 number. In the event that a new owner raises rent to the NCHFA limit, residents are uninformed about how significant the jump would be. Meanwhile, Davidson’s average household income, already more than double the state average, continues to rise.

This uncertainty about rent is a growing source of anxiety for Bungalows residents. “What’s the possibility that our rent could go up 50 or 100 dollars?” said Anne, who has lived at the Bungalows for three years. “You can have a small percentage of people that make a lot of money, and that really wrecks it for low-income people. It drives up that median and all of a sudden our noses are under water.”

Some residents rely on rental assistance vouchers provided by Section 8 of the Housing Act of 1937. While accepting payment through vouchers is typical in Mecklenburg County, there are no agreements in place to ensure that the potential new landlords of the Bungalows would follow suit. At the Davidson Board of Commissioners on September 27, Wright reiterated DHC’s intent to secure the Bungalows. Long-time resident Lynda is skeptical, given that she has repeatedly heard cost cited as a limitation to addressing maintenance issues. “If you want to purchase this property,” she asked, “what are you going to purchase it with if you’re not spending money to keep up the maintenance?”

Receiving quality maintenance has been a persistent struggle for Bungalows residents, as covered in two previous Davidsonian articles by Ian Macel ‘24 and Hunter Callaway ‘22. When former maintenance contractor Jack Orr continually ignored issues that threatened both safety and quality of life, residents pushed for a county inspection late in 2021. The inspectors uncovered 36 Davidson Minimum Housing Code violations, which The Bungalows’ overseers began addressing three months later. The limited scope of the Code meant repairs not encompassed by it, like aging blinds, stovetops, and heating systems, continued to be postponed.

Lynda noted that now, maintenance issues and delays have begun to build up again. After the peripheral storms that came with Hurricane Ian, she noticed a water stain expanding below the electrical switches in her living room from a leak behind the wall. Fearing the risk of getting electrocuted, she requested for the switch to be inspected. “I’m still waiting,” she said. “Stuff like that [is] kind of piecemeal. They don’t do what I consider preventative maintenance. They just wait until something breaks and it’s an emergency.”

An upcoming DHC project next door has furthered the sense of neglect and distrust amongst Bungalows residents. Neighboring The Bungalows is a tract of land that formerly housed the site of Hoke Lumber. Last year, the town board approved a proposal from Alliance Group to build 81 townhouses on the property. Through a partnership with the Town and the Davidson Community Foundation (DCF), DHC will acquire eight of these units as income-restricted, affordable homes. Specifically, they will be attainable for those who earn between 80 and 120 percent of AMI. DHC has committed $1.2 million to the project.

For Lynda, the announcement stirred questions and doubts. “How are you going to purchase that, but then you don’t have the money for maintenance here, and you’re saying that the majority owner won’t accept the offer that you’re putting in? How much are you offering? It just doesn’t sound right.”

At the end of his letter, Wright assured the community that there were plans to “set up a resident meeting once we have more direction from the majority partner on the process.” Anne, Lynda, and other residents are anxious to know more about what lies ahead for The Bungalows, but have low expectations when it comes to clear communication. “We’ve been hearing that,” said Anne. “On June 9th they said they would start having regular tenant meetings; we hadn’t had them before that and we haven’t had a meeting since. The only other meeting we had here was before code enforcement came.”

The names of Bungalows residents have been changed for anonymity. When emailed for comment, Gerald Wright stated he was unable to provide information beyond the letter on the Bungalows sale “as a requirement of our current negotiations with the Limited Partner.”

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